The erratic stock market has been roiling investors around the world, but in an interview, former Schwab executive Mark Thompson was undaunted, pleased with his recent investments in gold, as well as the success of his book, Now, Build a Great Business, which addresses building businesses in down economies.
Co-written with best-selling author Brian Tracy (find more from Brian Tracy on SUCCESS.com), the book is a step-by-step guide to using economic downturns to expand your business, develop new products and reconnect with your customers.
SUCCESS: How is this book different from other books about building businesses?
Mark Thompson: We’re very practical and wanted to get away from theory and go into practice. For people already in business, we wanted a checklist of three steps that would allow you to get right down and do what you need to do Monday morning. For someone going into business, we wanted to show how to build a great one by classifying what you need to do that, such as focusing on hiring the right people and what to measure in terms of performance.
Why did you emphasize “now” in the title?
MT: Things are tough. Do not wait until things get better. People have this mentality that they will wait until the economy picks up.
The best companies that have been around have been through tumultuous markets like this one. Honestly, of the companies that have been the best for 20 years or more, they started in pretty tough circumstances like those we’ve experienced more recently. Many of them are listed in the book. We have everything from MTV to Trader Joe’s to FedEx to Walt Disney to IBM. All of them started during a tough cycle in the marketplace. Why? Because, ironically, in a tough cycle they can get a lot of resources they wouldn’t have normally.
What three things do you need to be successful in business?
MT: One thing that tends to be absolutely missed, but is key, is to make progress measurable. Be specific. Make a goal that’s clear to your mom, and make sure a 10-year-old kid could tell you how close you are to achieving it. It gets very fuzzy in organizations. Decide what you clearly want to achieve and make it measurable so everyone can agree on whether you’re making it or not.
Another really critical step is getting in the customer’s shoes. Get out there and mystery shop all of the competition. Honestly mystery shop your own stores.
I’d say a third area would be interacting. The whole idea of doing it now means understanding that the customer is scared too and reaching out. The one thing that is observed in research is that silence is not golden. Even if you don’t have an answer during a crisis, people never expect the silence to be good news. You need to be stepping up instantly and being responsive.
We call it the three Rs. When something goes wrong, first be responsible. Say, “Management will take care of it,” and handle it as promised. Second, don’t just be responsible but responsive. For example, if a person who cared about you asked, “Do you love me?” and you responded automatically with a yes, your credibility would go well. If someone came to me and asked me the same thing and my response was silence, they would read 10,000 bad things into that silence. Third, reliable does not mean changing the rules when things get bad, saying, “We never thought it would get this bad, so we’re going to change what we promised before.”
Do those things right, and you will win market share. Customers always want their problems solved. Sometimes they don’t mind if you messed up badly if you solve it well.
Any advice to business owners trying to survive this economy?
MT: I remember being with Schwab—I was part of the team that took it public in the ’80s—it [the stock] dropped, which wasn’t unlike what happened in 2008 and then again this year. Basically we really saw that in those circumstances, companies will retrench. They will cut customer services and make clients feel more isolated. You can’t save your way into growing a business. You need to get closer and closer to the customer, and in tough times you can differentiate better. At Schwab—a lot of other brokers were not answering the telephone—and one of the ways we got better when times were tough was by answering phones faster, making our systems better and adding more products. In fear mode, companies retrench. If you want to win customers, you probably want to win customers in a tough market.
You’ve spent a lot of time interviewing highly successful people about their successes. What did you learn from that experience, and how did it impact this book?
MT: One thing I didn’t mention is that you need business skills to run a business, but it really makes a difference if you give a damn about what you’re selling. It sounds Pollyannaish, but when things get tough, something you daydream about secretly that you would do for free can make a huge difference in terms of your performance and your competitors. If you’re halfhearted in what you do, there are 200 competitors waiting to take it from you. Passion really matters when things get tough, and you need to be realistic and come back to this.
Those are the things that make you better than the last guy. They make you run faster and work longer hours. You’ll live longer and have less sick days if you’re doing something you really care about. There’s plenty of research about that.
And people who are extremely successful—and we did research globally—succeeded for at least two decades. They’re not one-hit wonders. They’ve been in crappy markets like this one, and they’ve always invested during tough times in their customers. They found the best growth opportunity when everyone was running to retrench. Invest in employees who are as good or better than you. It’s tough, but you will find people to buy into the same cause and mission.