10/04/2007 11:57 am ET Updated May 25, 2011

Peak Performance

If you're going to San Francisco, be sure to wear a flower in your hair...and consider staying at one of the hotels operated by Joie de Vivre, California's largest boutique hotel company. OK, I'm kidding about the flower (but by all means go ahead if you want...) but not about the hotels, which will provide you with a look at an unusual and very successful business led by an entrepreneur named Chip Conley.

Chip, who is 46, is an extraordinarily thoughtful and purposeful business executive. He's creative, too -- each of his hotels offers a unique experience, from the cool, funky Phoenix to the luxurious, new-agey Hotel Vitale. USA Today once called Joie de Vivre's hotels "the most delightfully schizophrenic collection of hotels in America." This approach surely makes running the business more difficult -- it's hard to create a brand when your array of products appeals to very different customers -- and it's harder to get economies of scale when it comes to design, purchasing, marketing, etc. "It's not the most efficient way to create a hotel chain," Chip admits, and not what he was taught when he earned his MBA from Stanford. But it seems to be working. The company, after enduring a terrible post-Sept 11 slump (during which Chip took no salary for three years) is again growing, and it now operates 37 hotels, as well as restaurants and spas. Most are in and around the Bay area but Joie de Vivre is moving into southern California as well. The company intends to launch another 15 hotels in the next year or two.

So what's behind his success? I caught up with Chip by phone recently because he has written a new book called Peak: How Great Companies Get Their Mojo from Maslow (Jossey Bass, $27.95). The title offers a clue to what makes Joie De Vivre special -- it aims to deliver peak experiences to its employees, its customers and its investors. The book looks at what the work of psychologist Abraham Maslow (if you ever took psych in college, you probably remember his hierarchy of needs pyramid) has to say about running a business.

Conventional wisdom, Chip writes, says that:

(1) money is the primary motivator for employees, (2) customers stay loyal when they are satisfied and (3) investors exclusively focus on the financial return on investment.

Wrong on all counts, he argues. Great companies ought to satisfy higher human needs, by aiming for the peak of Maslow's pyramid. So, as an employer, Joie de Vivre aims to provide its workers not just with decent wages and benefits but with the knowledge that they are appreciated and, at peak, a sense of meaning in their work. This isn't easy with much of your workforce does what can be called menial labor -- cleaning rooms, carrying heavy bags, doing the books at night -- but the company tries to remind its people that it is in the hospitality business, and that they can have a real impact on their guests. Each employee is invited to stay for free twice a month at another Joie de Vivre hotel, to see what it feels like to be treated well as a guest.

Similarly, the company aims to deliver peak experiences to guests by helping to renew and refresh them and remind them of who they are. Chip writes,

My premise is, all other factors being equal (location, size of room, etc.), one boutique hotel will succeed over another based on its ability to address the unrecognized need of its loyal customers: the need to have their identity refreshed.

Hmm. I like Chip's hotels -- they're interesting and unpredictable, and the people who work there are friendly -- but it never occurred to me that I needed to have my "identity refreshed." Then again, he calls it an "unrecognized need," so who am I to argue? As a customer, I'm not sure that I buy into the whole "peak" idea -- give me a friendly face at the front desk, a comfortable bed, free wifi and I'm happy. I'll find ways other than consuming to refresh my identity, if, indeed, it needs refreshment.

Having said that, I think there's a more fundamental insight in Peak that deserves emphasis. In Chip's view, business is not a series of discrete, short-term, win-lose transactions, although many companies continue to operate as if it was; they squeeze their employees and suppliers, charge their customers whatever the market will bear, and profit the rest. Instead, business is built on a network of durable, long-term, win-win relationships with customers, suppliers, employees and communities. Chip quotes John Mackey of Whole Foods, who says,

Business is simple. Management's job is to take care of employees. The employees' job is to take care of the customers. Happy customers take care of the shareholders. It's a virtuous circle.

Herb Kelleher says much the same thing about Southwest Airlines. So, I think, do the leaders of another well-run hospitality company, Marriott. Other companies cited in this book -- Harley Davidson, Starbucks, Medtronic -- share this approach, as do many of the firms that I wrote about in my book, Faith and Fortune.

For his part, Chip brings a unique sensibility to Joie de Vivre, whose mantra is to "Create Joy." One example: The company invited nearly 10,000 Californians with the name Joy to the company's 20th anniversary party last month at the Hotel Vitale, gave away a free room to the first 25 who responded, and celebrated the idea of joy by giving a grant to a nonprofit called Seeds of Joy, which supports poetry therapy. If nothing else, Chip figured, it would be an interesting if unscientific sociological experiment to see what people named Joy are like. "They responded as if they were long lost family," he says.

Joie de Vivre is no ordinary company, I think you'll agree. To learn more about Chip, his work and his family, check out his website.