While much in the technology industry and the economy has changed since Winning Workplaces named Rackspace Chairman Graham Weston as a Best Boss in 2006, he tells us their business strategy – providing unmatched service – remains a constant. Read more of Weston’s thoughts below, including what he plans to say to attendees of our 2009 conference as a keynote speaker.

Rackspace was the first and remains the best example of using the concept of “Fanatical Support” to find and maintain business. How have you continued to be a leader in this practice, and how has this involved employee engagement and innovation?
There are two ways to differentiate a company – culture and service – and we’ve chosen to differentiate on both of those. They’re hard to do, and that’s because they require a long-term focus and persistence around putting your people first and being accountable to customers. These are ideas that are easy to say and put in a brochure; they’re just very hard to put into practice.

We’ve been saying since 2000 that the critical thing you have to get right in hosting is the service element, and lots of companies would agree with that now, but none of them have been able to pull that off. It’s hard to do, and when things are hard to do it’s a barrier to entry. If it’s hard for us, it’s really hard for someone who’s not as committed to it.

And that’s where 1600 additional employees come from since 2006. It comes from having lots of people who are telling their friends about us.

There’s been a lot of talk that, despite the bad economy, businesses can and should deliver more value to customers and other stakeholders. What are your thoughts on this, and how is Rackspace doing this?
We’ve been fortunate in being able to continue to grow all the way through this downturn, but we’ve still tried to focus more effort on eliminating things that don’t create value for customers. We’ve asked questions like:

  • How do we let customers find their fit?
  • How do we give our associates, whom we call Rackers, permission to let a customer move from one service to another, even if it results in less revenue?

What we’ve found is that needs – email, a website, computing – come and go, but customers are forever.

What will you speak about at our October conference, “The ROI of Great Workplaces”?
My general thesis is that a winning workplace pays for itself and accelerates the business because you’re engaging everyone in the organization rather than a select few. I think the power in these companies is that you’re inviting everyone to take ownership over what’s happening.

When someone recommends us to a friend or raves about us, we call that person a promoter. Our mission is to create promoters. When all our customers become promoters, that’s a glimpse of greatness in our minds.

So winning workplaces not only create greater levels of engagement, ownership, innovation and productivity – they also reduce your marketing and sales costs because you’re turning your customers into your sales force.

So I think there’s a huge ROI. What I mainly want to talk about is the fact that you’re either in a virtuous cycle or a doom loop. In the virtuous cycle, you treat your people well, they treat your customers well, your customers tell their friends, their friends call you and want to buy, and you need to hire more people to meet demand. But in the doom loop, your employees are mad because they’re being treated poorly, they quit, your service levels go down, your customers get angry, and they then tell their friends how bad you are.

There are so many companies that make a science out of denying you service. For example, when I call Southwest Airlines, I know someone is going to pick up the phone. But when I go through other airlines, I know they’re going to make me go through their awful voicemail system.

We just think that if a company sees its mission as one of creating customers who love it, and if you can harness the power of that virtuous cycle, there’s enormous ROI from it. It creates sustainable competitive advantage in the marketplace.

What are some of the internal metrics that the virtuous cycle can improve?
When you work for a company you’re proud of, you have a greater sense of ownership and so your employee turnover falls. This makes recruiting costs fall. It also reduces both orientation and ongoing training costs. So much of a company’s operations deal with needless employee turnover, so this lowers all those related costs.