Putting the Client Where He Belongs: Front and Center

From its founding, any business’ raison d’être is to provide customers with a product and/or service that improves their lives in some way. When a business consistently does that well, it succeeds and thrives – as well it should.

      Conversely, when a business loses that impetus, when its focus shifts away from its customers’ needs and, instead, concentrates on the money it makes and a desire to make more, its demise is in sight.

      Such appears to be the case with Goldman Sachs. 
      Wall Street (and beyond) is abuzz this week on the heels of a provocative March 14 New York Times Op-Ed by Greg Smith titled “Why I am Leaving Goldman Sachs.”

      In it, this vice president, a 12-year veteran of the firm, explains that the company he came to know and love was a culture that “revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years.”

      Where is Goldman Sachs today, and why is this man so disillusioned that he has decided to leave? What changed? According to Smith, “The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm … you will be promoted into a position of influence.”

      He adds, “Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most money off of them.”

A Common Tale, Alas

Much the same story can likely be told of some of the big marketing and communications agencies today. A lot of the effort they expend seems to be on expanding their service offerings to their clients, not necessarily because the clients need them but because more service means higher retainer fees and greater agency profits.

      The initial assignment, however small, is seen as a foot in the door to sell ever more services that they may or may not need – like the proverbial door-to-door salesman. I know some clients will automatically push back, telling their agency to concentrate on delivering the promised service. And they’re right to do so.

      The correct way to grow an agency’s business with a client is first to deliver the service for which it has been contracted. When the delivered results meet or exceed the client’s expectations, it’s likely the firm will be invited to provide additional services.

      Of course, it’s a delicate dance because, in the course or working side-by-side in the client organization, other client challenges may become apparent, which the agency is prepared and able to address. If the agency’s honest motivation is to help the client deal with the problem rather than to “grow the business,” there’s a good chance it will be invited to do so – often without having to ask for it.

      As Smith knows, a service-oriented business should bring to bear appropriate and necessary additional services to their clients, not principally for the supplementary revenue they might afford but rather to provide those clients with complete solutions to their challenges.

      My experience has always been that when you provide great service to your clients, when you help them achieve or exceed the results they desire, they are more than happy to reward you with more opportunities, and they are pleased to know that you can make a profit. 

      On the other hand, when clients are seen first and foremost as a source of revenue and profit rather than as a firm's core driver, the clients sense it. And frankly, such a firm's ultimate demise is predictable and justly deserved.

Leading by Example

The larger question is whether the right or the wrong attitude is embedded in the culture. When leaders of the firm talk of little else but profitability and revenue streams, those on the lower rungs of the ladder correctly sense where the organization’s priorities lie and, by extension, what gets rewarded.

      Smith understands this truth: “These days, the most common question I get from junior analysts about derivatives is, ‘How much money did we make off the client?’ It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst … doesn’t exactly turn into a model citizen.”

      I believe, too, that in 10 years, some of those junior analysts will be vice presidents there perpetuating its poisonous culture – that is, if Goldman Sachs is still in business.

      And that’s the question that emerges from this Op-Ed: will Goldman Sachs learn the wise and timely lesson that Mr. Smith is offering them and survive? Frankly, it’s a pretty simple warning: “I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”

      He adds: “It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you.”

      So when a business loses touch with its culture, when its people cease following the guiding beacon that led the firm through 143 years of success, what should it do to regain its footing? Smith advises that it should “…make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist… And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm – or the trust of its clients – for very much longer.”

      Wise counsel.