Interest rate cut! Great! Ummm ... well, maybe great.

Interest rates were on their way up in the US, in part to stem inflation. You see, if money costs more to borrow, then less will be borrowed, and less cash will be available to drive up prices.

But the subprime mortgage crisis, plus a sluggish housing market, put pressure on the US (and other countries around the world), to put cash into banks to cover credit and debt shortfalls. It also put pressure on the US to lower interest rates so the housing glut doesn't lead to a recession.

And so, interest rates were hacked down .5 percent a few days ago. We can worry about inflation later, I guess some US financial types thought.

But the problem is global. What we do in the US is felt around the world. Lowering interest rates means our bonds yield less to long term investors. We rely on these investors to keep us in cash to run our government, fund our military operations, and much more. We need the cash generated by these bonds.

We also need the dollar to be considered a de facto "gold standard" (pardon me) for currency pegs, to help reduce uncertainty in key export/import pricing.

So it's a bit concerning that Saudi Arabia has not adopted a similar interest rate cut, and is considering allowing its currency to float relative to the US dollar. As this article from the Telegraph (UK) says reports, "This is a very dangerous situation for the dollar," a statement made by the currency chief at BNP Paribas.

Customer Experience Management Certification - London!

Shameless plug:

I'm co-teaching a certificate course in Customer Experience Management in London. Here is a link to the official PDF with all the details.

In a nutshell, registration closes September 17, for a September 26-7 two-day course just outside of London, close by Heathrow. Come for the course, stay for the weekend and have a blast!

I've been teaching these for a while now, and always have a ball with the attendees. Corporations send the big guns: chief marketing officers, CRM honchos and, lately, Vice Presidents or Directors of Customer Experience. That's a watershed, I think. I've seen customer experience management adopted at a higher level, faster, than I saw adoption of CRM-related titles at the beginning of the CRM wave. People understand how important customer experience management is.

Sampson, my colleague who co-teaches with me, is a CRM and CEM consultant based in Hong Kong, and the guy who runs the single largest customer management online community in China. I'll be teaching this time with Jennifer Kirkby, former CRM research director for Gartner, one of the clearest guiding voices in the analyst biz.

If you can make it, it will be great to see you there. Or, send the PDF to someone you know, if you think they could benefit from a deep drill-down into customer experience management's ability to help companies compete.

The picture was taken by a TRIUM colleague of mine when we did our London module. Many thanks for allowing me to use it. If you want permission to use it, contact me.

Chrysler Steals Toyota's Competitive Advantage! Not.

Big news here: James E. Press, formerly the highest ranking Toyota North America executive, is now co-president at Chrysler. The article mentions that Toyota North America is not fazed, and they promptly replaced Mr. Press with a Japanese executive (I predict this is a temporary move). The Toyota Way, normally defined as an approach based on principles "which emphasize employee involvement and continuous improvement." This is contrasted with the top-down management style of Chrysler that relies on a charismatic, strong leader.

So, what will Mr. Press bring to Chrysler? After all, hiring him is a sign that the private equity company that bought the automobile manufacturer probably isn't going to strip it down and sell it. So surely Mr. Press has talents that fill a gap.

I don't think it will be teamwork and continuous improvement. To do this, he'd need a team that fits the Toyota culture. And he'd need some control over manufacturing. As for teamwork, he's got to fend off Robert Nardelli, Chrysler's new CEO, recently of Home Depot. Ah, now you see. Yes. This is the guy who got the golden parachute, earning millions and outraging just about everyone but his family, even though he eviscerated the Home Depot customer experience, hammering down its customers' satisfaction levels (see here), and sucking the wind out of Home Depot's stock.

Oh, sure, Mr. Nardelli shouldn't take the blame for a slow housing market. Right. (I hope you can hear my sarcasm.) When people buy houses, they use Home Depot. When they don't buy houses, they use Home Depot to fix up the one they're keeping. How was Lowe's stock doing during his tenure at Home Depot? Look at what Google Finance tells you in the chart below.



Lowe's has a strong reputation for delivering a great in-store experience. How important is that? New Home Depot CEO Frank Blake has reversed the company's slide in marketshare loss, even though the housing market it truly in crisis. How? Improving the customer experience. See here.

OK, back to how Mr. Nardelli's track record at Home Depot presages his approach at Chrysler. What was his mantra while managing things at Home Depot? GE style top-down management (certainly as authoritarian as Chrysler's existing culture) with continuous improvement. Any guess what mantra he'll use at Chrysler as CEO? Probably the same thing. Probably with the same results. Improvements in his way of thinking probably included things like profit per employee. Easy to make that go up by firing your front line. That's a sure what to annoy Home Depot customers. While I'm not privy to the actual metrics that Mr. Nardelli optimized, I know the result was that he damaged satisfaction ratings and dropped the stock. If he uses similar methods at Chrysler? That's not good news.

With all this as background, Mr. Press is window dressing right now. He can't be much more unless he's able to do what has made Toyota truly strong: Build cars that meet the full range of customer requirements. These include things like solid door closures and green engineering. These are critical examples of how customers filter information about their choices in the market. A door closure that sounds solid sends a signal about the entire care -- and about the entire company. Toyota didn't invent hybrid technology, but they own it in the minds of US consumers (just ask 10 people who invented the hybrid car), because Toyota can credibly claim it and US companies (who invented hybrid technology) cannot credibly claim it. Facts matter less than perceptions.

That is what has driven Toyota: they understand market perceptions. And even though they surely believe in continuous improvement, they are not competing at the margins. Little changes and improvements are fine, but Toyota wants the customer for life, and to do that, they think in a much bigger picture, and over a longer time frame, than American automobile manufacturers do. Period.

Mr. Press is likely to be on the sidelines watching his co-president Tom LaSorda, who heads up manufacturing, and Mr. Nardelli wring "profit" out of the company to bolster shareholder value. Will Mr. Press ever get in the game to build a company based on a true customer focus? I hope so. And if he gets this mandate, he's got his work cut out for him. It will require a change in culture, information sharing, processes, strategic planning and financial investments with long time horizons ... in short, a lot of stuff that private equity firms don't know much about.

We need to look at Mr. Press' appointment with a jaundiced eye. After all, to really bring his value to Chrysler, he's really got to run this show. And, the measure of his success should be winning back the credibility of the company in the eyes of consumers.

It's not about making good cars -- Chrysler already does that. It's about building a company that global consumers can be passionate about. From this, profits can come. But don't put profit down as his main measure of success. It's long past time when corporate decisions were driven from transaction data, or from (at best) customer data poorly integrated into service, innovation and touchpoint management. It takes a really sophisticated company to understand what drives profit for their target markets. And it takes a company that can work as one. Looking at the top of Chrysler's management, I see problems ahead.

[NEWS FLASH: Chrysler has just named Phil Murtaugh as CEO of its Asia operations. See here. Phil has been running SAIC Motor, the huge car maker from China that, along with companies like Chery (think "Chevy knockoff" and you're most deeply correct) and First Automobile Works, has been bringing the Chinese car industry up really fast. In the next few years, the efforts of companies such as SAIC will be obvious in every major Western market. I think Phil is going to really help out Chrysler, by forcing the executive team to look at customer-relevant quality (the localization part of globalization) as well as helping them figure out the labor arbitrage issues. I hope he gets close to the US labor unions who have so much at stake with Chrysler's success.]

Apple's new iPod, and one-button Starbucks purchase

One of the five forces of customer experience management is the customer's awareness of a company's brand. This is separate from their awareness of what other people THINK of that brand.

But one of the nuances here is tricky, because in the world of branding, no brand stands alone. Think of Gucci. Somewhere in your head, some neurons on firing, and nearby is the cluster of neurons you've set aside for BMW. And, probably, Apple.

And, perhaps, Starbucks.

So, when Apple does a deal with BMW (as they have), and with Starbucks (as they've just announced today), you got a lot of neighboring neurons lighting up like stars.

When companies in different sectors partner up like this, they're called constellation partners. They don't even have to spend a lot of money to get a ton of brand equity out of the partnership. I doubt seriously that the iPod jack in the MiniCooper (a BMW product) sold that many MiniCoops. Nor did it drive a ton of iPod sales. In fact, the whole deal probably COST Apple and BMW more than they could point to in revenue.

BUT, that's not the point. The point is that people talk about it, and the buzz activity reinforces the brand positioning of both companies. Free promotion, baby, and of the best kind, because the closeness of the brands combines with the novelty of the relationship to create something really memorable and strangely logical.

And think now of what it means to be able to walk into a Starbucks with your new iPod Touch(tm) and push a single soft-button to buy the tune playing at that very moment within your Starbucks. (And they play some darn good tunes.)

This is a great example of a spin on that force of customer experience management we just mentioned, because it not only is a direct customer experience of the Starbucks brand, and of the Apple brand, but it is also an experience of the constellation of the two of them. I will growl at the first person who uses the phrase "brand synergy". We don't need synergy added to any more business phrases. And we already have constellation to describe this kind of phenomenon. People experience the stars, connect the dots and see a bigger picture -- Steve Jobs as Orion, Starbucks as Aquarius.

So in six months, when you go into a Starbucks and see Apple users pushing buttons on the iPod Touch, don't be surprised if you see some PC laptop users glowering just a little. In the past, they might have been able to live happily with their Dell or HP laptop, but in a few months they're going to feel like Steve Jobs just bumped ahead in line for a double shot of cool.