By: Chip Conley



If you’ve ever taken a psychology or business organisational course you will have come across Abraham Maslow and his hierarchy of needs which describes how an individual requires fulfilment of an increasing pyramid of requirements: physiological, safety, love/belonging, esteem and ultimately self-actualisation.

Maslow based his study on exemplar people such as Abraham Lincoln, Albert Einstein and Eleanor Roosevelt rather than the sick or infirm, people he called “Peakers”, people who had characteristics of creativity, flexibility, courage, willingness to make mistakes, openness, collegiality and humility – what we aspire too in business.

So in the next ten minutes, join us to find out how Chip Conley believes following the same process can help your business “Peak” and how to get “Mojo from Maslow”.

Lesson 1: Karmic Capitalism.

In running his “Joie de Vivre” chain of boutique hotels, Chip Conley is committed to using his business as a vehicle for making a better world. He calls this Karmic Capitalism. He believes karma, applied to the business world, means individuals in companies must consider the long-term effect on their actions – on the environment, the community, their relationships and themselves.

The problem with business today is the fact we get too close to the transactional day-to-day details of work and have less time to think of what we need to do to create a good karma. As a result we can divide businesses into two types.

X or Y? Every company is organised based on one of two certain premises of human nature: Theory X – where businesses subscribe to a mechanical or highly hierarchical approach to management in which people need to be watched and controlled because they inherently dislike work and want to be directed or Theory Y – where people are motivated to work and enjoy controlling their work environment if certain conditions are satisfied.

Although most of us would express our support of Theory Y, the reality is most business are still organised according to Theory X with hierarchical employee reviews, timekeeping and probationary periods for new starts common.

With Theory Y based organisations - the Karmic capitalists - making the conscious decision to live a work life with a humanist approach completely alters the perspective of how business decisions are made and how business relationships are conducted.

Companies that cultivate an environment that allows for peak individual performance are rewarded with peak company performance. They are able to show that qualities like creativity, integrity, trust, optimism and teamwork have a profound impact on productivity, customer retention and product quality. Business by being nice? Strange thing Karma.

Lesson 2: Maslow for Business

As we identified, Maslow’s pyramid of hierarchical needs has five layers: physiological, safety, love/belonging, esteem and ultimately self-actualisation. In the two base layers basic survival is where an individual places their attention. For a company this means the organisation is just focussing on the basics of running the business.

Like many companies facing the current economic squeeze, it is treading water but in a pond full of ripples that could turn into tsunamis. Theory X companies may cancel the holiday party as a short term move but possibly the opposite of what the company culture needs to surf the tsunami.

Further up the pyramid we reach for success in our social relationships and in our esteem. These third and fourth levels of Maslow’s hierarchy represent what many people and companies strive for. It’s the stuff that brings us a sense of accomplishment as a business person. Satisfying, but not transformational. Where transformation occurs is at the top of the pyramid.

Conley represents these levels in his own pyramid, the Transformational pyramid, which can in turn be used as the framework to apply Maslow’s hierarchy of needs to the three most crucial relationships found in the workplace: with the employee, the customer and the investor.

Lesson 3: The Employee Pyramid

Money creates base motivation:

Money isn’t the most important thing in life, but its reasonably close to oxygen on the ’gotta have it’ scale “ 
- Zig Ziglar

Hands up if you disagree? I thought not. But the key point is: it creates base motivation not all motivation. Whilst money is at the base of the Employee Pyramid, it needs to be considered more broadly than just the size of the paycheck.

Most companies are aware of what a competitive basic wage entails and there is little difference between competitors. Most employees (at least in the western economies) find that their salary pays the rent so it’s really the tangible and intangible benefits that differentiate you in their eyes.

Unless you are a Theory X company, you will aspire to provide your employees a package that not only permits them to fulfil their hierarchy of needs but also allows you to aspire to greater things. As Peter Drucker said, “Dissatisfaction with money grossly demotivates. Satisfaction with money is however, mainly a ‘hygiene factor’”.

Google represents a good example of the use of intangible benefits to motivate employees from free company cafes to free car washes. In our time compressed world, maybe the greatest compensation gift and employer can give its employees is time off. The intangible benefits here are significant. What other assets, perishable or non-monetary could make a difference for your employees?

Appreciation Creates Loyalty.

As William James a peer of Maslow once wrote, “The deepest hunger in humans is the desire to be appreciated”. This is no less appropriate in business where most organisations are so caught up in the tangibility of compensation issues that they forget to say “well done”. The irony is that compensation costs big dollars yet only satisfies base needs whereas recognition is an inexpensive gift that provides a huge “bang for the buck”.

Loyalty to a company is inextricably linked to loyalty to work superiors but “employees join companies, but they leave their managers”. What people want most from their supervisors is the same thing kids want from their parents: someone who sets clear and consistent expectations, cares for them, values their unique qualities and encourages and supports their growth and development.

Great companies educate and obligate their managers to provide one-to-one informal and formal feedback mechanisms to their subordinates to reinforce business objectives. In addition, a company will find that regularly exercising this recognition muscle will help break down the silos that start to develop between departments. When the director of technology calls a relatively new sales person to congratulate them on signing up their first corporate account, it sends a message that everyone’s i it together.

Meaning creates Inspiration.

People want to work for a cause, not just for a living. However too many organisations ask their employees to engage in hollow work, to be enthusiastic about small-minded visions, to commit themselves to the selfish purposes and competitive drives of the company. Conley, suggests there are three kinds of relationships someone can have with work: You can either have a job, a career or a calling.

This ties in with the Transformational Pyramid: Someone who sees the relationship as a job will be anchored to the survival level with money the tie in, those on a career path find motivation on the success level and those who experience work as a calling at the transformational level.

There is however a subtle difference between meaning at work, and meaning in work.

Meaning at work relates to how an employee feels about the company, their work environment and the company’s mission. Meaning in work relates to how an employee feels about their specific job task. It is the achievement of meaning at work that realises transformation. So how can meaning at work be achieved? Conley believes an employee must align intrinsically to the mission of the company. If the company can identify its higher calling: what philanthropic, strategic or humanistic mast it “pins its colours to” – then the employee can in turn find meaning.

“In the end it is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work.” Jim Collins, Good to Great.

Lesson 4: The Customer Pyramid

Satisfaction is Created by Meeting Expectations

“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today because that need was filled by others (cars, trucks, airplanes and event telephones). But because it was not filled by the railroads themselves, they let others take customers away. They assumed themselves to be in the railroad business rather than in the transportation business.” - Ted Levitt

What risk affects most companies? Getting comfortable with purely satisfying customers rather than delighting the hell out of them. When a company’s leadership is focussed purely on meeting the expectations of their customers, the company can become a sitting duck for a surprise competitor with a new mousetrap.

The fact is there is a parallel between the Customer Pyramid and the Employee Pyramid. Business leaders become fixated on the bottom of these pyramids – employee compensation and customer satisfaction – purely because they’re easily measurable. So how can we get beyond base camp? Every industry has a natural time based product or service evolution and we need to know where we are.

  • Stage One: Initially the companies that launch an industry are just trying to meet the acceptable minimum standards. Stage One companies are focussed purely on offering their clients an acceptable product.
  • Stage Two: During Stage Two new competitors enter the market and differentiation starts to occur, focussing on answering customer needs. The successful company during this stage of an industry tends to be market-driven.
  • Stage Three: Finally Stage Three dawns and a new more innovative competitor emerges, a competitor that realises client’s expectation and expressed needs no longer drive the market. The customers have run out of ideas. The customer’s untapped desires become the key in a Stage Three industry and the successful companies are imagination driven. So where is your industry? Are you ahead or behind the curve with respect to evolving at a pace to keep up with your customer’s needs?

Allegiance is Created by Meeting Desires

Meeting desires is all about understanding the unique preference of a customer. In today’s lingo we call this “mass customisation” or the ability to cater to a “market-of-one” and do so over and over again.

We’ve moved from one-size-fits-all culture to a one-size-fits-one customer. Being normal does not carry the currency it once did. We all want to feel special, a little different, and companies that indulge this yearning are richly rewarded. “Validate me”. That’s what customers are looking for on this middle level of the Customer Pyramid.

Such is the prevalence of CRM systems today, you would think that we have got this mastered. But that is not the case. As Seth Godin is known to have said, Customer Relationship Management wrong. You can’t manage customer relationships. Customers manage the relationship. Today’s successful leaders therefore realise that “touch” is possibly more important than “tech”.

Market Evangelists are created by Meeting Unrecognised Needs

To address the unrecognised need of its loyal customers, companies need to find a way to give them What Conley calls “an identify refresh” - some status, some belonging.

How can this be achieved? The first step in rising to the peak of the customer pyramid is to be willing to ask: What business are you in? Like the railroad example earlier, we need to think beyond our normal lens and identify what we really mean to our customers. Like Apple or Harley Davison, can we offer something beyond the product?

We need then to follow up with the question: What are the unrecognised needs of our customers? Apple positioned themselves at the top of the pyramid by suggesting to customers that with an Apple product you can do anything –technology is the by product. Harley Davidson, through HOG owner groups created a social connection. At the peak, combines with the inherent customisation of their rides, Harley owners experience freedom of expression.

How can you do it? Help your customers meet their highest goals. Give your customers the ability to truly express themselves. Make your customers feel like they are part of a bigger cause. Ultimately, offer your customers something of real value that they hadn’t even imagined.

Lesson 5: The Investor Pyramid

Trust Through Transactional Alignment

Everyone in a business is affected by the relationship a company has with its investors. Whether you’re the CEO of the mail boy, you must have your investor’s interest at heart. Note: Investors aren’t only those who provide financial support, Investors could also lend moral, ethical or cultural support. Leaders are also Investors.

The Investor Pyramid focussed on how you create a strong foundation for the relationship with the person to whom you report. You can’t meet investors’ expectations if you don’t understand their goals. Get this right and you’ve created trust - the foundation bricks and mortar that any successful relationship needs.

What’s foundational for an investor is the peace of mind that comes with the feeling that his or her investment goals are aligned with the company goals, such that strong ROI is being created. When peoples interests are completely aligned and an investor believes in the integrity of those he or she has invested with, trust is the natural response.

It’s a bit like dating. You don’t rush into a marriage until you’ve made certain that your compatible in some of the key basics. The reason many customer-investor relationships don’t work out is that the two parties didn’t communicate their individual intent to see if they had the same goals.

So what do you do? Before they invest make sure you understand the tangible motivations of your investors. What do they want out of the “marriage”. Beware of the “wrong owner” syndrome. Make sure you both have the same vision and commitment. Don’t be swayed by the glamorous suitor. Beauty is only skin deep. It’s all about being open. Practice honest, direct and regular communication with your investors. Share your thoughts and aspirations. That way there will be no surprises.

Assurance Through Relationship Alignment

The focus of a transactional alignment is the deal, both in the structure of how the investment is made and the cash flows that are generated. The focus of relationship alignment, however, is the long term collaboration that can flourish when a money source and an entrepreneur come together.

Relationship investors don’t judge the people they invest in on a moment by moment basis. What these investors are looking for is the overall strategy. They see long term relationship. They are willing to invest in an entrepreneur many times, knowing they will eventually come up with the goods.

How can you establish relational alignment? First and foremost, make sure you have chosen investors who are interested in moving beyond pure transactional alignment and then explore their deeper motivations. Consider some perks that might sweeten the relationship. Some investors have more money than they need. What they are looking for is access, a little VIP treatment or something to spice up their life.

Mojo is the Ultimate Legacy

If there is one constant theme in all three pyramids, it’s that conventional wisdom is wrong. Money is not the primary motivator for employees, customers don’t stay loyal if they are merely satisfied and investors are not exclusively focused on the financial return on investments. These are base needs that ignore higher human needs. At the peak of the Investor Pyramid its ultimately a legacy, not liquidity that people seek. In essence, they seek to grow their mojo.

More and more investors are putting their money where their heart is. Philanthropic investments are on the rise. With the Gates foundation and Warren Buffett leading, with a bit of help from Bono, legacy investors are seeking higher needs such as intellectual satisfaction even - Maslow’s Self Actualisation.

Legacy investors typically invest in the way they do to “give back” in a significant way and transcend their own lives. They see the psychic returns of making a difference in the world - returns that, like the pyramids of Cheops, survive the sands of time.