Harvard Business Review of Fixing The Game
Fixing the Game by Roger L Martin (Harvard Business Review Press, 2011)
Roger Martin wrote this book to compare how a sports franchise (NFL) modified its game in order to delight their customers and how this could also be achieved in business through changing the rules of the game to fix it. In essence this book is about what Capitalism can learn from the NFL.
A great insight in this book is about delighting the customer. An example was given from the recent BP Deepwater experience. BP had a public relations nightmare when Deepwater started spilling water into theGulf of Mexico. The BP position was to protect shareholders first and thereby tried to explain and manage the situation with the shareholder in mind. One of the statements made that theGulf of Mexicois very big…therefore a ‘small’ spill won’t have significant impact. BPs reaction can be traced back to their values statements that says that BP will be competitively successful and performance driven. This was reflected in the Deepwater stance. What is interesting is that this action didn’t protect their share price which fell by 50%, however it did cost the CEO his job.
This is a totally different approach to Johnson & Johnson who in the 1980’s found that their Tylenol product had been spiked with cyanide and cause the death of a significant number of customers in theUSA. J&J went public quickly, removed the product from the shelf and developed a new tamper proof bottle. While this did affect sales in the short term it created increased value in the brand.
Why was there a difference? It is due in part to the J&J credo which says:
We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services…We are responsible to our employees, the men and women who work with us throughout the world…We are responsible to the communities in which we live and work and to the world community as well…Our final responsibility is to our stockholders. When we operate according to these principles, the stockholders should realise a fair return.
Another interesting principal is how organisations game the game to get targets that benefit shareholders through quarterly expectations. The parallel is drawn between the share market and the gambling market attached to sporting codes. This is defined as the expectations market where people are betting on an outcome and without rules and regulations people will try to game the game. The NFL corrects their game by tweaking the rules to keep customers delighted and this tweaking removes some of the gaming. Martin recommends that this should occur more in the financial markets as well to avoid further GFCs.
Martin is recommending that organisations set out to delight the customer and for regulators to tweak the game so that it delivers real outcomes based on real results. There are also tangible links between his theory and servant leadership.
In order to fix the game Martin has four final recommendations:
- Right incentives to Executives to drive the right sustainable activities
- Tweak the rules of the game to ensure point 1 occurs
- Rethink the role of Boards, especially the independent director
- Provide a framework that enables companies and Executives to think about their responsibilities beyond the shareholder
And remember we can fix the game ourselves by delighting the customer and putting them first…that way we can ensure our ‘real world’ success.
‘Fixing The Game’ by Roger L. Martin is available from Amazon and HBR.