The following post originally appeared on the Harvard Business Review Blog Network.

Listen in on MBA classes and corporate conferences and you will hear a lot of talk about the need for inspiring missions, ethical behavior and transcendent purpose. And judging from the “core values” statements in most annual reports, the vast majority of business leaders want their companies to grow by enriching the lives of their customers and employees.

And yet, this can often sound like so much fluff in the real business world. Our system of financial accounting rewards quarterly profits, but struggles mightily to place a value on ethical behavior. Even accounting rules specifically dealing with reputation — goodwill and intangible assets — are subject to frequent rule changes and endless debate.
Perhaps the accountants are just overcomplicating a basic idea. Reputation is earned through the simple, age-old concept of the Golden Rule: treat others as you yourself would want to be treated. Each time you live up to the Golden Rule, your reputation is enhanced; each time you fail, it is diminished. And the mathematics of long-term financial success — revenues, profits, cash flow — square perfectly with this scorecard.

We all want to be treated with honor and respect in ways, large and small, that enrich our lives. Such experiences not only make us happy, we want to share them with people we care about. By recommending an experience, we’re signaling our trust that our friends will be treated similarly. Recommendations also signal to businesses how customers view their relationship with the company. When customers feel so well treated that they enthusiastically recommend a company to friends, they are promoters. When treated so badly they recommend avoiding the company, they are detractors. Both have direct and measurable economic consequences.

This is the concept at the heart of the Net Promoter system, which my colleague Rob Markey and I describe in our book, published last month. The Net Promoter system focuses the entire organization on generating promoters, who buy more, stay longer, refer friends and even provide useful feedback and ideas. It also helps minimize the number of costly detractors. A recent research project we conducted found that across multiple industries, the company with the leading Net Promoter score typically grew more than twice as fast as their competitors.

That should keep the accountants happy. But for companies, executives and employees, there’s also an inspirational dimension: the system provides them with a practical way to measure how consistently they treat people right. You might call it the Golden Ruler.

That’s how Walt Bettinger, chief executive of Charles Schwab, describes his company’s Net Promoter system when recommending it to other CEOs:

“First, I ask them if they believe in the importance of the Golden Rule — that ancient moral and ethical principle that we should treat people the way we would want to be treated. They always nod emphatically and say, ‘Yes, of course.’ So then I ask them what they do to measure how consistently they and their organization are living the Golden Rule each day. Their typical response: ‘Well, it would be great if we could measure it, but there’s no practical way to do that.’ To which I reply that there most certainly is a way. In fact, at Schwab, we have been using the Net Promoter System to measure our Golden Rule compliance for more than five years, and it works brilliantly. Net Promoter is the first screen I open when I boot up my computer each morning. It lets me know for each part of our company how we are performing in living up to our core values. By making NPS a top priority, we have become a better company — not just in terms of living our core values, but also in terms of profitable growth.”

Bettinger is not alone. CEO Dan Cathy explains the winning strategy at Chick-fil-A in similar terms: “We strive to deliver something for which there is unlimited demand–being treated with honor and respect. There seems to be a very limited supply of that in today’s world.”

These CEOs have not discovered a new concept: in one form or another, the Golden Rule is a pillar of most of the world’s great religions and it also lies at the heart of secular ethics. Business ethicists Paul Lawrence and Nitin Nohria describe the Golden Rule as an expression of the basic human instinct to bond with others.

The challenge executives face is how to put the Golden Rule into practice, especially when the lingua franca of financial accounting pushes the business to focus on short-term profits. “[M]orals are such a central and pervasive aspect of human life that we badly need a scientific way of understanding them,” Lawrence and Nohria write.

As CEOs Bettinger and Cathy have discovered, a Net Promoter system provides one framework to do that. When properly installed and operated, it delivers financial growth. But it also shows that those MBA class discussions and annual report rhetoric aren’t just fluff. If you build a way to measure it, you’ll find that it really does pay to be good.

It is surprising how often I hear about Chick-fil-A from my friends, even though I live in Massachusetts where there are only a couple of Chick-fil-A restaurants.  For example, I was sitting in Bain’s Boston headquarters with the partner team that oversees the firm’s internal Net Promoter process (Bain gathers NPS feedback from its major clients on a regular basis).  During a break, I happened to mention to the partner representing our Dallas office that I had invited Dan Cathy, the president of Chick-fil-A, to speak at the upcoming NPS Conference in Miami.  

My partner exclaimed that his family simply loved Chick-fil-A and visited the restaurant in his Dallas neighborhood almost every week.  He then confided that it was really his three-year-old son who was the biggest fan. Whenever the family got in the car on Saturday, the three-year-old would ask if they could visit Jose the mop-man.  My partner explained that the first time they visited their local Chick-fil-A restaurant, an employee named Jose was mopping the floor, and when the family entered, he welcomed the young boy with a big smile.  With a wink at the parents, he asked the youngster if he could help with this mopping chore.  A moment later, the boy was full of giggles as Jose gave him a ride around the lobby on top of the mop.  Now, every time they come back to the restaurant, the son looks for Jose—who welcomes him by name—and they find some important job to work on together.

There are lots of ways you might label this kind of behavior.  I’ve heard names like “random acts of kindness,” but I really don’t believe it was random.  Maybe intelligent kindness or caring service would be more accurate.  Personally, I like to think of it as an example of frugal wow.  It didn’t cost the store very much to have Jose make the little boy feel special.  It almost certainly made Jose feel better about his job when he made that youngster smile.  It probably made the other customers in the restaurant smile too.  It probably energized Jose so that he was more productive, and it undoubtedly topped up his reservoir of good will to share with other customers and crew members.  Then there is the very tangible value of having repeat customers who tell these happy stories to family, friends, and neighbors.

Just writing about this story is making me smile.  Which proves the power of frugal wow.  Jose’s frugal wow is rippling out from that Dallas restaurant and spreading smiles all the way to Boston.  One of the things I find so remarkable about Chick-fil-A is the frequency and variety of creative frugal wow stories that I encounter.  I’m hoping that Dan Cathy can explain why he thinks this is happening—and what he and the other corporate execs in the Atlanta headquarters are doing to encourage this kind of behavior so it continues to occur with increasing frequency in Chick-fil-A restaurants across the country.   

If you were among the 450+ attendees at our recent NPS conference in NYC, you had the treat of hearing Steve Bonner, CEO of Cancer Treatment Centers of America (CTCA), explain how his organization targets what he calls the “Mother Standard”—the kind of care you would want for your own mother.  By using the Net Promoter Score as its primary gauge of that standard, CTCA has been able to make steady progress.  Steve explained that his Board of Directors reviews NPS trends for each of CTCA’s hospitals near the beginning of their meetings.  In fact, these are the first numbers that get reviewed by the Board, before any of the financial reports.

Only one thing happens prior to the review of NPS data, and that is a visit from a current patient who describes his or her experience at a CTCA facility.  The Board rotates the location of its meetings so it can learn about the full range of facilities.

Hearing from a current patient helps to center the Board on its true mission: taking such good care of patients that they would recommend CTCA to a friend or relative.  Board discussions could easily lapse into PowerPoint graphs full of numbers, as they do at many companies. But when a customer is standing in front of you, it’s a little easier to remember that the numbers that count most are those that reflect the customer’s experience.

I noted to Steve that I was puzzled at the slow adoption of NPS among health care providers. The sluggish pace is especially puzzling since so many of their important vendors and partners—including Sodexho, Philips, Medtronic, GE, and Siemens—have already adopted Net Promoter systems.  Steve replied that, as healthcare becomes more competitive and consumer choice expands, more healthcare leaders will realize that the old-fashioned approach to measuring customer satisfaction  (long surveys, low response rates, slow cycle times, no closed-loop feedback) are severely inadequate.  But today, health care is just not as competitive or as consumer-focused as it needs to be.

In the meantime, forward-thinking organizations such as CTCA have been utilizing cutting-edge tools such as NPS to create a competitive advantage that will be difficult to overcome.  By taking customer loyalty seriously—and by turning customers into promoters—CTCA has driven its Net Promoter Scores well above 80% and sometimes above 90%.  The company is leading the way toward customer-centered healthcare by treating customers the way everyone feels their dear mother deserves to be treated.

I wonder what the NPS would be at the hospital where your own mother, father, or child will next be treated?  Don’t you deserve to know?

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One of my partners at Bain & Company asked me to summarize the most important lessons I learned at the San Francisco Net Promoter Conference. That was a tough request because there were so many impressive sessions, so many insightful case studies, and so many examples of barriers encountered and problems solved. Distilling everything down into a succinct summary of a few key lessons required some time to reflect.

Now that I have had time to ponder, I would say that the most important lesson is the remarkable level of progress that can be achieved with NPS. Walt Bettinger, CEO of Charles Schwab, showed us that his firm achieved a 50 point improvement in NPS between 2004 and the end of 2008. In that same period, Schwab’s retail business moved from a position of negligible growth—indeed, it was one of the weakest performers among large brokerage firms—all the way to top of the industry. In 2008, Bettinger added, Schwab’s net new assets exceeded the combined net new assets for all of its major competitors. Now that is impressive progress!

John Heyman, CEO of Radiant Systems, described how his company transformed its culture through its implementation of Net Promoter. Radiant Systems supplies retailers and hospitality firms with automated cash registers and related front-of-shop systems and is the leader in its industry. Heyman described how his team managed to improve NPS from negative 37% in 2005 to plus 38% in 2008, while growth accelerated to more than 25% per year. We heard similar stories from senior execs at Zappos, Logitech, and Intuit, among others.

What did all of these success stories have in common?

1. The CEO owned the NPS initiative personally and made sure it became a top priority for the entire leadership team.
2. A process for closed-loop learning was established for front line teams. Executives engaged directly in conversations with detractors and promoters to fully understand root causes and likely solutions.
3. Bad profits were identified and eliminated.
4. Reliable measurement processes were developed to establish accountability for front line teams and for executives.
5. Net Promoter implementation was viewed in terms of transformational change management, not simply a process for continuous improvement
6. NPS became more than a report card for the customer experience; it became the practical scorecard for how well the firm was living up to its core values.

Yes, the most important lesson I learned in San Francisco is that when leaders follow these rules, they can generate remarkably impressive results.