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The psychology of a turnaround

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in Best-Practices Leadership,Leaders & Managers

Standing in the business books section at a bookstore, Chip Conley, founder of Joie de Vivre Hotels, discovered the book that would save his business.

In those post-9/11 days, his chain of Bay Area hotels was suffering. Revenue per available room had collapsed by an average of 52%. And margins were being squeezed by online purveyors like Priceline.

So he sought answers from the business experts, but instead he found a bolt of inspiration in a book by midcentury psychologist Abraham Maslow.

According to Maslow, humans have five levels of needs. Beginning with the most urgent, those needs are physiological, safety, belonging, esteem and self-actualization.

 

 

 

 

 

 

 

 

Conley’s eureka moment led to writing his own book (PEAK: How Great Companies Get Their Mojo from Maslow) and to a rewrite of his company’s business model. Here are a few of Conley’s new guiding principles, based on Maslow’s five levels:

• Great companies give employees a calling, not a job. Conley recalls a conversation with Southwest Airlines CEO Gary Kelly. In explaining why Southwest wouldn’t implement a baggage fee, like the other airlines, Kelly pointed out that flight attendants would start feeling like baggage handlers. They’d be unhappy.

“We want our employees to feel that their job is a calling,” he said. “And the people who most have to feel that way are the ones closest to the customer.”

Take care of customers’ higher-level needs. Otherwise, you’re pro­ducing a commodity, and you’ll lose them.

Many hotels offer clean, safe rooms. That’s simply a commodity. What Conley offers is a hotel that matches “how certain customers would describe themselves on a good day,” he says.

“Everyone in our business used to talk only about demographics,” Conley says. “We focus on psychographics.”

CEO should really stand for Chief Emotions Officer. Positive emotions spread like a flu virus, so Conley believes in managing them.

For example, he asked that all senior management meetings end with a leader describing someone who had done great work the week before. Right after the meeting, an exec would seek and thank the employee.

It’s not hard to imagine the ripple effect: Being thanked gives the em­­ployee an injection of positive emotion. That affects how he treats customers, co-workers, maybe even family. Meanwhile, the person who does the thanking also feels a sense of pride.

Lesson: We’re all human, yet, says Conley, “It’s the most important, neglected fact in business.”

— Adapted from “Chip Conley: The 5 Things Everyone Wants From You,” Eric Schurenberg, Inc.

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{ 1 commentsῂ read them below or add one }

Sam Cannon March 28, 2012 at 2:59 pm

Maslow had some gems, but the real gold mine is his “Eupsychian Management” where he starts to set up some tactical vectors. It’s still a stretch for a capitalism gone cancerous, but it’s a wonderful read.

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