A Lesson from Tom Watson, Jr (former CEO of IBM)

Lessons from History
There are lessons in history. You all know that already, so I won't plow into quotes and metaphors to convince you of this. So, if we know this, why is it so hard to learn these lessons and incorporate them into our business practices?

The answer is, at least to me, we are looking for easy solutions or some of us are looking for the next best idea. And then there are some others who believe that if the idea or strategy is more complex, then it's gotta be better.

The Question Most People Get Wrong
Let's start with a simple question. What is the purpose of a business?

Many people answer, "To make a profit."

I don't think this is the correct answer. It is the correct answer to many analysts on Wall Street.  However, the truly great analysts will tell you that for the short-term this answer may be true, but the long-term? No way. These analyst look at the long-term. They want to see long recurring revenue streams and good margins.

I like Drucker's answer to this question. Drucker said, "The purpose of a business is to create and keep a customer." I think this is the right answer, in spite of what some executives think about profits and orders and meeting quarterly pressures.

Keeping a Customer--The 25-Year Study: Clientize
The keeping part of "keeping of a customer" is the main theme behind a study I have been conducting for the past twenty-five years. This work has culminated in the book titled "Clientize."

My study started with the simple question to executives, "What is it about this firm (the one you have chosen to be your long-term partner) that you chose them over all the others?" I found clients' buy from certain providers and vendors because of the professionals handling their account and the concern they had for their clients' business and professional interests.

Winning Professionals: Winners Buy From Winners
First rate businesses buy from first rate winning professionals. Winning professionals are those who are looking out for the client's interests. How the professionals demonstrate that they are looking out for their clients is what clients revealed to me in my face-to-face discussions. I took a lot of notes and taught these ideas to other professionals who worked with me. This study and the clients answers are captured in the book Clientize. You can get it from Amazon or through the link on my website which is over the left of this post--just click on the book.

Here is what Thomas Watson, Jr., the former CEO of IBM said about what IBM does, "We make computers. But we sell improved profits that our computers can make for our customers."

In the day, sales people used "features and benefits" type sales techniques. It went like this, "We have a faster processor (feature), which allows you to get your work done in a shorter amount of time (benefit)." And so this is how almost all of IBM's competitors sold. It was easy to point out that IBM's products were inferior in terms of feature based technology to prospective customers. And yet, IBM dominated the industry. In the hallowed halls of corporate boardrooms and government agencies, the message that everyone heard in their heads was, "Nobody ever got fired from buying IBM." And so they did.

Winning Professionals Focus on the Client's Interests
Why was this? Why did executives buy from IBM? Why did IBM dominate the computer industry? Because IBM got it right. IBM focused on the customer and their needs. The customers' needs were and oh-by-the-way, still are, profits. IBM sales people didn't focus on their own profits, they focused on the customers profits. IBM got it right years ago, while the other smaller players, focused on the speeds, and the latest technology, IBM focused on what mattered to their customers--and the safe bet became "buy IBM."

Focus on your customers needs--not yours--and you will turn customers into longtime clients. And maybe, you will be as successful as IBM.
 

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