J.D. (Dave) Power was never a “yes man.” If he was, consumers never would have had the benefit of his company’s 34 years of publicly available market research, and auto manufacturers — whether they liked it or not — would never have gotten the unvarnished, third-party view of their products, processes and customers that ultimately created a better product and a better customer experience.
Power is no longer affiliated with J.D. Power & Associates, the company he founded in 1968, having sold it to McGraw Hill in 2005. But he’s still speaking truth to power.
Upon the publishing of his new book (“Power,” by Sarah Morgans and Bill Thorness), Power shared some insights on his long road in the automotive industry. Here are my takeaways, which may give readers perspective on their own efforts to build their companies. The truth hurts, but the truth wins — though it may take awhile.
Power could have made a nice living by growing a research company that was attached to, and blessed by, a large automaker. But that would’ve been the typical research company of the day — similar to Marplan, the research arm of McCann-Erickson that consulted for General Motors. “I felt they (GM) weren’t getting the real answers they needed in their surveys,” he says.
In Power’s new model, he subsidized the surveys with the idea to eventually sell the data to the manufacturers. “The market research departments at GM, Ford and Chrysler disliked us having independent data because it was beginning to show that they weren’t doing their job,” he says. “We knew we had good data, but the key element was that we owned the data. So we could talk about it.”
Power forced the issue by sending out press releases on his findings. “So it was in the public domain,” he says. “The top managers (at the auto manufacturers) were reading the press releases. That created demand to get more information out of the studies. We went straight to senior management and the market research departments learned they had to live with us.”
It took years, but eventually all of the car companies subscribed, Power says.
Power made sure that the company’s independence would last after he gave up the reins. The company garnered more than 100 inquiries from potential buyers, including the large market research firms. “But we weren’t interested in going in with them, because we knew it would change the culture, very much so,” Power says.
When the company sold to McGraw Hill, one of the deciding factors was that it would keep the new company as a separate division. Create your work environment and understand it’s not for everyone.
J.D. Power & Associates started as the quintessential family business. Power recounts the oft-told story in which his wife would tabulate the first surveys while his children, before they went to school, would stuff envelopes and attach quarters (face up) to the surveys — the token thank you to respondents.
Power instilled this family atmosphere in the rest of the company as it grew. “That’s why we came up with (the name) J.D. Power & Associates — everyone was an associate,” he says. “We tried to foster that kind of relationship with all the people in the organization.”
What started with his wife’s tabulations led to a full-fledged coding department, initially staffed with students but also retirees, working second shift. Many of them became managers, including some of the retirees, staying on until the company was sold in 2005.
But Power’s work style and the way he fostered it wasn’t for everyone. “When we’d hire someone on at the senior level, my wife and I liked to take that person and their spouse out to dinner,” he says. “We’d listen to what was going on. Oftentimes you can pick up on other problems along the way. And some people didn’t want to do that (have dinner). So that was a red flag to me that we shouldn’t hire that person.”
“People either liked or didn’t like the environment,” Power says. “We weren’t trying to keep anyone, especially if they didn’t have the family orientation when they came in.” Know when it’s time to go.
As Power built his work around his family, it was fitting that his family became the biggest factor in the decision to sell.
Power’s wife — a co-founder of the business and with him all the way — died in 2002. “That was a blow, but I was also getting older and seeing that the company had grown so much that my life wasn’t my own,” he says.
At that point, the company counted 800 employees worldwide. “The family did not want to run the company,” Power says. “They saw it as too big and there were a lot of changes coming. I finally said we need to step back as a family.”
He saw how the Internet was changing his company, and he admits that building the company’s Power Information Network was taking too much of his time.
While his family was all in from day one, their positions grew to the point it was affecting their own family lives. “And here I was traveling around, busy with meetings with the CEOs of the car companies, and my son Jamey was in charge of our international operations,” Power says. “He had three children. He said, ‘I don’t want to have my children grow up the way I did.’”
After selling, Power stayed on in an advisory role, and Jamey and his daughter Mary held positions in the company after the sale, as well. His children now run his foundation and are active with the foundation’s charities. In Part 2 of this blog, Power talks about listening to your customer, car rental and auto dealer customer service, the automotive franchise system and how the customer now has the power.