An Open Letter To Restoration Hardware CEO Gary Friedman

Dear Mr. Friedman,

As one of the architects of the customer experience for some great companies working to deliver customer service and delight, like you, I share your passion for getting it right for customers.  This is the clearest path to customer-driven growth.  However “right” means holding a mirror to your entire operation, including how leaders lead.  This must include how leaders enable people to deliver value, and how they model behavior and give people permission to do the right things.

To that end, I offer this nine-step action plan for inspiring customer-focused growth in employees. This approach has proven itself with many executives and at companies of varying sizes. It should work for Restoration Hardware, too, as you are at a crossroads in your growth strategy.

1. Make employees part of the solution: In your e-mail to staff, you called employees the problem. With every company struggle in the marketplace, this is usually not the isolated reason for failure.  Market challenges can also be due to  a disconnect in organizational alignment of strategy and execution.  And when strategy and execution aren’t aligned, oftentimes employees are unclear on what, exactly, they need to be prioritizing every day. Leading for customer-focused growth must include clarity for employees – beyond identifying what they failed to do. The most successful leaders connect their higher purpose and strategy to employees’ activities, and connect their work to the overall business.  In this manner, employees are elevated as part of the solution versus being identified as the problem. It’s a major difference.
2. Unite Your C-Suite: In an interview with Bloomberg about the e-mail, you said you wanted to make sure you “weren’t communicating through 15 layers of management.” We share that goal; one that I encourage all customer-focused leaders to try to do, which is reduce bureaucracy and move towards united C-Suite leadership. It appears that perhaps your  organizational complexity is preventing desired results, and that is impacting your quarterly returns and the dramatic reduction in stock value.  Too many layers of management means too many people focusing on their silo or functional area and how to best present that to you, as opposed to everyone focusing on the experience of the end customer.
3. Humbly apologize: Your e-mail is part of the news cycle now. Existing and potential customers of your business have seen this, and have some idea about some of your internal shortcomings. What you need to do immediately is humbly apologize towards your customers — and yes, your employees — and figure out how to make amends. This is more than just a couple of interviews to the business press. Craft a letter and have it on the front page of your website. Explain where you want to take the company and why. Transparency and openness boosts the strength of relationships. Customers want to see that. It’s a crucial element of customer-focused growth.  Then ACT.  An apology without action is just words.
4. Use customers as an advantage: Bring them in. Talk to them about their experiences with your brand. How do they feel about you? What could be better? What are the wait times on orders causing them to do? How do they want to be viewed and treated? Take this beyond focus groups to what I call “fearless listening.”  Remove the mirrors, and talk one on one with them about their experiences with Restoration along each stage of their journey with you.  Probe to understand the actual perception of your brand in the marketplace. Oftentimes — especially with 15 layers of management — there is a lot of inaccurate information coming in from customers via mid-level executives in an attempt to make you happy. But now you’ve seen the fiscal returns plummeting, so you know the picture isn’t rosy. It’s time to really understand what the customers want; that’s the only true way to ultimately drive customer-focused growth.
5. Personally Listen, Fearlessly: You can’t delegate the customer conversation to others.  You must have a seat at that table, face-to-face with your customers. People need to see you involved. Customers need to know building a real, tangible, amazing customer experience for them is your passion. This is a bit of ‘walk the walk and talk the talk’ here. CEOs like yourself are busy people, yes, but talking to customers is the only way to set up the type of company you’re aspiring to.
6. Focus Investment: As you understand where customers have been let down by your products and experience, establish focus on where to invest.  One of the most prevalent actions that prevail in these types of situations is for every silo to identify their problems, plan their approaches and to take independent action.  Focus on the few one-company actions that will have most impact versus silo-by-silo execution.  Don’t boil the ocean. Invest in the basics and frameworks that are systemically causing the majority of the problems.  And get rid of the roadblocks getting in the way of your employees’ ability to deliver value.
7. Market Hope: You are at a crossroads. I call this your “prove it to me” moment.  Your employees, your customers and the market is watching for proof that the company can recover.  So take action.  Be deliberate and keep them simple.  Celebrate the wins one-by-one: market back what you are doing and the impact your actions are cultivating.  Simply put:  market hope.  A culture based on small, customer-focused wins will ultimately build into a culture that becomes truly customer-obsessed.  People need proof.  They need hope. And they need to hear it from you.  You can establish that through the celebration of small victories.
8. Examine How You Compensate:  People go where they smell the green. Their behavior will be guided by how you compensate and reward them for those things that you value.  If quality of product is crucial, is compensation aligned to the cycles required for a shipment?  If order time and fulfillment is critical, are teams responsible rewarded and compensated for their shared metrics that will ensure reliability in that performance?  Are you hiring people for the skills that you are the most crucial to delivering the value you need to deliver to customers?  This may mean changing how you compensate today.  It’s critical when a company pivots. And the well-done pivot does drive an upward spiral.  For example,  Twitter was an app to find podcasts at one point before it pivoted to move toward its current incarnation.  If you want buy-in on a pivot, aligning compensation is key.
9. Rinse and Repeat: Nothing about building a customer-focused culture is a one-off. It happens all the time, consistently, and needs to be tweaked and re-tweaked and new iterations come into play. The No. 1 thing above all is understanding your customers and what they want, and valuing that — and making sure your entire executive team and all their reports and everyone down the line values that as well. This takes time. It’s way more than one simple all-caps e-mail that launches a news cycle.

Mr. Friedman, I wish you all the best in the transition ahead.  And hope that one or two of these ideas might be helpful to you as you move forward.

All best,

Jeanne Bliss