1. What Do Customers Want? SWaMFest VI October 13, 2010 Ed Hess Professor of Business Administration Batten Executive-in-Residence Hesse@darden.virginia.edu www.EDHLTD.com

2. 2 THE DNA OF GROWTH

3. 3 Research Findings 5 research projects The Organic Growth Index ( “OGI”) The Characteristics of High Organic Growers (“HOGS”) The Challenges of Managing Private Company High Growth The Myths of Growth The Risks of Growth

4. WORKING ON YOUR BUSINESS Peter Drucker said it concisely, clearly, and compellingly: “The sole purpose of business is to serve customers.” 4

5. WHAT DO CUSTOMERS WANT? All customers no matter what you are selling want the same 3 things:  Defect-free products & services  On-time delivery  Great caring service 5

6. CUSTOMERS WANT  Consistency  Reliability  Ease of doing business  Responsiveness  Needs met 6

7. SUCCESSFUL BUSINESSES  FOCUS on what they can do very, very well “2 inches wide, 2 miles deep”  Are EXECUTION CHAMPIONS  Have a CONSTANT IMPROVEMENT DNA- they get better each day 7

8. HOW?  PROCESSES – the recipes, checklists, the how to do every step in the customer experience  Better, Faster, & Cheaper becomes the objectives everyday  Execution is the blocking & tackling of business  Business is like farming 8

9. YOUR DAILY GOAL  FOCUS everyday on doing what you do EXCEPTIONALLY WELL 99% of the time and quickly fix the other 1% in a caring apologetic manner.  Quality comes first  Reputation comes first  Customers and employees come before you 9

10. THE BIG “W”- WHY YOU?  WHY is a customer going to buy from you?  What do you do differently than the competition that really matters to your customer?  What makes you different?  What does your customer need? “Listen till it hurts” “You can’t listen while your talking” 10

11. DIFFERENTIATORS  Quality  Speed  Ease of doing business  On-time and quality guarantees  Great service  Reliability  Consistency 11

12. YOU DO NOT NEED TO HAVE  Unique products or services  Most innovative products  Cheapest products But you must have EXECUTION EXCELLENCE & GREAT SERVICE That comes from people, processes, and leadership. 12

13. CUSTOMER CENTRICITY To be successful, you must have: CUSTOMER CENTRICITY & HIGH EMPLOYEE ENGAGEMENT & A HIGH PERFORMANCE CULTURE 13

14. EXECUTION EXCELLENCE TOOLS  Morning & afternoon huddles  MBO: Manage by Objectives daily  MBE: Manage by Exceptions daily  “Leave a fire extinguisher” behind  Measure what is important  Reward what is important  Communicate, communicate, communicate 14

15. THE SECRET SAUCE 15 EmployeesClients $$$

16. ENABLING EXECUTION EXCELLENCE  The Outback Way: “Teach don’t punish”  Teams not stars  Money is not enough  Celebrate success  Help people be all they can be  Everyday is SHOWTIME!!!  Cross-train: no single point of failure 16

17. THE 4 PRINCIPLES OF LEADERSHIP  Take care of your people  The Golden Rule  Lead by example  Always do what is right It is NOT about you – it is about THEM. 17

18. 4 WAYS TO GROW YOUR BUSINESS  Improvements: Better, faster, cheaper  Innovation: Doing something new  Scaling: Doing more of what you are doing  Strategic Acquisitions 18

19. 4 WAYS TO SELL MORE STUFF  Expand geographically  Sell complimentary or adjacent products to existing customers  Sell complimentary services to existing customers  Deliver a scaled down version to a different customer segment 19

20. WAYS TO BECOME MORE PROFITABLE  Technology to increase quality, efficiency & productivity  Just-in-time inventory  Reduce waste & mistakes  Discounts for fast payments- get cash faster  Reduce employee turnover  Preferred provider networks to reduce costs  UPS model 20

21. THE KILLERS OF BUSINESS  Commoditization  Complacency  Arrogance  Taking your customers & employees for granted  Losing your personal edge-laziness & lack of personal discipline  Bad quality; bad reputation; bad conduct 21