Has Peak by Chip Conley been sitting on your reading list? Pick up the key ideas in the book with this quick summary.
What’s the right way to do business? If you’re an entrepreneur or starting your own business, you’ve probably asked yourself that question at some point.
Surely, there are many (many!) ways to go about it. But it is important to know: What needs and values – beyond the basic ones for the survival of your business – must you address to make your customers happy? And to make your employees and investors happy enough that they want to work hard for the business?
The author sets out to answer that exact question. Based on Abraham Maslow’s celebrated Hierarchy of Needs and the author’s own experience with running a successful hotel business, this book summary will guide you through the steps necessary to make your business thrive by emphasizing relationships.
In this summary of Peak by Chip Conley, you’ll discover
- why the author believes that relationships are the most important currency in both life and business;
- why meeting your customers’ unrecognized needs will make them advocates for your business; and
- why you should consider all your investors philanthropists.
Peak Key Idea #1: During the 2001 economic crisis, the author discovered a new way of conducting business.
Have you ever found yourself downhearted and unable to see the light at the end of the tunnel? Sometimes all it takes to pull yourself out of a time of crisis is a good book. This is exactly what happened to the author, successful hotelier Chip Conley.
Like many businesses, the author’s chain of twenty boutique hotels in the San Francisco Bay Area suffered badly during the recession in 2001.
The impact of the bursting dot-com bubble hit this region especially hard due to the many internet startups based in the area. Many businesses lost customers and money, Conley’s hotels among them.
One day, struggling to cope with the grim state of his business, Conley left the office to take a walk around town. He soon found himself in a bookstore, browsing the psychology section and recognizing a book he vaguely recalled from his days in college.
That book was Toward a Psychology of Being by Abraham Maslow, a classic in human psychology. The book focuses on self-actualization and finding peak experiences, or those high points of bliss in everyday life and work.
The author immersed himself in the book, reading for several hours, soon realizing what he had to do: reconnect with the dream that inspired him to start his business in the first place.
He would return to the initial idea of creating a business where his customers, employees, investors, and even he himself, would find joy and fulfillment.
Peak Key Idea #2: Abraham Maslow’s psychology points out that success is not only a matter of money.
What do you hope to get out of life? Some people will gravitate toward money and material things. Others toward less tangible things like loving relationships, creative and pleasurable work, or making the world a better place.
Abraham Maslow is a psychologist who proposes that there is more to life than simply survival and wealth. To illustrate this, he created a Hierarchy of Needs Pyramid.
The pyramid puts basic human needs, such as food, water and shelter, at its foundation. Once these are met, new needs like social connection and appreciation emerge until we reach the top of the pyramid. Here, Maslow places the need for self-actualization, i.e., reaching our full potential and finding deep meaning in our life and work.
Companies have a long history of ignoring higher needs like social connection, as it is intangible, i.e., it can’t be physically measured like financial profits. But recently a shift has been taking place and society is becoming more aware of the importance of intangible needs.
Take the South Asian country of Bhutan, where the king has decided to measure the prosperity of his country by looking at its Gross National Happiness index rather than the Gross Domestic Product.
This same shift is beginning to happen in the business world as well, where we can see companies looking beyond the basic needs of customers and employees.
For example, the intangible value of customer loyalty is now being sought after by companies as a way to measure new business through word-of-mouth recommendations.
And the needs of employees have also become important, as can be seen at outdoor apparel company Patagonia, which is shifting away from strict employee schedules and timetables for everyday work. As long as they make sure their work gets done, employees are free to enjoy breaks and outdoor activities on their own schedule.
Peak Key Idea #3: According to Maslow, relationships are the most important currency in both life and business.
Have you ever wondered why some business managers seem less cheerful and happy than the people who work underneath them? One theory suggests that they might be lacking the benefit of a positive relationship with their customers.
When you look at long-term statistics, you see that good relationships lead to a successful business.
Economist Fred Reichheld explains in his book, The Loyalty Effect, that with a sustained increase in customer loyalty of just 5 percent, company profits can increase by as much as 25 to 95 percent. This goes to show that it is worth the extra effort to focus on customer satisfaction over generating short-term profits by cutting costs or compromising on quality.
Strong customer loyalty can even be better than money in the bank when it comes to helping a business through tough times.
For instance, following the 2001 economic crisis, the author was able to take advantage of the customer loyalty his hotels had built up over the years. His business sent out letters to their most frequent guests asking for support and to recommend their services to friends and family.
The same long-terms benefits of good relationships apply to investors as well.
Businessman John Bogle explains the importance of creating good relationships with investors in his book The Battle for the Soul of Capitalism. It shows that, when investors’ only motivation is to make profits, they usually only hold on to their stock in a company for about a year. But if an investor is motivated by a personal relationship and shared values, the average holding time increases to six years.
So if you want customers and investors to stand behind your business through good times and bad, make sure you develop strong personal relationships.
Peak Key Idea #4: Happy employees are good employees.
How many people do you know who say they love to go to work? Chances are, not many. After all, workplaces tend to be sterile, noisy and unpleasant.
But some companies are starting to realize that it doesn’t have to be this way. Have you ever wondered what it would be like to work at a place you didn’t want to leave?
Companies like Google and Pixar are finding success by creating a new and exciting workplace with good food, fun events and nice parties. And this works out well because, at the end of the day, a big paycheck isn’t as great a motivator as you might think.
Sadly, most companies still look to pay raises as the most effective way to motivate and hold onto employees. But studies have shown that focusing on money isn’t the best way to go. Underpaid employees will remain unmotivated and employees that are already well paid don’t become any happier when they receive more.
What employees do want is to feel appreciated.
This is reflected in the book Managing with Carrots – Using Recognition to Attract and Retain the Best People by Adrian Gostick and Chester Elton. It quotes a study revealing that, when companies put an employee recognition and appreciation strategy in place, they are twice as successful in generating revenue than those without such a strategy.
Another way of motivating employees is to help them see and experience the good that comes from their hard work.
The author makes this clear to his employees by inviting them to stay at one of his hotels, free of charge, four times a year. This gesture itself is a terrific perk. But, more importantly, it gives the employees a first-hand experience of the service they are providing their customers.
Peak Key Idea #5: Satisfied customers are loyal customers.
So how do you go about creating customer loyalty? Ask yourself: Why do I keep going back to my favorite store?
It often comes down to good customer service. We tend to return to places where we feel welcome and supported in finding what we need.
Therefore, it stands to reason that, if you can figure out how to satisfy your customers’ expectations, they’ll be more likely to remain loyal.
The author’s Joie de Vivre hotel chain improved its chances at customer satisfaction by creating an online matchmaking tool. Customers answer a few questions and the service matches them to the hotel that best suits their personality and needs.
This shows that when you can find out the specific desires of your customers, you’ll be better able to satisfy them. And there’s been a growing trend in customers wishing to be seen as individuals with unique tastes that need to be met.
Take the successful optometry store, Paris Miki. The customer provides a word, like “retro” or “quirky,” and a computer system uses the specific shape of the customer’s face to recommend the best frames and lenses.
To go the extra mile in customer satisfaction, you can consider fulfilling the deeper desires of a client, even if it doesn’t necessarily fall into your business model. By tapping into your customer’s subconscious desires, you can provide an even more memorable and enriching experience.
At the San Francisco restaurant Café Gratitude, the waiter, after presenting customers with the daily specials, performs the odd ritual of asking them thought-provoking questions such as, “Which important person in your life would you like to acknowledge today?” Or “What are you grateful for today?”
By showing a willingness to share more profound and human ideals with its customers, the restaurant also satisfies their desire for a unique experience.
Peak Key Idea #6: Involved investors become long-time investors.
An investment partnership can be like dating. For the relationship to be more than just a one-night stand you should make sure to find out what your investor is looking for.
And finding out what they want should start at the business level.
Don’t assume every investor is a philanthropist. Nearly every investor wants to make a profit. And while some will have good intentions and a willingness to invest in a good cause, others will simply be in it for the money. It’s important to figure out their expectations so you can act accordingly.
The author, for example, sends out an annual survey to investors in an effort to make sure he knows what they’re thinking and where their priorities are.
Again, developing a strong personal relationship with investors is crucial for establishing trust.
During the 2001 financial crisis, the author turned to his investors for help. And due to their relationship, he was able to reach out to them using humor despite the grim situation.
Along with the annual financial report, the author sent out T-shirts to them that read, “I bought a hotel in San Francisco and all I got was this lousy T-shirt!”
Furthermore, history shows us that investors will have your back and be more loyal if they believe in what your company stands for.
This attitude dates back centuries to when members of religious orders would refuse to invest in slave trading or companies that dealt in alcohol or tobacco. Some investors really care where they put their money, and we still see it today with mainstream banks supporting investment opportunities in humanitarian and eco-friendly endeavors.
In Review: Peak Book Summary
The key message in this book:
As in life, the beauty of business is building heartfelt relationships with all the members of a company. A good company should give its employees, customers and investors the opportunity to not only fulfill their basic needs but also to feel appreciated, that they belong and that they can make the world a better place.
Be a dreammaker.
Whether you’re an employee looking to find more enjoyment in your work, a boss wanting to create a better workplace or a dissatisfied customer wondering how to find the service you need, take the time to sit down and dream. What would your ideal world look like? Perhaps you can find ways to make those dreams come true.
Suggested further reading: The Rebel Rules by Chip Conley
In The Rebel Rules, Chip Conley gives us the lowdown on success stories of entrepreneurial rebels. Conley makes sense of the seeming oxymoron of the rebel businessman, who embodies two apparent opposites – business savvy and refusal to play by the rules. He argues that business rebels, i.e., people who connect with their inner passions and dare to use their vision and instinct, aren’t only more successful in business but happier in general.