The Upside-Down PyramidCVRz - Amazon S3 Upside Down...The UPSIDE-DOWN PYRAMID How to Turn Your...

The

UPSIDE-DOWNPYRAMID

How to Turn Your Organization Upside Down and Turn Your Profi ts Right Side Up

R O I C E K R U E G E R J A M E S S K I N N E R

M A R K V I C T O R H A N S E N

© 2007, Roice Krueger, James Skinner, and Mark Victor Hansen, All rights reserved. 1

Ideas That Can Change Your Life™ in Business

The Upside-Down Pyramid How to Turn Your Organization Upside Down and

Turn Your Profits Right Side Up

Roice Krueger, James Skinner, and Mark Victor Hansen

“The Upside-Down Pyramid” shows you how to

take your organization and orient it toward the

customer. The customer after all is paying

everyone’s salary!

___________________________________________



The Upside-Down Pyramid

The Authors: ROICE KRUEGER co-founded Franklin Covey, the

world’s largest training company, and has supervised

consulting projects for 80 percent of the Fortune 500.

JAMES SKINNER is the founder of two global financial

groups that manage billions of dollars of assets. He is

also recognized as one of the world’s foremost business

thinkers and appears regularly on Japanese television.

MARK VICTOR HANSEN is the co-creator of the Chicken

Soup for the Soul empire and is the best-selling nonfiction

author of all time. His goal is to make the planet work

for all humanity!

NOTE: Ideas That Can Change Your Life™ is a

collaboration of three of the world’s most amazing

authors, speakers, and thinkers. The first person “I” may

refer to any of the authors.




Organization Matters

Do you work in an organization of at least four or five

people? If you do, you have seen organization dynamics

at work. In this book we will discuss organizations and

their basic structure.

We call it the upside-down pyramid. That’s what this

book is about. For those of you who are concerned

about getting your companies to focus on customers

and for those of you who want to improve the energy

and the direction of employees, I think you will find this

book very useful.

This topic has everything to do with leadership and

organizational skills.

The Traditional Pyramid

When you think of an organization, what shape do you

usually envision it as having? What is a typical way of

drawing a quick organization chart? It’s a pyramid, isn’t

it?




Let’s draw a simple organization chart with three levels.

Who do we put at the top of the pyramid? What’s

usually the title of the person? I’m just going to put

“Boss,” to make it really generic. We’ve got the boss in

the top level of the chart.

Now, who is in the center level of the chart and

reporting to the boss? We’ve got managers in this

hypothetical organization, so I’m going to put managers

in the center.

Who reports to the managers? Now, notice the

word we use: workers. The workers have named

themselves this because they do the work. They go at

the bottom of the chart.

Now, where do we traditionally put the customers?

Outside the pyramid, below it; we put the customers

down here.

Something’s already feeling a little strange, right?

Let’s look at the diagram and see how this works.




Who are the workers trying to keep happy? They are

trying to keep their managers happy.

Who are the managers trying to keep happy? They

are trying to keep the boss happy.

Who is the boss trying to keep happy?

The owners, the shareholders, whoever is out there,

right? (We will insert those in the diagram above the

boss!) These are the owners.




Who is taking care of the customers?

Nobody!

Have we got a problem?

Now this is a very traditional organization. Our

structures are created to force our people to try to keep

the boss happy. The structure forces the boss to try to

keep the owners happy. Everyone is looking up, but

what should they be doing? They should be looking

down. But they’re looking up, aren’t they?

Implications of the Traditional Pyramid

Now, let’s say there are 100 people in this organization.

How many minds are effectively being used to run that

company? One, right?

The boss is the only one who is being effectively

used, because everybody’s following the boss.

Have we got a problem?




If this company is competing against another

company, we’ve got a big problem!

Why are organizations formed in this manner? Why

have we adopted the pyramid? Where does it come from

in history and time? Thank about it.

Let’s take China. Who ruled in Chinese history? The

emperors and the empresses ruled. They were the

“bosses”; they had the power.

What gave them their power? The army was one

part of their power because the rulers maintained the

army. What else? The rulers had the gold, the money.

What else? They had the connection with God. Who or

what did the people believe gave the emperor or

empress their power? The rulers had a “mandate from

heaven,” right? That’s where they got their right to rule.

Now, there is something else that gave them

tremendous power: education and knowledge.

The workers had neither.




An Historical Perspective on the Pyramid

Over time we took that same type of power pyramid

and applied it to organizations and modern companies!

Who is treated as being close to the Deity in a

modern organization? The boss is close! Do you ever

question the boss? Do you ever challenge the boss?

People are very hesitant to do that. If someone does

challenge the boss, the mature people around may

understand that the power structure has changed.

However, most people don’t understand that. They

continue on, looking up with fear and trepidation, trying

to serve the boss.

This gives us dysfunctional organizations. People did

this in France, in England, in many countries of the

world. We had kings and queens who ruled.

But something has changed today.

Do the bosses have all the gold? No.

Do they have the army? No.




Do they have the education? Yes, but not all the

education.

So why are we still using this type of organization?

Why do we continue to perpetuate it?

Turn the Pyramid Upside Down

What do we need to do with this organization to make it

functional in today’s world? What would you do? Turn it

upside down, of course! Let’s see what this looks like.




The customers stay outside the pyramid at the top.

And then we’ve got our workers at the top, our

managers in the middle, and our boss at the bottom.

In this organization, whom are the workers trying to

keep happy?

They are trying to keep the customers happy. Good.

Who are the managers trying to keep happy? Think

twice; don’t guess at it. Who are the managers trying to

keep happy? It’s not the workers. Who should they be

trying to keep happy? There’s only one correct answer:

the customers!

Who is the boss trying to keep happy? He is trying

to keep the customers happy!

Who is taking care of the owner? The customers are

taking care of the owners.

Do you see this?




The Impact of Using Many Minds

If there are 100 people inside this organization, how

many minds are effectively being used to keep the

customer happy?

The answer should be 100 people are being used

effectively, because all of them are working.

If this organization were competing with a

traditional organization, who would win? The inverted

pyramid company, for sure.

Why Governments Flipped

Now, let’s talk about the key to how we flip the

organization upside down.

Let’s go back to history again. What dramatically

changed and caused a complete revolution in the

economies of the world, innovation, and how things

work? What happened in history? What forms of

government came about that replaced our emperors and

empresses? Democracy, parliamentary governments, and

so forth.




Who governs in the parliamentary style or

democratic style?

The people.

How did they get there?

What gave the power to the people? Why did we

have to invert the governmental pyramid? Why was it

such a revolution? Why did these people do that?

Education is the answer.

The power went to the people fundamentally

because of their increasing level of education. Often

they were as smart as, if not smarter than, the

aristocracy.

I sometimes think that people are still far smarter

than the politicians.




The power base shifted because of education. And

with education they gained the gold. They could elect

their representatives and they can take them out.

According to what? There was something that created

the model. The British created the Magna Carta, and in

the United States we created the Constitution. The law

governed the people, not a king or queen.

And the people agreed to live by the law, not by the

dictates of a king or queen.

How to Flip the Organization

Now this teaches us how to operate our organization

today. How do you liberate, today, the people inside the

organization so the boss is not dictating what needs to

be done and so people are looking up at the customers

instead of the boss?

Here’s the key that will transform your organization

today when you apply it. You must have a clear vision of

the purpose of your organization. What is the strategy

that you are implementing now? What is it that you are

focusing on? All of that should be focused on your end




user, the customer, because why else does an

organization exist?

An organization exists to serve the customer.

Well, what about the owner? Don’t the customers

exist to serve the owner?

See, we have a problem.

We set up all of our systems and processes. We track

profitability and we worship profitability. We shouldn’t

be worshiping profitability. We should be worshiping the

customer because the customer is the person who pays us! From

that we then create our profit.

So, we should create an agreement with all the

employees: a constitution. That’s why we have words

like mission, vision, value, strategy.

All our systems and processes should be pointing

towards the agreement or constitution. And here’s the

key: with all of that done, each employee needs to know




what they need to do to fulfill that focus. They should

know what their role is in fulfilling the purpose of the

organization.

Survey after survey finds that an average of

40 percent (sometimes even 70 percent or 80 percent) of

employees do not know or understand their role in the

organization. They don’t understand what their purpose

is; they only know they’re doing the work.

How about your organization?

Do you know your specific role or function in the

organization and how it ties in to the long-term and

short-term goals of the organization?

Whenever I ask these questions, generally people

just shake their heads at me and say, “I don’t know; I

don’t understand.” Now, even if you’re working with a

company of two, you still must coordinate two roles. If

there are three in the company, then three roles; if four,

then four roles; and so forth. The more people you get,

the more frequently you have to stop and say, “What is




truly important in my organization? What is it we are

focused on? How are we fulfilling the needs of the

customers?”

When you ask these questions, you will transform

the pyramid, and turn the organization upside down.

This is how you gain an agreement with all the people in

the organization and create focus.

Everyone knows what their role is in achieving this

focus on the customer.

Customer Focus

I want to give you two distinctions that can help you

accelerate the pace in which you turn the organization

upside down.

If you really want to turn it upside down, which way

does the power have to move? Down, right?

You have to push power down through the

organization in order for people to be able to actually

serve the customer.




Many people and organizations feel completely

disempowered. They would like to serve the customer,

but they can’t.

Have you ever felt you wanted to do something for

the customer but for some reason were unable to?

The boss doesn’t feel that way. He feels he can do

whatever he wants; he’s the emperor. In order to turn

this upside down, you have to push power down

through the organization.

In order to push power, you have to know where

the power comes from.

So, what is the greatest source of power in any

organization? What is it that managers traditionally try to

horde to keep the power?

Give the Employees Information

Information is the greatest source of power; if you have

the information, you have the power.




So, if you want flip the organization upside down,

where does the information need to move? Down to the

workers.

The workers have to have the information.

When I was starting out with my first company, one

of the most powerful things I did was share information

with my employees. Novel concept!

So, what is the most important information that

managers and the company like to horde?

The accounts!

Guess what I did with the accounts? I pinned them

on the wall: The entire cash flow, every inflow and every

outflow, I pinned on the wall. I didn’t even say anything;

I just taped it to the wall! Employees would come in the

morning and look at the cash flow, and they’d say,

“Dang, we’re in trouble!” We were just starting out; I

didn’t know how to run a company. I figured, man,




we’re in trouble, we’re going bankrupt, and they’ve got

to get a picture of this. So, I taped it on the wall. My

assistant would come in the morning and say, “We have

no money.” I came to work one morning and my

secretary wasn’t there. This is a true story. I went over to

her desk, and there was a note that said, “Dear boss, I’m

out selling today.” Nobody had to tell her to do it. She

said, “I’m out getting us some customers because we

don’t have enough money.”

Do you think the owners were happy about this? I

was the owner. I thought this was a really great idea. I

taped it on the wall.

The employees were coming in and saying we’re

spending too much money, because they had the

information. They started coming up with ways to cut

costs because they knew it was important. They had the

same information as the managers and the boss.

In most organizations, the boss and the managers

are the only ones with the information. So, the boss and




the managers are the only people concerned with getting

sales and cutting costs.

This is one of those “Aha!” moments. Now you’re

thinking, “Oh, no wonder the employees don’t care;

they don’t know, right?”

So, you need to push the information down. Is it

enough to push the information down to the workers?

Give the Customers Information

Ultimately, where does the information really need to be

pushed down to? It needs to be pushed to the customer.

Including our customers in the whole process is a novel

concept.

Can you name an organization that has pushed the

information down to the customers? How about

FedEx?

Can you find out where your package is? What plane

is your package on? Who cleared it through customs?

Have the duties been paid? You can go onto their site




and find exactly where your package is located. You

have as much information as the boss. You know as

much about a package as he does. Now, for anybody

who’s ever been a customer and wanted to find out

where their package was, was it useful to be able to get

that information? Do you feel better as a customer

because you have the information?

Now that you have a vendor who will give you the

information, are you interested in using a courier service

that will not?

See, that’s a really interesting thought, right?

If you start to give the information to the customers

and involve them in the process, they don’t want to use

anybody else.

Is it important in restaurants today to let your

customers know things like nutrition information? It’s

starting to become very important, because we have

people with all kinds of health needs. They are starting




to have access to all the information regarding their

health that used to be available only to their doctors.

The entire healthcare industry is being turned on its

head. Now they’re pushing the information down so the

nurses have information and patients have information.

Patients are starting to understand their own

illnesses, their own conditions, what their own DNA

predisposes them to, and are starting to make healthful

food choices based on what they actually need.

So many restaurants, particularly those that didn’t

serve healthful food to begin with, are finding it very

important to get information to the customers.

People are not going to places that will not give

them the information.

To keep up with this trend, organizations need to

push the information down. You also need to push

down the decision-making power.




Example: The Ritz-Carlton

One of my favorite examples of an organization that

manages to focus on the customers is Ritz-Carlton.

Their hotels are really terrific. You might want to go

sometime just to find out how they do it.

Every employee in the organization can, at any time,

without consulting a manager or a boss, spend $2,000 to

make the customer happy. Is that powerful? Anytime,

with no consultation, they can just do it.

The power has been pushed down. Is it enough to

push the power down to the workers?

Hello! You might be starting to get the idea of

where this is all going. If you are a manager or a boss,

you may be feeling uncomfortable about now. You’re

thinking, “What am I going to be doing? Not much!”

That’s a good thing, by the way. If everybody is

focused, you don’t have to carry 100 percent of the

burden anymore.




Will your customers pick up some of the burden?

Will they take some of the responsibility? Yes, if you

give them the power and the information.

So are there any companies that you can think of

that give that power to the customer?

Example: Dell Computers

How about Dell computers? They are not going to tell

you what kind of computer you should have. You just

go onto their site, choose the parts you want, and create

a computer just for you. The power to design the

product used to be with the company, but it is now with

the customer.

Who used to design the products? The managers

and the bosses used to decide what product they would

manufacture.

As soon as you started to realize that you could

decide what product should be manufactured, how

interested are you in a company that wants to tell you




what you should buy? Not very interested, right? You

should start to see the power of this.

The two things that you need to do to invert this

pyramid and get everyone focused on making the

customer happy—and making your competition very

unhappy—is first, push down the information, and then

second, push down the power. That’s how you make the

customer happy in today’s world.

Academic Examples

I want to talk about when my daughters went to

elementary school. I thought that if everyone who is rich

pulled their kids out of public school and put them in

private school or a charter school, the system fails. I

found this kindergarten teacher who was really good and

whispered to the kids, sang to them, and was

multilingual in class. I wanted to sit in her class because

it was so marvelous. She put the students first.

Back when I went to college, I learned that the

student picks the teacher, not the subject. I became a

student leader: a student senator and then student body




president. At my university (Southern Illinois University)

I was told that the power structure was inverted and that

the customers in this case were the students. It was

students first, faculty second, and administration never.

The students were the kings and queens and emperors

and empresses. We got a fine education too. They asked

us to tell them what we wanted to learn and how we

wanted to learn it. They said, “We’re going to arrange

seminars for you to take. Whom would you like to teach

them?” Then they helped us pick professors from

Harvard, Wharton, Yale, and Stanford who were 65 and

retiring. They put the power back with the kids.

Of 64,000 students, maybe only 20 or 30 of us were

really making decisions, but all the kids had access to us.

And we had access to the president, the board chairman,

and the chancellor.

Turning the university system on its ear was a great

idea.

Summary

Turn your organization upside down.




Put the customers at the top and focus everyone in

the organization on the customer. Share information

with the employees. Give them the power to take care

of the customers. Enable the customers by sharing

information with them and giving them power to get

what they want!

We hope this information will assist you in being a

great leader in your organization and in the world in

which we live.

With best wishes,

Roice Krueger, James Skinner, Mark Victor Hansen

___________________________________________

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