Balancing Superior Products With Arrogance And Incompetence

While attending an out-of-state college showcase soccer tournament with my high school daughter, I had the occasion to get together with an old colleague, one I last saw about 18 years ago when we were both relatively young, inexperienced, rising stars at a software firm that catered exclusively to the publishing field. Let's call our old employer "Q." Seeing my old pal and reminiscing about old times led me to reflect on some of the lessons we learned together at Q, lessons that for me have been very helpful in my career. Here are a few. Build what the customer needs and you will generate customer satisfaction and loyalty. This sounds fairly obvious and intuitive, but too often we see products that solve problems customers don't have. Or more maddeningly, products that solve minor customer problems but ignore major customer problems. The founder of Q didn't run the company, but he served as chief technologist, essentially deciding what to build. And he determined this in large part by walking the exhibit halls at industry trade shows like MacWorld and Seybold, asking questions, listening to customer complaints, sitting in the back row during product demonstrations, eavesdropping on the chatter, and so on. By and large he was unknown except to die-hard users, so by merely turning his name badge around he could wander unobtrusively and gather impressive intel. Typically before the end of each major industry conference we would announce some aspect of a future release that was uncannily tied to a new customer demand. In those days, our product offerings were known to be comprehensive and tightly in line with market needs. Accordingly, our market share grew quickly from radical upstart to duopoly with the then market leader.

Try hard to disguise your hatred of customers and employees. Another lesson that should appear obvious, but how often have you encountered an inexplicably complex product and wondered if anyone, even once, just once, who worked at the manufacturer ever tried to actually use one of their products?! One of my personal pet peeves is that annoying tamper-resistant adhesive tape found on Compact Discs. While it may resist tampering, it also prevents opening! (I think illegal music file sharing could have been completely eliminated if they had removed that tape!) Another pet peeve is the hard plastic packaging in which many consumer electronics are sold, the kind that requires a Ginsu knife and the dexterity of a neurosurgeon to avoid severing a finger while opening. The president of Q was one of the most disagreeable people I've ever met. It's not that he was outwardly unfriendly; he seemed gregarious enough. It was that he maintained an unbridled contempt for customers and employees. His idea of a motivational speech was to recount yet another way in which he bullied a valued supplier into giving us free product, or how he reacted to an unhappy customer by deactivating the software license and demanding the product back. He refused to allow anyone to "test drive" the product, demanding that any potential user buy the product first -- and we naturally offered no returns or refunds. He didn't trust salespeople to abide by this rule, so only the most trusted salespeople were allowed to have working software in their possession. And even this was monitored through a special serial code and any attempt to activate it for a demonstration would lock it and render it useless.

The actual incidences where our president personally offended customers were relatively few; he typically reserved his wrath for his employees. But the tone he set came through loud and clear in our pricing, service posture and employee turnover. We eventually learned an important lesson: Even superior products aren't a sustainable advantage for the future, and often aren't even enough today. Customers routinely told us they loved the product but hated the company, and the moment the competition caught up they would run, not walk, to kick us out. Others would tell us outright that they were much happier creating manual and more expensive workarounds for what the competing products didn't do, than spending money on our product and in so doing support the madman running the firm. In short, if you hate customers, you should avoid going into commerce. If you hate employees, you should avoid being an employer.

When all the competent employees leave, a lot of useless employees are left behind. I've had many excellent mentors during my career who taught me positive lessons. But I've also learned what not to do from some of the less than shining stars in my past. But by a significant margin, the worst manager, the worst leader and the person who most embodied the Peter Principle (in a hierarchy every employee tends to rise to his level of incompetence) was Q's Vice President of Sales. It would be too much of a compliment to say she embodied the Dilbert Principle (companies systematically promote their least competent employees to management in order to limit the damage they are capable of doing) because that suggests there was a conscious understanding of the depths of her incompetence. Whether it was her lack of knowledge about the sales function, her lack of knowledge of our products or customers or markets, her unwillingness or inability to be a conduit for market feedback on pricing or service issues, her fear of one-on-one conversations and the resulting hire of an administrator whose sole job was to intercept calls and say "no" to all requests, or the fact that she rushed from every team meeting to attend other, more important, and often imaginary, meetings, we found her laughably inept and completely useless. Her specialty was not hiring quality salespeople, it was terminating productive salespeople when they earned too much and then devising innovative schemes to avoid paying severance and earned commissions. The greatest contribution generated by Sales was product revenue; the second was the profit generated by retaining earned commissions rather than paying them. The fact was, because the president considered everyone fungible, the good employees eventually left. Those who remained were a mix of evangelists, good people who hadn't yet left, teacher's pets, employees with limited employment prospects and incompetents.

This lesson has been repeated many times over the years. In fact, at a later employer where I spent a mostly enjoyable decade plus, I saw CEOs come and go, I saw strategies come and go, I saw products come and go. Some of these were good, some poor, some market-leading, some lagging. But one constant throughout were the middle managers, the civil servants who kept the company running even as regimes changed at the top. I don't know why so many CEOs fail to realize that market forces and competition typically pose fewer challenges than internal forces, like inertia and a desire to avoid change. At Q, I suspect that even the evil president was aware of what an idiot his head of sales was. However, at my more recent longtime employer the same sales leaders have reigned for years, outlasting several CEOs and doing all they can to thwart progress. My advice to the current CEO, and his imminent replacement when he's ousted shortly: fire your sales managers. The only constants in the organization have been declining growth and lack of turnover by the people charged with driving that growth. Instead they conduct layoff after layoff of the worker bees, they rearrange the titles in the board room, and yet they continue to wonder why the reports from Sales reflect no material change in the company's fortunes. If only they learned the lesson I learned long ago at Q, that when good people leave, many incompetents remain.

Despite the harsh tone, the story ends well. My incompetent VP of Sales now runs a sales consulting firm, reportedly educating sales managers and salespeople how to do what she spectacularly failed to do. The president of the firm retired a rich man. The founder also retired a rich man, and now spends time advocating some admirable social reforms. And my buddy and I, well we're a bit grayer, a bit pudgier, a bit wiser, but the lessons we learned as young comrades are as vivid today as our friendship is, even after an 18-year absence. I hope you too find lessons and friends that endure.