Revenue Journal®

We are surrounded by an endless din and clatter of information, in the form of warnings, predictions, stories, statistics, news, and advice.

The longer I'm in business, the more I'm convinced that nothing "out there" matters as much as what is going on in your customers' heads, your own head, and the processes that you create to help your customers do business with you. Everything else - politics, natural disasters, man-made disasters, new inventions, stock markets, and the daily news - is hardly worth your time.

I heard someone say recently that you should spend 80% of your time on the top three most important things in your life. The sad fact is, it's incredibly easy to get sucked into spending 80% of our time on the least important things in our lives, which is why Stephen Covey's 7 Habits book continues to be a best-seller.

As a CEO or entrepreneur, customers should be on your "top three things" list, because if you have no customers, you have no revenue. If you have no revenue, you really don't have a sustainable business. So the first order of any business is to understand what customers are thinking and doing.

In reality, how much time do you actually spend, every day, focused intently on your customers? Asking it another way, how much time do you spend interacting with customers, versus the amount of time you spend with everyone else - employees and other managers, your investors, your finance people (because of regulations and taxes), and your business partners? If you were to actually keep track of the amount of time you spend with these types of people in a given day or week or month, I think you'd find that 80% of your time - if not 100% - is spent with people who are not your customers.

Employees and vendors are important, and of course you must remain in compliance with an ever-increasing, complex set of regulations. But as the leader of your company, if you are out of touch with what customers really want, you can't direct your employees and vendors properly. You can't determine which business structure is best. And you can't design and implement the processes that will lead to more revenue. All of the correct, revenue-producing decisions and actions come from customer knowledge.

Mark Hurd: Forget Davos, I'm going to Best Buy.

Mark Hurd, the current CEO of HP, is doing a great job of turning HP around. In the recent Forbes story about him, the reporter noted that Hurd declined to fly to the World Economic Forum in Davos, Switzerland in January, giving up a chance to rub elbows with other powerful people in politics and business. Instead, the reporter notes, "a few weeks earlier he spent a day working the floor at a Best Buy near HP's base in Palo Alto, Calif., to hear how customers viewed his products."

Have you ever heard of a CEO of a prominent electronics company actually spending time in a local store, talking to customers? It's not amazing to me that he did this; it's perfectly logical. If you want to know what your customers are thinking, you go where they are, and ask them. What's amazing is how rare it is for any CEO to do this.

Hurd is also a stickler for process, asking detailed questions and insisting on straight answers, as evidenced by this excerpt from the Forbes story:

Three months into his new job Hurd visited the main [HP] site, in San Diego, the printer division, whose $27 billion in revenue accounts for 29% of the total. He huddled in a conference room with a dozen managers who briefed him on their separate businesses, from consumer scanners to car-size commercial monsters able to print a bound book in three minutes.

"The whole staff is there, the lights are on and it's just you and Mark," says Steven Nigro, a senior vice president. "Everyone else is sitting around you, grateful they aren't in the spotlight." Hurd looked at Nigro's forecast for 2006 revenues, operating expenses and marketing and began his slow, steady questioning - if we added a bit more sales growth, how would that show up in margins? Where does the sales staff need more bodies?

"If you can't explain this better than I can," he told Nigro at one point, "come back in two months and tell me then what's going on." When they met again as planned, Hurd recalled every number Nigro had told him, without resorting to notes. News of such meetings flooded management, and the message was clear: You must understand how the revenue moves through your business and how your business fits into HP.

Hurd has had to battle through a nasty corporate scandal, where an HP subcontractor used impersonation to obtain phone records of employees, directors, and journalists to try to figure out who had been leaking to the press. In spite of this highly publicized scandal, HP has just become the largest tech company - beating out IBM, which had held that spot for 40 years.

Regular readers of this column know how I feel about CEOs who rub elbows with customers. They have an incredible edge over those who don't. They can't be fooled by internal, agenda-driven or delusional thinking. Combine that personal customer knowledge with a process orientation, and you've got the makings of a successful company, no matter what happens "out there."

New revenues come from two sources: identifying and meeting new customer needs, and efficient processes. Don't let the din distract you from your real mission.