PDF Summary:Excellence Wins, by Horst Schulze

In today's fiercely competitive marketplace, businesses that fail to deliver exceptional service are destined for irrelevance. According to hotel manager Horst Schulze in Excellence Wins, this is because exceptional service can earn you loyal customers for life—while lackluster service can drive away even your most diehard fans. To create a culture of exceptional service, Schulze offers a business philosophy and strategies that can help business leaders, entrepreneurs, and anyone else elevate their organization's standards.

In this guide, you’ll learn how to build a world-class organization obsessed with customer service. We’ll discuss how to motivate employees by providing a clear vision of success to work toward and giving them the authority to do so. We’ll also explain how to delight customers by anticipating their needs. In our commentary, we’ll elaborate on how to provide world-class customer service with tips from books like Superfans and Linchpin. Additionally, we’ll supplement Schulze’s management advice with ideas from books like When They Win, You Win and The Great Game of Business.

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How to Build an Exceptional Organization

Going above and beyond in fulfilling customer desires is vital for any organization striving to provide exceptional service. But savvy leadership also plays a key role in steering the company in a positive direction. Here are some strategies managers and executives can use to build an organization fully committed to delighting customers.

Strategy #1: Motivate Your Team

Schulze believes that too many managers view their employees as reluctant workers who need to be pushed or coerced into action. Instead, he argues that leaders get better results if they inspire their employees to want to work hard and provide high-quality service.

It’s possible to motivate employees to achieve company goals because humans have an innate desire for purpose and meaningful relationships, according to Schulze. The opportunity to provide world-class service to customers is a chance for them to attain both of these desires: Employees feel like they’re accomplishing a worthy purpose by working at an elite level, and they build meaningful relationships by working together and serving customers.

(Shortform note: In The Leadership Challenge, James Kouzes and Barry Posner elaborate that leaders can further motivate their workers by giving them opportunities to actively shape the company’s purpose. For instance, survey your employees about the greater purpose they want to accomplish with their work and adjust your company strategy based on their feedback. Likewise, leaders can encourage their workers to build meaningful relationships by frequently gathering them to celebrate each other’s accomplishments. Research shows that group celebrations strengthen bonds between co-workers and make them feel like a community.)

Schulze argues that to effectively motivate your employees, you need to do two things: Grant them the authority to improve the business and establish a clear vision.

Action #1: Grant Employees Authority to Improve the Business

First, Schulze states that if you want motivated employees, they need to feel like they have the authority to personally improve the business on a daily basis. Managers don’t always give this authority to their employees: Often, employees are told they have to follow strict operational procedures or pass problems off to a manager rather than creatively solving problems themselves. In contrast, Schulze gives every one of his employees at the Ritz-Carlton permission to spend up to $2,000 in any way that keeps a hotel guest satisfied with their experience, without pre-approval of any kind.

(Shortform note: $2,000 may seem like an unreasonably high amount of money for employees to spend to fix a single issue. However, experts explain that the average Ritz-Carlton customer is projected to spend $250,000 at Ritz-Carlton hotels over the course of their lifetime—so if a $2,000 investment can preserve a customer relationship, it pays off in the long run.)

Giving employees this authority is inherently motivating, says Schulze. When workers feel like management respects and trusts them to judge how best to serve the customer, they’ll want to work hard to live up to their managers’ expectations.

Schulze argues that giving all employees authority is particularly effective because frontline workers have the best vantage point to identify problems and solutions. They’re closer to the customers than managers or owners, so they often have a better sense of how to improve the customer experience.

If every employee is obligated to fix every flaw with your business or customer problem they encounter (even if it’s technically outside of their job description), your business will, over time, offer an increasingly high-quality customer experience. For example, a janitor in a dentist’s office might notice that the waiting area magazines are outdated and worn. If given authority, the janitor could remove the old magazines and buy new, fresh reading options to make the waiting area more inviting for customers.

Build a Culture of Trust

According to Charles Duhigg in Smarter Better Faster, the idea that frontline employees should be given the authority to solve problems they encounter is a core tenet of a management philosophy called lean manufacturing, which was developed at Toyota. Like Schulze, Duhigg contends that workers need to feel like management trusts and respects them before they take the initiative to improve the business. Furthermore, Duhigg warns that if workers don’t feel like management trusts and respects them, they’ll be too afraid of making mistakes—and being punished for them—to use the authority they have.

For this reason, Duhigg argues that before workers can proactively solve problems for the business, managers must create a “commitment culture”—a workplace environment where managers are genuinely invested in their employees' success and will support them even if they make mistakes. To do this, Duhigg recommends investing in long-term employee training, providing generous benefits, and reserving layoffs as a last resort.

Action #2: Establish a Clear Vision

Schulze contends that if you want to motivate your team, you must set a clear and worthy vision for what you want to accomplish. This vision will be a more effective motivator if it primarily benefits other people rather than just yourself—by accomplishing it, you become a force for good in the world. Additionally, if you want your business to be profitable, part of your vision should involve providing your customers with the best possible experience (as we’ve discussed).

This vision is the purpose that your employees naturally crave. Even if it’s challenging, employees ultimately want to work toward an inspiring vision because it allows them to feel pride and gain admiration for their achievements.

Schulze argues that a clear vision also helps you maintain your priorities during challenging times. When you’re forced into difficult lose-lose situations, the vision serves as a compass, revealing what decisions best align with the organization's core purpose.

For example, say a software company is debating whether to eliminate some advanced features from the new version of their flagship product to meet a deadline. However, their core vision is to provide customers with the most innovative and capable software solutions on the market. Staying true to that vision leads them to keep developing the advanced features, even if it forces them to delay their launch. Ultimately, this is what’s best for their customers.

Your Vision Should Be Unattainable and Resilient

In The Infinite Game, Simon Sinek elaborates that your vision for the good you want to accomplish in the world should be ultimately unattainable. A vision that could theoretically be permanently solved once you reach a certain milestone wouldn't be ambitious enough to inspire passion and purpose in your team. For example, if you run a financial advisory firm, you could make it your vision to empower every individual to achieve the financial security they need to achieve their dreams.

Moreover, while Schulze asserts your vision should be something that helps you maintain your organization’s core priorities during challenging times, Sinek takes this further. He contends the vision you choose must be resilient enough to endure massive changes and challenges to your industry that force you to transform your services and products.

For example, imagine if a company that provides art therapy for people with mental disorders could no longer conduct in-person sessions during the Covid-19 pandemic in 2020. Guided by their vision (use creativity and self-expression to help heal everyone who needs it), they might have pivoted and developed an online art therapy platform with virtual courses, activities, and a supportive community.

Strategy #2: Reinforce a Purpose-Driven Culture

We’ve discussed two requirements that you need to motivate your employees. Next, to put these motivating forces into action, Schulze contends that you need to establish a purpose-driven culture.

To do this, condense your vision into a concise vision statement that’s easy to remember. Then, weave this vision statement into your communication at work as much as you can: in meetings as well as in personal conversations. In doing so, you ingrain the vision statement in your organization’s culture, nudging employees to think more about how to align their work with the vision.

For example, imagine you manage an art gallery and have developed the vision statement, “We want to build connections in our community through art.” Mentioning this vision statement to your marketing coordinator may encourage them to spend less time building an online presence for the gallery and more time organizing local events.

(Shortform note: In Leading Change, John P. Kotter contends that when you write a vision statement, you must strike a balance: If it’s too vague, employees won’t know how to implement it in their daily work. If it’s too specific, it might restrict employees’ autonomy, preventing them from doing their best work. For instance, the art gallery we mentioned before wouldn’t want their vision statement to be “Spread art” (too vague), or “Hold art shows every other Thursday” (too specific). Additionally, don’t just keep repeating the vision statement at employees—give them the opportunity to criticize it. Even if you don’t change your vision, employees are more likely to commit to it if they feel you’ve heard and understood their concerns.)

Schulze recommends reinforcing your purpose-driven culture in two types of meetings: first-time employee orientation meetings and daily refresher meetings.

First-Time Employee Orientation

According to Schulze, an employee’s first day is a valuable opportunity to instill the company's vision. When someone starts a new job, this big, emotional life change tends to open their mind to fresh perspectives and behaviors. During this time, new employees will more readily embrace your organization's purpose-driven culture.

(Shortform note: The Bridges Transition Model is a framework for understanding change that divides significant transitions into three stages: Endings, where you come to terms with what you’re losing; the Neutral Zone, where you’re surrounded by unknowns and must discover how to establish something new; and New Beginnings, where you fully embrace a new state of being. Identifying which of these stages a new employee is in may reveal how to best guide them as they adjust to your organization’s culture. For instance, if a new employee is still in stage one, mourning the loss of their previous job, you may need to give them time to reflect on the good things they’ve left behind instead of demanding that they immediately adapt.)

Schulze explains that he begins his first-time employee orientations by asserting that no individual, including himself, is superior to others; every employee is equally important in contributing to the company's success. Then, he unpacks the company's vision statement, explaining it in detail to help employees understand what they’re working toward and why their efforts matter.

He also establishes the basics of customer service that we discussed in the first section of this guide: why employees should prioritize customer service above all else, the desires that all customers have, and so on. Finally, Schulze helps employees set goals and learn the specifics of how to do their jobs.

Counterpoint: Orientation Should Focus on Concrete Financial Information

Schulze contends that employee orientation should focus on instilling a specific business philosophy, including the company's vision and the general principles of what makes customer service valuable. In contrast, Jack Stack and Bo Burlingham argue in The Great Game of Business that orientation should emphasize more nitty-gritty aspects of the business’s strategy. In particular, they recommend educating employees in detail about the company’s financial health: Employees should understand how to read and influence the company’s balance sheets and income statements to effectively take ownership and help the business succeed.

Once employees see how their jobs influence the business’s financials, they can continuously adjust their processes at work to increase profits. Whereas Schulze recommends helping new employees set goals at orientation, providing financial transparency will help employees update their goals after orientation, based on the company’s changing financial situation.

Furthermore, this financial transparency may be a more effective way of convincing employees that their managers don’t see themselves as superior to them. Sharing financial information implies that you believe employees can productively contribute to company strategy, whereas hiding financial information implies that employees aren’t skilled enough to use it effectively.

Daily Refresher Meetings

Schulze argues that one-time orientations or training sessions are insufficient for employees to retain the principles of your organizational culture and consistently deliver the desired level of service. Even if you give a very inspiring orientation presentation, employees will forget most of what you talked about if you don’t regularly reinforce these ideas.

(Shortform note: One way organizational leaders can regularly reinforce company culture is by modeling that culture through their behavior. For instance, say that an organization values open communication. Its managers can reinforce this value long after orientation by communicating feedback in a clear, honest way and by welcoming employees’ constructive criticism.)

To help workers internalize the principles of a purpose-driven culture, Schulze advocates for a brief team meeting at the start of every employee shift. During this meeting, a team leader explains a single principle of your company’s guiding philosophy and allows their team to discuss it. Schulze created a list of 24 principles for teams to review over the course of 24 days that detail exactly how employees in his hotels should work. For instance, one principle states that every employee is responsible for fixing the flaws with the business they identify on the job (as we discussed earlier).

(Shortform note: If you’re already meeting with your team to review one of your organization’s cultural principles every day, it may be productive to add a few strategy-focused items to your agenda to help team members coordinate their work. In Mastering the Rockefeller Habits, Verne Harnish recommends conducting daily meetings where every team member quickly sums up what they’re doing today, the team reviews how well the company as a whole is performing, and anyone facing an obstacle in their work announces it so the rest of the team can try to resolve it.)

Strategy #3: Measure Your Progress Toward Success

Schulze contends that, in addition to motivating your team and reinforcing a purpose-driven culture to sustain that motivation, leaders need to continually measure their progress toward success and adjust their strategies accordingly.

Rigorous, ongoing measurement helps leaders identify areas in which they think the business is performing well but it isn’t. These blind spots can easily arise if leaders assess their business using anecdotal evidence or gut feelings alone. Instead, if they consistently measure the right evidence, identify issues, and adjust their processes in response, companies can continually elevate the quality of their products or services.

(Shortform note: In The Lean Startup, Eric Ries warns that some types of rigorous measurement can create blind spots: They might conceal how your business is really performing. Vanity metrics are ones that sound nice when you track them but don’t accurately reflect your business’s health. Focusing too much on vanity metrics may prevent you from identifying issues and adjusting your processes accordingly, causing deadly flaws to stay hidden until it’s too late. For example, a social media company might track its total number of users, even if many of those accounts are inactive or rarely used. This could obscure the fact that user engagement and retention are declining.)

Schulze recommends measuring three vital metrics in particular.

Metric #1: Customer Satisfaction and Loyalty

First, Schulze recommends measuring customer satisfaction and loyalty. After serving customers, survey them to discover whether they’d want to buy from you again and whether they’d recommend your product or service to someone else. This provides clear data on whether customers are truly having a positive experience that will lead to more business.

(Shortform note: Some experts argue that customer satisfaction is an overrated metric for businesses trying to maximize loyalty. One study of 75,000 customers found that people who were immensely satisfied with a customer service experience were only slightly more loyal than if the company had just met their basic needs. Instead of aiming to maximize customer satisfaction, consider reducing the effort customers must exert to resolve issues they have with your product or service. For instance, give customer service reps the authority to fix problems rather than forcing them to transfer customers to another department.)

Metric #2: Employee Satisfaction

Second, measure your employees’ job satisfaction. According to Schulze, every dip in employee satisfaction signals a greater likelihood of employee turnover—which loses you valuable expertise and forces you to spend on replacements. Staying up-to-date on how engaged and motivated your employees feel will show you when you must take action to keep them satisfied.

(Shortform note: What can you do to increase your employees’ job satisfaction and minimize the risk of turnover? In When They Win, You Win, Russ Laraway contends that employees are happier and more engaged with managers actively coaching them. Although coaching does involve correcting workers’ mistakes, Laraway notes that the majority of feedback should be encouragement and praise for what employees are doing well. This frequent recognition helps employees feel valued, helping them better enjoy their jobs.)

Metric #3: Lead Measures

Third, measure lead measures: metrics that accurately predict your business’s future performance. Schulze contends that studying these metrics allows the company to be proactive rather than reactive to worrisome patterns before they become larger problems that impact the core business. For example, if you run a barbershop, one of your lead measures might be the number of fully booked-in-advance days on your calendar. If you notice that you have far fewer reservations than usual, you could respond by increasing your social media presence before taking a major financial hit.

(Shortform note: In The 4 Disciplines of Execution, Chris McChesney, Jim Huling, and Sean Covey explain that the opposite of lead measures are lag measures: metrics that indicate your success but don’t directly influence your future performance. Although lag measures indicate whether you ultimately succeed or fail, you can’t influence them directly—you can only increase them by working to increase your lead measures. For instance, the revenue your website generates on a given day is a lag measure. To increase this lag measure, you can focus on lead measures like the percentage of users who click on your advertisements or your ranking in search engine results.)