Last week we looked at how open source thinking ensures passion within your organization is amplified. A school friend who I hadn’t spoken to since we became ‘old boys’ has come back from the UK and made the remark that the standards we let slip here in Corporate Australia, was startling compared to his experience in London town. More importantly by not sharing values and behaviours (internally and externally) we are at risk at not achieving our stated goals.

There is a tension at the heart of the relationship between most companies and their customers. Companies are offering better deals than ever, literally the best bargains in history. It has never been cheaper to fly, to make a phone call, to buy a laptop computer or obtain a hotel room. Yet the more companies raise quality and lower prices—and the more they spend on flashy ads and frantic promotions—the less they seem to impress their customers.

If, companies compete on the originality of their ideas and the power of their point of view, then what’s wrong with how they’re thinking about customers? One unfortunate answer is that too many companies aren’t thinking about customers. So many companies are so busy acquiring, consolidating, downsizing, and outsourcing that meeting the expectations of their customers runs a distant second to meeting the cost-cutting demands. To spin the African proverb, when two business elephants merge, it’s the customers who suffer. 

Most venture capitalists search for “killer-app” technologies that will lead to a killer IPO. Maveron (whose name is a blend of the words “maverick” and “vision”) searches for companies with a killer connection with customers—what Dan Levitan calls a “psychological contract” that redefines expectations and reinvents a category. 

Most venture capitalists search for “killer-app” technologies that will lead to a killer IPO. Maveron (whose name is a blend of the words “maverick” and “vision”) searches for companies with a killer connection with customers—what Dan Levitan calls a “psychological contract” that redefines expectations and reinvents a category. 

The parallels between Starbucks and Potbelly are uncanny. Like Starbucks, which started in Seattle 16 years before Howard Schultz bought it, Potbelly was a cult brand in its hometown long before it went national. Like Howard Schultz, Potbelly’s chairman and CEO, Bryant Keil, didn’t start the company himself. He was a devoted customer who bought the operation from its founders in 1996. 

Also like Starbucks, Potbelly has refused to franchise, relying instead on company-owned stores. It’s a more demanding, more capital-intensive strategy, but it maintains the quality, consistency, and personality of the brand—and it upholds the company’s psychological contract with employees and customers. 

As Bryant Keil explains Potbelly’s formula for growth, it becomes clear that he has huge ambitions for his company— all of which depend on maintaining a uniquely personal connection with his customers. 

Indeed, Potbelly makes big investments in the pursuit of productive imperfection. The company has a full-time design czar whose job it is to be sure that all the stores, whether they’re in Dallas, Indianapolis, or Washington D.C, have the right mix of signs, books, artwork, and artifacts to give them a personal touch and a local feel. Even the menu isn’t perfect. Potbelly’s official menu is limited to 11 core sandwiches. But over time, repeat customers learn that the shop makes lots of off-the-menu items—something known inside the company as Potbelly Underground. This ‘Underground’ is a small innovation that sends a big message: “The challenge is, how does a company get big but continue to feel small? Potbelly Underground helps a loyal customer tell the person on the other side of the counter, ‘I’m an insider, I’m part of the club.’ 

That’s a memorable lesson in how companies that are eager to forge a strong psychological contract treat even overeager customers. If you’re determined to encourage customers to buy into your values, then you have to value more than the easy sell. It’s a harder way to do business, but one that leaves a more lasting impression—and creates a more enduring relationship.