winning behavior terry bacon & david pugh

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WINNING BEHAVIORWhat the Smartest, Most Successful

Companies Do Differently

TERRY BACON and DAVID PUGH

TERRY BACON is cofounder and president of Lore International Institute, an executive coaching andbusiness consulting firm. A graduate of the United States Military Academy at West Point and the AmericanUniversity, Dr. Bacon is the author of nearly eighty books including Leadership Through Influence, Effective

People Skills, Helping Customers Buy and Leading in a Boundary-less Organization.

DAVID PUGH is a cofounder and executive vice president of Lore International Institute. He specializes inbusiness proposal design and writing techniques. Dr. Pugh (a graduate of Washington State University, theWharton School, Stanford Graduate School of Business and the University of Chicago Graduate School ofBusiness) is the co-author (along with Dr. Bacon) of Proposing to Win.

Winning Behavior - Page 1

MAIN IDEA

Winning companies don’t necessarily have better products or lower prices than their competitors. Instead, they treat their customersbetter than anyone else. In this way, they earn what can be termed as “behavioral differentiation”(BD) – they differentiate themselvesby treating their customers better.

Accordingly, highly successful companies organize themselves around the ideal of providing exceptional service to their customers.Their leadership, culture, processes, reward systems and infrastructure are all geared towards making the delivery of exceptionallygood behavior the norm rather than the exception. In this way, behavioral differentiation becomes the foundation for a sustainablecompetitive advantage.

The new imperative in business today is not to keep coming up with new and improved products, or to drive prices down continuallylower. Instead, the challenge today is to organize your firm to consistently out-behave your rivals.

“We believe that behavioral differentiation is emerging as the final frontier in competitive strategy. It is the one domain of

differentiation where you can still achieve and sustain significant gains. To be sure, it’s not a substitute for product quality, price

competitiveness, or customer satisfaction. Among excellent companies today, these are requisites. Without them, you will not even

be in the game. But when you and your rivals all have met these criteria, behavioral differentiation can turn the tide in your favor. It can

make the difference when your customers are unable to tell you and your competitors apart on technical capability, product quality,

price and other traditional differentiators.”

– Terry Bacon and David Pugh

1. The concept of behavioral differentiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Winning companies out-behave their less-successful rivals. They become the suppliers of choice for theircustomers because customers like working with them. This is the essence of the concept of behavioraldifferentiation (BD) – making customers want to do business with you even though there are many otherchoices available in the marketplace. In an era of superior products, high levels of service and rivals whocan readily copy your offerings, BD is the sole remaining domain where a competitive advantage can begained and then sustained.

2. The four frontiers of behavioral differentiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 3 - 5

In practice, there are four fronts on which behavioral differentiation can be created:

Most companies start out providing operational BD first. They then extend into exceptional BD as theiremployees become more confident about making decisions. When these two types of BD becomeingrained in the fabric of the organization, symbolic BD is achieved. All three of these BD types(operational, exceptional and symbolic) will have a halo effect, thereby creating strong interpersonal BD.

3. How to create and sustain behavioral differentiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 6 - 8

The secret to creating and then sustaining BD is to manage your customer’s experience from start to finish.To achieve that consistently, you must have three elements working together effectively and efficiently:

When all these elements come together well, you can design and deliver interactions that will surpasswhatever a customer would experience by doing business elsewhere. That is the essence of sustainablebehavioral differentiation.

Symbolic BD“Walk the talk”

3

2 Exceptional BD“Break the rules”

Operational BD“Raise the bar”

1

4

Interpersonal BD“Being a caringprofessional”

Leadership

3

2

1

BehavioralDifferentiationCorporate Culture

Business Processes

1. The concept of behavioral differentiation

Winning companies out-behave their less-successful rivals.They become the suppliers of choice for their customersbecause customers like working with them. This is the essenceof the concept of behavioral differentiation (BD) – makingcustomers want to do business with you even though there aremany other choices available in the marketplace. In an era ofsuperior products, high levels of service and rivals who canreadily copy your offerings, BD is the sole remaining domainwhere a competitive advantage can be gained and sustained.

In business, differentiating your product and service offerings ishighly desirable because:• It allows you to charge higher prices.• It allows you to increase your market share.• It will enable you to excel while competitors merely survive.

If you take a simplified and uncomplicated view of whatever youare attempting to do in business, you will see there are really onlythree things you can manage to attempt to generate somedifferentiation for your firm:

1. Products – Many companies try to incorporate uniqueinnovations in the design, production, distribution, marketingor servicing of their product. The only problem is a competitorwith resources – and with your product as a guide – will beable to copy any product feature. Thus, a competitiveadvantage in this area is likely to be short lived at best.

2. Price – Often companies work to be the low-price leaderthrough highly efficient internal systems and rigorousexternal controls. Again, this type of competitive advantagewill be only temporary as competitors emulating yourapproach will beat down their costs relentlessly.

3. Behavior – Superior behavior can be an excellentdifferentiator when products and price are similar – whichtends to be the case in many of today’s competitive markets.This is the one aspect of differentiation which can bemanaged. That is, you can build your organization to act insuch a way that it enhances your customer loyalty andincreases your market share. Behavior plays a significantpart in how customers make their purchase decisions.Invariably, customers look at products and services as beingroughly comparable, and therefore they will choose to buyfrom whoever treats them well.

By combining these factors, you hope to distinguish yourself inthe marketplace by offering customers:• A unique product with features nobody else offers.• Products that can’t be purchased elsewhere.• Products that are designed for a specific market niche.• Excellent after-sales or customer service.• A very broad range of products.• Your well known brand name.• Market size and dominance creating recognition.• A low price.• A superior customer experience.

Of all these attempts at differentiation, behavioral differentiationis the most powerful for a number of reasons:

� It hits home on a personal level – by showing how much youvalue your customer’s business.

� BD is cumulative – it builds on the result of a lot of smallgestures made over a period of time.

� BD is consistent – it can be enhanced or reduced every timeyour customer interacts with your company.

� BD embraces all – it incorporates the way you package,deliver and services your products as well as the product orservice offering itself.

� BD is demanding – it takes a significant amount of institutionalcommitment and organization to deliver a consistentlysuperior customer experience.

Behavioral differentiation can take many forms:

� Some companies provide awe-inspiring levels of customerservice – as exemplified by Nordstrom.

� Others inject a spirit of fun into everything they do – theSouthwest Airlines approach.

� Wal-Mart creates its behavioral differentiation by combiningits low-price leadership strategy with superior customerservice and a dominant market position.

� Enterprise Rent-A-Car combines serving a market segmentits main rivals ignore with superior customer service to createbehavioral differentiation.

“A smart firm differentiates itself from its rivals in as many ways

as it reasonably can because it knows that virtually all of these

domains of differentiation can be copied. Over time, the

marketplace tends to assimilate difference, so smart firms

defend themselves against numbing sameness through multiple

forms of differentiation.”


“How do you answer the single most important question in

marketing: ‘Why should customers choose us instead of our

rivals?’ Companies spend billions of dollars every year trying to

answer this question. It is the fundamental question behind all

business, and it’s becoming increasingly difficult to answer

because you and your competitors offer roughly the same things.

In the markets of today, how do you find new ways to differentiate

yourself?”


“The masters of BD consistently out-behave their competitors.”


“What are the implications for your business? If BD improved

your business only by 10-percent, what impact would it have on

your top and bottom lines? Alternatively, what would be the

impact if your competitors increased their behavioral

differentiation and you did nothing? The world has become a

more competitive place. The stakes are getting higher. The race

will not be won by the swiftest or the strongest. It will be won by

the smartest, and being smart in business today means knowing

how your behavior, across the spectrum of your people and in

every interaction with your customers, can differentiate you from

your competitors and help you capture more than your fair share

of the business.”



1 2 3

Products

What is offered andhow it is delivered

Price

Offering lowerprices than others

Behavior

How you actuallyact with customers

2. The four frontiers of behavioral differentiation

In practice, there are four fronts on which behavioraldifferentiation can be created:

Most companies start out providing operational BD first. Theythen extend into exceptional BD as their employees becomemore confident about making decisions. When these two typesof BD become ingrained in the fabric of the organization,symbolic BD is achieved. All three of these BD types(operational, exceptional and symbolic) will have a halo effect,thereby creating strong interpersonal BD.

Operational behavioral differentiation is all about making thecompany stand out because of its customer service practices. Inthis case, delivering exceptional customer service becomes anintegral part of how the company operates. Or put differently,operational BD means setting a new and higher standard for howcustomers are treated.

Note that operational BD must be consistent and sustained to bememorable. The company’s normal operating procedures mustembrace delivering great service so the majority of your peopledeliver that rather than just one or two star performers.Operational BD requires that customers receive outstandingservice the majority of the time, regardless of who they actuallyinteract with.

Operational BD means having people in the company who goabove and beyond the call of duty to assist the customer. Whatactually constitutes operational BD will vary from one industry toanother quite broadly, but may include:

� Having greeters at the door to assist people who come intoyour shop.

� Instituting a “no-fault” returns practice which is generouslyapplied, even to the point of accepting as “returns” someitems you don’t even carry.

� Salespeople who send personal “thank you” notes after everymeeting with customers.

� Senior executives who not only visit stores regularly butactually help serve customers.

� Face to face meetings are held on a regular basis wherecustomers can specify what they want and expect from yourproducts without the messages being filtered and sanitized byyour PR department.

� Having sales reps who are trained to actually go beyondselling products and services and instead help yourcustomers reduce their costs, improve productivity orenhance their own business operations.

� Answering every customer complaint within an hour andworking to resolve problems completely and definitively – allat no extra cost to your customers.

� Collecting information about customer preferences andactually using that information to tailor what you offer to theiractual needs.

“Operational BDs like these can and should be managed. They

must be normalized so that every customer at every touch point

receives and perceives special treatment. Unless you manage

your people and processes so these behaviors are systematic

and consistent, you won’t create a sustainable behavioral

advantage.”


“Operational BDs are the most tactical of the four types because

they are deliberate choices you make about how to interact with

customers and they can occur at most of your customer touch

points. They reflect the moment-by-moment ways in which

customers experience your company and its people. If they are

consistent and sustained – if customers experience these

behaviors with the majority of your employees the majority of the

time – then they form the baseline of the customer’s experience

of you.”


Exceptional BD occurs whenever an employee goes out of theirway to help a customer. Ideally, this will be highly memorable forthe customer. Their expectations will be exceeded and they willbe delighted with the service they received. Adding to theirsatisfaction will be the knowledge the employee had to “bend” oreven “break” the company’s policies or standard operatingprocedures to do this.

In practice, exceptional BDs usually incur costs (financial or timeor effort) that are unsustainable. This type of exceptionalbehavior shows the customer you’re willing to stretch theenvelope to keep them happy. It makes sense for companies tocreate an environment where employees can exercise goodjudgement on behalf of the company.

For example, Ritz-Carlton expects its employees to respond to aguest’s complaint immediately. Employees are then encouragedto follow-up with a telephone call within 20 minutes to ensureeverything has been resolved to the customer’s satisfaction. Thecompany, however, goes still further. Every employee isauthorized to spend up to $2,000 to satisfy a guest withoutrequiring managerial approval. All of these ideas are focused onthe goal of never losing a guest to another hotel group. By doingthis, Ritz-Carlton has made it possible for every one of its 22,000employees to go beyond the normal standards and provideexceptional service. (This policy also shows each employee theirbusiness judgement is trustworthy and that they are expected toact responsibly in applying their discretion).

“Although there are legitimate reasons for setting boundaries

and protecting the business from unscrupulous customers,

companies should nonetheless find ways to create an



3

2 Exceptional BD“Break the rules”

Operational BD“Raise the bar”

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4

Interpersonal BD“Being a caringprofessional”

1 Operational BD“Raise the bar”

Exceptional BD“Break the rules”

2

environment where exceptional behavioral differentiation is

possible when appropriate. Exceptional behaviors generally

depend on the initiative of individual employees, but companies

can encourage and support those initiatives by trusting them to

make sensible decisions and giving them the latitude and

responsibility to exercise their judgement.”


“Goodwill in the interchange between buyers and sellers

depends on an unspoken quid pro quo: ‘If you treat me right, I’ll

treat you right’. This sense of reciprocity extends not only to the

exchange of value in product for price (as a customer I want to

receive fair value for money) but also to the social interaction (I

want to be treated with courtesy and respect). When either party

violates this unspoken quid pro quo, goodwill suffers and each

party becomes more defensive. Sellers become less willing to do

anything exceptional for customers, and buyers take their

business elsewhere (or create ‘revenge’ Web sites).”


Symbolic behavioral differentiation is subtle. It requiresalignment between what the company does internally and themessage it projects externally. When there is alignment, yourorganization is “walking the talk” – that is, it is behaving in waysthat reflect and reinforces whatever it is telling customers.

For example:

� If you sell permanent press clothing, all your sales reps andexecutives should wear your line of clothing and look wellgroomed at all times.

� If you specialize in project management, all yourpresentations should finish on time and you should meetevery customer deadline.

� If you run a health club, all your employees should look likethey personally use your equipment.

� If you sell network equipment, your own company shouldhave state-of-the-art equipment and be a good example of thebenefits of doing this.

When customers see you say one thing but do somethingentirely different, they become jaded and cynical. They also startto question whether anything you say can be trusted. For thisreason, symbolic BD is challenging. It requires that you have theintellectual discipline to be awareof the messages your companysends and then the follow through to ensure that your behaviormatches the message.

Walking the talk is often difficult because the company’smessages typically get created by senior leaders and those farremoved from the challenges of the front line staff. There may belittle or even no correlation between what they assume ishappening and what’s really going on. This is where amisalignment of the company’s messages with its behaviors canhave dramatic consequences.

“Because they operate on such a broad scale, symbolic BDs are

the most strategic of the four types of BD. They can build trust

and credibility with customers very rapidly if customers judge

them to be authentic. Most importantly, symbolic BDs are

ubiquitous and will always either reinforce or contradict the

company’s core message to the marketplace. This occurs

because the behavior customers perceive will always either be

congruent or incongruent with the promises expressed or

implied in the company’s messages to its markets.”


“Ask any Harley rider – they’ll gladly share their experiences.

These experiences of motorcycling create the thoughts, images

and emotions of which dreams are made. So when we say, ‘We

fulfill dreams through the experience of motorcycling’, we’re

talking about ‘E’ business – Harley style...the Experience

Business.”

– Jeffrey Bleustein, chairman and CEO, Harley-Davidson Inc.

Interpersonal behavioral differentiation arises when anindividual employee shows genuine interest in helping acustomer and follows through to see that is achieved. This kind ofbehavior cannot be operationalized, but will arise only whenemployees act this way. Interpersonal BD comes from the heart,not as a result of a company policy or processes, and thereforecannot be faked.

When employees are highly skilled in this area:

� They empathize with the customer – and become sensitive totheir needs and desires behind a purchase decision.

� They become good at using the basic tools of influence – likesmiling, maintaining good eye contact, gesturing in friendlyways, leaning forward, etc.

� They are sincere – about wanting to help the customer.

� They learn to anticipate – so they can read what the customeris thinking and feeling before they even say very much. Bodylanguage is a big part of this, as is picking up on all the“unspoken cues” that can be observed.

� They have the attitude they are in business to genuinely addvalue to the customer’s life rather than meet a sales quota.

Interpersonal BD can be considered as the natural extension ofoperational BD. Operational BDs are systemic – they reflect yourorganization’s policies, procedures and standard operatingpractices. Interpersonal BDs emerge when the customer’spersonality and temperament takes those policies and applythem constructively. Interpersonal and operational BDs aremutually reinforcing.

“Although interpersonal behavioral differentiation resides in the

individual skill and will of employees, it can be managed by

creating an environment that retains employees who delight

customers with their warmth, caring and engaging personalities.

They are, in spirit and deed, caring professionals, and that

makes a huge difference with customers.”


“Employees with high interpersonal skills will enhance the

behavioral differentiation caused by a company’s operational

policies. Similarly, when a customer’s operational policies allow

for the exceptional treatment of customers, employees are likely

to feel better during their interactions with customers, which will

support and encourage employees with outstanding

interpersonal skills. Beyond hiring, training and setting high

standards, companies have to create an environment where

interpersonal BDs can be sustained, which is hard if the

company is understaffed and employees are too busy.”




3

4Interpersonal BD

“Being a caring professional”

In total, then, behavioral differentiation is all about making yourbusiness stand out from the competition through the way yourpeople behave towards customers. This can work in both apositive and a negative direction:

Customers expect:• To be treated professionally and courteously.• To interact with people who are competent and knowledgeable.• To have honest and candid discussions.• That your people will have integrity.• To be handled efficiently and as quickly as possible.

You gain ground and create a positive bias towards yourcompany when positive behavioral differentiation occurs. Thismay occur:

� When the customer realizes your people have gone toextraordinary lengths to learn about them or about the needsof the industry within which they work. The fact you do morehomework than your competitors and thus have more insightswill be noted and appreciated.

� When the customer perceives you genuinely care about themand their business – which is usually demonstrated by makingsome sort of meaningful contribution.

� When you are unusually thoughtful, considerate andempathetic towards them.

� When you customize your product or service specifically forthem, or otherwise show that you are committed tounderstanding and serving their unique needs.

� When you go out of your way to address their needs, makingan effort which is well beyond what they could reasonablyexpect.

All of these differentiation efforts are memorable and positive. Asa result, the customer likes your firm, and is positivelypredisposed to do more business with you in the future. Inaddition, a highly satisfied customer is also more likely to tell theirfriends and associates about you, creating more flow-onbusiness in the future. Positive BD creates an attractive forcewhich will draw customers away from the bland center andtowards your company in the future. And even better, positiveBDs are difficult if not downright impossible for a competitor toimitate.

On the other side of the coin, you can also lose ground andcreate a repulsive force if you inadvertently or not generatenegative behavioral differentiation. This occurs:

� When the customer has to deal with people from yourcompany who are ignorant and incompetent.

� When your employees have an arrogant or condescendingattitude, making deal with them unpleasant.

� If your people come across as self-serving – more concernedabout their own convenience and schedule than aboutresolving customer concerns.

� When customers try to get help but your people areunresponsive or unwilling to follow through.

� In situations where your people are poor communicators andshow a lack of respect.

� When your employees are unprofessional and show theyhave a lackadaisical attitude about customer problems.

Negative BD is even more powerful than positive BD. Studieshave shown it usually takes about five or more positiveexperiences to offset the bad feelings created by each negativeexperience. With this in mind, avoiding negative BD should be apriority.

“Your company’s marketing image can be deceiving for a while.

You can claim to be the best, fastest, most comprehensive,

easiest to work with, most exciting, most luxurious, most

personalized, most state-of-the-art, most advanced, and so on,

but what customers will ultimately believe about you is what you

deliver and how you behave towards them. You are how you

behave – and you behave how you are.”


“The opportunity for BD occurs during every interaction with

customers – through every stage in the selling and buying

process. You are on stage all the time with your customers. Like

it or not, you are always either showing them that there is no

difference between you and your rivals or you are behaving in

ways that positively (or negatively) differentiate you from the

other companies that want their business.”


“Most business men generally are so busy coping with

immediate and piecemeal matters that there is a lamentable

tendency to let the long run or future take care of itself. We often

are so busy putting out fires, so to speak, that we find it difficult to

do the planning that would prevent those fires from occurring in

the first place. As a prominent educator has expressed it,

Americans generally spend so much time on things that are

urgent that we have none left to spend on those that are

important.”

– Gustav Metzman, former president,New York Central Railroad

“Behavioral differentiation is hard to copy because it is not simply

a matter of observing how your competitors are behaving

towards customers and then sending out a memo asking your

employees to behave the same way. People are not robots, and

their behavior is not like a broken part you can replace. Behavior

is the outward manifestation of deeply rooted attitudes, values

and beliefs. To sustain differentiating behaviors you have to

create a culture that supports and rewards those behaviors and

encourages people who are already disposed to treat customers

well to be themselves.”



CustomerExpectations

Customer Experience

Their anticipated range of behavior whenthey interact with your business

Positive Behavioral Differentiation

Negative Behavioral Differentiation

3. How to create and sustain behavioral differentiation

The secret to creating and then sustaining BD is to manage yourcustomer’s experience from start to finish. To achieve thatconsistently well, you must have three elements workingtogether effectively and efficiently:

When all these elements come together well, you can design anddeliver interactions that will surpass whatever a customer wouldexperience by doing business elsewhere. That is the essence ofsustainable BD.

Quite simply leadership is the most important driving forcebehind the creation of positive BD. Unless there is a leader whois prepared to exemplify, support and encourage extraordinarybehavior, nothing much will happen. A great leader supplies thedetermination to make this happen, even in the face of temporarysetbacks, internal opposition and teething problems.

Leaders also need to have the courage to ignore the industrystandard practices and business models. They must have greatlevels of self confidence to continue investing in the delivery oftruly exceptional service when every competitor is heading in adifferent direction. In short, exceptional business leaders areneeded in order for positive BD to be generated.

Exceptional business leaders:

� Understand and teach employees that the company’sattempts to stand apart from its competitors will stand or fallon the way they behave towards each individual customer.

� View behavior as an integral part of their business strategyand not just part of their customer service department.

� Consider the customer’s experience to be the ultimate sourceof a sustainable competitive advantage. As such, they keepraising the bar.

� Place heavy emphasis on screening and hiring newemployees who have the right attitudes and demeanor withregards to serving customers.

� Know the difference between espousing good values andputting those values into practice.

� Understand their own personal behavior is highly symbolic,and therefore they act as models of the types of behavior theyencourage.

� See managing their company’s culture as their number onepriority. They become evangelists for the key values andbeliefs and spend most of their time teaching, coaching andmentoring others.

� Understand intuitively that BD cannot be delegated. This issomething that requires their personal touch.

� Act as a bridge between employees and customers becausethey understand and identify with both groups. The bestleaders are “servant leaders” who actually enjoy hanging outwith front-line employees and real honest-to-goodnesscustomers.

� Accept responsibility to inspire their employees to treatcustomers in exceptional ways. To this end, great leadersensure an internal environment exists which allowsemployees to do whatever it takes to generate BD.

“You have to be thoughtful about your behavior. It becomes an

important element of corporate strategy as well as the basis for

decisions you make about the people you hire, the jobs you

create, the training and education you provide, the goals and

expectations you set, the responsibilities and authorities you

delegate, the rewards and recognition you give, and the

processes you create for running the business on a day-to-day

and moment-by-moment basis.”


“In exemplary companies, BD is not a passing fancy but a deeply

rooted idea. It’s one of the governing principles of the

organization, and it’s driven by the leaders’ or founders’

convictions about how to treat employees, customers and other

stakeholders. In these exemplary companies, BD is not a

program imposed by a new CEO or the head of customer

service; it’s a set of core beliefs about how to behave. Those

beliefs are embraced at all levels of the organization: They are

used to screen candidate employees; they are taught in

introductory training programs and corporate universities; they

are reinforced in regular meetings of employees; they are

modeled by the organization’s leaders.”


“I believed then, and I still do, that people are an organization’s

only sustainable competitive advantage. The leader should mind

the interests of all stakeholders, of course, but he or she should

also be an outspoken advocate for employees, making sure they

are front and center in an organization.”

– Rich Teerlink, retired CEO, Harley-Davidson

“Where do you start? You start with a philosophy, and the rest

follows from that. If you believe in training and developing

people, you don’t necessarily need a huge training budget. You

begin by imparting knowledge in various ways – by holding

meetings, by talking to people, by coaching them, by mentoring

them. If you believe in reciprocal commitments, you start building

those commitments with the people you work with. If you believe

in information sharing, you share information with the people you

have the most contact with. In other words, you begin in your

immediate sphere of influence. You start with your own

behavior.”

– Alan Webber, Fast Company magazine

“It takes skill and will to create and sustain BD. Both are

important, but without the will, the skill won’t matter. So although

training and education are crucial, simply training people to

behave well won’t make a lasting difference in how they treat

customers. Behavioral differentiation does not happen

serendipitously. It must be led. It won’t happen if leaders only pay

lip service to it, and it won’t happen if leaders don’t walk the talk

themselves. It won’t happen with signs and slogans alone. It

requires a constant infusion of energy, focus and direction from

the leadership of the organization.”



Leadership

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BehavioralDifferentiation

Corporate Culture

Business Processes

1 Leadership

As important as inspired leadership is, it alone won’t create BD. Astrong and vibrant corporate culture oriented around BD is alsorequired. That way the organization will continue to moveforward, even when the leadership changes. Culture has aprofound influence on what the people in an organization sayand do, which in turn impacts on how they treat customers.

Culture reflects the heart and soul of an organization – what itstands for and values. These values persist over time, wellbeyond the comings and goings of individual employees. In thisway, a culture unerringly reflects the collective memory of theorganization. It provides a framework by which actions can beplanned and followed through on.

The key forces which build a culture centered on BD are:

� The company’s public image as established through itsadvertising, packaging, promotional materials and marketcommunications. Consistent messages teach employeesand customers what to expect when dealing with you.

� All of your internal communications like mission statements,newsletters, operating principles and so forth. If there isalignment between what’s said and what actually happens,then these communications build the culture and reinforce it.Similarly, if people say one thing and do another, confusionwill reign supreme.

� The public talks given by leaders also have a powerful impact.When these leaders promise potential customers they will betreated exceptionallywell, employees are motivated to do so.

� Management making BD a high priority item in terms of howthey allocate their time and resources including where theorganization’s high performers get assigned.

� The company’s hiring practices are also a key determinant. Ifthe organization screens job applicants to select newemployees who are good at delivering high levels of customerservice, that sends a strong signal to the rest of theorganization. It also means over time, the old-timers will besuperceded by people with the right temperament andattitudes.

� What managers reward and the behavior they penalize willalso contribute. If the people in the organization who deliverexceptional customer service get noticed, recognized andpromoted, everyone else will take careful note. A good awardprogram can do much to build the culture of the organization.

� Corporate education and training programs should reinforcethe initiative to raise behavioral standards. So too should alldepartment meetings, on-the-job tutorials and coaching ormentoring. Many companies which deliver notably highstandards of customer service place great emphasis onmentoring as the way to spread the message and getemployee buy-in.

� The organization’s standard policies, systems andprocedures will define what’s right and what’s wrong. Toenshrine exceptional behavior as the expected norm,companies need to put in place day-to-day processes thatsupport that ideal and leave nothing to chance. The rightprocesses will stress how customer interactions should behandled, and what actions are desirable on the part of theemployees.

� The mythos of the company – as epitomized in stories andlegends – will also serve to reinforce the culture and inspireothers to do likewise. By turning those who deliveroutstanding customer service into heroes, you send a strongsignal to everyone else to do likewise.

� You have to spend more on employee education anddevelopment than others. Many winning companies take thisrequirement so seriously they have set up their own in-houseuniversities and training facilities to provide the education andcoaching needed to make ordinary employees become starperformers.

In essence, what you need is a corporate culture which respectseach individual customer and commits to meeting their needs.This starts with respect for your employees. If you differentiateyourself as a good employer and create a workplacewhich buildsthe self-esteem of your people, you can then reasonably expectthem to provide extraordinary levels of service to yourcustomers. In this respect what happens externally is a mirrorreflection of what happens inside your organization. A strong andvibrant culture is required.

“High-performance organizations are not products of

high-performance individuals. They are the products of

high-performance cultures. Why? Individuals come and go, but

cultures pervade an organization and endure.”

– Mike Ruettgers, former CEO, EMC Corporation

“To one degree or another, the culture of a company is an

extension of its leadership. Culture is the means through which

leaders realize their vision, and in companies that excel at BD

that vision invariably focuses on how people are treated, within

the company and without. Leaders drive these values through

their words and actions, their priorities and decisions, and

through the cultures they create. If those cultures are powerful

enough, they will shape behavior through the far-flung regions of

a company’s empire and will survive even when the leaders who

created them are gone.”


“Culture has a profound influence in shaping people’s behavior,

and its influence is ubiquitous. Leaders certainly shape culture,

but the culture influences employees’ decisions and treatment of

customers even when the company’s leaders are absent, which

is what makes culture a powerful driver of BD.”


“We’re in the customer service business; we just happen to

provide airline transportation.”

– Colleen Barrett, president and COO, Southwest Airlines

“If I try to teach anything to my front-line people, I teach them to

deal with their passengers the way they would like their

grandmother, their next-door neighbor, or the person they sit

next to in church. Because really and truly if you read our mission

statement, it is as simple as saying, ‘Practice the Golden Rule

everyday’. If you do that with your fellow workers as well as your

passengers, you are going to have a happier day. Now it just

stands to reason, and it’s really not very complicated, if you have

a better day, the people you are working with will probably have a

better day. If our employees are happy, some of that happiness

will transmit to our passengers, if they are consistently happy

when dealing with us, then they are more likely to come back,

and then we probably are going to make a little money, making

our shareholders happy. It’s really pretty simple.”

– Colleen Barrett, president and COO, Southwest Airlines


Corporate Culture2

The genuine tactical workhorses of BD are the policies, systems,procedures and processes your company uses to manage itsinteractions with customers. These will include:• How your organization recruits new people.• The ways employees are trained and managed.• The structure of your reward and incentive systems.• The various ways your business gets and keeps customers.• How your customer relationships are managed.• How you communicate with customers.Processes establish the behaviors that should occur whencustomers interact with your employees during the course oftheir normal transactions. They standardize and simplify thework so a consistent experience is delivered regardless of whichemployee is involved. The key question, however, is whether aprocess has been designed to achieve the company’s efficiencygoal or to have a positive effect on customers. Smart companiesdo both, but if that is not feasible, they err on the side of servingcustomers well even if that detracts a little from overall efficiency.

Great companies create processes that enhance the customerexperience. Often, this involves empowering the front-lineemployee. Or it may involve taking an outstanding employee’sbest practice and making it standard procedure for the entireorganization. This is the main reason why processes arepotentially very powerful drivers of BD.

BD may be top-down (driven by the business leaders) orbottom-up (driven by individual employees). To developprocesses which are BD-oriented:

� Be thoughtful about how your organization behaves. MakeBD an important element in all your business planningexercises, hiring decisions, training and education programsand your incentive system. Find ways to get your peoplethinking about specifically how to deliver exceptional service.

� Build systems and processes which make it easy for front-lineemployees to make decisions that will delight customers. Inpractice, that requires that you trust your people to actintelligently and with the interests of the company at heart. Toactually achieve this:• Make wise hiring choices.• Set high expectations that everyone understands.• Spend money on training and coaching.• Support fully the decisions your people make.• Monitor customer satisfaction levels closely.• Reward exemplary behavior.• Trust your people.

� Learn to think like a customer. Specify what an exceptionalcustomer experience would look and feel like, and then figureout what processes would deliver just such an experienceconsistently well. Then work to put those processes in place.

� Keep it simple. At the end of the day, your golden rule might besomething as direct as: “Serve customers as you would like tobe served”. The simpler your credo becomes, the easier it is toput in place the processes which will be required.

“What is the secret to creating and sustaining behavioral

differentiation? It’s just this: You have to manage your

customer’s experiences from start to finish. You have to think

about what they are experiencing at every touch point and then

design interactions that surpass what they experience when

they interact with your competitors.”


“Behavioral differentiation represents an enormous untapped

opportunity for many organizations and professionals. Today,

the question customers usually ask isn’t ‘Who can do the work?’

They have no trouble finding many qualified providers. The

question is, ‘Whom do we want to work with?’ Business

development in the new age is increasingly a chemistry test, and

the chemistry between the buyer and the seller is shaped by the

seller’s behaviors.”


“To create or increase BD in your company, you need to avoid

being sidetracked by the minutiae and distractions of the

day-to-day business life. If you do not behaviorally differentiate

yourself now, then a change program to develop BD is likely to

require a significant effort, in part because behavioral changes

are difficult and in part because the behaviors you may need to

change are ubiquitous, involving not only direct interactions

between your employees and your customers but also every

indirect touch point.”


“It’s important to keep in mind that you cannot avoid giving

behavioral impressions to customers. You are always signifying

by your behavior that you are either distinctly better than your

competitors, or no different from your competitors, or distinctly

worse than your competitors. Whether you like it or not,

customers are always coming to one of those three conclusions

about you. If you choose to ignore behavior as a potential source

of competitive advantage, then at best you are likely to fall into

the bland, undifferentiated middle and you will be outdistanced

by your competitors who do differentiate themselves

behaviorally. At worst, you will lose customers. Or you can be

thoughtful and strategic about your behavior towards

employees, customers, and other stakeholder groups and use

behavior to differentiate yourself and gain competitive

advantage. The choice is yours.”


“You should care about behavioral differentiation because it is an

aspect of your business that you can manage. You can behave in

ways that enable you to build a competitive advantage. You

should care about behavioral differentiation because if your

competitors are out-behaving you, then you are losing business

you should not be losing. You should care about it because it is

an excellent source of sustainable advantage and because it can

help you build customer loyalty and market share. In this era of

hypercompetitive markets and increasing competition,

behavioral differentiation may be the best opportunity you have

to win more business.”



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3 Business Processes

winning behavior terry bacon & david pugh

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