A Cautionary Tale at Stanford Business School

by | Nov 2, 2022 | Business and Finance, Leadership

Stanford Business School invited me to speak on one of my book tours. Universities have comprised a good portion of my speaking engagements, and the connection with students fills me up in a way that is incredibly gratifying. It may be a reason I wrote my most recent book, The Little Book of College Sobriety, which amplifies the stories of college students and other young adults. 

On the road again visiting universities with this book, I’ve been thinking about some of the most formidable lessons I’ve shared when speaking to students and faculty over the years. What follows is the formidable lesson I shared at Stanford.

Great leaders are connected – to their shareholders and to their boards of course, but what matters most are the connections to one’s customers – the users of your products and services, whichever field you’re in.

A Big Mistake

I learn best through my mistakes, and I made a big one early in my career because I didn’t understand the power of this connection. The mistake caused a potential gem of a company to go under. It wasn’t my mistake alone, but I agreed with a decision that spelled doom for a business. All because we weren’t close to our customers.

I was hired at Z Channel in Los Angeles right after my time at HBO. Z Channel was a pay programming channel that was the darling of Hollywood because it featured all movies all the time—back then a novel idea. There were first run hits, foreign films, director’s cuts, blockbusters. The paying audience was too small to make the business profitable, and I was part of a new ownership team dedicated to turning that around. Management had access to first run sports rights, like Dodgers and Clippers games. We figured: surely adding pro sports to the movies would broaden our reach and get us new paying customers!

We never asked our viewers what they wanted, just arrogantly assumed they would either be apathetic toward sports and ignore them, or voracious and devour them. The voracious market would be our new paying customers.

We never did a single focus group or survey or other research to talk to our current viewers and better understand them.

It’s not a poor business instinct to want to offer your customers more—a bigger, richer, more robust product experience. It’s just not the right first instinct. The right first one is to dive deeply into the wants, needs and passions of your customers, regarding them as partners as you co-create your products and services. Have sure footing on what works and keep doing it, then envision a future with new offerings, and get feedback on those. Product choices are ultimately the organization’s call, but why not gather all the intel you can before making it?

How The Story Ends

I bet you know how this story ends. Adding sports was a disaster. The new sports customers couldn’t figure out why say, a Fellini film followed a Dodgers game. Just as one little example. The movie lovers took to the media to express their outrage, and many cancelled their subscriptions, feeling betrayed. Ultimately Z Channel folded.

I don’t know if another strategy would have saved Z Channel. But I do know that as long as you regard your customers from some distant place, without a heartbeat, you’re doomed to fail.

Great leaders get close, and stay close to their customers.



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