The Manager's Handbook

20Quality Drives Profit

We don't want to push our ideas on to customers, we simply want to make what they want.

—Laura Ashley

It wasn't my competition, higher expenses, or the Texas energy recession that almost cost me my first company—it was lousy service. I was 29 years old and with some investor money had bought a third‐generation business from the original family. It was a storied company, and prior to my involvement, the customer base had been so loyal that the average client had been with them for 11.4 years—a number I'll never forget.

With my MBA learning, I knew profits came from increasing revenue and decreasing costs. The faster the technicians worked, and the more salespeople we hired, the more money we'd make. So that's what I did. I increased the number of salespeople by a third and told them to go sell what they could, as fast as they could. I pushed our field employees to get the work done in less time. I cut overtime and put monitors on the trucks to reduce fuel expense. We switched to a cheaper health plan to save money.

For six months profits increased, just like my professors said would happen. Then the ground shifted beneath me. I learned that a customer was leaving after 23 years with the company. A service manager left to work for the competition—something I was told had never happened in the 88 years the family owned the company. Morale was plummeting. More of the best people were leaving, and the closing rate on our sales proposals began to drop because ...