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CEOs’ favorite metric could be described as a ‘religion’

May 21, 2020, 10:13 AM UTC

Good morning.

We write a lot about ‘big data’ at Fortune these days. But in the C-suite, there is a small piece of data that reigns supreme. It’s called Net Promoter Score—NPS—and at Fortune 500 companies, it is all the rage. “One could use the word ‘religion,’” IBM’s Michelle Peluso told Fortune’s Geoffrey Colvin.

I experienced the religious fervor myself about a year ago, when I was moderating a conversation on how to build a “data-driven, consumer-centric” company among a group of very successful Fortune 500 CEOs. We went around the room, asking each what data they paid most attention to. And one after another—CEOs from tech, airlines, retail, diversified manufacturing, you name it—repeated like a mantra: “NPS.”

The measure, invented 17 years ago by a Bain consultant, is deceptively simple. It is based on a single survey question.

1. On a scale of zero to 10, how likely is it that you would recommend XX to a friend or colleague.

The score is calculated by taking the percentage of people who answered 9 or 10 and subtracting the percentage who answered 6 or lower. The “score” can range from -100 to 100.

The beauty of NPS is its simplicity. The problem comes in its ability to be manipulated, abused and misinterpreted. Colvin catalogues the downsides with dexterity in his story, which appears in the June issue of our magazine but is available this morning here. It is a must read. (Warning, you need to be a subscriber to access it.  Maybe today is the day to sign up!)

By the way, I’m happy to report that CEO Daily has one of the highest NPS scores of any Fortune product. (And please continue to give me high ratings, so I can feed my family.)

More news below.

Alan Murray


Another spike

The director of the CDC says the U.S. is at risk of another spike of COVID-19 cases this autumn and winter, coinciding with flu season, which is precisely when healthcare systems will be under an additional burden. Robert Redfield said the U.S. would have to rapidly expand its tracking and detection capabilities to limit that prospect, undermining U.S. President Donald Trump's argument that the worst of the pandemic is over. In other news, global coronavirus cases have now topped 5 million. FT 

China Fight Escalates 

The tension between Trump and his Chinese counterpart, Xi Jinping, continued to escalate, as Trump claimed the leader is behind a “disinformation and propaganda attack on the United States and Europe," in a series of tweets on Wednesday night, while an official responsible for the Communist Party newspaper called the Trump administration "political hooligans." Bloomberg

More negative rates? 

The Bank of England is considering how low interest rates can go—and whether following Europe into negative territory is a good idea. Governor Andrew Bailey said that: "we do not rule things out as a matter of principle. That would be a foolish thing to do." Meanwhile, the U.S. Fed is still opposed. Fortune 

400 Million Orders 

AstraZeneca said Thursday morning that it had booked orders for 400 million doses of an experimental COVID-19 vaccine that it is developing with Oxford University. The company also said it had received more than $1 billion in funding from a subsidiary of the U.S. Health Department. AstraZeneca is one of the frontrunners in a global race to develop a vaccine, and is already building out a supply chain to manufacture doses. FT


March 16 

This was the day financial markets nearly went over the edge—as the prospect of COVID-19 sent investors scrambling to get out of financial markets on a vast scale. Though a full-out crash was narrowly avoided, the hit was a bigger deal than many realize. “The 2008 financial crisis was a car crash in slow motion,” said Adam Lollos, head of short-term credit at Citigroup Inc. “This was like, ‘Boom!’" WSJ

Ghosn Arrests 

Remember Carlos Ghosn? Take a trip down memory lane, because two operatives have been arrested in connection with Ghosn's high-stakes, made for the movies smuggling from Japan to Lebanon, which was briefly the biggest news story in the world. One of the operatives, who has a long and shady legal history himself, said he took the gig out of principle. FT

Venezuelan gold 

Venezuela has launched legal proceedings against the Bank of England—asking for the right to sell off its gold. The gold has been retained by the Bank as Venezuelan assets were frozen under sanctions against the country, but the country's leadership says it needs the funds in order to help it pay for the fight against COVID-19 in the country, which is already in a state of prolonged economic and social collapse. BBC

Pizza Arbitrage 

The owner of a U.S. pizza restaurant discovered he was (inadvertently) selling pizzas on the food delivery app DoorDash, and then realized he could make a profit through buying back his own pies. The cause was a fee-waiving system designed to bring in business—at a cost. "You have insanely large pools of capital creating an incredibly inefficient money-losing business model," said the writer who documented the discovery. Margins

This edition of CEO Daily was edited by Katherine Dunn.