The Red Velvet Rope Policy – Choose your Customers, Find your Vision
When your by-product becomes your product we have lost our vision. Money is a by-product. Your product is what you can give to the world.
– John Hope Bryant
Ever heard of the Red Velvet Rope Policy? Ask Michael Port about being particular about who you decide to work with. That is – the practice of aligning your business core competence with the customers you can best serve while simultaneously growing your own capabilities. It’s about not allowing the customer to wag the company. So choose carefully who you choose to do business with for both competitive competence building and depth of relationship.
I encountered this in spades yesterday. We had an interview with Michael Byrne, CEO of Linfox, the largest logistics company in Australia. Check this out: in about 2003 they made a concerted decision to selectively decommission 2/3 of their customers. That’s right, they consciously chose to let go about two-thirds of their customers over time, because they didn’t fit the vision of what Linfox intended as its own design, future and core competence. In some instances customers may have asked Linfox to sacrifice service integrity to ensure delivery of goods, or maybe some customers were trying to redirect Linfox into business areas they didn’t feel they wanted to build market share or product expertise. They probably suffered dearly for this noble decision right? Wrong. They tripled their revenue while gaining significant business capability.
I’m not done. Linfox is a logistics and freight business – a trucking business. their primary overhead and environmental impact is around fuel and energy use so it stands to reason that the pursuit of profit and market share might motivate them to marginalize their emissions concerns. Not so. They now teach eco-driving for their truck drivers, capture facilities rainwater runoff for re-purposing, build libraries in India, pursue zero emissions, and are leading safety initiatives in Australia instead of waiting for government mandate. That’s right – these initiatives aren’t to be legally complaint, they are all to do good, while doing good for their business. The community wins, and the environment wins, all while building the conscionable company – which becomes then the killer talent attractor. Think about it. What kind of company do you want to work for?