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If your company is a traditional company caught in the spiral of not doing enough to keep talented employees, having to engage in price games and other marketing ploys to keep any semblance of a customer base, and find your investors helping you financially plan to cover their short-term interests, then this book might be of interest to you. Frederick Reichheld, the author, is a principal at Bain & Co, a Boston consulting firm.
Loyalty, or high retention of these key stakeholders, is a key to the success of an organization. It is the opposite of "churn," the bane of the bureaucracy. Reichheld makes the case that long-term stability decreases costs of replacement, captures the learning that makes interactions easier, and increases the value that can be delivered from the organization.
The author writes about the traditional company caught in all the traps we have come to love over the years-love to write about, that is. As managers, we intend one thing and, lo and behold, there are some unintended dysfunctional results that come up and bite us. We intend to be a low-cost producer and watch "head count" carefully. However, we didn't intend that this low-cost strategy would cost us talented employees who weren't treated as part of a "head count." We also didn't intend to have customers leave because they refuse to deal with inexperienced employees, and-the double edge of that sword-employees whom they didn't know.
So, in these firms that did not learn about the unintended dysfunctions of their strategies the situation became even more complex as they tried to address these unintended results as ends in themselves. The author is in the middle of this game. He provides all kinds of antidotes to the unintended results. For example, the finance guys play the heavy in this book-as they should, by the way. The financial "mental model" is cost based and related to what shows up on the balance sheet and income statement. Reichheld tells us how to play the game when managing from those statements. The game is to build rigorous...