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Your final Capstone Project is a leadership development plan
(LDP). An LDP is a very practical document, one which allows
you to reflect on yourself and your learning, complemented with
outside research, and which—upon completion—will provide
you with a “past, present, and future” roadmap for becoming an
increasingly more effective leader in all aspects of your life.
The first part of crafting an effective LDP is to have a strongly
grounded understanding of the major theories of management,
which you have gained through your progress in this program
and reviewed throughout this course. Your LDP should be
divided into sections that help you to organize your roadmap,
including (but not limited to) the following topics:
· Effective Leadership Overview/Summary (3-6 pages)
· Theories
· Moderators/Contingencies (i.e., factors that might impact the
overall effectiveness of various leadership theories)
· Relationship and Network Building
· Communication
· Development of One’s Followers
· Leadership Self-Assessment (3-5 pages)
· Strengths
· Values
· Personality
· Leadership Development Goals (2-3 pages)
For this section, you should choose two or three objectives
(e.g., nurture relationships; network; increase self-confidence;
communicate more effectively; build stronger teams). For each
development goal, please provide the Development Objective,
Development Activities (how you will work toward
accomplishing the objective), Resources/Support (that you have
or can develop toward achieving the objective), Timeline,
Potential Obstacles, and Evidence of Progress (i.e., milestones),
as shown below:
·
· Development Objective “X”:
· Development Activities
· Resources/Support
· Timeline
· Potential Obstacles
· Evidence of Progress
· Development Objective “Y”:
· Development Activities
· Resources/Support
· Timeline
· Potential Obstacles
· Evidence of Progress
· Development Objective “Z”:
· Development Activities
· Resources/Support
· Timeline
· Potential Obstacles
· Evidence of Progress
· Appendices (at your discretion, you may include other
documents/resources helpful to you in following your LDP)
· Resources
Your well-written paper should meet the following
requirements:
· Be 8-14 pages in length
· Be formatted according to the CSU-Global Guide to Writing
and APA Requirements
· Cite at least four credible, academic resources that support
your assertions and strengthen your arguments. The CSU-Global
Library is a great place to find these resources.
The Ordinary Heroes Of the Taj
Section: The Globe
How an Indian hotel chain's organizational culture nurtured
employees who were willing to risk their lives to save their
guests.
ON NOVEMBER 26, 2008, Harish Manwani, chairman, and
Nitin Paranjpe, CEO, of Hindustan Unilever hosted a dinner at
the Taj Mahal Palace hotel in Mumbai (Taj Mumbai, for short).
Unilever's directors, senior executives, and their spouses were
bidding farewell to Patrick Cescau, the CEO, and welcoming
Paul Polman, the CEO-elect. About 35 Taj Mumbai employees,
led by a 24-year-old banquet manager, Mallika Jagad, were
assigned to manage the event in a second-floor banquet room.
Around 9:30, as they served the main course, they heard what
they thought were fireworks at a nearby wedding. In reality,
these were the first gunshots from terrorists who were storming
the Taj.
The staff quickly realized something was wrong. Jagad had the
doors locked and the lights turned off. She asked everyone to lie
down quietly under tables and refrain from using cell phones.
She insisted that husbands and wives separate to reduce the risk
to families. The group stayed there all night, listening to the
terrorists rampaging through the hotel, hurling grenades, firing
automatic weapons, and tearing the place apart. The Taj staff
kept calm, according to the guests, and constantly went around
offering water and asking people if they needed anything else.
Early the next morning, a fire started in the hallway outside,
forcing the group to try to climb out the windows. A fire crew
spotted them and, with its ladders, helped the trapped people
escape quickly. The staff evacuated the guests first, and no
casualties resulted. "It was my responsibility…. I may have
been the youngest person in the room, but I was still doing my
job," Jagad later told one of us.
ELSEWHERE IN THE HOTEL, the upscale Japanese restaurant
Wasabi by Morimoto was busy at 9:30 pm. A warning call from
a hotel operator alerted the staff that terrorists had entered the
building and were heading toward the restaurant. Forty-eight-
year-old Thomas Varghese, the senior waiter at Wasabi,
immediately instructed his 50-odd guests to crouch under tables,
and he directed employees to form a human cordon around
them. Four hours later, security men asked Varghese if he could
get the guests out of the hotel. He decided to use a spiral
staircase near the restaurant to evacuate the customers first and
then the hotel staff. The 30-year Taj veteran insisted that he
would be the last man to leave, but he never did get out. The
terrorists gunned him down as he reached the bottom of the
staircase.
WHEN KARAMBIR SINGH KANG, the Taj Mumbai's general
manager, heard about the attacks, he immediately left the
conference he was attending at another Taj property. He took
charge at the Taj Mumbai the moment he arrived, supervising
the evacuation of guests and coordinating the efforts of
firefighters amid the chaos. His wife and two young children
were in a sixth-floor suite, where the general manager
traditionally lives. Kang thought they would be safe, but when
he realized that the terrorists were on the upper floors, he tried
to get to his family. It was impossible. By midnight the sixth
floor was in flames, and there was no hope of anyone's
surviving. Kang led the rescue efforts until noon the next day.
Only then did he call his parents to tell them that the terrorists
had killed his wife and children. His father, a retired general,
told him, "Son, do your duty. Do not desert your post." Kang
replied, "If it [the hotel] goes down, I will be the last man out."
Three years ago, when armed terrorists attacked a dozen
locations in Mumbai--including two luxury hotels, a hospital,
the railway station, a restaurant, and a Jewish center--they
killed as many as 159 people, both Indians and foreigners, and
gravely wounded more than 200. The assault, known as 26/11,
scarred the nation's psyche by exposing the country's
vulnerability to terrorism, although India is no stranger to it.
The Taj Mumbai's burning domes and spires, which stayed
ablaze for two days and three nights, will forever symbolize the
tragic events of 26/11.
During the onslaught on the Taj Mumbai, 31 people died and 28
were hurt, but the hotel received only praise the day after. Its
guests were overwhelmed by employees' dedication to duty,
their desire to protect guests without regard to personal safety,
and their quick thinking. Restaurant and banquet staff rushed
people to safe locations such as kitchens and basements.
Telephone operators stayed at their posts, alerting guests to lock
doors and not step out. Kitchen staff formed human shields to
protect guests during evacuation attempts. As many as 11 Taj
Mumbai employees--a third of the hotel's casualties--laid down
their lives while helping between 1,200 and 1,500 guests
escape.
At some level, that isn't surprising. One of the world's top
hotels, the Taj Mumbai is ranked number 20 by Condé Nast
Traveler in the overseas business hotel category. The hotel is
known for the highest levels of quality, its ability to go many
extra miles to delight customers, and its staff of highly trained
employees, some of whom have worked there for decades. It is a
well-oiled machine, where every employee knows his or her job,
has encyclopedic knowledge about regular guests, and is
comfortable taking orders.
Even so, the Taj Mumbai's employees gave customer service a
whole new meaning during the terrorist strike. What created
that extreme customer-centric culture of employee after
employee staying back to rescue guests when they could have
saved themselves? What can other organizations do to emulate
that level of service, both in times of crisis and in periods of
normalcy? Can companies scale up and perpetuate extreme
customer centricity?
Our studies show that the Taj employees' actions weren't
prescribed in manuals; no official policies or procedures existed
for an event such as 26/11. Some contextual factors could have
had a bearing, such as India's ancient culture of hospitality; the
values of the House of Tata, which owns the Taj Group; and the
Taj Mumbai's historical roots in the patriotic movement for a
free India. The story, probably apocryphal, goes that in the
1890s, when security men denied J.N. Tata entry into the Royal
Navy Yacht Club, pointing to a board that apparently said "No
Entry for Indians and Dogs," he vowed to set up a hotel the
likes of which the British had never seen. The Taj opened its
doors in 1903.
Still, something unique happened on 26/11. We believe that the
unusual hiring, training, and incentive systems of the Taj
Group--which operates 108 hotels in 12 countries--have
combined to create an organizational culture in which
employees are willing to do almost anything for guests. This
extraordinary customer centricity helped, in a moment of crisis,
to turn its employees into a band of ordinary heroes. To be sure,
no single factor can explain the employees' valor. Designing an
organization for extreme customer centricity requires several
dimensions, the most critical of which we describe in this
article.
A Values-Driven Recruitment System
The Taj Group's three-pronged recruiting system helps to
identify people it can train to be customer-centric. Unlike other
companies that recruit mainly from India's metropolitan areas,
the chain hires most of its frontline staff from smaller cities and
towns such as Pune (not Mumbai); Chandigarh and Dehradun
(not Delhi); Trichirappalli and Coimbatore (not Chennai);
Mysore and Manipal (not Bangalore); and Haldia (not Calcutta).
According to senior executives, the rationale is neither the
larger size of the labor pool outside the big cities nor the desire
to reduce salary costs, although both may be additional benefits.
The Taj Group prefers to go into the hinterland because that's
where traditional Indian values--such as respect for elders and
teachers, humility, consideration of others, discipline, and
honesty--still hold sway. In the cities, by contrast, youngsters
are increasingly driven by money, are happy to cut corners, and
are unlikely to be loyal to the company or empathetic with
customers.
The Taj Group believes in hiring young people, often straight
out of high school. Its recruitment teams start out in small
towns and semiurban areas by identifying schools that, in the
local people's opinion, have good teaching standards. They call
on the schools' headmasters to help them choose prospective
candidates. Contrary to popular perception, the Taj Group
doesn't scout for the best English speakers or math whizzes; it
will even recruit would-be dropouts. Its recruiters look for three
character traits: respect for elders (how does he treat his
teachers?); cheerfulness (does she perceive life positively even
in adversity?); and neediness (how badly does his family need
the income from a job?).
The chosen few are sent to the nearest of six residential Taj
Group skill-certification centers, located in the metros. The
trainees learn and earn for the next 18 months, staying in no-
rent company dormitories, eating free food, and receiving an
annual stipend of about 5,000 rupees a month (roughly $100) in
the first year, which rises to 7,000 rupees a month ($142) in the
second year. Trainees remit most of their stipends to their
families, because the Taj Group pays their living costs. As a
result, most work hard and display good values despite the
temptations of the big city, and they want to build careers with
the Taj Group. The company offers traineeships to those who
exhibit potential and haven't made any egregious errors or
dropped out.
One level up, the Taj Group recruits supervisors and junior
managers from approximately half of the more than 100 hotel-
management and catering institutes in India. It cultivates
relationships with about 30 through a campus-connect program
under which the Taj Group trains faculty and facilitates student
visits. It maintains about 10 permanent relationships while other
institutes rotate in and out of the program. Although the Taj
Group administers a battery of tests to gauge candidates' domain
knowledge and to develop psychometric profiles, recruiters
admit that they primarily assess the prospects' sense of values
and desire to contribute. What the Taj Group looks for in
managers is integrity, along with the ability to work
consistently and conscientiously, to always put guests first, to
respond beyond the call of duty, and to work well under
pressure.
For the company's topmost echelons, the Taj Group signs up 50
or so management trainees every year from India's second- and
third-tier B-schools such as Infinity Business School, in Delhi,
or Symbiosis Institute, in Pune, usually for functions such as
marketing or sales. It doesn't recruit from the premier
institutions, as the Taj Group has found that MBA graduates
from lower-tier B-schools want to build careers with a single
company, tend to fit in better with a customer-centric culture,
and aren't driven solely by money. A hotelier must want, above
all else, to make other people happy, and the Taj Group keeps
that top of mind in its recruitment processes.
Training Customer Ambassadors
The Taj Group has a long history of training and mentoring,
which helps to sustain its customer centricity. The practice
began in the 1960s, when CEO Ajit Kerkar--who personally
interviewed every recruit, including cooks, bellhops, and wait
staff, before employing them--mentored generations of
employees. The effort has become more process-driven over
time.
Most hotel chains train frontline employees for 12 months, on
average, but the Taj Group insists on an 18-month program.
Managers, too, go through 18 months of classroom and on-the-
job operations training. For instance, trainee managers will
spend a fortnight focusing on service in the Taj Group's training
restaurant and the next 15 days working hands-on in a hotel
restaurant.
The Taj Group's experience and research has shown that
employees make 70% to 80% of their contacts with guests in an
unsupervised environment. Training protocols therefore assume,
first, that employees will usually have to deal with guests
without supervision--that is, employees must know what to do
and how to do it, whatever the circumstances, without needing
to turn to a supervisor.
One tool the company uses is a two-hour weekly debriefing
session with every trainee, who must answer two questions:
What did you learn this week? What did you see this week? The
process forces trainee managers to absorb essential concepts in
the classroom, try out newfound skills in live settings, and learn
to negotiate the differences between them. This helps managers
develop the ability to sense and respond on the fly.
The Taj Group also estimates that a 24-hour stay in a hotel
results in between 40 and 45 guest-employee interactions, which
it labels "moments of truth." This leads to the second key
assumption underlying its programs: It must train employees to
manage those interactions so that each one creates a favorable
impression on the guest. To ensure that result, the company
imparts three kinds of skills: technical skills, so that employees
master their jobs (for instance, wait staff must know foods,
wines, how to serve, and so on); grooming, personality, and
language skills, which are hygiene factors; and customer-
handling skills, so that employees learn to listen to guests,
understand their needs, and customize service or improvise to
meet those needs.
In a counterintuitive twist, the Taj Group insists that employees
must act as the customer's, not the company's, ambassadors.
Employees obviously represent the chain, but that logic could
become counterproductive if they start watching out for the
hotel's interests, not the guests', especially at moments of truth.
Trainees are assured that the company's leadership, right up to
the CEO, will support any employee decision that puts guests
front and center and that shows that employees did everything
possible to delight them.
According to senior executives, this shift in perspective changes
the way employees respond to situations. Moreover, it alters the
extent to which they act--and believe they can act--in order to
please guests. A senior executive told us that when an irate
guest swore he would never stay at the Taj Mumbai again
because the air conditioner hadn't worked all night, a trainee
manager offered him breakfast on the house and provided
complimentary transportation to the airport. She also ensured
that someone from the next Taj property at which he was
booked picked him up from the airport. Did the trainee spend a
lot of the company's money on a single guest? Yes. Did she
have to ask for permission or justify her actions? No. In the Taj
Group's unwritten rule book, all that mattered was that the
employee did her best to mollify an angry guest so that he
would return to the Taj.
The Taj Group's training programs not only motivate
employees, but they also create a favorable organizational
culture. H.N. Shrinivas, the senior vice president of human
resources for the Taj Group, notes: "If you empower employees
to take decisions as agents of the customer, it energizes them
and makes them feel in command." That's in part why the Taj
Group has won Gallup's Great Workplace Award in India for
two years in a row.
Incumbent managers conduct all the training in the Taj Group,
which uses few consultants. This allows the chain to impart not
just technical skills but also the tacit knowledge, values, and
elements of organizational culture that differentiate it from the
competition. Every hotel has a training manager to coordinate
the process, and given that Taj properties impart training only
in the areas in which they excel, they vie with one another to
become training grounds.
Like all the other companies in the House of Tata, the Taj
Group uses the Tata Leadership Practices framework, which
lays out three sets of leadership competencies that managers
must develop: leadership of results, business, and people. Every
year 150 to 200 managers attend training sessions designed to
address those competencies. The company thereafter tailors
plans on the basis of individuals' strengths and weaknesses, and
it hires an external coach to support each manager on his or her
leadership journey.
The Taj Group expects managers to lead by example. For
instance, after a day of work, the general manager of every
hotel is expected to be in the lobby in the evenings, to welcome
guests. That might seem old-fashioned, but that's the Taj
tradition of hospitality.
A Recognition-as-Reward System
Underpinning the Taj Group's rewards system is the notion that
happy employees lead to happy customers. One way of ensuring
that outcome, the organization believes, is to show that it values
the efforts of both frontline and heart-of-the house employees
by thanking them personally. These expressions of gratitude,
senior executives find, must come from immediate supervisors,
who are central in determining how employees feel about the
company. In addition, the timing of the recognition is usually
more important than the reward itself.
Using these ideas, in 2001 the Taj Group created a Special
Thanks and Recognition System (STARS) that links customer
delight to employee rewards. Employees accumulate points
throughout the year in three domains: compliments from guests,
compliments from colleagues, and their own suggestions.
Crucially, at the end of each day, a STARS committee
comprising each hotel's general manager, HR manager, training
manager, and the concerned department head review all the
nominations and suggestions. The members of this group decide
whether the compliments are evidence of exceptional
performance and if the employee's suggestions are good. Then
they post their comments on the company's intranet. If the
committee doesn't make a decision within 48 hours, the
employee gets the points by default.
By accumulating points, Taj Group employees aspire to reach
one of five performance levels: the managing director's club;
the COO's club; and the platinum, gold, and silver levels.
Departments honor workers who reach those last three levels
with gift vouchers, STARS lapel pins, and STARS shields and
trophies, whereas the hotel bestows the COO's club awards. At
an annual organization-wide celebration called the Taj Business
Excellence Awards ceremony, employees who have made the
managing director's club get crystal trophies, gift vouchers, and
certificates.
According to independent experts, the Taj Group's service
standards and customer-retention rates rose after it launched the
STARS program, because employees felt that their contributions
were valued. In fact, STARS won the Hermes Award in 2002 for
the best human resource innovation in the global hospitality
industry.
THE TAJ GROUP'S hiring, training, and recognition systems
have together created an extraordinary service culture, but you
may still wonder if the response of the Taj Mumbai's employees
to 26/11 was unique. Perhaps. Perhaps not.
At about 9:30 am on December 26, 2004, a tsunami rippled
across the Indian Ocean, wreaking havoc on coastal populations
from Indonesia to India, killing about 185,000 people. Among
those affected was the island nation of the Maldives, where tidal
waves devastated several resort hotels, including two belonging
to the Taj Group: the Taj Exotica and the Taj Coral Reef.
As soon as the giant waves struck, guests say, Taj Group
employees rushed to every room and escorted them to high
ground. Women and children were sheltered in the island's only
two-story building. Many guests were panic-stricken, believing
that more waves could follow, but staff members remained calm
and optimistic.
No more waves arrived, but the first one had inundated kitchens
and storerooms. A Taj Group team, led by the head chef,
immediately set about salvaging food supplies, carrying cooking
equipment to high ground, and preparing a hot meal.
Housekeeping staff retrieved furniture from the lagoon, pumped
water out of a restaurant, and restored a semblance of normalcy.
Despite the trying circumstances, lunch was served by 1:00 pm.
The two Taj hotels continued to improvise for two more days
until help arrived from India, and then they evacuated all the
guests to Chennai in an aircraft that the Taj Group had
chartered. There were no casualties and no panic, according to
guests, some of whom were so thankful that they later
volunteered to help rebuild the island nation. These Taj Group
employees behaved like ordinary heroes, just as their colleagues
at the Taj Mumbai would four years later. That, it appears, is
indeed the Taj Way.
HBR Reprint R1112J
The Taj Approach to HR
SEEK fresh recruits rather than lateral hires.
HIRE from small towns and semiurban areas, not metros.
RECRUIT from high schools and second-tier business schools
rather than colleges and premier B-schools.
INDUCT managers who seek a single-company career and will
be hands-on.
FOCUS more on hiring people with integrity and devotion to
duty than on acquiring those with talent and skills.
TRAIN workers for 18 months, not just 12.
ENSURE that employees can deal with guests without
consulting a supervisor.
TEACH people to improvise rather than do things by the book.
INSIST that employees place guests' interests over the
company's.
HAVE incumbent managers, not consultants, conduct training.
USE timely recognition, not money, as reward.
ENSURE that recognition comes from immediate supervisors,
not top management.
~~~~~~~~
By Rohit Deshpandé and Anjali Raina
Social Strategies That Work
Businesses that thrive on social platforms don't just sell stuff--
they also help people connect
More than a billion people use social platforms such as
Facebook, eHarmony, Renren, and LinkedIn. What's the
attraction? They satisfy two basic human needs: to meet new
people and to strengthen existing relationships. Fee-based
dating websites, which collectively grossed $1 billion in 2010
by connecting strangers, now account for an estimated one in
six new marriages. Facebook, which fortifies friendships, boasts
a staggering 750 million users and a valuation in excess of $100
billion.
Numbers like those attract traditional companies, which have
launched Facebook fan pages and Twitter accounts in hopes of
finding new customers and engaging existing ones. But few of
those companies succeed in generating profits on social
platforms, despite collecting lots of "friends" and "followers."
To find out why some firms fail while others succeed in these
venues, I studied more than 60 companies across industries
ranging from manufacturing to consumer packaged goods to
financial services as they ventured into online social realms.
What the poorly performing companies shared was that they
merely imported their digital strategies into social environments
by broadcasting commercial messages or seeking customer
feedback. Customers reject such overtures because their main
goal on the platforms is to connect with other people, not with
companies. That behavior isn't hard to understand. Imagine
sitting at a dinner table with friends when a stranger pulls up a
chair and says, "Hey! Can I sell you something?" You'd
probably say no, preferring your friends' conversation over
corporate advances. Many companies have learned that lesson
the hard way.
In contrast, the companies that found significant returns devised
social strategies that help people create or enhance
relationships. These work because they're consistent with users'
expectations and behavior on social platforms. To return to our
dinner analogy, a company with a social strategy sits at the
table and asks, "May I introduce you to someone or help you
develop better friendships?" That approach gets a lot more
takers. (See the exhibit "Digital Strategy vs. Social Strategy.")
You Scratch My Back…
To explain successful social strategies, I find it useful to
characterize them in a simple statement with three components
that all the strategies share:
Successful social strategies (1) reduce costs or increase
customers' willingness to pay (2) by helping people establish or
strengthen relationships (3) if they do free work on a company's
behalf.
This definition yields four types of successful social strategies
that firms can pursue (see the table "Four Ways to Pursue Social
Strategies"):
· Reduce costs by helping people meet.
· Increase willingness to pay by helping people meet.
· Reduce costs by helping people strengthen relationships.
· Increase willingness to pay by helping people strengthen
relationships.
The work people do on a company's behalf can include customer
acquisition, supplying inputs such as R&D and web content, and
selling the company's products or services.
To see how the strategy of reducing costs by helping people
strengthen relationships works, consider Zynga, a three-year-old
company whose free social games, including FarmVille and
CityVille, are on track to generate $1 billion in revenue in
2011. The games run inside the Facebook environment and have
attracted more than 250 million users (the typical player is a
middle-aged woman). The Facebook platform allows the games
to access the demographic data of players and lists of their
"friends," as well as to post status updates that those friends can
see. In CityVille, players plant seeds on a virtual plot, cultivate
the land, harvest crops, and sell them to local virtual
businesses. They then use the profits to buy more seeds, build
businesses, or expand the city.
The game presents players with obstacles such as limits on the
number of plots or businesses they can possess. To increase the
limit, players can pay with virtual goods they buy from Zynga--
a major source of the firm's revenues. Or, to the social-strategy
point, they can enlist friends, via Facebook status updates or
Zynga's messaging system, to help. And they can return the
favor by sending virtual gifts to friends and by visiting their
plots.
The positive impact that Zynga's games have on players' social
lives is clear. According to a survey done by Information
Solution
s Group, almost a third of players reported that the games
helped them connect with family and current friends; another
third said games facilitated connections with old friends; and a
third used the games to make new friends. My interviews with
dozens of players revealed how. Many use the opportunity as an
excuse to connect. A woman with two children told me, "When I
am done with work and kids, I want to reach out to my friends,
but it's too late to call. So I go to play, and see if I can help
them out with something. They notice it, which helps us stay
connected." Others consider posting a game-status update on
Facebook as an invitation to contact them. A younger male
player said, "I am not going to post on Facebook that I had a
bad day, but I might mention something about it, when I post,
that I need something in a game. My friends will see it and
often someone will call or e-mail."
To obtain these social benefits, people undertake actions that
help Zynga. In exchange for an opportunity to reestablish and
maintain contact with friends, players encourage others to join
or return to Zynga's games. By my estimates, those social
mechanisms slash Zynga's customer acquisition and retention
costs by half, improving its profitability by approximately 20
percentage points. Hence, Zynga's social strategy (1) reduces its
acquisition and retention costs (2) by allowing people to
reconnect with friends (3) if they invite them to return to the
game.
The reviewing site Yelp uses a different type of social strategy:
It reduces costs by acquiring its most valuable content for free
by helping people meet. Advertisers provide Yelp's revenues,
but its content--18 million reviews of local establishments so
far--is written by an educated cadre of volunteers, called
Yelpers, mostly in their twenties and thirties. The site traffic,
about 50 million visitors a month, attests to the usefulness of
the reviews; it's the company's social strategy that significantly
accounts for that quality.
The most passionate and prolific Yelpers may be invited to join
the Elite Squad, a select tier in the Yelp community. Squad
membership gives them access to exclusive Yelp-hosted events
that range from the refined, such as cocktail parties at museums,
to the rowdy, like a Mardi Gras-themed bacchanalia at San
Francisco's Bubble Lounge, which attracted hundreds of
revelers in 2009. Such events commonly produce new
friendships and other relationships that continue beyond the
confines of Yelp.
To maintain these social benefits, Squad members must
continue to produce reviews, as the elite status is renewed--or
not--every year. My interviews with elite Yelpers indicate that
they will continue to write reviews specifically to maintain their
status. The effects for Yelp's business are substantial. My
research shows that an average elite Yelper will write reviews
at a constant rate for nearly two years, whereas otherwise
identical nonelite Yelpers without such social benefits will
reduce their contributions after about six months. Therefore, the
average elite Yelper will produce about 100 more reviews than a
nonelite; without these elite contributions, Yelp's review stream
would fall by about 25%. Thus, Yelp's social strategy (1) helps
it obtain quality content for free (2) by allowing the best
contributors to meet like-minded people (3) if they write
reviews.
Business and Pleasure
Because Zynga and Yelp are online startups with inherently
social products, devising their social strategies is relatively
straightforward. But companies in very different sectors are
developing social strategies as well.
Consider eBay's Group Gifts online application, launched in late
2010, which people use to pool funds to buy gifts for their
friends. A group organizer logs on to eBay and names a gift
recipient, either directly or by picking the name from a list of
her Facebook friends. eBay then offers a set of general gifts, or
the organizer can authorize an eBay application to access the
recipient's Facebook "about me" profile and base a gift
recommendation on that. The organizer then selects a gift and
issues an invitation to other contributors by posting a request to
contribute on her Facebook page. The invitation contains a link
to the eBay gift page, where contributors can contribute and
write a note to the recipient. When the gift price is reached,
eBay sends the gift and well-wishers' notes. The social benefits
are clear: Group Gifts helps people purchase better-targeted and
more-expensive gifts than they might otherwise. That not only
strengthens relationships with the recipient but also can help
enhance relationships among the joint gift givers. As one
interviewee said, "If it wasn't for the Facebook update, I would
never know about the farewell gift for this guy, and no one
asked me to contribute. But I saw this and chipped in, and just
yesterday I got a thank-you note….I think it will be easier to
stay in touch with him."
To obtain such social benefits, people must advertise Group
Gifts to their friends and respond to their friends'
advertisements. Such friend-to-friend advertising generates
dramatic results: A third of Group Gifts participants sign up for
new PayPal accounts, and a third return to eBay within a month
to purchase other items. What's more, the average price of
Group Gifts goods is five times higher than that of an average
eBay sale. Thus, eBay's social strategy (1) increases willingness
to pay (2) by allowing people to strengthen their friendships
through gift giving (3) if they ask their friends to buy from
eBay.
Social strategies can also be tailored to address the challenges
of meeting people for professional purposes. American Express
developed such a strategy for its OPEN credit cards, which
target small business owners. Customer churn is a challenge in
the credit card business, so AmEx set about making OPEN cards
stickier. Initially, the company hosted conferences focused on
small business management for card members and then launched
an online platform, called OPEN Forum, to showcase
conference content. The forum site was a hit, attracting more
than a million visitors a month.
Management observed that cardholders were connecting with
one another through the content and launched a members-only
social network called Connectodex, which allows users to post
profiles, list services they offer and need, and freely connect for
business. More than 15,000 small businesses have joined the
network. Although members could use other professional
networks such as LinkedIn, they report preferring Connectodex,
as small businesses with which they interact are already vetted
by AmEx. A Forrester Research study confirmed this need when
it found that nearly half of owners of small businesses with
more than $100,000 in revenues say they wanted to learn from
other owners.
To reap social and networking benefits from Connectodex,
small business owners must obtain or continue holding an
AmEx OPEN card. As a result, the service has effectively
reduced customer churn and increased willingness to pay for the
card. At the same time, platform users' net promoter scores (a
gauge of their likelihood of recommending the card) now
significantly surpass nonusers' scores. Thus, the American
Express social strategy (1) increases willingness to pay (2) by
helping professionals to meet others like them (3) if they
maintain their card membership.
How to Build a Social Strategy
I have observed many companies seek to build social strategies,
with vastly different outcomes. Those that failed in the effort
focused on their business goals and paid less attention to
customers' unmet social needs. These strategies didn't
effectively help people with relationships, so they were
unwilling to do jobs for the company. In contrast, companies
with successful strategies first thought through how to address
unmet social needs and then connected the proposed solutions to
business goals. Because the process of identifying unmet social
needs is often hard, I recommend that firms focus on helping
people with four types of social challenges: connecting with
strangers, interacting with strangers, reconnecting with friends,
and interacting with friends.
Let's look at how a major credit card company I'll call XCard
devised and tested a social strategy (the company requested that
its name be disguised). The CMO assembled an eight-person
team that included members from marketing, product
development, and IT--plus consultants, myself included. The
group ultimately reported directly to the CEO. We led the team
in a structured strategy-development process in which team
members devised at least one strategy for each of the four types
of social challenges that card members may face. In each case,
the goal was to increase card-member spending or retention, or
acquire new customers, in exchange for solutions to those
challenges. Each of the four social strategies of course adhered
to the core principle: They reduced costs or increased
customers' willingness to pay by helping people establish or
strengthen relationships if they did free work on the company's
behalf.
Social challenge A: Reconnecting with acquaintances and
friends outside a core group can be awkward.
Social strategy A: Help people reconnect through shopping with
friends. The team devised a program that would give
cardholders an excuse to reconnect by inviting others who
already had the card or who had agreed to sign up for one to
join them for shopping. Shopping together at the same retailer
at the same time would yield additional reward points.
Social challenge B: People need help interacting with
acquaintances and friends outside a core group.
Social strategy B: Help people interact through gift giving. The
XCard team envisioned a gift program in which, upon request,
XCard would examine another member's purchases or purchase
locations (only if they had opted into the program) and
recommend gifts targeted to their purchase profile. The program
would give members an incentive to use XCard more in order to
build an accurate purchase history, resulting in well-targeted
recommendations for friends.
Social challenge C: Finding strangers with whom you have
something in common isn't easy.
Social strategy C: Connect executive women who have XCard's
high-end charge card. Many of these customers travel frequently
and have few opportunities to socialize with women like
themselves. The team devised invitation-only events at
exclusive hotels in major cities to convene these cardholders
when they traveled.
Social challenge D: People find it uncomfortable to interact
with strangers without first knowing more about them.
Social strategy D: Help moms with young children learn
something about one another. These customers have an appetite
for information about child care products, but some have
difficulty finding trusted advice about them. The team
conceived a branded card that would allow moms to access a
dedicated social platform, search for other cardholding moms
who had bought a particular product, and connect to them. Only
moms who made themselves searchable and continued to make
purchases with the card would be allowed to search.
Theory into Practice
Having identified several potential strategies for helping people
create or improve relationships, the team evaluated them using
three tests.
Social utility test: Will the strategy help customers solve a
social challenge they can't easily address on their own? This
test requires that you focus on an important--but unmet--social
challenge for the target group. People doing such analyses often
assume that if they don't personally experience a given social
challenge, others don't either. That is usually wrong. Social-
strategy development requires an unprejudiced look at the target
group's social needs. The shopping-with-friends, executive-
women, and moms strategies passed the test's requirement to
address an important, unmet social need. This evaluation
required researching the demand for social solutions in each
group--for example, executive women's interest in networking
opportunities. The research revealed that although networking
groups are plentiful, invitation-only events for executive women
that capitalize on their heavy travel schedules are not. The team
also confirmed that moms want to find other moms who have
bought a specific product and that no existing tools allowed
them to do so. Similarly, the research revealed a substantial
appetite for shopping with friends. However, the team found
that people would hesitate to use a program that, by making gift
recommendations based on their purchase patterns, in effect
revealed their purchase preferences to others. For that reason,
the team disqualified the gift-giving strategy.
Social solution test: Will the strategy leverage the firm's unique
resources and provide a differentiated, hard-to-copy social
solution? The team realized that the card's leadership in an
exclusive segment and its superior rewards program were
distinctive. Those resources conferred a hard-to-replicate
advantage for the executive-women strategy and offered a
better-than-alternatives option for that segment. Likewise, the
shop-with-friends strategy continued to look promising,
primarily because it leveraged the card's superior rewards
program. The moms strategy didn't fare as well in this analysis
because the firm lacked the detailed transaction data needed to
create a service that competitors couldn't readily replicate or
even outperform. Concerns also surfaced that large retailers of
children's products, such as Toys "R" Us or Walmart, could
create a more effective platform. The team sought to address
this concern, but ultimately the moms strategy was disqualified.
Business value test: Will the social solution directly lead to
improved profitability? This test requires that the strategy
directly lower costs or increase willingness to pay. The
executive-women strategy that had thus far survived stumbled
here because of the small size of the target group--only 0.2% of
cardholders. Although reducing defection among this small but
disproportionately profitable segment could have a measurable
bottom-line impact, the team determined that it was not as large
as that offered by the shop-with-friends option.
Before piloting this option, the team checked that the activities
intended to improve relationships were directly related to jobs
that help the company lower costs or increase willingness to
pay. That was true, for example, in the Zynga and eBay Group
Gifts strategies, which allowed people to connect only if they
posted status updates advertising the product. Indeed, the shop-
with-friends strategy tightly aligned social and economic
benefits: The social act of inviting a friend to shop is the very
act that yields profits, by generating fees if the friend becomes
a new card member, makes a purchase with the card, or both.
Because each new customer recruited, for free, by a card
member roughly halves customer-acquisition costs, the team
calculated that the strategy had great economic potential. As
this strategy performed best on all three tests, the team chose it
as the one to pilot.
The Pilot Takes Off
By e-mail, XCard invited 10,000 customers in one metropolitan
area to receive a pilot Facebook shop-with-friends application.
Almost 45% of recipients checked out the application; half of
that subgroup signed up. Signatories were required to enter their
credit card number for validation and then were asked to pick a
time to go shopping with friends. Subsequently, they were
prompted to post a Facebook status update announcing when
they would like to shop and informing others that all involved
would receive additional XCard rewards for co-shopping.
When friends clicked on the update, they were returned to the
application, where they could sign up for an XCard or register
their existing card and confirm their attendance. During the
two-month pilot, a fifth of those who had signed up posted a
status update, of whom three-quarters received at least one
response (some received as many as six responses). A third of
those who responded became new cardholders, and 75% of
invitations to shop together resulted in purchases.
Pleased with the results, the CEO and CMO green-lighted the
social strategy for a full rollout in 2012. With changing
corporate priorities and increased focus on the exclusive cards,
the executive team also asked the group to pilot the executive-
women strategy. Most important, the company established a
permanent social-strategy unit that reports to the CMO and is
tasked with developing and testing new social strategies.
As most businesses are accustomed to helping people meet their
economic rather than their social needs, creating social
strategies will require fundamental changes in the way
companies approach strategy development. As social platforms
become even more central to consumers' lives, companies that
don't figure out how to appropriate their value and create true
social strategies will find it harder and harder to compete with
those that do. Starting this process soon, even in small steps, is
both a critical defensive and offensive move.
HBR Reprint R1111H
Idea in Brief
Most companies don't succeed in online social platforms.
That's because they merely import their digital strategies to
these venues. But commercial messages and feedback
opportunities are not what customers primarily seek. They want
to connect with people, not companies.
Businesses that win in this arena adopt a social strategy that (1)
reduces costs or increases customers' willingness to pay (2) by
helping people establish or strengthen relationships (3) if they
do free work on the company's behalf.
Successful social strategies have all three components. They're
built, bit by digital bit, through helping people with the social
challenges of connecting and interacting with friends and
strangers.
Digital Strategy vs. Social Strategy
The primary advantage of a social strategy over a purely digital
one is in tapping into how people really want to connect--with
other people, not with a company. A business with a successful
social strategy helps people form and strengthen relationships in
ways that also benefit the company.
DIGITAL STRATEGIES broadcast commercial messages and
seek customer feedback in order to facilitate marketing and sell
goods and services.
: .
SOCIAL STRATEGIES help people improve existing
relationships or build new ones if they do free work on the
company's behalf.
: .
FOUR WAYS TO PURSUE SOCIAL STRATEGIES
Here's how four companies have successfully implemented their
social strategies. Each firm reduces costs or increases
customers' willingness to pay by helping people establish or
strengthen relationships if they do free work on the company's
behalf.
By Mikołaj Jan Piskorski
Mikołaj Jan Piskorski, who often goes by Misiek, is an
associate professor in the strategy unit at Harvard Business
School. His forthcoming book is Connect: Why Social Platforms
Work and How to Leverage Them for Success (Princeton
University Press, 2012). Twitter: @mpiskorski
Fast-food chain offers a wide range of schemes to motivate
different staff groups.
Thanks to the nature of its business, fast-food giant McDonald's
Restaurants has employee motivation built into its DNA. With
each of its restaurants operating as a separate profit unit,
employees have a vested interest in engaging with the concept
of teamwork and collaborating to ensure their restaurant is as
successful as possible.
McDonald's incentivises and supports these desired behaviours
through two bonus schemes for its 400 company-owned
restaurants.
Each month, all employees in the top 10% of restaurants, based
on mystery shopper scores, receive a bonus. In addition,
restaurant managers are eligible for a quarterly bonus based on
three equally weighted measures: mystery shopper scores, sales
growth and profitability.
Neal Blackshire, benefits and compensation manager, says:
"The entire management team is being aligned as a team to be
motivated to, and rewarded for, achieving those business
metrics. And the entire team is being challenged to deliver the
best customer service they can because they are never exactly
sure when they're going to be visited [by mystery shoppers]."
Both company-owned restaurants and franchises are also
eligible for the titles Restaurant of the Quarter and Restaurant
of the Year, which can earn them a day or night out, funded by
their employer.
Motivation scheme portfolio
These initiatives are part of a wider portfolio of motivation and
incentive schemes that operate across McDonald's in the UK as
well as its global business.
One of the newest of these is the Ray Kroc Awards, which
recognise the best business managers across Europe. Named
after the founder of McDonald's Corporation in the US, the
programme replicates initiatives previously available in the US
and across Asia Pacific, the Middle East and Africa (APMEA).
For the latest awards, 12 UK winners were selected from
nominations by McDonald's operations managers and directors
of franchising, across both company-owned and franchised
restaurants, representing the top 1% of performers at this level.
The winners attended a two-day event in Barcelona in June,
during which they were presented with trophies at a gala awards
ceremony. "It was a full-on production, like a mini Oscars
[ceremony]," says Blackshire. "There was a red carpet for them
all to walk up, they all had their names printed on stars lining
that red carpet, and a specially shot video opened the evening
with some of the winners in their usual restaurant.
"All those 12 UK managers came back to their restaurants and
will have been talking to their peers about what a fantastic time
they had. Undoubtedly, we'll have 1,200 managers keen to be
nominated next year."
Appealing recognition schemes
Blackshire believes that keeping recognition schemes fresh and
exciting is key to maximising staff motivation, which is why, as
well as introducing new programmes, McDonald's also reinvents
existing schemes to ensure they continue to appeal to
employees.
One of the highest-profile examples in the last couple of years
was the evolution of McDonald's employee of the month scheme
into its Olympic Champion Crew (OCC) initiative, for which it
won 'Most motivational benefits' at the Employee Benefits
Awards 2013.
Launched in January 2011 to 1,200 UK restaurants, the
programme linked employee motivation to the business need to
identify top performers to staff McDonald's four restaurants at
the 2012 Olympic and Paralympic Games.
In the following 10 months, each restaurant selected an Olympic
champion of the month, before nominating their top five
champions to proceed to the next stage of the programme. Each
monthly champion received an Olympic-themed gift box
containing a personalised congratulations card, plus Olympic-
themed gifts.
In November 2011, 100 regional skills assessments were held to
identify the top 2,500 employees, who were given the
opportunity to work at the Olympic Park restaurants during the
Games.
The selected staff were given accommodation at a London hotel,
where they could enjoy facilities such as a wellbeing zone
comprising a beach-themed area and a lounge zone, which
included ping pong, pool tables, football tables and large
plasma television screens for staff to watch coverage of the
Games. A programme of activities was organised to generate a
sense of fun and team spirit, and to enable staff to see more of
London."That really gave it an impetus and breathed new life
into a programme that had been around for a number of years
and perhaps had been taken a little bit for granted," says
Blackshire. "It took the Olympic element to really inject that
extra enthusiasm. Obviously, the ability to have those
ambassadors to come back from the Olympic Park, being able to
talk about the hotel set-up and all the other things we did to
look after them away from actually working in the restaurant,
really is more powerful than any number of booklets, videos and
face-to-face meetings."
But the programme did not end with the Paralympic Games
closing ceremony. Instead, McDonald's built on its legacy,
evolving and relaunching its champion of the month programme
for all hourly-paid employees. This is used as the basis for a
much wider recognition programme.
After each restaurant elects a champion of the month, from this
group an employee of the quarter is chosen for each restaurant,
then an employee of the quarter for each consulting group or
operating management group. Finally, each February, an
employee of the year for the UK is selected, receiving a cash
prize and a week at the company villa in Portugal.
Global awards scheme
Company support department staff, meanwhile, are eligible for
McDonald's global President's Award scheme. Five winners are
chosen each year from nominations made by the organisation's
executive team. Winning staff receive an all-expenses-paid trip
to Chicago to collect their prize from the global chief executive
officer at a banquet event.
In view of the vast range of recognition and incentive schemes
in operation at McDonald's, Blackshire now aims to streamline
the portfolio to create a more cohesive offering. "One of my
plans over the next 12 to 18 months is to get each of those plans
to be a little more connected to each other," he says. "Like
anything, when things [are introduced] over a period of time,
some of the interconnectivity and value we can derive can be
lost. I think we can improve on our current position.
"Also, for various historical reasons, some of these programmes
are run by different parts of the people team, and there is some
sense in bringing these together. So, my team will become
responsible for managing some of these other ones that we don't
already manage in the coming year or so. We just need to have a
planned transition to bring that together."
Communicating motivation plans
Blackshire is also keen to collate details of, and criteria for, all
of these schemes into a single place so staff can easily identify
which they are eligible for.
"I want to have that a little bit better defined and better
communicated," he says. "Because of the culture of the
organisation, I don't think we're going to see a sudden uplift in
motivation or productivity because suddenly it's all there
together. In many cases, [employees] aren't doing what they're
doing because they think they're going to get an award out of it,
but it's important for us as a business to recognise our people
for what they do."
But measuring the true effectiveness of such schemes, and
employees' engagement with them, can be tricky. "Because
we've got an awful lot going on in our restaurants at any one
time, it is quite hard to distinguish exactly what impact one
programme or one activity had in among everything else," says
Blackshire.
But he believes there is a strong business rationale for an
employee motivation and recognition strategy. "There is no
doubt that happy and motivated employees do a better job," he
says. "If people have done very good work for you, it's
absolutely right and proper they should be recognised for it."
Neal Blackshire's top tips for motivational success
* Ensure the right employee behaviours are recognised.
* Ensure the frequency of recognition and reward is right for
the workforce. Blackshire explains: "Some of our reward and
recognitions are annual, some are monthly. If you only
recognise the champion of the year in a restaurant, frankly it
wouldn't gain a lot of traction because you would have had a lot
of good people doing a lot of good stuff during that year."
* Understand what employees want and value. "About 20 years
ago, we had a service award programme in place, which
operated a points system for catalogue [based items]," says
Blackshire. "That catalogue had lots of garden furniture and
home furnishings, but 40-50% of our employees were under the
age of 21. Not surprisingly, they didn't really want these as they
still lived at home [for example], so wanted something a bit
more useful. That led us to ditching that programme and
reinventing it with vouchers for a high-street retailer, which
was much more popular because people could find more things
they valued with their service awards."
~~~~~~~~
By Debbie Lovewell

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  • 1. Your final Capstone Project is a leadership development plan (LDP). An LDP is a very practical document, one which allows you to reflect on yourself and your learning, complemented with outside research, and which—upon completion—will provide you with a “past, present, and future” roadmap for becoming an increasingly more effective leader in all aspects of your life. The first part of crafting an effective LDP is to have a strongly grounded understanding of the major theories of management, which you have gained through your progress in this program and reviewed throughout this course. Your LDP should be divided into sections that help you to organize your roadmap, including (but not limited to) the following topics: · Effective Leadership Overview/Summary (3-6 pages) · Theories · Moderators/Contingencies (i.e., factors that might impact the overall effectiveness of various leadership theories) · Relationship and Network Building · Communication · Development of One’s Followers · Leadership Self-Assessment (3-5 pages) · Strengths · Values · Personality · Leadership Development Goals (2-3 pages) For this section, you should choose two or three objectives (e.g., nurture relationships; network; increase self-confidence; communicate more effectively; build stronger teams). For each development goal, please provide the Development Objective, Development Activities (how you will work toward accomplishing the objective), Resources/Support (that you have or can develop toward achieving the objective), Timeline, Potential Obstacles, and Evidence of Progress (i.e., milestones), as shown below: ·
  • 2. · Development Objective “X”: · Development Activities · Resources/Support · Timeline · Potential Obstacles · Evidence of Progress · Development Objective “Y”: · Development Activities · Resources/Support · Timeline · Potential Obstacles · Evidence of Progress · Development Objective “Z”: · Development Activities · Resources/Support · Timeline · Potential Obstacles · Evidence of Progress · Appendices (at your discretion, you may include other documents/resources helpful to you in following your LDP) · Resources Your well-written paper should meet the following requirements: · Be 8-14 pages in length · Be formatted according to the CSU-Global Guide to Writing and APA Requirements · Cite at least four credible, academic resources that support your assertions and strengthen your arguments. The CSU-Global Library is a great place to find these resources. The Ordinary Heroes Of the Taj Section: The Globe How an Indian hotel chain's organizational culture nurtured employees who were willing to risk their lives to save their guests. ON NOVEMBER 26, 2008, Harish Manwani, chairman, and
  • 3. Nitin Paranjpe, CEO, of Hindustan Unilever hosted a dinner at the Taj Mahal Palace hotel in Mumbai (Taj Mumbai, for short). Unilever's directors, senior executives, and their spouses were bidding farewell to Patrick Cescau, the CEO, and welcoming Paul Polman, the CEO-elect. About 35 Taj Mumbai employees, led by a 24-year-old banquet manager, Mallika Jagad, were assigned to manage the event in a second-floor banquet room. Around 9:30, as they served the main course, they heard what they thought were fireworks at a nearby wedding. In reality, these were the first gunshots from terrorists who were storming the Taj. The staff quickly realized something was wrong. Jagad had the doors locked and the lights turned off. She asked everyone to lie down quietly under tables and refrain from using cell phones. She insisted that husbands and wives separate to reduce the risk to families. The group stayed there all night, listening to the terrorists rampaging through the hotel, hurling grenades, firing automatic weapons, and tearing the place apart. The Taj staff kept calm, according to the guests, and constantly went around offering water and asking people if they needed anything else. Early the next morning, a fire started in the hallway outside, forcing the group to try to climb out the windows. A fire crew spotted them and, with its ladders, helped the trapped people escape quickly. The staff evacuated the guests first, and no casualties resulted. "It was my responsibility…. I may have been the youngest person in the room, but I was still doing my job," Jagad later told one of us. ELSEWHERE IN THE HOTEL, the upscale Japanese restaurant Wasabi by Morimoto was busy at 9:30 pm. A warning call from a hotel operator alerted the staff that terrorists had entered the building and were heading toward the restaurant. Forty-eight- year-old Thomas Varghese, the senior waiter at Wasabi, immediately instructed his 50-odd guests to crouch under tables, and he directed employees to form a human cordon around them. Four hours later, security men asked Varghese if he could get the guests out of the hotel. He decided to use a spiral
  • 4. staircase near the restaurant to evacuate the customers first and then the hotel staff. The 30-year Taj veteran insisted that he would be the last man to leave, but he never did get out. The terrorists gunned him down as he reached the bottom of the staircase. WHEN KARAMBIR SINGH KANG, the Taj Mumbai's general manager, heard about the attacks, he immediately left the conference he was attending at another Taj property. He took charge at the Taj Mumbai the moment he arrived, supervising the evacuation of guests and coordinating the efforts of firefighters amid the chaos. His wife and two young children were in a sixth-floor suite, where the general manager traditionally lives. Kang thought they would be safe, but when he realized that the terrorists were on the upper floors, he tried to get to his family. It was impossible. By midnight the sixth floor was in flames, and there was no hope of anyone's surviving. Kang led the rescue efforts until noon the next day. Only then did he call his parents to tell them that the terrorists had killed his wife and children. His father, a retired general, told him, "Son, do your duty. Do not desert your post." Kang replied, "If it [the hotel] goes down, I will be the last man out." Three years ago, when armed terrorists attacked a dozen locations in Mumbai--including two luxury hotels, a hospital, the railway station, a restaurant, and a Jewish center--they killed as many as 159 people, both Indians and foreigners, and gravely wounded more than 200. The assault, known as 26/11, scarred the nation's psyche by exposing the country's vulnerability to terrorism, although India is no stranger to it. The Taj Mumbai's burning domes and spires, which stayed ablaze for two days and three nights, will forever symbolize the tragic events of 26/11. During the onslaught on the Taj Mumbai, 31 people died and 28 were hurt, but the hotel received only praise the day after. Its guests were overwhelmed by employees' dedication to duty, their desire to protect guests without regard to personal safety, and their quick thinking. Restaurant and banquet staff rushed
  • 5. people to safe locations such as kitchens and basements. Telephone operators stayed at their posts, alerting guests to lock doors and not step out. Kitchen staff formed human shields to protect guests during evacuation attempts. As many as 11 Taj Mumbai employees--a third of the hotel's casualties--laid down their lives while helping between 1,200 and 1,500 guests escape. At some level, that isn't surprising. One of the world's top hotels, the Taj Mumbai is ranked number 20 by Condé Nast Traveler in the overseas business hotel category. The hotel is known for the highest levels of quality, its ability to go many extra miles to delight customers, and its staff of highly trained employees, some of whom have worked there for decades. It is a well-oiled machine, where every employee knows his or her job, has encyclopedic knowledge about regular guests, and is comfortable taking orders. Even so, the Taj Mumbai's employees gave customer service a whole new meaning during the terrorist strike. What created that extreme customer-centric culture of employee after employee staying back to rescue guests when they could have saved themselves? What can other organizations do to emulate that level of service, both in times of crisis and in periods of normalcy? Can companies scale up and perpetuate extreme customer centricity? Our studies show that the Taj employees' actions weren't prescribed in manuals; no official policies or procedures existed for an event such as 26/11. Some contextual factors could have had a bearing, such as India's ancient culture of hospitality; the values of the House of Tata, which owns the Taj Group; and the Taj Mumbai's historical roots in the patriotic movement for a free India. The story, probably apocryphal, goes that in the 1890s, when security men denied J.N. Tata entry into the Royal Navy Yacht Club, pointing to a board that apparently said "No Entry for Indians and Dogs," he vowed to set up a hotel the likes of which the British had never seen. The Taj opened its doors in 1903.
  • 6. Still, something unique happened on 26/11. We believe that the unusual hiring, training, and incentive systems of the Taj Group--which operates 108 hotels in 12 countries--have combined to create an organizational culture in which employees are willing to do almost anything for guests. This extraordinary customer centricity helped, in a moment of crisis, to turn its employees into a band of ordinary heroes. To be sure, no single factor can explain the employees' valor. Designing an organization for extreme customer centricity requires several dimensions, the most critical of which we describe in this article. A Values-Driven Recruitment System The Taj Group's three-pronged recruiting system helps to identify people it can train to be customer-centric. Unlike other companies that recruit mainly from India's metropolitan areas, the chain hires most of its frontline staff from smaller cities and towns such as Pune (not Mumbai); Chandigarh and Dehradun (not Delhi); Trichirappalli and Coimbatore (not Chennai); Mysore and Manipal (not Bangalore); and Haldia (not Calcutta). According to senior executives, the rationale is neither the larger size of the labor pool outside the big cities nor the desire to reduce salary costs, although both may be additional benefits. The Taj Group prefers to go into the hinterland because that's where traditional Indian values--such as respect for elders and teachers, humility, consideration of others, discipline, and honesty--still hold sway. In the cities, by contrast, youngsters are increasingly driven by money, are happy to cut corners, and are unlikely to be loyal to the company or empathetic with customers. The Taj Group believes in hiring young people, often straight out of high school. Its recruitment teams start out in small towns and semiurban areas by identifying schools that, in the local people's opinion, have good teaching standards. They call on the schools' headmasters to help them choose prospective candidates. Contrary to popular perception, the Taj Group doesn't scout for the best English speakers or math whizzes; it
  • 7. will even recruit would-be dropouts. Its recruiters look for three character traits: respect for elders (how does he treat his teachers?); cheerfulness (does she perceive life positively even in adversity?); and neediness (how badly does his family need the income from a job?). The chosen few are sent to the nearest of six residential Taj Group skill-certification centers, located in the metros. The trainees learn and earn for the next 18 months, staying in no- rent company dormitories, eating free food, and receiving an annual stipend of about 5,000 rupees a month (roughly $100) in the first year, which rises to 7,000 rupees a month ($142) in the second year. Trainees remit most of their stipends to their families, because the Taj Group pays their living costs. As a result, most work hard and display good values despite the temptations of the big city, and they want to build careers with the Taj Group. The company offers traineeships to those who exhibit potential and haven't made any egregious errors or dropped out. One level up, the Taj Group recruits supervisors and junior managers from approximately half of the more than 100 hotel- management and catering institutes in India. It cultivates relationships with about 30 through a campus-connect program under which the Taj Group trains faculty and facilitates student visits. It maintains about 10 permanent relationships while other institutes rotate in and out of the program. Although the Taj Group administers a battery of tests to gauge candidates' domain knowledge and to develop psychometric profiles, recruiters admit that they primarily assess the prospects' sense of values and desire to contribute. What the Taj Group looks for in managers is integrity, along with the ability to work consistently and conscientiously, to always put guests first, to respond beyond the call of duty, and to work well under pressure. For the company's topmost echelons, the Taj Group signs up 50 or so management trainees every year from India's second- and third-tier B-schools such as Infinity Business School, in Delhi,
  • 8. or Symbiosis Institute, in Pune, usually for functions such as marketing or sales. It doesn't recruit from the premier institutions, as the Taj Group has found that MBA graduates from lower-tier B-schools want to build careers with a single company, tend to fit in better with a customer-centric culture, and aren't driven solely by money. A hotelier must want, above all else, to make other people happy, and the Taj Group keeps that top of mind in its recruitment processes. Training Customer Ambassadors The Taj Group has a long history of training and mentoring, which helps to sustain its customer centricity. The practice began in the 1960s, when CEO Ajit Kerkar--who personally interviewed every recruit, including cooks, bellhops, and wait staff, before employing them--mentored generations of employees. The effort has become more process-driven over time. Most hotel chains train frontline employees for 12 months, on average, but the Taj Group insists on an 18-month program. Managers, too, go through 18 months of classroom and on-the- job operations training. For instance, trainee managers will spend a fortnight focusing on service in the Taj Group's training restaurant and the next 15 days working hands-on in a hotel restaurant. The Taj Group's experience and research has shown that employees make 70% to 80% of their contacts with guests in an unsupervised environment. Training protocols therefore assume, first, that employees will usually have to deal with guests without supervision--that is, employees must know what to do and how to do it, whatever the circumstances, without needing to turn to a supervisor. One tool the company uses is a two-hour weekly debriefing session with every trainee, who must answer two questions: What did you learn this week? What did you see this week? The process forces trainee managers to absorb essential concepts in the classroom, try out newfound skills in live settings, and learn to negotiate the differences between them. This helps managers
  • 9. develop the ability to sense and respond on the fly. The Taj Group also estimates that a 24-hour stay in a hotel results in between 40 and 45 guest-employee interactions, which it labels "moments of truth." This leads to the second key assumption underlying its programs: It must train employees to manage those interactions so that each one creates a favorable impression on the guest. To ensure that result, the company imparts three kinds of skills: technical skills, so that employees master their jobs (for instance, wait staff must know foods, wines, how to serve, and so on); grooming, personality, and language skills, which are hygiene factors; and customer- handling skills, so that employees learn to listen to guests, understand their needs, and customize service or improvise to meet those needs. In a counterintuitive twist, the Taj Group insists that employees must act as the customer's, not the company's, ambassadors. Employees obviously represent the chain, but that logic could become counterproductive if they start watching out for the hotel's interests, not the guests', especially at moments of truth. Trainees are assured that the company's leadership, right up to the CEO, will support any employee decision that puts guests front and center and that shows that employees did everything possible to delight them. According to senior executives, this shift in perspective changes the way employees respond to situations. Moreover, it alters the extent to which they act--and believe they can act--in order to please guests. A senior executive told us that when an irate guest swore he would never stay at the Taj Mumbai again because the air conditioner hadn't worked all night, a trainee manager offered him breakfast on the house and provided complimentary transportation to the airport. She also ensured that someone from the next Taj property at which he was booked picked him up from the airport. Did the trainee spend a lot of the company's money on a single guest? Yes. Did she have to ask for permission or justify her actions? No. In the Taj Group's unwritten rule book, all that mattered was that the
  • 10. employee did her best to mollify an angry guest so that he would return to the Taj. The Taj Group's training programs not only motivate employees, but they also create a favorable organizational culture. H.N. Shrinivas, the senior vice president of human resources for the Taj Group, notes: "If you empower employees to take decisions as agents of the customer, it energizes them and makes them feel in command." That's in part why the Taj Group has won Gallup's Great Workplace Award in India for two years in a row. Incumbent managers conduct all the training in the Taj Group, which uses few consultants. This allows the chain to impart not just technical skills but also the tacit knowledge, values, and elements of organizational culture that differentiate it from the competition. Every hotel has a training manager to coordinate the process, and given that Taj properties impart training only in the areas in which they excel, they vie with one another to become training grounds. Like all the other companies in the House of Tata, the Taj Group uses the Tata Leadership Practices framework, which lays out three sets of leadership competencies that managers must develop: leadership of results, business, and people. Every year 150 to 200 managers attend training sessions designed to address those competencies. The company thereafter tailors plans on the basis of individuals' strengths and weaknesses, and it hires an external coach to support each manager on his or her leadership journey. The Taj Group expects managers to lead by example. For instance, after a day of work, the general manager of every hotel is expected to be in the lobby in the evenings, to welcome guests. That might seem old-fashioned, but that's the Taj tradition of hospitality. A Recognition-as-Reward System Underpinning the Taj Group's rewards system is the notion that happy employees lead to happy customers. One way of ensuring that outcome, the organization believes, is to show that it values
  • 11. the efforts of both frontline and heart-of-the house employees by thanking them personally. These expressions of gratitude, senior executives find, must come from immediate supervisors, who are central in determining how employees feel about the company. In addition, the timing of the recognition is usually more important than the reward itself. Using these ideas, in 2001 the Taj Group created a Special Thanks and Recognition System (STARS) that links customer delight to employee rewards. Employees accumulate points throughout the year in three domains: compliments from guests, compliments from colleagues, and their own suggestions. Crucially, at the end of each day, a STARS committee comprising each hotel's general manager, HR manager, training manager, and the concerned department head review all the nominations and suggestions. The members of this group decide whether the compliments are evidence of exceptional performance and if the employee's suggestions are good. Then they post their comments on the company's intranet. If the committee doesn't make a decision within 48 hours, the employee gets the points by default. By accumulating points, Taj Group employees aspire to reach one of five performance levels: the managing director's club; the COO's club; and the platinum, gold, and silver levels. Departments honor workers who reach those last three levels with gift vouchers, STARS lapel pins, and STARS shields and trophies, whereas the hotel bestows the COO's club awards. At an annual organization-wide celebration called the Taj Business Excellence Awards ceremony, employees who have made the managing director's club get crystal trophies, gift vouchers, and certificates. According to independent experts, the Taj Group's service standards and customer-retention rates rose after it launched the STARS program, because employees felt that their contributions were valued. In fact, STARS won the Hermes Award in 2002 for the best human resource innovation in the global hospitality industry.
  • 12. THE TAJ GROUP'S hiring, training, and recognition systems have together created an extraordinary service culture, but you may still wonder if the response of the Taj Mumbai's employees to 26/11 was unique. Perhaps. Perhaps not. At about 9:30 am on December 26, 2004, a tsunami rippled across the Indian Ocean, wreaking havoc on coastal populations from Indonesia to India, killing about 185,000 people. Among those affected was the island nation of the Maldives, where tidal waves devastated several resort hotels, including two belonging to the Taj Group: the Taj Exotica and the Taj Coral Reef. As soon as the giant waves struck, guests say, Taj Group employees rushed to every room and escorted them to high ground. Women and children were sheltered in the island's only two-story building. Many guests were panic-stricken, believing that more waves could follow, but staff members remained calm and optimistic. No more waves arrived, but the first one had inundated kitchens and storerooms. A Taj Group team, led by the head chef, immediately set about salvaging food supplies, carrying cooking equipment to high ground, and preparing a hot meal. Housekeeping staff retrieved furniture from the lagoon, pumped water out of a restaurant, and restored a semblance of normalcy. Despite the trying circumstances, lunch was served by 1:00 pm. The two Taj hotels continued to improvise for two more days until help arrived from India, and then they evacuated all the guests to Chennai in an aircraft that the Taj Group had chartered. There were no casualties and no panic, according to guests, some of whom were so thankful that they later volunteered to help rebuild the island nation. These Taj Group employees behaved like ordinary heroes, just as their colleagues at the Taj Mumbai would four years later. That, it appears, is indeed the Taj Way. HBR Reprint R1112J The Taj Approach to HR SEEK fresh recruits rather than lateral hires. HIRE from small towns and semiurban areas, not metros.
  • 13. RECRUIT from high schools and second-tier business schools rather than colleges and premier B-schools. INDUCT managers who seek a single-company career and will be hands-on. FOCUS more on hiring people with integrity and devotion to duty than on acquiring those with talent and skills. TRAIN workers for 18 months, not just 12. ENSURE that employees can deal with guests without consulting a supervisor. TEACH people to improvise rather than do things by the book. INSIST that employees place guests' interests over the company's. HAVE incumbent managers, not consultants, conduct training. USE timely recognition, not money, as reward. ENSURE that recognition comes from immediate supervisors, not top management. ~~~~~~~~ By Rohit Deshpandé and Anjali Raina Social Strategies That Work Businesses that thrive on social platforms don't just sell stuff-- they also help people connect More than a billion people use social platforms such as Facebook, eHarmony, Renren, and LinkedIn. What's the attraction? They satisfy two basic human needs: to meet new people and to strengthen existing relationships. Fee-based dating websites, which collectively grossed $1 billion in 2010 by connecting strangers, now account for an estimated one in six new marriages. Facebook, which fortifies friendships, boasts a staggering 750 million users and a valuation in excess of $100 billion. Numbers like those attract traditional companies, which have launched Facebook fan pages and Twitter accounts in hopes of finding new customers and engaging existing ones. But few of those companies succeed in generating profits on social
  • 14. platforms, despite collecting lots of "friends" and "followers." To find out why some firms fail while others succeed in these venues, I studied more than 60 companies across industries ranging from manufacturing to consumer packaged goods to financial services as they ventured into online social realms. What the poorly performing companies shared was that they merely imported their digital strategies into social environments by broadcasting commercial messages or seeking customer feedback. Customers reject such overtures because their main goal on the platforms is to connect with other people, not with companies. That behavior isn't hard to understand. Imagine sitting at a dinner table with friends when a stranger pulls up a chair and says, "Hey! Can I sell you something?" You'd probably say no, preferring your friends' conversation over corporate advances. Many companies have learned that lesson the hard way. In contrast, the companies that found significant returns devised social strategies that help people create or enhance relationships. These work because they're consistent with users' expectations and behavior on social platforms. To return to our dinner analogy, a company with a social strategy sits at the table and asks, "May I introduce you to someone or help you develop better friendships?" That approach gets a lot more takers. (See the exhibit "Digital Strategy vs. Social Strategy.") You Scratch My Back… To explain successful social strategies, I find it useful to characterize them in a simple statement with three components that all the strategies share: Successful social strategies (1) reduce costs or increase customers' willingness to pay (2) by helping people establish or strengthen relationships (3) if they do free work on a company's behalf. This definition yields four types of successful social strategies that firms can pursue (see the table "Four Ways to Pursue Social Strategies"): · Reduce costs by helping people meet.
  • 15. · Increase willingness to pay by helping people meet. · Reduce costs by helping people strengthen relationships. · Increase willingness to pay by helping people strengthen relationships. The work people do on a company's behalf can include customer acquisition, supplying inputs such as R&D and web content, and selling the company's products or services. To see how the strategy of reducing costs by helping people strengthen relationships works, consider Zynga, a three-year-old company whose free social games, including FarmVille and CityVille, are on track to generate $1 billion in revenue in 2011. The games run inside the Facebook environment and have attracted more than 250 million users (the typical player is a middle-aged woman). The Facebook platform allows the games to access the demographic data of players and lists of their "friends," as well as to post status updates that those friends can see. In CityVille, players plant seeds on a virtual plot, cultivate the land, harvest crops, and sell them to local virtual businesses. They then use the profits to buy more seeds, build businesses, or expand the city. The game presents players with obstacles such as limits on the number of plots or businesses they can possess. To increase the limit, players can pay with virtual goods they buy from Zynga-- a major source of the firm's revenues. Or, to the social-strategy point, they can enlist friends, via Facebook status updates or Zynga's messaging system, to help. And they can return the favor by sending virtual gifts to friends and by visiting their plots. The positive impact that Zynga's games have on players' social lives is clear. According to a survey done by Information Solution
  • 16. s Group, almost a third of players reported that the games helped them connect with family and current friends; another third said games facilitated connections with old friends; and a third used the games to make new friends. My interviews with dozens of players revealed how. Many use the opportunity as an excuse to connect. A woman with two children told me, "When I am done with work and kids, I want to reach out to my friends, but it's too late to call. So I go to play, and see if I can help them out with something. They notice it, which helps us stay connected." Others consider posting a game-status update on Facebook as an invitation to contact them. A younger male player said, "I am not going to post on Facebook that I had a bad day, but I might mention something about it, when I post, that I need something in a game. My friends will see it and often someone will call or e-mail." To obtain these social benefits, people undertake actions that help Zynga. In exchange for an opportunity to reestablish and maintain contact with friends, players encourage others to join or return to Zynga's games. By my estimates, those social mechanisms slash Zynga's customer acquisition and retention costs by half, improving its profitability by approximately 20 percentage points. Hence, Zynga's social strategy (1) reduces its acquisition and retention costs (2) by allowing people to reconnect with friends (3) if they invite them to return to the game.
  • 17. The reviewing site Yelp uses a different type of social strategy: It reduces costs by acquiring its most valuable content for free by helping people meet. Advertisers provide Yelp's revenues, but its content--18 million reviews of local establishments so far--is written by an educated cadre of volunteers, called Yelpers, mostly in their twenties and thirties. The site traffic, about 50 million visitors a month, attests to the usefulness of the reviews; it's the company's social strategy that significantly accounts for that quality. The most passionate and prolific Yelpers may be invited to join the Elite Squad, a select tier in the Yelp community. Squad membership gives them access to exclusive Yelp-hosted events that range from the refined, such as cocktail parties at museums, to the rowdy, like a Mardi Gras-themed bacchanalia at San Francisco's Bubble Lounge, which attracted hundreds of revelers in 2009. Such events commonly produce new friendships and other relationships that continue beyond the confines of Yelp. To maintain these social benefits, Squad members must continue to produce reviews, as the elite status is renewed--or not--every year. My interviews with elite Yelpers indicate that they will continue to write reviews specifically to maintain their status. The effects for Yelp's business are substantial. My research shows that an average elite Yelper will write reviews at a constant rate for nearly two years, whereas otherwise
  • 18. identical nonelite Yelpers without such social benefits will reduce their contributions after about six months. Therefore, the average elite Yelper will produce about 100 more reviews than a nonelite; without these elite contributions, Yelp's review stream would fall by about 25%. Thus, Yelp's social strategy (1) helps it obtain quality content for free (2) by allowing the best contributors to meet like-minded people (3) if they write reviews. Business and Pleasure Because Zynga and Yelp are online startups with inherently social products, devising their social strategies is relatively straightforward. But companies in very different sectors are developing social strategies as well. Consider eBay's Group Gifts online application, launched in late 2010, which people use to pool funds to buy gifts for their friends. A group organizer logs on to eBay and names a gift recipient, either directly or by picking the name from a list of her Facebook friends. eBay then offers a set of general gifts, or the organizer can authorize an eBay application to access the recipient's Facebook "about me" profile and base a gift recommendation on that. The organizer then selects a gift and issues an invitation to other contributors by posting a request to contribute on her Facebook page. The invitation contains a link to the eBay gift page, where contributors can contribute and write a note to the recipient. When the gift price is reached,
  • 19. eBay sends the gift and well-wishers' notes. The social benefits are clear: Group Gifts helps people purchase better-targeted and more-expensive gifts than they might otherwise. That not only strengthens relationships with the recipient but also can help enhance relationships among the joint gift givers. As one interviewee said, "If it wasn't for the Facebook update, I would never know about the farewell gift for this guy, and no one asked me to contribute. But I saw this and chipped in, and just yesterday I got a thank-you note….I think it will be easier to stay in touch with him." To obtain such social benefits, people must advertise Group Gifts to their friends and respond to their friends' advertisements. Such friend-to-friend advertising generates dramatic results: A third of Group Gifts participants sign up for new PayPal accounts, and a third return to eBay within a month to purchase other items. What's more, the average price of Group Gifts goods is five times higher than that of an average eBay sale. Thus, eBay's social strategy (1) increases willingness to pay (2) by allowing people to strengthen their friendships through gift giving (3) if they ask their friends to buy from eBay. Social strategies can also be tailored to address the challenges of meeting people for professional purposes. American Express developed such a strategy for its OPEN credit cards, which target small business owners. Customer churn is a challenge in
  • 20. the credit card business, so AmEx set about making OPEN cards stickier. Initially, the company hosted conferences focused on small business management for card members and then launched an online platform, called OPEN Forum, to showcase conference content. The forum site was a hit, attracting more than a million visitors a month. Management observed that cardholders were connecting with one another through the content and launched a members-only social network called Connectodex, which allows users to post profiles, list services they offer and need, and freely connect for business. More than 15,000 small businesses have joined the network. Although members could use other professional networks such as LinkedIn, they report preferring Connectodex, as small businesses with which they interact are already vetted by AmEx. A Forrester Research study confirmed this need when it found that nearly half of owners of small businesses with more than $100,000 in revenues say they wanted to learn from other owners. To reap social and networking benefits from Connectodex, small business owners must obtain or continue holding an AmEx OPEN card. As a result, the service has effectively reduced customer churn and increased willingness to pay for the card. At the same time, platform users' net promoter scores (a gauge of their likelihood of recommending the card) now significantly surpass nonusers' scores. Thus, the American
  • 21. Express social strategy (1) increases willingness to pay (2) by helping professionals to meet others like them (3) if they maintain their card membership. How to Build a Social Strategy I have observed many companies seek to build social strategies, with vastly different outcomes. Those that failed in the effort focused on their business goals and paid less attention to customers' unmet social needs. These strategies didn't effectively help people with relationships, so they were unwilling to do jobs for the company. In contrast, companies with successful strategies first thought through how to address unmet social needs and then connected the proposed solutions to business goals. Because the process of identifying unmet social needs is often hard, I recommend that firms focus on helping people with four types of social challenges: connecting with strangers, interacting with strangers, reconnecting with friends, and interacting with friends. Let's look at how a major credit card company I'll call XCard devised and tested a social strategy (the company requested that its name be disguised). The CMO assembled an eight-person team that included members from marketing, product development, and IT--plus consultants, myself included. The group ultimately reported directly to the CEO. We led the team in a structured strategy-development process in which team members devised at least one strategy for each of the four types
  • 22. of social challenges that card members may face. In each case, the goal was to increase card-member spending or retention, or acquire new customers, in exchange for solutions to those challenges. Each of the four social strategies of course adhered to the core principle: They reduced costs or increased customers' willingness to pay by helping people establish or strengthen relationships if they did free work on the company's behalf. Social challenge A: Reconnecting with acquaintances and friends outside a core group can be awkward. Social strategy A: Help people reconnect through shopping with friends. The team devised a program that would give cardholders an excuse to reconnect by inviting others who already had the card or who had agreed to sign up for one to join them for shopping. Shopping together at the same retailer at the same time would yield additional reward points. Social challenge B: People need help interacting with acquaintances and friends outside a core group. Social strategy B: Help people interact through gift giving. The XCard team envisioned a gift program in which, upon request, XCard would examine another member's purchases or purchase locations (only if they had opted into the program) and recommend gifts targeted to their purchase profile. The program would give members an incentive to use XCard more in order to build an accurate purchase history, resulting in well-targeted
  • 23. recommendations for friends. Social challenge C: Finding strangers with whom you have something in common isn't easy. Social strategy C: Connect executive women who have XCard's high-end charge card. Many of these customers travel frequently and have few opportunities to socialize with women like themselves. The team devised invitation-only events at exclusive hotels in major cities to convene these cardholders when they traveled. Social challenge D: People find it uncomfortable to interact with strangers without first knowing more about them. Social strategy D: Help moms with young children learn something about one another. These customers have an appetite for information about child care products, but some have difficulty finding trusted advice about them. The team conceived a branded card that would allow moms to access a dedicated social platform, search for other cardholding moms who had bought a particular product, and connect to them. Only moms who made themselves searchable and continued to make purchases with the card would be allowed to search. Theory into Practice Having identified several potential strategies for helping people create or improve relationships, the team evaluated them using three tests. Social utility test: Will the strategy help customers solve a
  • 24. social challenge they can't easily address on their own? This test requires that you focus on an important--but unmet--social challenge for the target group. People doing such analyses often assume that if they don't personally experience a given social challenge, others don't either. That is usually wrong. Social- strategy development requires an unprejudiced look at the target group's social needs. The shopping-with-friends, executive- women, and moms strategies passed the test's requirement to address an important, unmet social need. This evaluation required researching the demand for social solutions in each group--for example, executive women's interest in networking opportunities. The research revealed that although networking groups are plentiful, invitation-only events for executive women that capitalize on their heavy travel schedules are not. The team also confirmed that moms want to find other moms who have bought a specific product and that no existing tools allowed them to do so. Similarly, the research revealed a substantial appetite for shopping with friends. However, the team found that people would hesitate to use a program that, by making gift recommendations based on their purchase patterns, in effect revealed their purchase preferences to others. For that reason, the team disqualified the gift-giving strategy. Social solution test: Will the strategy leverage the firm's unique resources and provide a differentiated, hard-to-copy social solution? The team realized that the card's leadership in an
  • 25. exclusive segment and its superior rewards program were distinctive. Those resources conferred a hard-to-replicate advantage for the executive-women strategy and offered a better-than-alternatives option for that segment. Likewise, the shop-with-friends strategy continued to look promising, primarily because it leveraged the card's superior rewards program. The moms strategy didn't fare as well in this analysis because the firm lacked the detailed transaction data needed to create a service that competitors couldn't readily replicate or even outperform. Concerns also surfaced that large retailers of children's products, such as Toys "R" Us or Walmart, could create a more effective platform. The team sought to address this concern, but ultimately the moms strategy was disqualified. Business value test: Will the social solution directly lead to improved profitability? This test requires that the strategy directly lower costs or increase willingness to pay. The executive-women strategy that had thus far survived stumbled here because of the small size of the target group--only 0.2% of cardholders. Although reducing defection among this small but disproportionately profitable segment could have a measurable bottom-line impact, the team determined that it was not as large as that offered by the shop-with-friends option. Before piloting this option, the team checked that the activities intended to improve relationships were directly related to jobs that help the company lower costs or increase willingness to
  • 26. pay. That was true, for example, in the Zynga and eBay Group Gifts strategies, which allowed people to connect only if they posted status updates advertising the product. Indeed, the shop- with-friends strategy tightly aligned social and economic benefits: The social act of inviting a friend to shop is the very act that yields profits, by generating fees if the friend becomes a new card member, makes a purchase with the card, or both. Because each new customer recruited, for free, by a card member roughly halves customer-acquisition costs, the team calculated that the strategy had great economic potential. As this strategy performed best on all three tests, the team chose it as the one to pilot. The Pilot Takes Off By e-mail, XCard invited 10,000 customers in one metropolitan area to receive a pilot Facebook shop-with-friends application. Almost 45% of recipients checked out the application; half of that subgroup signed up. Signatories were required to enter their credit card number for validation and then were asked to pick a time to go shopping with friends. Subsequently, they were prompted to post a Facebook status update announcing when they would like to shop and informing others that all involved would receive additional XCard rewards for co-shopping. When friends clicked on the update, they were returned to the application, where they could sign up for an XCard or register their existing card and confirm their attendance. During the
  • 27. two-month pilot, a fifth of those who had signed up posted a status update, of whom three-quarters received at least one response (some received as many as six responses). A third of those who responded became new cardholders, and 75% of invitations to shop together resulted in purchases. Pleased with the results, the CEO and CMO green-lighted the social strategy for a full rollout in 2012. With changing corporate priorities and increased focus on the exclusive cards, the executive team also asked the group to pilot the executive- women strategy. Most important, the company established a permanent social-strategy unit that reports to the CMO and is tasked with developing and testing new social strategies. As most businesses are accustomed to helping people meet their economic rather than their social needs, creating social strategies will require fundamental changes in the way companies approach strategy development. As social platforms become even more central to consumers' lives, companies that don't figure out how to appropriate their value and create true social strategies will find it harder and harder to compete with those that do. Starting this process soon, even in small steps, is both a critical defensive and offensive move. HBR Reprint R1111H Idea in Brief Most companies don't succeed in online social platforms. That's because they merely import their digital strategies to
  • 28. these venues. But commercial messages and feedback opportunities are not what customers primarily seek. They want to connect with people, not companies. Businesses that win in this arena adopt a social strategy that (1) reduces costs or increases customers' willingness to pay (2) by helping people establish or strengthen relationships (3) if they do free work on the company's behalf. Successful social strategies have all three components. They're built, bit by digital bit, through helping people with the social challenges of connecting and interacting with friends and strangers. Digital Strategy vs. Social Strategy The primary advantage of a social strategy over a purely digital one is in tapping into how people really want to connect--with other people, not with a company. A business with a successful social strategy helps people form and strengthen relationships in ways that also benefit the company. DIGITAL STRATEGIES broadcast commercial messages and seek customer feedback in order to facilitate marketing and sell goods and services. : . SOCIAL STRATEGIES help people improve existing relationships or build new ones if they do free work on the company's behalf. : .
  • 29. FOUR WAYS TO PURSUE SOCIAL STRATEGIES Here's how four companies have successfully implemented their social strategies. Each firm reduces costs or increases customers' willingness to pay by helping people establish or strengthen relationships if they do free work on the company's behalf. By Mikołaj Jan Piskorski Mikołaj Jan Piskorski, who often goes by Misiek, is an associate professor in the strategy unit at Harvard Business School. His forthcoming book is Connect: Why Social Platforms Work and How to Leverage Them for Success (Princeton University Press, 2012). Twitter: @mpiskorski Fast-food chain offers a wide range of schemes to motivate different staff groups. Thanks to the nature of its business, fast-food giant McDonald's Restaurants has employee motivation built into its DNA. With each of its restaurants operating as a separate profit unit, employees have a vested interest in engaging with the concept
  • 30. of teamwork and collaborating to ensure their restaurant is as successful as possible. McDonald's incentivises and supports these desired behaviours through two bonus schemes for its 400 company-owned restaurants. Each month, all employees in the top 10% of restaurants, based on mystery shopper scores, receive a bonus. In addition, restaurant managers are eligible for a quarterly bonus based on three equally weighted measures: mystery shopper scores, sales growth and profitability. Neal Blackshire, benefits and compensation manager, says: "The entire management team is being aligned as a team to be motivated to, and rewarded for, achieving those business metrics. And the entire team is being challenged to deliver the best customer service they can because they are never exactly sure when they're going to be visited [by mystery shoppers]." Both company-owned restaurants and franchises are also eligible for the titles Restaurant of the Quarter and Restaurant of the Year, which can earn them a day or night out, funded by their employer. Motivation scheme portfolio These initiatives are part of a wider portfolio of motivation and incentive schemes that operate across McDonald's in the UK as well as its global business. One of the newest of these is the Ray Kroc Awards, which
  • 31. recognise the best business managers across Europe. Named after the founder of McDonald's Corporation in the US, the programme replicates initiatives previously available in the US and across Asia Pacific, the Middle East and Africa (APMEA). For the latest awards, 12 UK winners were selected from nominations by McDonald's operations managers and directors of franchising, across both company-owned and franchised restaurants, representing the top 1% of performers at this level. The winners attended a two-day event in Barcelona in June, during which they were presented with trophies at a gala awards ceremony. "It was a full-on production, like a mini Oscars [ceremony]," says Blackshire. "There was a red carpet for them all to walk up, they all had their names printed on stars lining that red carpet, and a specially shot video opened the evening with some of the winners in their usual restaurant. "All those 12 UK managers came back to their restaurants and will have been talking to their peers about what a fantastic time they had. Undoubtedly, we'll have 1,200 managers keen to be nominated next year." Appealing recognition schemes Blackshire believes that keeping recognition schemes fresh and exciting is key to maximising staff motivation, which is why, as well as introducing new programmes, McDonald's also reinvents existing schemes to ensure they continue to appeal to employees.
  • 32. One of the highest-profile examples in the last couple of years was the evolution of McDonald's employee of the month scheme into its Olympic Champion Crew (OCC) initiative, for which it won 'Most motivational benefits' at the Employee Benefits Awards 2013. Launched in January 2011 to 1,200 UK restaurants, the programme linked employee motivation to the business need to identify top performers to staff McDonald's four restaurants at the 2012 Olympic and Paralympic Games. In the following 10 months, each restaurant selected an Olympic champion of the month, before nominating their top five champions to proceed to the next stage of the programme. Each monthly champion received an Olympic-themed gift box containing a personalised congratulations card, plus Olympic- themed gifts. In November 2011, 100 regional skills assessments were held to identify the top 2,500 employees, who were given the opportunity to work at the Olympic Park restaurants during the Games. The selected staff were given accommodation at a London hotel, where they could enjoy facilities such as a wellbeing zone comprising a beach-themed area and a lounge zone, which included ping pong, pool tables, football tables and large plasma television screens for staff to watch coverage of the Games. A programme of activities was organised to generate a
  • 33. sense of fun and team spirit, and to enable staff to see more of London."That really gave it an impetus and breathed new life into a programme that had been around for a number of years and perhaps had been taken a little bit for granted," says Blackshire. "It took the Olympic element to really inject that extra enthusiasm. Obviously, the ability to have those ambassadors to come back from the Olympic Park, being able to talk about the hotel set-up and all the other things we did to look after them away from actually working in the restaurant, really is more powerful than any number of booklets, videos and face-to-face meetings." But the programme did not end with the Paralympic Games closing ceremony. Instead, McDonald's built on its legacy, evolving and relaunching its champion of the month programme for all hourly-paid employees. This is used as the basis for a much wider recognition programme. After each restaurant elects a champion of the month, from this group an employee of the quarter is chosen for each restaurant, then an employee of the quarter for each consulting group or operating management group. Finally, each February, an employee of the year for the UK is selected, receiving a cash prize and a week at the company villa in Portugal. Global awards scheme Company support department staff, meanwhile, are eligible for McDonald's global President's Award scheme. Five winners are
  • 34. chosen each year from nominations made by the organisation's executive team. Winning staff receive an all-expenses-paid trip to Chicago to collect their prize from the global chief executive officer at a banquet event. In view of the vast range of recognition and incentive schemes in operation at McDonald's, Blackshire now aims to streamline the portfolio to create a more cohesive offering. "One of my plans over the next 12 to 18 months is to get each of those plans to be a little more connected to each other," he says. "Like anything, when things [are introduced] over a period of time, some of the interconnectivity and value we can derive can be lost. I think we can improve on our current position. "Also, for various historical reasons, some of these programmes are run by different parts of the people team, and there is some sense in bringing these together. So, my team will become responsible for managing some of these other ones that we don't already manage in the coming year or so. We just need to have a planned transition to bring that together." Communicating motivation plans Blackshire is also keen to collate details of, and criteria for, all of these schemes into a single place so staff can easily identify which they are eligible for. "I want to have that a little bit better defined and better communicated," he says. "Because of the culture of the organisation, I don't think we're going to see a sudden uplift in
  • 35. motivation or productivity because suddenly it's all there together. In many cases, [employees] aren't doing what they're doing because they think they're going to get an award out of it, but it's important for us as a business to recognise our people for what they do." But measuring the true effectiveness of such schemes, and employees' engagement with them, can be tricky. "Because we've got an awful lot going on in our restaurants at any one time, it is quite hard to distinguish exactly what impact one programme or one activity had in among everything else," says Blackshire. But he believes there is a strong business rationale for an employee motivation and recognition strategy. "There is no doubt that happy and motivated employees do a better job," he says. "If people have done very good work for you, it's absolutely right and proper they should be recognised for it." Neal Blackshire's top tips for motivational success * Ensure the right employee behaviours are recognised. * Ensure the frequency of recognition and reward is right for the workforce. Blackshire explains: "Some of our reward and recognitions are annual, some are monthly. If you only recognise the champion of the year in a restaurant, frankly it wouldn't gain a lot of traction because you would have had a lot of good people doing a lot of good stuff during that year." * Understand what employees want and value. "About 20 years
  • 36. ago, we had a service award programme in place, which operated a points system for catalogue [based items]," says Blackshire. "That catalogue had lots of garden furniture and home furnishings, but 40-50% of our employees were under the age of 21. Not surprisingly, they didn't really want these as they still lived at home [for example], so wanted something a bit more useful. That led us to ditching that programme and reinventing it with vouchers for a high-street retailer, which was much more popular because people could find more things they valued with their service awards." ~~~~~~~~ By Debbie Lovewell