Bain: The Good Old Bad Old Days

Bill Bain founded Bain & Company in 1973 along with a handful of colleagues from the Boston Consulting Group. In its first decade or so, Bain grew rapidly—at an average annual clip of 50 percent—largely through word of mouth in the CEO community, which appreciated Bain’s good counsel especially in the realms of strategy and cost-cutting.

I suspect that when I applied for a consulting job at Bain in 1977, I might have been the only person from my class at Harvard College to do so.⁴ Signing up with a swashbuckling four-year-old company wasn’t a particularly safe choice, but I sensed that this was a place where I would learn a great deal in a hurry. On that score, I was right. Unlike other consulting firms that were hired to work on narrow projects, often specified by the client—and not always defined well—Bain focused on the profitable growth of the whole company, which required building strong relationships with CEOs and other senior corporate leaders. For a young consultant, Bain provided an incomparable opportunity to have a substantial impact on major companies while you learned a ton and could earn good money.

What was Bain doing right back then? From my humble vantage point, it seemed like the firm’s leaders saw their primary duty as building a community of extraordinary teams that could do great things for our clients. In our brightest years, our leaders focused effectively on ensuring that their teams were having a meaningful impact—helping clients generate superior results.

Bain understood from day one the central importance of delivering value to customers. Customer loyalty was the only way the firm could grow. It was a point of pride for us in our early years that we had no marketing. For many years, in fact, we didn’t even have business cards. We believed that sales and marketing expenses were a tax that a company had to pay when it failed to deliver remarkable outcomes to customers. As a small startup firm, we knew this was a tax we could not afford, so we focused our energies on helping our clients achieve remarkable results. And I mean focused: we had no senior partners who served primarily as rainmakers, which would have meant that their time would have been spent acquiring new accounts rather than serving customers. None of us spoke at conferences; we didn’t schmooze at industry gatherings. The only reason we grew so fast was that our clients loved our work so much that they bought more from us every year and referred us to their friends and colleagues.

Bain’s focus on earning customer loyalty did not waver through the years, but something else did. Early on, our founders preached this gospel: Impact, Fun, Profits. Down in my basement, I still have a bottle of champagne from an early firm celebration. It sports a custom-printed label featuring those three words—Impact, Fun, Profits—arranged in a mutually reinforcing triangle. It all made sense to me. When you serve clients so well that you have a major impact on their success, that serves as the foundation for a fun work experience and generates profits for the firm, which in turn makes the whole process sustainable.

But the early formula came up short in terms of consistently honoring employees. I noticed that too many departing employees were treated as losers or even traitors. The founders believed that the employee’s job was to make Bain great, and those defectors were failing in that mission. What I came to learn over the years is that truly great leaders are committed to helping employees lead great lives, and the gulf between these two philosophies gets clarified when the going gets rough. That’s what happened at Bain. The leaders talked a good game about the vitally important “extraordinary community of teams,” but when the business hit a downturn, those founders punched the layoff button. Newly hired consultants and longtime partners alike were unceremoniously dumped in order to keep the founders’ bonus pool healthy. To me and other junior partners, it began to feel like our leaders had jettisoned “Fun” and “Impact” in favor of profits. It seemed that caring for the happiness and well-being of team members and building a community of extraordinary teams were no longer serious priorities.

It soon became apparent that our founders’ primary purpose was to maximize their own personal wealth. The troubles began in 1984, when Bill Bain and his senior colleagues decided to cash out their holdings in the consulting firm to fund investments in their new spin-off, Bain Capital, and another similar entity called Bain Holdings. That’s when they saddled the consulting firm with some $200 million in debt to fund the employee stock ownership plan mentioned above, a burden that began slowly driving the company into the ground. This process transpired in utmost secrecy so that nobody at Bain outside of the leadership inner circle understood the transaction or its implications.

All of this was perfectly legal, of course. Bain was a private company, owned by a small, tight-knit group of founders who prized their privacy and steadfastly refused to share data on the firm’s revenues or profitability (even with us junior partners). They had every right to embrace maximizing shareholder value as their North Star, and given that it was their shares whose value was being maximized, I’m sure it all seemed appropriate to them. But when leaders focus on maximizing shareholder value—especially for their own financial gain—they cede the moral high ground. When teams no longer believe that their firm is guided by a higher purpose, they are no longer inspired to do remarkable things to enrich the lives of their clients.

Through their swelling ambitions for Bain Capital and Bain Holdings, Bill Bain’s inner circle got distracted from the core mission of helping teams deliver great results for clients. They kept secret the economics of each client relationship, practice, and office, which impeded us from making wise decisions for the business and understanding the depth of our challenges. This breach of trust between the founders and the younger generations—who by the way were the ones working every day on the front lines with our customers—resulted in defections of some of our most talented colleagues. The firm’s woes were further compounded by the crunching recession of 1989.

By 1990, when Mitt Romney agreed to try to rescue Bain, the firm could barely meet its payroll.

Insights and Innovations

We did manage the long climb back up out of our deep hole. Despite Goldman Sachs’s bleak assessment—a zero percent chance of success—we were able to resurrect the firm and get it back to its roots: Impact, Fun, Profits. Surely a large part of the credit for that turnaround belongs to Mitt Romney, who immediately shared profitability data so every office around the world could adjust tactics and priorities. Mitt also scheduled our partner meetings for Saturday mornings in order to free us up to spend our weekdays fully engaged in client work (and symbolically remind us that dealing with our internal issues should not get in the way of our client work). As I look back, Mitt stands out as one of the most talented leaders I have ever encountered. But our whole team played important roles, developing a number of insights and innovations and building client relationships that enabled the firm once again to be a truly great place to work, and thereby ensuring that it could once again attract and retain outstanding talent.

Let’s begin with those insights (not necessarily in chronological order but instead organized for clarity and their relative importance in the march toward becoming a great place to work). For many years, Bain had conducted annually a so-called employee engagement survey. As we rebuilt the company, most of us agreed that this annual process, while useful for spotting our biggest challenges, had to be augmented with more frequent real-time feedback to help teams make better decisions and gauge progress day by day and week by week. One challenge: through a long string of well-intentioned tweaks, the annual survey had ballooned to more than a hundred questions. So, a creative leader in our human resources department took on the task of distilling the survey down to its essence. After lots of statistical slicing and dicing, he discovered that more than 80 percent of the variation in team member happiness could be explained by how much team members agreed with a single statement: I feel valued, motivated, and inspired.

Over the years, I have refined that to read I feel like a valued member of a team that wins with its customers. For a time I thought that “I feel like a valued member of a winning team” would suffice, but I think it is wise to remind everyone that the only true wins result when the customer is happy. Earning a valued role on a team that consistently delivers on that mission—and receiving appropriate recognition and rewards—is what motivates our people. So, to get Bain back on track we structured ourselves into very small teams (three to five members, typically) in which all members depended on each other. We worked hard to develop outstanding team leaders who exemplified our core values. And we developed a rhythm of practical feedback and learning processes to help teams evaluate their progress.

We embraced the idea that the center—headquarters—existed primarily to serve the field. (Most organizations have it the other way around.) Henceforth, the primary duty of our most senior leaders would be to help frontline teams deliver great results for clients. One of the inherent challenges here, we knew, was to keep our most talented and accomplished people out in the field directing the good work of those frontline teams: working directly with clients. In most companies the most talented and ambitious people get promoted, move to headquarters, and climb their way up to the C-suite. On their path to those corner offices, they are awarded powerful jobs running functional silos, which inevitably means that over time they tend to become removed from customers. This distance from the day-to-day service of customers makes it very difficult for them to know what decisions and policies are getting in the way of delivering great customer value or how best to help teams deliver great results.

Ultimately, we solved that problem by eliminating headquarters. We elect a managing partner every three years, and although an individual can serve up to three consecutive terms in that role, that has yet to happen. The managing partner continues to work in his or her home office, and we therefore can operate with no official headquarters.

In the same spirit, we ask our customer-facing leaders to play active roles in vital functions such as recruiting and training. For most of the major administrative roles—such as office head and practice leader or member of the compensation and promotion committee (which often represents the pinnacle of power in typical professional firms)—Bain reinforces the servant-leadership nature of these roles by rotating partners through these positions while they still devote at least half of their time to directly serving clients.

We compensate with this same philosophy in mind: client work generally pays better than administrative work. Again, this starts at the top. As Mitt prepared to turn over the firm leadership to the next generation of leadership, we agreed that the managing partner, as a servant-leader, should never receive the highest compensation in the firm. His or her job is to help partners deliver outstanding results for clients, not to boss people around and make the important decisions for them. I’ve emphasized the point here because it’s a core idea: The primary duty of our senior leaders is to help our frontline teams achieve success for their clients.

The Power of Doing Huddles Right

We developed a process of regular team huddles aimed at enabling teams to gauge progress, spot problems early, and reset priorities as needed. Of course, lots of companies use huddles, but in my experience Bain huddles are different from most. Much like agile scrums, they are quick, typically held weekly or biweekly, and focus on helping the team identify, prioritize, and solve its own problems/opportunities. Our London office pioneered their development during a time when that office was really struggling with unhappy teams and high turnover. Huddles proved so successful that they spread organically, with leaders bringing the process with them as they were transferred to other offices around the globe. Eventually huddles became standard across all Bain offices around the world.

Rather than focusing on sales targets or operational priorities—which already get plenty of attention—our huddles focus the team on the elements we believe can make work great. These elements include, among others, how to handle a tricky client situation, how to protect team members from burnout, and what changes are required to honor our core values. Our teams prepare for huddles by responding to a very brief survey emailed to each team member the day before the huddle. Individual responses remain anonymous, but survey results are shared with the entire team in advance of the huddle. This kind of preparation means that during the huddle itself there’s a shared base of knowledge, and the team can move quickly to the next level of diagnosis and action.⁵

Over time, we’ve seen some very effective process enhancements that have been adopted voluntarily by large numbers of teams. For example, many teams appoint a huddle captain, or ombudsperson, who can help lead huddles without the formal team leader being in the room (or on Zoom). This facilitates follow-up conversations—probing for root causes and possible solutions—that can also remain confidential.

I’ll discuss several other advances in later chapters. For the purposes of this chapter, though, the most important dimension of the huddle is the handful of questions that guide the conversation. Every survey starts with the question “How likely would you be to recommend this team to an interested colleague?” (0–10). This question makes people think about the team’s culture and values, quality of leadership, and ability to win. Next comes a statement (1–5 degree of agreement) about client impact: “Our team’s work adds significant value to the client.” Then we ask team members to rate the sustainability of the workload, their opportunity to learn and grow, and whether they feel respected and included. Finally, we encourage shout-outs for members who have gone above and beyond to help the team succeed. During a crisis or other transformational change, we add a question that helps gauge progress. For example, as the Covid-19 crisis emerged, we added this highly relevant question: “Our case team is actively discussing Work-From-Home norms and making appropriate use of available resources and tools” (1–5 degree of agreement). The survey tool also makes it easy for team leaders to drag and drop additional questions from a library of questions designed to help solve common problems—although always with the guideline of keeping it short.

In the beginning each team ran its own process, using a tool such as SurveyMonkey. Today we rely on a sophisticated digital survey management system that maintains the anonymity of the scores and comments that are submitted by individual respondents so that people feel safe to speak the truth. We do share aggregate team scores transparently to let teams know how they are performing vis-à-vis every other team in their office. Even more important, the monthly partner meeting in each office reviews a summary of the survey results, which rank-orders teams so that any problems are readily apparent. Office leadership reaches out to leaders of struggling teams to offer help and support.

That’s a key point. We have worked hard to ensure that this process helps teams improve rather than being punitive. It’s a way for team leaders who are in trouble to get out of trouble. Of course, our transparent team-scoring system inevitably puts some pressure on low-scoring teams because consultants are naturally reluctant to join troubled teams. On the other hand, as noted, teams with low scores get first dibs on the kinds of office resources that can help turn things around.

I asked one of our new consultants whom I had known since he was a youngster (and a playmate of my children) about his experience with the team survey results and whether he felt pressure from the team leader to artificially inflate the score. He responded that, in all honesty, he had been surprised at the effectiveness of the process. He had worked at another consulting firm prior to getting his MBA and had seen the dark side of team ratings in a competitive culture. He assured me that in his office, at least, the process was working effectively. In fact, the first team to which he was assigned upon joining the firm was one of the lowest-scoring in the entire office. This doesn’t look good, he remembered thinking. So he was surprised when his team leader, rather than hiding or explaining away this result, used it as leverage with office leadership to put his team first in line for additional resources. In this case, those resources took the form of a set of workstations located together to help keep the team, which was staffed from multiple offices, coordinated and connected.

Focusing on Frontline Team Leaders

What single factor has the most impact on inspiring teams to strive for greatness? Of course, there are entire books written on this subject. But at Bain, we came to realize through our own experience that the frontline team leader sets the tone, models the values, sets the priorities, and balances individual needs with team needs. Given this critical importance, we select leaders with great care and invest heavily in their training and coaching. As noted, we developed the huddle process to help our team leaders get coaching from their members. Huddle scores arrive frequently and, like grades on homework assignments, are designed primarily for coaching rather than evaluation.

There’s a second process we use with teams to help them evaluate their leader: a robust and trusted upward feedback process that takes place every six months. What makes it unique is what we ask, how we use that information, and how carefully we designed the process to make it trustworthy. Bain’s approach to teams is somewhat unusual in that our teams disband and re-form frequently, so it is very possible that a consultant will get the opportunity to work multiple times with the same team leader. With that in mind, team members rate every leader with whom they have worked during the previous six months by answering one question: “How much would you like to work with this leader again?”⁶ To provide coaching insights, we also ask respondents to list the things their leader should start, stop, and continue doing in order to improve.

For this process to work, everybody involved has to trust it, which is easier said than done. The team leader has to believe that the correct people are answering the question—meaning, among other things, that those people being surveyed were actually on that team for more than a few days and therefore know what they’re talking about. In addition, the team leader has to believe that each of those “correct” people will get one vote and that those votes will be counted accurately. Equally, the people being surveyed have to be confident that their answers will remain anonymous, so they can be candid without fear of reprisal, and that leadership will use their input appropriately. Finally, leaders must trust their teams to provide thoughtful and constructive feedback. Again, not simple, but indispensable.

At Bain, we use this process to identify the most inspiring leaders, celebrate their successes, and share their best practices. We also provide lots of coaching to help laggards grow and improve. When Mitt Romney handed the reins of the firm to our worldwide managing partner, Tom Tierney, we collectively made a number of important decisions.⁷ One that helped put us on a path toward making Bain a great place to work was deciding that only the leaders who were rated highly by their team would be eligible for promotion. When Tom and I recently reminisced about the Bain turnaround, he reminded me that one of his first tasks as managing partner was to manage out almost half of Bain’s partners—those who were not inspiring their teams. Today the firm’s promotion policy has evolved, but strong ratings on team upward feedback still provide a major asset in a promotion candidate’s portfolio. Many otherwise qualified candidates get passed over because of weak team ratings.

Let me clarify this key point. Team feedback and upward ratings don’t solely determine who gets promoted—in fact, there are many dimensions to a promotion-related decision that team members aren’t in a position to evaluate. But the upward-feedback hurdle has to be cleared before the individual can even be considered for promotion. Why? One thing that teams most certainly can judge is how well their leader lives the organization’s values and thereby is or isn’t worthy of trust and respect. By delegating this considerable power to our people, we ensure at every level of the organization that only leaders who live our values can get promoted to positions of more power and authority.

A radical process? Yes and no. It’s never easy for the senior leaders of an organization to cede control, especially if their personal fortunes are closely tied to the fortunes of the company. But I’ll turn the question around and ask a skeptic to explain why this process, or something like it, shouldn’t be adopted by every business that is serious about being a great place to work. Bain believes so deeply in the universal relevance of this process for building a great place to work that we have designed it into a client offering labeled “Net Promoter for People.”⁸

Focusing on Results

Bain’s mission has always prioritized getting results for our clients. In the early days, we focused on economic results—indeed, those were the exact words in our mission statement. We came to recognize that our mission should include other dimensions of results that are hard to measure with standard financials, such things as social impact, team experience, and client capabilities. In 2019, we officially removed “economic” to make official this evolution to our broader mission. I believe that embracing this broader mission led to important innovations that helped Bain become a truly great place to work.

For example, as a firm we invest heavily in causes that are important to our teams, supporting their volunteer efforts and social justice initiatives. We have scored a perfect 100 on the Human Rights Campaign’s Corporate Equality Index for fifteen consecutive years. We have developed firm-wide plans to achieve zero net carbon and have committed $1 billion worth of pro bono services over the next decade to support social-impact initiatives. And on the local level, the partner in charge of each office delegates enormous responsibility to grassroots teams of frontline volunteers to design and run everything from office meetings to office renovations to summer meetings/office retreats and our Results Challenge, in which teams compete to win recognition for their exceptional impact on their clients’ success.

How does this program work? Each year, case teams self-nominate their case for consideration. The nomination requires teams to demonstrate their proficiency in four main areas: true results delivered; an enduring client relationship; creating client Promoters; and inspired team. Office leadership selects finalists for the office competition. The final presentation is a momentous occasion. Theatrics, costumes, and celebratory music set the tone. Junior and support team members typically take the lead in presenting to the entire office, typically at the annual offsite meeting. They bring key points to life—results (financial or otherwise) achieved; impact on clients and key stakeholders (often delivered via video testimonials or verbatim quotes); approach for creating Promoters, including the client Net Promoter feedback (including scores and comments); huddle scores; and other milestones, such as individual promotions and life events—to underscore how inspired they were on the case.

An office-wide vote or a selection committee selects the winner. The winning team receives a stipend for a team event and an etched crystal award and becomes eligible for the regional competition. This process not only emphasizes the primary importance of delivering great results for clients but also exposes the firm’s best work to a wide array of employees, who learn to recognize what great Bain work looks like.

In summary, we inspire our teams by hiring and training outstanding frontline leaders. We help them succeed by empowering team members to deliver outstanding value to their clients. Then we provide the tools (such as huddles, upward feedback, training, and so on) to help guide and gauge progress so they can learn how to get better every day. We strive to ensure that every person is inspired to earn a valued role on a team that wins with its clients.

It’s probably worth underscoring that client Net Promoter Scores are kept separate from our compensation system. We believe that doing otherwise would dishonor our team members by placing them in a position whereby they might feel compelled to game their scores rather than seek honest feedback that illuminates how best to improve. Linking scores to bonuses would have a chilling effect on candor, would work against the process and spirit of the team, and would undermine the NPS philosophy.

To Enable Turnarounds, Leaders Must Honor Teams

The Bain turnaround was remarkable by any standard, but the vital role played by inspiring teams is a consistent element in most effective turnarounds. For example, the remarkable reversal of fortune at the Charles Schwab Corporation, which I detail in The Ultimate Question 2.0, relied on this important ingredient. Nuisance and penalty fees had mushroomed to 25 percent of revenues. These bad-profit policies were irritating customers and dishonoring the employees who had to enforce them. CEO Walt Bettinger committed to eliminating all of these bad profits because he believed strongly that his teams had to be proud of how the firm treated its customers. Schwab has returned to its status as an industry leader in large part because Bettinger made good on his promise.

We saw a similar pattern at T-Mobile, where an entire industry was addicted to bad profits. By steadily eradicating those disgraceful tactics, frontline teams were energized and motivated to serve customers with pride. As noted in the previous chapter, CEO John Legere inspired his frontline teams by venturing out from his Seattle-area headquarters for regular visits with those teams. He listened carefully to their suggestions and took action. He supported Callie Field’s proposal to radically reorganize the company around its customers, splitting customer service call center factories into 150 separate teams—each with its own leader and separate profit and loss statement. Each team was responsible for a set of specific customers, usually based on geography, so when customers called in for help, they would be dealing with customer service representatives with the same local accents, sports team affiliations, and local knowledge (including that particular stretch of highway where calls get dropped). And because T-Mobile understood the economic advantage of delighting customers, the company invested heavily in upgrading the employee experience.

Concurrently, T-Mobile’s leadership reduced the size of the teams to ten customer service representatives per coach/leader.⁹ That is far smaller than most phone centers, which operate with a factory mindset that is focused primarily on productivity. T-Mobile’s smaller teams enabled coaches to spend more time helping each colleague. Leaders allocate twenty minutes every day to team e-huddles and skills development. Most phone centers (again, with their factory mindsets) would never consider cutting into productive hours like this—but then again, most of these operations don’t understand the importance of honoring teams or loving customers. Those companies would also have a hard time understanding how T-Mobile can afford to pay six-figure incomes to phone center supervisors when they deliver great results on their profit and loss statements, which they understand result from happy customers coming back for more and bringing their friends.

Inspiring the Teams at Discover

I now want to return to Discover Financial Services (introduced in chapter 2), which caught my eye when it beat out American Express for NPS leadership in credit cards. Among the contributing factors to that surprise success, as I’ve explained, were the company’s investments and systems and training to help contact center representatives deliver great service.

Let’s dig deeper. At Discover, the frontline teams in the service centers see ample evidence that they are valued and appreciated. “They are not viewed as a cost center,” then-CEO David Nelms told me, “but a profit center. They are our brand ambassadors. We pay very competitive salaries to start and then invest heavily in their training and in the technology to help them do a great job with customers.”

Backing up one more step, Discover still has these jobs in the United States. Nelms noted that the cost-center mentality that prevailed with most of his competitors persuaded them to outsource their customer service operations to low-wage countries or force-feed automated solutions to deal with their customers. Nelms and his colleagues were convinced that it takes a knowledgeable, culturally adept, and caring employee to solve the kinds of complex problems that can arise in the credit card context. Outsourcing, offshoring, and automation weren’t going to cut it. An unhappy customer on the verge of cutting up his or her card can only be won back through the intervention of a talented employee.

Current CEO Roger Hochschild told me that employee surveys over the years reveal that Discover’s call center employees are even happier than the folks at headquarters—a rare occurrence. Bain research has found that in general, the further you go down the organizational chain of command (and closer to the customer), employee NPS ratings steadily decline. But as my research for an earlier book revealed, at loyalty superstar companies, employee happiness is pretty consistent across organizational levels.¹⁴ This underscores the power of a headquarters team that is committed to servant leadership.

How exactly did Discover make its frontline teams feel so honored? Well, the company pays well and offers extraordinary benefits. Discover inspires its teams by providing exactly the same health care coverage options for its frontline teams as it does for its most senior executives. In this era when student debt is crippling the lives of so many young people, Discover offers a remarkable alternative, the Discover College Commitment, which covers tuition, fees, books, and supplies needed to complete select online degrees at one of three schools: the University of Florida (via UF Online), Wilmington University, and Brandman University. Employees can start participating their first day on the job. Discover offers academic counseling to help employees find the program that best fits their educational and professional development. Unlike typical education benefit programs, in which students pay course costs up front in hopes of receiving reimbursement months later if they earn a good grade, Discover pays 100 percent of tuition up front with no strings attached. It’s a remarkably generous approach, implying a level of trust that one rarely sees in the corporate setting.

Visibility helps too. Phone reps at most companies would be shocked to get a visit from their company CEO and might conclude that bad things—perhaps even layoffs—were in the works if the CEO did show up.¹⁵ At Discover, CEO Roger Hochschild visits each call center at least once each year, delivering four presentations throughout the day to cover all shifts. Typically, he updates teams on the company’s progress and priorities and finishes with a lively question-and-answer session. There is clear evidence that leaders listen to their teams—and take action. To cite one fairly down-to-earth example, the reps did not feel that it was fair for workers on Sunday shifts to get higher pay than those who worked Saturdays, given that most people found working Saturdays equally undesirable. In response, management adjusted pay rates so Saturday’s matched Sunday’s.

Service center employees are paid to reinforce their inherent desire to treat the customer right. There are no commissions in the compensation structure at Discover—in fact, there is no traditional selling of any kind. “We feel that when customers call in for help,” Roger explained to me, “the best way to sell them additional products is to deliver great service—then make it easy for them to learn more about our offerings on our website, app, and marketing communications.”

To make sure I wasn’t hearing just the headquarters perspective on call center happiness, I visited Discover’s Phoenix call center and spent the day talking with rank-and-file employees. I came away convinced that yes, the employees feel like they are well cared for in terms of benefits, but their primary source of inspiration is that Discover helps them delight customers.

Donna Matthews, an eighteen-year veteran, enthusiastically cited the fact that she receives regular coaching that emphasizes doing the right thing for customers even if that might seem to work against Discover’s bottom line. She gave this example: Whenever a customer calls in to request a cash advance—up to a $100 loan available at a local ATM, but with a $10 fee and interest rates often in the range of 22 to 24 percent—she checks her computer screen to see if that customer is eligible for a cash-back transaction at one of the local retailers up to $120, with no fee and no interest, if paid off with the Discover month-end payment.¹⁶ “It makes us proud,” Donna said. “It makes us look forward to coming in to work each day.”

Phone reps are aware that Hochschild and his fellow headquarters-based executives listen to hour-long samples of call center customer interactions twice per month.¹⁷ Their goal: to discover which technology investments and process changes might help the reps delight more customers. During these sessions executives discuss what they learned from their listening sessions, and based on those discussions set priorities for improvements.

This process helps explain how Discover has developed outstanding digital tools to support its employees and its customers. Again, this is an industry outlier. Most financial service firms have tried to make customer service center costs disappear by hiding their phone numbers from customers and steering them to cheaper digital solutions. As noted in earlier chapters, Discover opted to make its digital options so good that customers seek them out whenever appropriate—but at the same time, the support phone number is prominently displayed across the website so that whenever customers want to talk to a human, they can know how to easily reach an agent 24 hours a day, 365 days per year.

Think about what this means from a service rep’s point of view. At other companies, many customers start their live conversation angry. They have fought with the automated voice response system or on the web have been shuffled off to a page of so-called frequently asked questions. If an increasingly frustrated customer is persistent, he or she finally gets hold of a human, who presumably has been hiding behind these unfriendly technological barriers the whole time! Not so for the Discover rep. The customer gets there effortlessly. The interaction is designed to be low-pressure and self-paced. The customer soon realizes that the rep is under no pressure to meet an average handle-time goal, which results in lower-key exchanges aimed at problem solving with much greater potential to result in customer delight.

Team leaders are promoted from within. These exemplars serve as role models and coaches to their teams. In addition, there is an extensive coaching and feedback system called iMatter that uses customer feedback to create coaching plans to improve service delivery and celebrate success. The iMatter system reinforces to team members that they can really make a difference in their customers’ lives. As at Bain, this feedback is never linked to bonuses to minimize gaming of the system.

A final interesting dimension of Discover’s approach to inspiring its employees is the way the company organizes its reps into teams. Whereas typical call center teams might range from twenty-five to thirty people, Discover prefers pods with the capacity to hold just sixteen agents. But given their flexible work scheduling, with plenty of time for individual coaching sessions, the typical team in action is closer to twelve agents. This happens to be similar to the size of a US Army Special Forces tactical team, a context within which soldiers are expected to demonstrate higher degrees of initiative, self-reliance, maturity, and resourcefulness. It also happens to be the size of Southwest Airlines’ airport teams, which are much smaller than typical airline teams, and is also reminiscent of T-Mobile’s customer service representative teams, described above.

What’s the common thread? Smaller teams elevate the importance of each individual, underscoring that everyone’s role is vital to the team’s success. From the pure accounting perspective, big teams are great because they leverage an expensive chief across a small army of low-wage grunts. But Discover’s experience argues that small teams provide the best way to inspire employees and love customers.

The Secret to Being an Inspiring Leader

When the primary purpose of a business is to enrich the lives of its customers, the leader’s first responsibility is to help team members embrace and achieve this inherently inspiring mission—safely and sustainably. Team members are inspired when they can play a valued role on a team that consistently delights customers and can earn appropriate recognition and rewards when that mission is accomplished.

The very best leaders make sure their team members can earn standing ovations (tens) from their customers (and their peers). Experiencing that signal of love and affirmation is the secret ingredient that great leaders utilize to inspire their teams and provides the essential fuel for winning on purpose.