What You Can Learn from Small Town Auto Dealers (HBR)

(Although this post was written nearly a decade ago, its lessons remain relevant.)

Until recently, one of the less-reported aspects of the crisis in the automotive industry is the effect that its radical downsizing is having on auto dealers. Now that General Motors and Chrysler have axed roughly 1,100 and 800 dealers respectively, stories of dealerships closing are front page news. While cuts have come largely at the expense of urban dealers, some smaller rural stores are surviving — at least for now.

Many of these smaller dealerships are family enterprises; three and even four generations old. Their longevity is a testament less to Detroit’s products and more to their smart and sharp business practices. And now that some of their competitors are closing they may do even better. Let’s consider what business leaders can learn from these small-town auto dealers.

Know your customers. Small-town auto dealers know what vehicles their customers prefer. This comes from having long-lasting ties to individual families, selling new cars and trucks to grandparents and parents, and putting the children into affordably priced used cars. Part of knowing your customers means considering their changing tastes. Decades ago many of smaller dealers signed franchise agreements with Asian and European manufacturers like Honda, Nissan, Toyota and VW to provide their customers with even more makes and models from which to choose.

Service matters. Dealers will tell you they make more servicing cars than selling them. Manufacturers pay for warranty repairs but good dealers, particularly those in small towns, will keep their customers returning after the warranty expires because they provide reliable servicing. They also have a reputation for honesty, a word that is not often associated with automotive retailing. Local dealers have no alternative to treating their customers right; they live in the community, and word gets around.

Invest in the community. In many areas, car dealers are the soft touch for youth sports teams as well as school musicals and church raffles. True, it is good visibility to have your store’s name on scores of soccer uniforms and and church bulletins, but something more is at work. Car dealers are part of the life of these towns; their philanthropy supports causes and activities that add texture to the community.

Maximize opportunity. Dealers are entrepreneurs. Those who are not closed will get aggressive. As reported in the Wall Street Journal, surviving dealers will buy up inventory at a good price, add salespeople (some from former competitors), and expand their sales reach. One Dodge dealer in Jackson, Michigan — right in the heart of “downturn valley” — said, “I’m going to buy every car I can find with every dollar I have until I run out of money.” While that attitude may have led investment bankers to run Wall Street into the ground, hearing it from a dealer sounds more optimistic. He has faith in himself, his business, and his community.

Not every dealer is worthy of imitation. Just as there are poor businessmen in every field, there are less-than-reliable automotive retailers, especially ones who cheated their customers, not to mention their own employees. But these smaller, successful dealerships can teach us a lesson or two that may help us grow our own businesses.

As a youngster I recall the dealer showroom windows that were papered over every September in anticipation of the sparkling new models that would soon be introduced. I still remember drooling along with my chums at the brand-new 1963 Corvette parked at the corner of Carl Schmidt’s Chevrolet in Perrysburg, Ohio. We ran our fingers over the radical new lines of the first Stingray. No salesman shooed us away; our ogling and awing was a kind of third-party endorsement.

Maybe that’s another lesson; let the kids touch the merchandise and one day, he’ll tell his friends about you.

First posted on HBR.org on 5.18.2009

Crisis Raises Issues for Executive Coaches (HBR)

Note: While this post was written nearly a decade ago, the research cited remains relevant today.

1999 was the year of me! 2009 may be the year of us!

At least that is what we may infer from a new survey of seventy executive coaches conducted by WJM Associates, an executive coaching firm located in New York City. As the survey states, “the change [in coaching priorities] seems to reflect the trend of executive coaching being used by organizations to address specific business issues, rather than for individual, general ‘self-improvement’.”

This makes good business sense. 1999 was a good year. It was a time of the new economy when e commerce was transforming the way people and business interact and operate. Top five coaching objectives 1999 were for “self-awareness, personal goal setting, work/life balance, stress management [and] improve quality of life.” 2009 is a very different. We are mired in the deepest economic downturn since World War II. Analyzing today’s coaching priorities which are specifically requested by client and their employers gives us a handle on how businesses are coping with the huge upheaval.

Build/Align/Motivate Team. Organizations need executives who know how to get people to follow their lead, especially in challenging times. It takes a leader who knows how to assemble the right people and put them in the right places so they can do the right work. Motivating them comes from providing them with the right resources and right opportunities. This is not always easy when resources are scarce so the leader needs to be seen as doing what she can to help her team succeed.

Executive presence. Leaders need to demonstrate their earned authority. Presence is the manifestation of earned authority that comes from knowing how to do things as well as having earned the respect of others. Another critical aspect of presence is composure. Leaders need to keep it together when everything else around them is falling apart. Leaders demonstrate their mettle during crisis.

Effective communications. If you want to lead others, connect with them. Yes, it is imperative to articulate the message, the goal, and the outcome. But you also need to invest yourself. That comes from listening to others as well as allowing others to give you honest feedback. Learning from what you listen is critical to moving the organization forward. Use the down time to learn more about the capabilities of your people.

Interpersonal savvy. As Harvard author and psychologist, Daniel Goleman, has taught us, leaders must be able to get along with others. The ability to relate to others as a fellow human being is essential to gaining buy in for a leadership objective. Sure you can tell people what to do, but if you do not earn their trust you will get compliance, not commitment. Being everyone’s pal is not necessary, but treating others with respect is essential gaining trust, an attribute that is essential to holding teams together in trying times.

Strategic thinking. So often we coaches hear the need for managers to think and act more strategically. A reason more managers do not do so is because their bosses keep them occupied with tactics so they do not have time to think let alone act strategically. Therefore, senior leaders must give their direct reports room to breathe, reflect and consider alternatives that will affect not just a department but also the enterprise. Now is a great time to map out new strategies that may help your company find ways to make the best of bad times.

Of these five, only “executive presence” is focused on the individual; the other four are focus on relationships with others or in the case of “strategic thinking” what executives can do for the business. That said, we cannot forget the individual, as my friend and fellow Harvard blogger, Stew Friedman, demonstrates with approach to Total Leadership, individuals must be tuned into their inner selves and satisfy those specific needs if they are to be truly effective, especially over the long term.

Executive coaches are business professionals; like all consultants who succeed they have learned to adapt to changing business conditions and respond to evolving developmental needs. And that may be a hidden benefit of the executive coaching process. Since most coaches work for a number of different businesses, good ones have experience working not only with different executives, but different cultures and disciplines. That provides coaches with a long view of how organizations respond to change and how those changes affect employees. That insight, over and above the coaching process helps individual executives gain perspective that they can apply to help their organizations manage tough times as well as good ones.

First posted on HBR.org on 5.21.2009