Mills on Marketing

The late Peter Drucker told us “the purpose of business is to create and keep a customer.” When businesses forget this fundamental fact they soon fall into decline.

When Lou Gerstner took over IBM in the early 1990’s, Big Blue was in deep strife, about to report its biggest loss ever, $8.1 billion. Here is how Gerstner saw his future:

“In the spring of 1993, a big part of what I had to do was get the company refocused on the marketplace as the only valid measure of success. I started telling virtually every audience…that there was a customer running IBM and that we are going to rebuild the company from the customer back.”

Gerstner went on to pull off one of the greatest turnaround stories of modern-day business, turning an $8 billion-plus loss into a $5 billion gain in 5 years by focusing on the needs of critical crown-jewel customers.

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“People duck as a natural reflex when something is hurled at them.

Similarly, the excellence reflex is a natural reaction to fix something that isn’t right, or to improve something that could be better. The excellence reflex is rooted in instinct and upbringing, and then constantly honed through awareness, caring, and practice.

The overarching concern to do the right thing well is something we can’t train for.

Either it’s there or it isn’t. So we need to train how to hire for it.”

This brilliant piece of insightful advice comes from a compelling read — Setting the Table, written by award winning New York restaurateur Danny Meyer.

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In what has to be one of the business books of the year, Phil Rosenzweig unmasks the delusions that are commonly found in the corporate world.

These potent delusions affect the business press and academic research, as well as many bestselling books that promise to reveal the secrets of success or the path to greatness. Such books claim to be based on rigorous thinking, but operate mainly at the level of storytelling. They provide comfort and inspiration, but deceive managers about the true nature of business success.

The most persuasive delusion Rosenzweig argues is the Halo Effect. When a company’s sales and profits are up, people often conclude that it has a brilliant strategy, a visionary leader, capable employees, and a superb corporate culture.

When performance falters, they conclude that the strategy was wrong, the leader became arrogant, the people were complacent, and the culture was stagnant.

In fact, little may have changed - company performance creates a Halo that shapes the way we perceive strategy, leadership, people, culture, and more.

Rosenzweig shows how the Halo Effect is widespread. He shows how business bestsellers, In Search of Excellence, Built to Last and Good to Great use flawed data which has been corrupted by the Halo Effect.

Read the book. It will make you rethink how you look at business performance.

Popularity: 8% [?]