Bacon on the Bookshelf

Savory picks for the free range reader

Taking Care of Business

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Why do people love taking care of business at Nordstrom and HATE IT with Comcast?  I’m delighted for David Wells to stop in at Bacon today, share his thoughts, and recommend some excellent business reads.  A brief bio follows his post.

From David:

Looking back over the past 30 to 40 years, a significant change has occurred in our economy as we have moved from manufacturing-based to primarily service-driven.  Your own monthly budget alone is evidence of this shift.  We all consume more and more services each year versus buying physical items.  We now stream our movies, Spotify our music, and read our books on a Kindle or iPad.

No doubt, we have all seen that some service companies are wonderful to do business with while others are simply awful.  Nordstrom – great, Comcast – maybe marginally better than the DMV.

From my vantage point as an investor and strategist in evaluating companies, I have observed that in many cases, the companies that provide us with the best customer service are often the most profitable.  These companies exist across a wide range of industries, many of which are generally regarded as highly competitive and low-margin.  So clearly, these companies have figured something out – how to deliver excellent customer service and a great investor return.

The question is why is it that some of these organizations are so wonderful to do business with and others so awful?  As consumers, there is a lot at stake here as we determine who we want to reward with our business.  But, in light of all the various organizations (for- and non-profit alike) we all work with – there is a bigger question to be asked around can we can help create and steward similar organizations that are both great places to work and make a real impact in the community.

The answer to this question in my mind is YES.  In my review today, I want to highlight three books that lay out this case:  So Good They Can’t Ignore You by Cal Newport, The Service Profit Chain by James Heskett, Earl Sasser, and Leonard Schlesinger, and Setting the Table by Danny Meyer.

What Makes for Great Jobs? – Cal Newport – So Good They Can’t Ignore You

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Newport, a tenured professor at Georgetown, wrote this book to look at the process by which successful careers are made.  He argues that the whole idea of “following your passion” for career success actually holds little water when subjected to higher levels of scrutiny.  For example, few folks learning to play an instrument are passionate about it while they are working hard to practice and learn the basics.  Only after they have mastered a portion of it, do they find that they have become ‘passionate’ about the activity.

What the research shows is that successful and happy careers come when an employee is able to have autonomy, a feeling of competence, and relatedness/connection.  Autonomy is simply the ability to control your own work and affect its outcome.  Competence is having a unique and valuable skill set that you are able to deploy, while relatedness means working in an organization where you are working with others towards a goal or purpose.

Newport argues that we get these three factors by adopting a ‘craftsman’ mentality and developing a particular skill set that is rare and valuable in the job marketplace.  As you get better and better at something, you are more in a position to control your work and who you work with.  Coincidentally, this often leads to folks saying they are passionate about their work.  Side note – this book is a great for newly graduating high school and college seniors.

What Makes for Great Organizations? – Heskett, Sasser, and Schlesinger – The Service Profit Chain 

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This almost 20-year-old book by Harvard Business School professors looks at how great service organizations are made.  The book itself is frankly a little dry to read in places – although the stories about how companies are applying these insights are worth their weight in gold.  For a more accessible read, check out their Harvard Business Review article which encapsulates their core ideas well.

The key insight that they develop is that when companies make employees and customers the focal point, businesses can drive outsized financial results.  They reference a mental model called the Service Profit Chain (SPC).  The basic premise of the SPC is that bottom line results are driven by customer loyalty.  Customer loyalty results from customer satisfaction – especially when the value received exceeds the customers’ expectations.  The best way that this value is created is through satisfied employees.

From our discussion above, we know that employees are satisfied when they have a work environment that gives them autonomy, competence and connection.  As organization leaders, the more we can create environments that help drive satisfied employees, the more likely we are to drive high customer satisfaction and above average results.

How to Do It? – Danny Meyer – Setting the Table

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This book is an oldie but goodie. Meyer is the famed restaurateur  behind such New York favorites as Union Square Cafe, Gramercy Tavern, Eleven Madison Park and Shake Shack.  All of these restaurants (and the others he manages) are united under Meyer’s core philosophy of hospitality.  Enlightened hospitality as practiced is a beautiful integration of the ideas of the Service Profit Chain and Newport’s keys to career success.

Meyer has created an atmosphere where employees have phenomenal jobs that allow them to develop their skills and become adept practitioners in the restaurant business.  These service ‘ninjas’ deliver a customer dining experience beyond compare, which we as consumers happily reward with great loyalty and big check sizes.   Setting the Table looks inside his restaurant empire to show what makes his organization tick.  It is eminently readable, and if you fancy yourself a foodie or connoisseur of the restaurant world, a real delight to read.

What does this all mean?

Good jobs and great organizations are in all of our best interests.  Not only do they improve our lives as consumers, but more core to the general discontent and simmering anger of the American populace being reflected in the 2016 election, they offer a pathway towards advancement that is at the core of our American Dream.  The New York Times highlighted this in a recent article called “Managed by Q’s ‘Good Jobs’ Gamble.”  “Managed by Q” is a start-up that works in the unglamorous world of commercial office cleaning.  By integrating the ideas above, the have created a business that is delivering great customer service, a large growth rate for investors, and creating a pathway to a great career for its employees.

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David Wells grew up in Roanoke, Virginia, and has lived in Nashville since 2006.  He, his wife, and their two young children love this town full of relatives, including, since 2009, his parents.

David has worked in finance following graduation from Wake Forest.  “What I love about working in the capital markets is this,” David says:  “I always joked growing up that I wanted to be a professional student.  My absolute favorite moment is when you do a ton of research and analysis and come to an insight on a company or industry that you know to be true, but at that moment no one else does.  It is really exciting to be on the leading edge of a tiny bit of knowledge.”   

David loves the brilliant food in Nashville, especially at Rolf and Daughters, but he doesn’t love the crazy short days of winter and how far we are from the beach.  (I feel you!)  His favorite thing to do on a Saturday is to walk down to Star Bagel with the kids and read the Saturday Wall Street Journal or the most recent Vanity Fair.

Currently on his nightstand is American Nationals, by Colin Woodard, a look at how regional cultures drive politics.  David generally reads history and biographies.  “If I can read someone’s life story who is above the age of 60, I feel like I get ‘free gray hair.’  All the wisdom of their accumulated experiences for $15 or $20 – it’s the greatest deal ever.”  Favorite authors include Ron Chernow, Roger Lowenstein, Atul Gawande, and Michael Lewis.  

Perfect happiness?  Sitting on the beach with a great book and reading “all the way up that moment when the sun starts to set and the wind makes it just a little cold to be sitting outside.  Also tucking my kids into bed at night.  Or dancing with my wife at a great party.”  Going to the Porsche driving school in Birmingham a few years ago was pretty close, too!

The lowest depth of misery?  “Believing you know a great amount, when in reality you know very little.  When that is true, I believe we become entirely subject to the whims of the ‘worse demons of our nature.’”  It was also rough going when he and his partner decided to close their business at the end of last year.  “That’s the hardest thing I have ever done.”  

I’m glad it wasn’t writing this post.  Thank you so much for sharing your recommendations with us today, David!  Thank you also for recently co-chairing this year’s KIPP fundraising breakfast, one of the most effective fundraisers in our city for one of our most impressive organizations.

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