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His attitude to the world of business was hewed in a
small rural community of Mennonites in Canada where
his father founded a successful stock feed business.
His elder brother still runs the company. Traditional
Mennonites - a Christian faith that dates back 500 years
- do not believe in modern-day conveniences such as
the car and instead rely on horse and cart. The young
Roger got an early introduction to real customer service
because his family was one of the few in town to own
a vehicle.
"I
lost count of the number of times I was awoken by a
horse and buggy in the front yard and there would be
someone from the community - perhaps a young woman in
labour or an injured farm hand," he remembers. "It would
have taken them three hours to get to the hospital in
their horse and buggy, so my father bundled them into
his car and took them - a journey of about 15 minutes.
He did this because he loved his customers, not because
he wanted to make money.
"He
went on to make a good deal of money out of his business,
but that wasn't the important thing. The important thing
was taking care of his customers."
His
Mennonite upbringing may have something to do with the
look of distaste that appears on his face when our conversation
turns to one of the hot topics of the day: the bonuses
paid to the former high-flying financiers partly responsible
for the current global financial crisis.
"These
people were all about making money, and the more money
they were paid the better - it helped define them as
human beings and they ranked themselves according to
their bonuses," he explains.
"In
fact, if you had offered them a choice - to accept a
US$10 million bonus, which would place them at the top
of the rankings, but they had to give US$8 million to
charity, or a US$5 million bonus that they could keep,
many would accept the US$10 million even though they
got less money. The money itself was therefore not that
important, it was the status that came with it."
Mr
Martin said the danger in such a compensation system
was that it attracted a type of person who was uninterested
in serving customers or building great brands. Making
money was the sole object and, as we have seen, that
has helped unravel the global financial system.
"Companies
have to be careful about their selection bias - if you
are only offering money to people, you are only going
to attract people who are interested in making money."
Unsurprisingly,
Mr Martin's corporate heroes are not the Merrill Lynches
or Goldman Sachs of this world. His admiration is reserved
for consumer goods giants Procter & Gamble and Johnson
& Johnson. Why do the makers of such mundane products
as baby powder, soap and shampoo elicit the excitement
of this top business educator?
"At
Johnson & Johnson headquarters it is hewed in granite
that the customer comes first. Shareholders are fourth
on the list, below customers, community and employees,"
he explains. "That has helped build the finest of companies
and one that has a market cap of US$144 billion.
"So
many CEOs over the years were saying that shareholders
always come first and that their employees should be
coming to work each day to work for the shareholders.
But why would anyone want to work for someone they do
not know and who can opt out of the relationship without
any discussions?"
He
said far more motivating for people - and fun - was
to work to provide the best possible products and services
for customers. The troubled bankers of the world could
learn a lesson from this, he adds.
"The
role of banks should be to help build the economy and
help people build houses," not create fancy financial
products, he said. One of the "worst ideas" in the history
of the financial industry was one that was originally
touted as innovative in the industry - structured products.
"It
appeared to be a good idea to create these structured
financial products, package mortgages and create profits
out of nothing," he says. "The problem was that no one
realised the correlations between these mortgages and
if one level of these things went south, the rest would
follow."
Mr
Martin writes extensively on innovation and is a columnist
for BusinessWeek Online's Innovation and Design Channel.
He has published three books: The Opposable Mind:
How Successful Leaders Win Through Integrative Thinking;
The Responsibility Virus: How Control Freaks, Shrinking
Violets - And the Rest of Us - Can Harness the Power
of True Partnership and The Future of the MBA:
Designing the Thinker of the Future.
He
serves on the boards of Thomson Reuters, Research in
Motion, the Skoll Foundation, the Canadian Credit Management
Foundation, Social Capital Partners and Tennis Canada.
He is a trustee of the Hospital for Sick Children and
chairs the Ontario Task Force on Competitiveness, Productivity
and Economic Progress.
There
is a lot of talk these days about cutting compensation
for executives. But is there a danger that in doing
this, you don't attract talented people?
I
would not call someone who has lost US$40 billion at
an insurance company talented. To reward performance
is fine, but if you are just paying a retention bonus
- a bonus simply to keep someone in the job - then that
is wrong. I don't call these people talented, I call
them bad people.
During
the air traffic controllers' strike in the US in the
1980s, 11,000 walked off the job and were fired and
2,000 stayed. Everyone believed there would be safety
issues, but what happened was that the number of accidents
and near misses dropped. The people who remained on
the job were the really good employees and wanted to
be there.
What
is innovation?
It
is the process of creating things that do not exist
- a product or service that results in consumers wanting
to pay more for it.
Is
Hong Kong an innovative place?
I
certainly believe it is, and if it wasn't, its gross
domestic product would probably only be a quarter of
what it is now. It has done things differently than
other cities in Asia and without having too many natural
advantages. Its ingredients for success have probably
been having the stable legal and regulatory framework.
Are
people going back to school to boost their skill levels
during the global financial crisis?
There
has been a mini surge in the number of people applying
to go to business school. It is not as high as after
the dotcom bust, but there has been an increase.
There
are so many people with MBAs these days. Has this debased
their currency to a certain extent?
Oh
yes. What is the value of an MBA these days? I would
say close to zero because there are so many programmes
that are basically mail order MBAs. Many are unaccredited
courses that people are sometimes paying a lot of money
for. The more important thing for an MBA is the letters
accompanying it - that is, the university it was awarded
by. So a Harvard MBA or an MBA from Rotman is obviously
still valuable.
How
do you relax?
I
write. I love to write, and it relaxes me. When the
folks in my office see me looking fatigued, they schedule
a day off for me. But I go home and write, because that
is how I restore my balance.
Do
you have any hobbies?
I
am a tennis enthusiast. I took it up in my 30s and am
committed to making myself a decent tennis player.
glen.norris@scmp.com
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