And in advertising, as Roy Spence and his colleagues have figured out, it's why agencies can't just dream up clever ads and do the media buys. Clients don't want advertising. They want to increase market share. They want to better their margins. They want marketing effectiveness, as measured by the attainment of specific, well-defined objectives.
Spence's agency, GSD&M--also in Austin, as it happens--is a monument to that realization. The agency's billings have grown nearly sixfold in the past decade. It counts blue-chippers such as Wal-Mart Stores and Southwest Airlines among its 22 clients and boasts a 90% client-retention rate. Part of GSD&M's pitches to prospects: measurable goals. Goals are a subject of discussion at the start of a campaign. ("Clients let us know how they define winning," says one staffer.) Progress toward them is scrutinized carefully as the campaign progresses. The agency hands out bonuses when clients achieve their goals, not when GSD&M achieves its own.
The artifact that reinforces the culture of pure client-centeredness is called a war room, and GSD&M invented it six years ago. "We were working with a client and really needed to concentrate," explains Spence. "So we just took over an empty office and started posting urgent information on the wall."
Today the war rooms have evolved into a kind of command central. They're often painted in the client's colors. Red phones, exclusively for calls to and from the client, dot the tables. Up on the wall are the client's (and sometimes its competitors') earnings reports, stock price, newspaper clippings, competitive analyses, and weekly sales figures; along shelves are products, industry paraphernalia, and personal items that the client's customers might possess. In the war rooms, agency staffers prepare pitches or repositioning initiatives. They conduct conference calls, look at reels of past commercials, brainstorm, and debate. "War rooms raise the intensity level and give us a mental edge," says Spence. "They remind us to keep our eye on the prize," the prize being the client's success. Forget your office, the rooms broadcast to employees, this isn't about you. It's about the needs of the people who've hired us.
And is it any surprise that clients like the war rooms, too? (Think of the message sent about where GSD&M's attention is.) When the agency moves into new quarters later this year, there will be eight war rooms as opposed to the three in its current facilities. Says Spence, GSD&M's president, "Clients see that we're 100% focused. And as we build their business, they build ours."
Open-Book Wallpaper. Customer expectations aren't just higher; sometimes they change character completely. And that kind of marketplace volatility presents a challenge of its own: sometimes you have to turn your company on a strategic dime. Pat Kelly, CEO of Physician Sales & Service (PSS), based in Jacksonville, Fla., found himself in just such a situation a couple of years ago. Kelly built PSS into a leading distributor of supplies for doctors' offices mostly on the basis of top-level service. Surveys showed that was what his customers wanted. And the extraordinary service allowed him to charge a premium. When the Clintons took office, however, health-care reform was in the air, and suddenly doctors were worried about costs. In just a matter of months, price went from last to first on their list of concerns.
So Kelly decided that PSS had to become a low-cost supplier, even while maintaining its service levels. He launched some innovative strategic moves, such as setting up a frequent buyers' club. He also had to tell his salespeople and employees that commissions and bonuses would likely take a hit.
Companies rarely make that kind of change easily. Employees grumble. They quit. The work doesn't get done the way it once did. At PSS, the opposite happened. No one was exactly overjoyed--but no one left. The company made the move, experienced a tough year, and rebounded quickly. PSS continued its breakneck growth and is now the national leader in its industry.
The difference? PSS has a share-the-wealth, share-the-information culture of a sort rarely found in American business. Every employee is a shareholder; some have more than a million dollars' worth in their accounts. Every PSS branch meets monthly to review its profit-and-loss statement. But it isn't just the P&L that gets employees' attention. Branches seem to paper a sizable portion of their walls with financial information: What salespeople X, Y, and Z sold yesterday. How much gross margin each of them realized. How the branch is doing, week by week and month by month, against plan. The wallpaper sends a strong message to everybody, every day: There are no secrets here. Nobody will ever try to put one over on you.
In an environment like that, it's impossible for employees to be cynical about the management's motives or actions. When Kelly told the PSS rank and file why a strategic shift was needed and what it would entail, employees believed him. Remember--and this is important to note--he hadn't just opened his books all of a sudden, when the crisis came; he'd had them open all along. He'd earned his employees' trust. He knew that the power of culture comes in part from its consistency. It has to seem as natural as the air employees breathe. That's the way we do things around here.
As a result of PSS's culture, Kelly could ask for--and get--the extraordinary cooperation and commitment needed to make a painful change. And PSS could convert short-term pain into long-term gain.
Different as they are, the cultural artifacts at Amy's, GSD&M, and PSS all belie the stubborn notion that the point of corporate culture is to accommodate employees' wishes--to make employees comfortable at the expense of their employer's competitive health. (Although comfort is occasionally the means to a competitive end: Born Information Services Group, a $36-million information-technology consulting firm in Wayzata, Minn., maintains lakefront vacation homes for employees' use--the better to keep turnover negligible in an industry in which it's the number one problem.) Contrary to the stereotype, high-culture organizations tend to be both tough and practical. The artifacts that animate their cultures emerge not from abstract theory but from clever yet simple responses to a business threat or opportunity.
