Revealing Hidden Threats to Your Business

I grew up in a cold climate in the northern United States. I learned to drive in snowy and icy conditions. My parents taught me to be cautious whenever the weather conditions were untenable. I was well prepared to drive in threatening conditions and always proceeded carefully to avoid an accident.

Unfortunately, we are not always aware when threatening conditions exist. One example of a hidden threat on the roads during the winter season is black ice; a transparent layer of ice that freezes with few, if any, air bubbles trapped inside making it virtually invisible.

Hidden threats like black ice are not unique to drivers. In the business world we can unsuspectingly conduct “business as usual” only to take a hit when we discover a hidden threat through a SWOT analysis a little too late. Wouldn’t it be great if we had a better way to reveal hidden threats to our businesses so that we could avoid sliding toward disaster?

Harvey David, author of Customers – The Hidden Threat To Your Business: How to Stop Your Greatest Asset From Becoming Your Biggest Liability, states that altering the supplier/customer relationship is “an unstoppable force for change.” In his book he describes a shift in the balance of power from supplier to customer and identifies seven reasons why companies are under real threats today. These seven include:

The shift from supply to demand economics
The commoditization of markets and customer promiscuity
The impact of the web, peer-to-peer computing, and other technology developments
Market clutter and the intensifying battle for customer attention
The move from push marketing to permission marketing
Legislation that sides with the customer
Values and social changes that are molding new forms of customer behavior

Knowing about the threats that exist can cause more than a little anxiety. This anxiety is not necessarily a bad thing according to psychologist Robert H. Rosen, author of Just Enough Anxiety. Rosen states that anxiety is an inevitable part of life and how we use it is vital to our business success. If we let it overwhelm us we will panic; if we run from it or deny it we will become complacent. However, Rosen asserts that we can use anxiety in positive ways and it can become a powerful force that enables us to uncover the hidden drivers of business success.

Over the course of his 35-year career as a psychologist, entrepreneur, and CEO advisor, Rosen has met with more than 250 top business leaders from around the globe. One thing these leaders agree on is that the very nature of business is changing, almost on a daily basis. In today’s world embracing change is essential for business survival. Making changes in response to customer needs and perceptions is crucial. According to Rosen, leadership practices that ignore the human side of business are outmoded.

So, we know we need to change but what changes should we make? There is no answer to this question that will fit every business. In fact, the only way to know what changes your business needs to make is to be knowledgeable of the needs and perceptions of your own customers and the only way to gain this knowledge is through scientifically sound customer surveys. Let’s look at an example of how scientific surveys can reveal hidden threats in a customer base.

Recently the National Business Research Institute (NBRI), conducted a customer survey for a company that provides wireless mesh networks. The survey, constructed using rigorous scientific standards, revealed that this company had many hidden dangers in their customer base. All of the items on the survey were subjected to a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. These ratings are obtained by benchmarking the responses of the company’s customers against customers from other businesses in the same industry. To be ranked as a “strength” a survey item must have a percentile ranking at or above the 75th percentile. Unfortunately, the analysis revealed none of the items scored in the strengths ranking for this company; instead 34% of the items ranked as weaknesses, scoring between the 25th and 49th percentiles of the benchmarking database. Some of the items scoring as weaknesses included:

I expect to continue buying products and/or services from this company.
I would provide a good recommendation for this company if called upon to do so.
The company’s personnel are motivated to do the right thing.
The company’s personnel exhibit integrity.
The company provides me with accurate information.
The company makes it easy for me to do business with them.
The company’s personnel exhibit professionalism.
The company’s personnel deliver what is promised.
Warranty repairs are handled satisfactorily
The company’s shipments are accurate.
The company’s personnel are courteous.
The company’s complaint management is satisfactory.

Below average scores on the above items is certainly a disconcerting result. However, being aware of these threats is the first step toward intervention and change. If the company’s top executives had “buried their heads in the sand” and refused to take the necessary steps to become more aware of their customers perceptions, these attitudes could have had a significant negative impact on the business.

The long list of items above is disconcerting and it can lead to the bewildering question, “Where do we begin?” It is obvious that change is needed to improve customer perceptions, but with this many items in need of improvement it may seem impossible to determine which items to prioritize. Fortunately, a Root Cause Analysis (RCA) was also performed on these survey items. This statistical procedure identifies the few items that serve as drivers of overall customer satisfaction and intent to return. The RCA identified that the following two items were driving customer satisfaction:

The company’s products are competitively priced.
The company’s products are worth the money.

Three items were driving the customer’s intent to return for future business. These items included:

The company’s shipments are accurate.
The company’s personnel are courteous.
The company makes it easy for me to do business with them.

Now this company has a much more manageable list and powerful knowledge needed to bring about change to improve customer perceptions and increase profits.

If you once again peruse the items above that ranked as weaknesses, as well as the items that served as key drivers, it is plain to see that customers are not the only “human side of business” that we need to be concerned about. Perceptions cannot be changed on any of these items unless you change the behavior of employees and employee behavior is influenced by employee attitudes. Thus, revealing hidden threats to your business necessitates conducting employee surveys as well. Let’s look at another case study in which survey results exposed hidden threats.

NBRI conducted an employee survey for a company that sells fastening elements as well as providing engineering and logistical services for these products. Like the company discussed earlier, this company had no items ranking in the strengths category. Instead, 57% of all of their survey items ranked in the weaknesses category! Some of the items ranking in this category included:

I have the training to do my job.
I trust management.
I understand what is expected of me in my job.
Overall, I like my job.
I have access to the information I need to do my job.
I have confidence in the leadership of this company.
Managers listen to employees.
Employees want to do a good job for the company.
I plan to be working here five years from now.

It is obvious that below average ratings on the employee survey items above could have a negative impact on customer perceptions. Fortunately, the company knows exactly which employee perceptions need to be improved to bring about maximum change. The RCA identified three drivers of employee perceptions. They were:

My manager motivates me to be successful in my job.
My manager treats me fairly.
My manager tells me when I do my work well.

If employee perceptions are improved in just these three areas, the company should see improvement in the 67% of the survey items they drive. Positive changes in the employees’ attitudes should bring about positive changes in the customers’ attitudes.

For our companies to be successful we cannot keep playing the same game when the rules keep changing. The success of a company is directly related to its employees and customers. Since people’s perceptions are dynamic and their attitudes change over time, what worked to improve perceptions and attitudes yesterday will not work tomorrow. In addition, instruments of change that succeed in one industry will not succeed in another. To thrive it is essential to regularly survey both your customers and your employees to reveal hidden threats to your business success. If you would like information on how NBRI can assist you in revealing hidden threats to your business, contact us today at 800-756-6168.

Cynthia K. S. Reed, Ph.D.
Organizational Psychologist
National Business Research Institute