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> the compound annual return of the respondent group is 8.97% greater than the non-respondent companies. That's actually interesting, because I could easily ex

> the compound annual return of the respondent group is 8.97% greater than the non-respondent companies. That's actually interesting, because I could easily explain away the opposite result: CEOs who waste their time responding to personal letters aren't focused on improving company performance. For example, there's some potential negative correlation between time spent playing golf and company performance [1]. Granted, even if this were statistically significant you can think of explanations why it makes sense: "These CEOs have thought so deeply about their business that responding to these letters is trivial", or "Being forced to answer these questions is beneficial for the CEOs business acumen". Of course the most likely explanation is that the correlation is just spurious and the two things are unrelated. Still, would be an interesting study! 1: http://www.businessinsider.com/ceo-golf-rounds-indicate-poor-performance-2014-11 http://www.businessinsider.com/ceo-golf-rounds-indicate-poor...

auntad 8y ago
I'd suspect a valid correlation that's not a causation. If a company is generally doing well, presumably the CEO isn't under as much stress and doesn't have as many firefighting responsibilities as those whose companies are doing poorly. Hence having the time to write a letter to a stranger. Maybe those underperforming companies will bounce back and you'll find a (much delayed) response in the author's mailbox a few months down the line!
- bluGill 8y ago
  I think the correlation is real. The type of person who writes to a CEO is likely to do other things for the company. For instance they might be a undercover reporter researching a story. Responding to the letter can give the company free press, which can be far more valuable than the time a personal letter takes. Likewise, many companies have a comments toll free number. Almost nobody will call them (who has a comment about their toothpaste), but it turns out the type of person who does call those numbers is likely the type of person who tells all their friends which is the best toothpaste, and so it is important that whoever answers that phone is an expert on what makes their toothpaste great. (honest answers are important - this type of person already knows their stuff so lies will hurt) Also, CEOs often know they have trouble connecting with their real customers. If a real customer writes, that is real information that they cannot easily get in any other way. A good CEO will pay attention because what one person writes 100 others think but don't say at all. All of the above are things that make a CEO who doesn't respond under perform.
  - jpmoyn 8y ago
    The example of an undercover reporter sending a letter to a CEO under the premise that they will write a nice article about the company if the CEO responds is pretty absurd.
    - freeone3000 8y ago
      It doesn't have to be a nice article. A request for comment can either be responded to, where you have a chance for your words on record, or you get "<companyname> has not responded to requests for comment as of publishing." which is worse than whatever spin you could have concocted.
    - bluGill 8y ago
      Reporters who are reviewing products do. They might have 10 different blenders to review, and if there is a button that doesn't make sense a good response takes you from "2/10 the buttons don't make sense" to "9/10, the buttons are a little weird but once you get used to them..."
losteric 8y ago
My theory is CEOs that pay attention to smaller things miss fewer opportunities, and build a culture of doing so across the company. Look up Bezos' infamous "?" emails.
- fjsolwmv 8y ago
  "?" isn't paying attention to things; it's telling other people to pay attention to things. It's building a culture, I guess.
  - mynameisvlad 8y ago
    “?” is paying attention enough to recognize something is wrong and needs to be resolved immediately without spending the time to find the resolution yourself. To say that it’s not implies that every single email to him results in a “?” which is patently false.
  - swalsh 8y ago
    I absolutely think it's paying attention. The way he describes it is "if the data says one thing, but the customers say another, it usually means there's a problem with how you're measuring". He says he personally reads the emails that come in (though rarely responds).
  - imgabe 8y ago
    Telling other people which things to pay attention to is the CEO's job.
groby_b 8y ago
The time cost for CEOs to respond to your letters is likely zero - they've got staff to handle that. And so replies are really a proxy for "how deeply does the company care about its customers"
- mysterypie 8y ago
  > they've got staff to handle that The author is certain that the CEOs responded personally. He says, "[CEO] wrote me a two-page letter that addressed my ideas point by point", "[CEO] sent me a handwritten letter", and "[CEO] forwarded my ideas to his marketing leaders".
  - mkirklions 8y ago
    The CEO might dictate it and sign it, but I dont think they are writing. I try my best not to write anymore, I have interns that can do this. I need to be putting my resources to my expertise, coding.
    - bluGill 8y ago
      How many letters does the CEO get? If the answer is small the CEO of course handles it: it doesn't really take that long and the PR is worth it. If the answer is many, of course staff handles it, with form responses - even then the "interesting" letters get passed on.
  - Merad 8y ago
    There was a great article around a year ago about how the Obama White House handled letters to the president. Obama wanted to personally read and respond to about 10 per day (IIRC), but his response was in the form of jotting down thoughts and notes as he read the letter and handing them off to letter writers who knew the president’s speaking and writing styles well enough to write “his” response. I doubt the average CEO has dedicated letter writing staff, but those who are more serious about responding to customers probably have assistants doing something similar.
leroy_masochist 8y ago
Here's my anecdotal-experience-driven theory of what's going on with the golfing-CEO companies underperforming the non-golfing-CEO ones: it isn't a matter of lost productive hours while golfing instead of working. It's that the golfing CEOs are, as a population, different from the non-golfing ones. The golfing ones are a bit more extroverted and charismatic than the non-golfers; they "look like CEOs". They are more likely than the non-golfing ones to have attended a top-tier MBA program. Their average height is significantly greater than the non-golfers. And so on; you see where I'm going. Certainly there are plenty of introverted, socially challenged golfers out there. But within any population whether CEOs or lawyers or cops or musicians or whatever else, the subset of people who golf is going to be, on average, more extroverted than the subset of people who don't. I think this somewhat ties in to Taleb's argument that you should trust surgeons who don't look like surgeons, since their achievement of professional success despite their tendency to create a negative first impression is a robust heuristic of professional competence[0]. The population of non-golfers, averaged out as a population, were held to subtly higher standards that required better performance out of them. This means that non-golfers, as a population, tend to be more challenged at work over the course of their careers, and that it was less likely that individuals could "fail up" -- the Peter Principle extends further for extroverts. Anyway that's my theory. 0: https://medium.com/incerto/surgeons-should-notlook-like-surgeons-23b0e2cf6d52 https://medium.com/incerto/surgeons-should-notlook-like-surg...
- cjhopman 8y ago
  Interesting theory. Do you apply it to men in predominantly female occupations and vice versa?
  - leroy_masochist 8y ago
    That's a good question. Best stab at an answer is that I think it's true for most companies where it's possible that the next CEO will have gone to HBS and worked for McKinsey. Would be a fun topic for research!
  - kybernetikos 8y ago
    I think it's entirely plausible that the median woman in a coding job is better than the median man in a coding job because of this effect. That's why vague claims (like in the google debacle) that women are biologically less suited to coding than men might not be relevant to your organisation even if we were to believe it true in general. A similar effect may explain some of this: https://hbr.org/2017/09/the-comprehensive-case-for-investing-more-vc-money-in-women-led-startups https://hbr.org/2017/09/the-comprehensive-case-for-investing...
zingmars 8y ago
> CEOs who waste their time responding to personal letters aren't focused on improving company performance To be fair, you can't always be working. Sometimes you need to wind down, and golfing or responding to your customers does sound like something a CEO would do while winding down.
snowwrestler 8y ago
Why do most companies fail? Because of supplier or distributor relationships? Operational inefficiencies? Board relations? Legal compliance issues? No. Most companies fail simply because they don't sell enough stuff. There's an old joke that "revenue solves all problems" in business. Simply put--companies fail when they don't build a big enough customer base. CEOs who read and react to customer feedback are focused on the most important thing to their business: their customers. I would definitely not characterize that as a "waste of time." I'd argue it is some of the most valuable uses of time that a CEO can spend.

auntad 8y ago

I'd suspect a valid correlation that's not a causation. If a company is generally doing well, presumably the CEO isn't under as much stress and doesn't have as many firefighting responsibilities as those whose companies are doing poorly. Hence having the time to write a letter to a stranger. Maybe those underperforming companies will bounce back and you'll find a (much delayed) response in the author's mailbox a few months down the line!

bluGill 8y ago
I think the correlation is real. The type of person who writes to a CEO is likely to do other things for the company. For instance they might be a undercover reporter researching a story. Responding to the letter can give the company free press, which can be far more valuable than the time a personal letter takes. Likewise, many companies have a comments toll free number. Almost nobody will call them (who has a comment about their toothpaste), but it turns out the type of person who does call those numbers is likely the type of person who tells all their friends which is the best toothpaste, and so it is important that whoever answers that phone is an expert on what makes their toothpaste great. (honest answers are important - this type of person already knows their stuff so lies will hurt) Also, CEOs often know they have trouble connecting with their real customers. If a real customer writes, that is real information that they cannot easily get in any other way. A good CEO will pay attention because what one person writes 100 others think but don't say at all. All of the above are things that make a CEO who doesn't respond under perform.
- jpmoyn 8y ago
  The example of an undercover reporter sending a letter to a CEO under the premise that they will write a nice article about the company if the CEO responds is pretty absurd.
  - freeone3000 8y ago
    It doesn't have to be a nice article. A request for comment can either be responded to, where you have a chance for your words on record, or you get "<companyname> has not responded to requests for comment as of publishing." which is worse than whatever spin you could have concocted.
  - bluGill 8y ago
    Reporters who are reviewing products do. They might have 10 different blenders to review, and if there is a button that doesn't make sense a good response takes you from "2/10 the buttons don't make sense" to "9/10, the buttons are a little weird but once you get used to them..."

losteric 8y ago

My theory is CEOs that pay attention to smaller things miss fewer opportunities, and build a culture of doing so across the company. Look up Bezos' infamous "?" emails.

fjsolwmv 8y ago
"?" isn't paying attention to things; it's telling other people to pay attention to things. It's building a culture, I guess.
- mynameisvlad 8y ago
  “?” is paying attention enough to recognize something is wrong and needs to be resolved immediately without spending the time to find the resolution yourself. To say that it’s not implies that every single email to him results in a “?” which is patently false.
- swalsh 8y ago
  I absolutely think it's paying attention. The way he describes it is "if the data says one thing, but the customers say another, it usually means there's a problem with how you're measuring". He says he personally reads the emails that come in (though rarely responds).
- imgabe 8y ago
  Telling other people which things to pay attention to is the CEO's job.

groby_b 8y ago

The time cost for CEOs to respond to your letters is likely zero - they've got staff to handle that. And so replies are really a proxy for "how deeply does the company care about its customers"

mysterypie 8y ago
> they've got staff to handle that The author is certain that the CEOs responded personally. He says, "[CEO] wrote me a two-page letter that addressed my ideas point by point", "[CEO] sent me a handwritten letter", and "[CEO] forwarded my ideas to his marketing leaders".
- mkirklions 8y ago
  The CEO might dictate it and sign it, but I dont think they are writing. I try my best not to write anymore, I have interns that can do this. I need to be putting my resources to my expertise, coding.
  - bluGill 8y ago
    How many letters does the CEO get? If the answer is small the CEO of course handles it: it doesn't really take that long and the PR is worth it. If the answer is many, of course staff handles it, with form responses - even then the "interesting" letters get passed on.
- Merad 8y ago
  There was a great article around a year ago about how the Obama White House handled letters to the president. Obama wanted to personally read and respond to about 10 per day (IIRC), but his response was in the form of jotting down thoughts and notes as he read the letter and handing them off to letter writers who knew the president’s speaking and writing styles well enough to write “his” response. I doubt the average CEO has dedicated letter writing staff, but those who are more serious about responding to customers probably have assistants doing something similar.

leroy_masochist 8y ago

Here's my anecdotal-experience-driven theory of what's going on with the golfing-CEO companies underperforming the non-golfing-CEO ones: it isn't a matter of lost productive hours while golfing instead of working. It's that the golfing CEOs are, as a population, different from the non-golfing ones. The golfing ones are a bit more extroverted and charismatic than the non-golfers; they "look like CEOs". They are more likely than the non-golfing ones to have attended a top-tier MBA program. Their average height is significantly greater than the non-golfers. And so on; you see where I'm going. Certainly there are plenty of introverted, socially challenged golfers out there. But within any population whether CEOs or lawyers or cops or musicians or whatever else, the subset of people who golf is going to be, on average, more extroverted than the subset of people who don't. I think this somewhat ties in to Taleb's argument that you should trust surgeons who don't look like surgeons, since their achievement of professional success despite their tendency to create a negative first impression is a robust heuristic of professional competence[0]. The population of non-golfers, averaged out as a population, were held to subtly higher standards that required better performance out of them. This means that non-golfers, as a population, tend to be more challenged at work over the course of their careers, and that it was less likely that individuals could "fail up" -- the Peter Principle extends further for extroverts. Anyway that's my theory. 0: https://medium.com/incerto/surgeons-should-notlook-like-surgeons-23b0e2cf6d52 https://medium.com/incerto/surgeons-should-notlook-like-surg...

cjhopman 8y ago
Interesting theory. Do you apply it to men in predominantly female occupations and vice versa?
- leroy_masochist 8y ago
  That's a good question. Best stab at an answer is that I think it's true for most companies where it's possible that the next CEO will have gone to HBS and worked for McKinsey. Would be a fun topic for research!
- kybernetikos 8y ago
  I think it's entirely plausible that the median woman in a coding job is better than the median man in a coding job because of this effect. That's why vague claims (like in the google debacle) that women are biologically less suited to coding than men might not be relevant to your organisation even if we were to believe it true in general. A similar effect may explain some of this: https://hbr.org/2017/09/the-comprehensive-case-for-investing-more-vc-money-in-women-led-startups https://hbr.org/2017/09/the-comprehensive-case-for-investing...

zingmars 8y ago

> CEOs who waste their time responding to personal letters aren't focused on improving company performance To be fair, you can't always be working. Sometimes you need to wind down, and golfing or responding to your customers does sound like something a CEO would do while winding down.

snowwrestler 8y ago

Why do most companies fail? Because of supplier or distributor relationships? Operational inefficiencies? Board relations? Legal compliance issues? No. Most companies fail simply because they don't sell enough stuff. There's an old joke that "revenue solves all problems" in business. Simply put--companies fail when they don't build a big enough customer base. CEOs who read and react to customer feedback are focused on the most important thing to their business: their customers. I would definitely not characterize that as a "waste of time." I'd argue it is some of the most valuable uses of time that a CEO can spend.