Guaranteed Growth

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But Mueller also mourns the guarantee for a much less obvious reason. Customers, he says, aren't the only group whose loyalty has started waning. "Our internal operations have lost their spark," he admits. "We're not as excellent. And that internal price is 100 times higher than any external effect." What's the connection? An extraordinary guarantee -- that is, one in which the company pays for its mistakes in serious bucks -- can "transform a company from top to bottom," says Christopher W. L. Hart, president of the Spire Group, a consulting firm in Brookline, Mass. "The concept truly touches everything in the organization. A guarantee is like turning up the power on a hose. Suddenly, you see leaks you never saw before."

Further, a money-back guarantee "almost always" lowers operational costs, he claims, because the threat of having to pay out focuses efforts on "making sure employees are empowered" to live up to the guarantee.

Once he had read Hart's 1993 book, Extraordinary Guarantees, after spotting a reference to it in a magazine, Saby Behar saw it as the perfect blueprint for General Stair.

But no sooner had Behar made his proposal than Garver began making the case against it. Behar clearly relishes such no-nonsense engagements. "I'm an argumentative guy," he says. First, Garver noted, there were plenty of instances in which General Stair and its client home builders loudly disagreed on what constituted being on time. Take the builder who called Tuesday to say lot 56 would be ready for stairs on Thursday. On Wednesday he called to say that he meant lot 36 would be ready on Thursday. Then on Thursday, when the General Stair installers arrived at lot 36, they saw not so much as a slab in place; it turned out the builder had meant lot 46. And remember the construction superintendent who called, screaming bloody murder about stairs that had not arrived -- for a house that turned out to be a one-story design? Furthermore, Garver argued, a full refund was simply too irresistible a bounty.

"What I was hearing was 'We are going to lose our asses," Behar says. That was OK with him. Not that he wanted the company -- which he owns with his brother-in-law and his wife's first cousin -- to suffer any crippling anatomical damage. But he was ready to follow the idea of the guarantee wherever it would lead. "What I had to do," he says, "was sell the nonbelievers."

Following the lead of his unlikely biblical role model, Behar expected there would be opposition. Instead of harping on the exact shape of the guarantee, he and his managers spent several subsequent meetings just talking about change. "I tried to preempt some of their emotions," Behar says.

For about four hours a week, they asked one another questions like, How will it make us feel to change? What will we gain, both professionally and personally? Some potential outcomes were obvious: increased market share, repeat customers, better margins, a smoother operation. Others required deeper thought: to grow as a team player, to gain an understanding of people and change, to attain higher status. "If we're recognized as the best stair company in the marketplace," said Yager, a former semipro hockey defenseman, "I'll get a feeling of self-respect that will help me be a better employee and friend and father."

None of the qualms about the guarantee evaporated. But over the weeks, the managers began discussing how such a guarantee might work. Since Garver opposed a full refund, could they possibly offer some sort of coupon or credit voucher? Behar proposed a $100-a-day voucher, to be awarded if the company was late with either the delivery or the installation of stairs or railings. Nope, said Garver, that's too much. They finally settled on her $50-a-day idea, based on figures showing what it costs the builder in interest to be delayed by a day.

As for the definition of "on time," Behar threw out a simple question: "If we can't trust the builders' information, why follow it? Why not produce our own?" So began the discussion of how General Stair might become even better informed than its customers about the status of the 65 jobs it has going at any one time. As the managers talked a vision came into view: two field reps, armed with communications gear such as two-way radios and cellular phones, routinely checking on houses to see how close they actually were to needing stairs delivered and installed. Thinking through that aspect of the guarantee would ultimately lead to an overhaul of the company's entire communications system. There would be new two-way radios and cellular phones, and a phone system that would include voice mail and would automatically beep the message recipient. Behar would invest in a couple of fax machines so that General Stair could set up a paper trail, faxing the agreed-upon delivery date to the builder as confirmation. The company would also need to hire an additional field rep to check on jobs. The total cost: about $50,000. "Either we could be just another millwork shop, or we could become an efficient business," Behar explains.

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