The 10 Principles of Success: What Made AO a Runaway Success

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As part of my job I see a lot of presentations from highly successful entrepreneurs – but one of the most inspiring ever has to be the one I saw today, hosted by NatWest Bank in Manchester.

John Roberts, CEO of ao.com, has an interesting story to tell.  The business started because a friend bet him £1 that he couldn’t sell kitchen appliances online – and 14 years later, it floated for £1.6Billion.

However, John’s presentation today wasn’t the usual ‘list of events as a corporate story’.  Instead, he talked about corporate mindsets and how he wants the organisation think and act – and his courage and original thinking on this are what really make him stand out as a business leader.  Here’s my summary of what he calls the Ten Principles of Success.

  1. Play devil’s advocate – he loves to debate, and with friends and colleagues he often argues in favour of something he actually disagrees with, just to see where that takes the conversation. His philosophy is simple – challenge everything and you’ll reach a step-change in thinking about the business. I’ve put this one first because it explains some of what follows!
  2. Build a great team. From the beginning he has paid a lot of attention to getting good people on board and seeing how they behave together – are they all rowing in the same direction? Every single new employee is met by either John or the CFO, despite the massive expansion the company has undergone.  And anyone who is not rowing with the team is ‘ruthlessly’ weeded out.
  3. Explain why. Too much management is purely instructional, but this is a short term tactic. Explaining ‘why’ is better.  If an employee not only knows how to carry out a task, but why it’s important, then they’ll do it better and take more pride in getting the right result.
  4. Principles not prescriptions. Empower staff with the responsibility to make things easier for the customer. Amazingly, staff in the AO call centre dealing with complaints have no financial restrictions – if they decide the best thing to do is to give the customer their appliance for free, they can do that without seeking permission.  Ultimately, the gain in reputation is worth more than the cash loss in correcting a mistake with generosity.  The guiding rule for all staff is: treat every customer like they’re your gran.
  5. The customer pays the bills. They vote with their credit card, and with their voice when reviewing the service. And recommendations are the best form of advertising.
  6. Outstandingly good service is more profitable than poor service. Rather than cutting corners on service, invest in getting a great result. Although this may seem counter-intuitive in terms of costs, getting the service right in the first place will reap rewards in terms of customer numbers and loyalty, and therefore profits.  Unlike similar national retailers who aim to get 85% of their deliveries completed first time, AO has a success rate of 99.7%, and the extra flexibility and convenience of their delivery service is the reason many customers chose AO.  And his best quote here: “Shit is an expensive commodity to shovel.”
  7. The tyranny of awe. The things that difficult for everyone get left alone – they’re not addressed by most companies. This of course is a market opportunity for the organisation willing to tackle it.  Many retailers charge a premium for Sunday deliveries – despite the fact there are many advantages in Sunday deliveries for both the customer and the retailer.  The roads are quieter for the delivery trucks, the customer is more likely to be at home.  AO has built its brand on delivering ‘when you’re in’.
  8. Always do the right thing. All staff are asked: would your Mum be proud of the decisions you made today? An example he gave was the follow-up to a tragic industrial accident.  All the legal advice said they shouldn’t prejudice any possible legal proceedings by talking to the family – but they did anyway, to give their condolences, because ‘it’s the right thing to do’.
  9. The value of praise and recognition. It’s not about pay; you can’t pay someone to care. Staff feel valued when they’re recognised.  Every week, John sends a hand-written thank you to the top ten examples of those involved in getting complements from customers for the service.
  10. Simplicity. The message must be simple – think of all the words you can delete. Simplicity “is a sharp knife that cuts through things”.

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