August 14, 2005

Getting Freaky

"Freakonomics" is lots of fun. Steven Levitt turns things upside down and sees relationships that most of us have not heretofore considered.

Much has been written about his attributing the decline in major crimes to the legalization of abortion. He also makes a compelling case that more children die in households with swimming pools than in households with guns.

What I liked about the book is that he is willing to see things differently.

And that's what we try to do in our business.

Because if we look at things the same way everyone else does, we're likely to come up with the same solutions....and then, where's the added value?

One of Levitt's most relevant points he actually attributes to the economist Richard Thaler whose 1985 study showed that a thirsty sunbather would pay $2.65 for a beer delivered from a resort hotel, but only $1.50 for the same beer if it came from a shabby grocery store.

People will pay different amounts for the same item depending upon who is providing it.

That is so applicable to most retail situations. Many products are the same at all major grocery stores. Which one you go to - and what you're willing to pay for the same product - really can be affected by how each grocery store presents itself in its communications and its shopping experience.

Similarly, where there are two or more car dealers in a community selling the same kind of car, one CAN create a more desirable environment and out-perform the other. And, it's not how much they spend, but HOW they spend it.

Some of Levitt's trivia is just plain fun. For example, we Americans complain about how much is spent on political campaigns in our country (about $1 billion/year). To put the amount in perspective, Levitt notes that it is the same amount of money that Americans annually spend on chewing gum.

Incidentally, Levitt dispels the notion that candidates who spend the most money always win. Of course if that were ever so, Nelson Rockefeller would have been President.

Lots of Levitt is about people's dishonesty. In Levitt's world, teachers cheat, white collar executives cheat, and crack dealers have a "corporate structure" that mirrors McDonald's.

That reminded me of a piece by Marshall Goldsmith, who writes a lot about leadership and coaching.

Walk the Walk

An important responsibility of corporate leadership is establishing and communicating a distinctive corporate culture. Goldsmith points out that many leaders "talk the talk." He says he visited Enron in its glory days, and they had a powerful presentation (very glitsy) about the company's corporate responsibility, etc., etc.

Only trouble was that they weren't "walking the walk."

Some years ago, we helped a client through a major downsizing of more than 3,000 employees. We opened up internal channels of communications that still exist today - more than a decade later - and are used regularly to convey that organization's corporate culture AND listen to employees' interests and concerns.

As Goldsmith notes, "Rather than wasting time on re-inventing words about desired leadership behavior, companies should ensure that leaders get (and act upon) feedback from employees - the people who actually observe this behavior."

Internal communications are every bit as important as external communications...perhaps even more so. Yet so many companies overlook them.

Trend of the Day

Cuddle Parties in New York. A group of strangers hug each other and then fall on the floor in what is known as a 'puppy pile.'

Bring back the squeegie guys!