I’ll start by telling you about the 800 refrigerators.
We wanted to boost profits.
Dan came to me and said, “Alex, come on, man. You do marketing. I need to sell more refrigerators.”
“I’ll call our main ad rep later today,” I said, “and see what I can do.”
I wondered what I could personally do to increase sales and boost profits. But I knew that Charles, our ad rep, might have some good ideas.
“Charles, I want to keep spending our tens of thousands of dollars each month with you, but our return so far hasn’t been good. What can we do to improve?”
“I’ll check on your situation,” said Charles. “Can we talk tomorrow at noon?”
The next day, Charles told me, “Right now, you guys are listing 800 different models of refrigerators for sale on our site. You should try cutting it down.”
“Why?” I asked.
“Because,” he said, “customers are shopping for refrigerators. They see all your models and they get confused. Our other customers,” he said, “do better when they list closer to 100 models. You’re listing 800 refrigerators.”
“Hold on a minute,” I told Charles.
“Dan,” I asked across the room, “do we have fridges in the warehouse?” The main warehouse was a mile down the road.
“No,” Dan said, “all the fridges ship directly from the manufacturer.”
That meant we had no fixed inventory costs on refrigerators. Our main costs on the fridges, before they sold, was advertising them. Mixed in among other sellers in the online shops of Shopping.com and Bizrate.com, we competed for a marketplace of qualified buyers. Customers clicked on our ads, which brought them to our website.
“Fewer options will allow the customer to focus more,” Charles said. “Customers don’t know the subtle differences between your products, so they feel overwhelmed and don’t buy from you.”
“That makes sense,” I said. “Plus, you’re suggesting we spend less money with you short-term, to increase sales long-term. I wouldn’t have expected that.”
We set a day to talk. I went to get Dan’s buy-in.
Dan and I had worked together earlier that year on a bunch of other projects, so we knew each other pretty well. I knew he liked playing softball, watching episodes of the TV show 24, spending time with his family, making yes/no decisions to items on written checklists, that he especially liked handling customer relationships over the phone, and he’d even told me he’d discovered that instead of micromanaging his staff, he liked coaching his coworkers.
He knew that I was serious about improving profits. He knew that when he worked with me, ideas turned into results far quicker than he’d thought possible, that I was great at facilitating teams, that work was something I brought my life to because I had a photo of my then-girlfriend on the wall, that I liked taking risk and wasn’t afraid to put myself on the line.
Could we triple our profits?
Dan and I met for half an hour. I showed him Charles’ numbers and suggestion that we should cut from 800 to 100 refrigerators. Dan was worried about losing sales. But he was excited by the idea of going from 3x return closer to a 10x return on the big category of refrigerators just like we had on some niche products. He was also unsure about the time it would take to delete hundreds of fridges from our online list.
We came up with a solution: delete similar model listings — instead of advertising each color of the same model refrigerator: white, tan and black, we could advertise only one color for each model of each refrigerator, or even only advertise selective models.
Each of us said what we wanted to do. Our work produced tangible results. We always had a deadline.
“I’ll get a list of fridges from Matthew in IT,” I said. “I’ll put it into Excel, and it’ll automatically delete duplicate models by color and very similar models, leaving one unique ad for each line of refrigerators.” Or something like that. Luckily our call with Charles was scheduled, and Charles helped persuade Dan it could be done.
“Okay guys,” Dan said, “But I want to keep one-third of our product up on the ads.” That was 266 fridges. Better than 800 fridges. Heck, I wasn’t even sure if reducing the number would make any difference. Dan and I were worried we’d lose sales, but…
“And,” Dan said, “let’s meet in a week to see what’s happening.”
If the strategy wasn’t working, we could revert back to our old system in a week. Since refrigerators were only part of our total sales, if the strategy worked, we could grow it across the business.
“Okay,” I said, “But I also want a list from you of the most profitable top-selling fridges. We’ll keep advertising those.” “Good idea,” Dan said, and went off to make his list.
The insight to advertise fewer products came from outside the company. It came from our advertising platform representative who had a different perspective than we did.
The reason it was hard to move forward and make things happen was that we had been missing many of the things that make a high-performance team.
Plus, I went against a core dog-eat-dog belief that our advertisers would take as much money as we would throw at them. I believed opposite sides can work alongside each other to both benefit.
Our team was within a bigger team — the whole company. Resources and approvals were on a macro level.
Later that afternoon I had a meeting with Basil. Basil was the president. I needed his approval to make any marketing changes.
“Even though I don’t like your idea,” he said gruffly, “cutting the number of products advertised, I’ll consider it.” He knew I’d boosted profits over the past few months. “I want to see a list of the products you’re going to cut.”
That was hundreds of products. “Look,” I said, “We’re not going to get this done if you have to approve everything one-by-one. I need your blanket approval — if Dan and I decide to make any marketing changes, we can do it. Okay?”
This scenario is actually typical in many businesses. I’ve heard similar stories from folks who worked at Old Navy and many other stores. General Electric even implemented a highly successful program called The GE Workout under Jack Welch so managers would make blanket decisions on the spot.
Basil sighed. This wasn’t his usual style, but he wanted results. And he remembered the two weeks he’d gone on vacation. “Do what you can,” he’d said then, “until I get back.” We’d done a lot in those two weeks. Maybe he thought, “They think they’re happier, they do more work, makes my job easier.”
Now Basil said, “Okay. You have my approval to make changes if you and Dan agree. But I want monthly updates.” Blanket approval solved, I went upstairs to put our plan into action.
Next week, Dan, Charles and I met again for half an hour. We had each done actual work, not just leading each other but also managing products. We wanted to see our results.
I was shocked, in a good way. Return on fridge sales had boosted from 3x to 8x – nearly tripling profits. And our other work on smaller changes had also shown results.
We kept working in sync.
We made minor changes, and met again the week after. We’d keep meeting for half an hour each week to make minor changes, but the results were in. Fridge sales remained constant, while ad expenses had dropped.
In just a few hours, we boosted profits by $12,000 each month, or $400 every single day.
* * *
THE EIGHT FEATURES OF HIGH-PERFORMING TEAMS:
Here are the features of that team and other high-performing teams I’ve worked with. You can skim and read the bold-faced text:
1) Every person said what they wanted with their work on the team. These wants were expressed through short interviews. That person was heard and asked for clarification by everyone who worked most closely with them. Their wants were broadly understood by everyone else on the bigger team.
Through conversations earlier in the year, Dan and I knew what each of us wanted. When I’d called up Charles, he and I said what we each wanted.
2) Teams had an exciting and ambitious goal with concrete results.
We didn’t expect to save $12,000 a month in only a few hours of work, but we expected to lead the way in rejuicing the website’s advertising with measurable results.
3) Every person said what they wanted to do, and did it. Many team members actively led, coached and influenced other members. It was clear who was responsible for every action item agreed upon by the team.
Jack, Charles and I each chose what we would do. Charles suggested he look at our results each week and compare them with other companies to give us insights. Jack liked my suggestion that he compile lists of our best-selling products. I volunteered to get a list of products to selectively delete. And so on.
4) Teams always had a deadline.
We never ended a meeting without knowing when we would meet next and what should be accomplished. When we had smaller action items, such as looking at whether it was worthwhile to continue advertising our three steam-irons, we grouped those responsibilities under the same due date. This made it easier to work along with each other.
5) A majority of team members worked in sync, with frequent real-time contact either over the phone or in-person to exchange ideas or give mutual feedback.
When Dan and I did our work, we sat at desks next to each other. Dan, Charles and I spent most of our actual time for this team in our shared phone calls.
6) Every person’s work produced directly visible work results.
The time I spent emailing and coaching was useful, but for me to be considered a real team member by Dan and Charles, I needed to do some “work-work” — I produced the list of products to cut, and I did other “hands-on work” as time went on. We each did.
7) Resources and approvals, when necessary, were on a blanket level, and raised in successively greater amounts as trust and results were continuously delivered. Blanket approvals were never given based on the external manager’s judgment of the project. Instead, blanket approvals were given because of the manager’s judgment of team members’ past performance. These managers who were not team members at least shared in saying what they wanted from their work with the team. They were easily available to members for questions and mentoring. Managers were given a clear expectation of the team’s exciting and ambitious goal, and updated continuously by the team’s representative.
Basil gave the team his approval within broad limits: “Change online marketing as you see fit, but agree as a team, and update me monthly.” This allowed the team to move quickly and reasonably. This blanket approval was given because Basil had seen team members succeed in the past.
8.) Big teams had teams-within-a-team. When a team was too big for everyone to clearly know what everyone else specifically wanted, everyone worked on a team-within-a-team. Each team-within-a-team made decisions and set goals for itself. Each team had a representative who reported to a core team. The core team made decisions and set goals for all the teams, with approval by a majority of teams-within-the-team.
Dan, Charles and I were a team-within-the-larger-company. I was the representative who went to Basil, the company’s president and the head of the core team, for broad approval of resources. Basil didn’t know exactly what Dan, Charles and I wanted, or exactly what we wanted to do. Basil wasn’t hands-on and didn’t produce any actual work product. But that was okay, because he wasn’t on our team-within-a-team.
* * *
FROM PYRAMID TO ECOSYSTEM
That’s it. I could’ve written about working at Pfizer, or consulting firms, or theater companies, or even non-work situations with family or friends. But these are the characteristics of every high-performing team or workplace I’ve ever been on with anywhere from 2 to 120 people, and high-performing organizations with hundreds or thousands of people.
You can rate each of these features from 1 to 5, where 1 is “not at all” and 5 is “completely”. So, was our feature #1 present, where “every person said what they wanted” in this team? I’d give it 5, because we checked that we understood each other very well within our small team. We even knew our preferred work style. Folks outside our team-within-a-team knew generally what we wanted. And I can rate the other features, and add up the score.
On this particular team with Dan, Charles and myself, I’d rate our team overall 35 out of 40 points. The area with most room for improvement was feature #8, how teams worked within bigger teams, which I’d rate a 2 out of 5 because Dan and I were restricted by rules chosen by the core team which we didn’t have control over. But still, 35 out of 40 is great, and it made us a high-performing team.
Or you can rate a horrible team you’ve been on, where you never thought to ask why you were working together, you didn’t have deadlines, etc. My rating for a horrible team I’m thinking of is 18.
Some features of high-performing teams I’ve worked on: team members became friends, trust and communication skyrocketed, results were surprisingly successful, and people felt personally and professionally fulfilled.
Dan, Charles and I weren’t thinking about who was in charge of whom. We thought about what we were responsible for. Dan and I had become friends over earlier projects. We all began to trust and communicate better as time went on — my first conversation with Charles was tense, because we didn’t know what we each wanted, but over time we got used to communicating. We got results and, even better, we felt most alive. Dan even once said he felt as if he was Jack Bauer in 24, taking risks. That’s just what Dan wanted. Plus, as profits went up, he relaxed, and chatted more casually with customers and his family.
Overall, team members and managers were surprised by how much fun they had, how much faster they got things done, and how great they felt about their work.
It was a process. Whenever one of the features got worse, performance got worse. Whenever the features got better, so did performance.
Between this and other projects, Dan and I made sure we kept feature #4 in place — we always knew our next deadline, so we always kept moving. We kept the other features in place too, to remain a high-performing team.
Before I moved on to consult with other companies, I trained Zack in sales to replace me on this team. Zack did a helluva job. During the training, sometimes I noticed with a small twinge of jealousy that Zack had suggestions I hadn’t thought of, or was sometimes better at working in sync than I had been.
But that’s part of what I love about working with high-performing teams — knowledge, skills and relationships get passed along and maintained, and each person adds something new.
Edited January 2008