When Henry Juskiewicz acquired Gibson Guitar in 1985 he faced a company with a great heritage but near collapse. In a recent interview with USA Today, Juskiewicz disclosed one of the steps he took to turn around the flagging company. To enforce the concept of product excellence, Juskiewicz took a faulty guitar destined to be sold as a “second” and in the presence of the company’s employees, smashed the guitar and declared that as of that moment, any guitar that would not meet the standard of a first-class Gibson guitar would not be sold to customers. Juskiewicz would rather see these guitars destroyed than end up in the hands of customers. To emphasize his philosophy, he instructed employees to smash each faulty guitar. Each week, Juskiewicz would lead his employees by using a chainsaw to complete the destruction of faulty guitars and ensure that they would never end up in the hands of customers.
To many, this procedure may sound theatrical and harsh. Finance people will likely argue that by smashing guitars that can be sold as seconds, the company loses out on a potential revenue stream. They will argue that defects in these guitars are rarely noticeable to the naked eye and will not impede on the customer’s guitar playing. However, Henry Juskiewicz realized a deeper truth, that however tempting it may be to capture additional revenue from the sale of faulty or defective products, in order to deliver amazing customer experiences, one cannot sell seconds. The impact on brand image and on the customer experience will ultimately be devastating.
While destroying guitars with a chainsaw may be a painful sight, this action sends two critical messages. The message to employees is that Gibson Guitar is a “no-excuses” experience and that anything less than perfection will not be tolerated. Product superiority is a competitive and strategic advantage and selling faulty guitars, however minute those faults may be, erodes that advantage. Furthermore, tolerating seconds will lead employees to accept less than the highest standards. Production standards will ultimately decline and the customer experience will be diminished. A subsequent reduction in profits and decline in customer loyalty will soon follow.
The message to customers centered on the company’s high product standards. By witnessing product excellence each time customers bought or played a guitar, they would know that Gibson Guitar provides only the very best. Customer expectations and experiences would be exceeded and delightful. By destroying faulty guitars, Juskiewicz was destroying any attitude of taking customers for granted. It would make no difference if faulty guitars were offered at a discount or that these guitars were clearly marked as being faulty. The brand would be tarnished and Gibson guitars would be identified as being less than perfect. A commitment to excellence is predicated on offering only first-class products and never allowing anything less than first-class products to reach the market. It is only by having this unwavering commitment to quality that Gibson was able to deliver excellence and ultimately delight its customers.
A short-term view will often lead executives to increase revenue by selling faulty or second-class products. Many companies succumb to this temptation and their myriad products can be purchased in a variety of outlet malls throughout the country. While revenue may in fact increase, the effect of selling faulty or second-rate products on the organization’s employees can be devastating. Employees will view less than the highest standards as the company norm and their work will ultimately reflect that reality, leading to greater compromises on product quality.
While destroying guitars and giving up revenue from faulty products may be costly, any organization that is committed to excellence must take painful measures. Organizations that seek true long-term loyalty from customers, must deliver that same level of commitment. No excuses, including offering discounts will matter. Organizations are either committed to excellence and the continual improvement of product and service standards or it is not. Product and service excellence are more than just buzzwords or nice ideas – it can serve as a competitive differentiator and strategic advantage.
Product and service excellence can also serve as a means to charge and obtain a higher price for products and services. At Gibson, prices had been declining twenty percent a year and to the astonishment of employees, Juskiewicz not only raised prices, in some cases, he doubled them. Yet even with dramatically increased prices, volume continued to increase. By offering a product that delighted customers, Gibson was able to significantly raise prices and have customers reaffirm their conviction in the value delivered by their premium priced products.
While Juskiewicz stated that the chainsaw process continues this very day, he points out that the pile of broken guitars is much smaller. By sending the message that only perfection would be accepted, Juskiewicz has not only raised the quality of his company’s guitars, but the production and service standards of his employees. After all, no employee wants to see the result of laborious efforts being destroyed by a chainsaw. Yet Juskiewicz knew that employing harsh and theatrical measures were necessary to shake up his company. By keeping a watchful eye over the program, he made sure that his company’s commitment to perfection would remain intact. As it is with all commitments, if dedication does not go up, it naturally goes down. This is a compromise that no company can afford to make.
Lior Arussy is the President of Strativity Group and the author of several books. His latest book is Passionate & Profitable: Why Customers Strategies Fail and 10 Steps to Do Them Right! (John Wiley & Sons, 2005). Read an excerpt of this book.
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