How Barack Obama Became CEO of the USA—and What It Means for Aspiring CEOs Everywhere
Posted by Bill - November 6th, 2008It’s just a few days after one of the most noteworthy political and social events in our country’s history, so it seems slightly uninspired to look to Tuesday’s election for lessons about leadership, competition, and change. But what is a presidential election, ultimately, then a nationwide exercise in leadership, competition, and change?
So today, still a little tired from watching concession speeches, victory celebrations, and nonstop punditry from all points on the political spectrum, allow me to offer a few insights about how Barack Obama ran his campaign to lead our country—and what it means for how we should think about how we run our companies and lead our organizations.
The first lesson is that being different makes all the difference. It’s remarkable, really, how similar so many of our first 43 presidents have been to one another. It’s not just that they’ve all been white males, but that so many of them have been cut from the same personal and political cloth. Lawyers. Military service. Many years (if not decades) entrenched in the political scene.
Other than the lawyer part (hey, we can forgive one shortcoming!), Barack Obama simply does not fit the traditional mold—and not just because of the color of his skin. Born in Hawaii to a mother from Kansas and a father from Kenya. Raised largely by his grandmother. Four years of his childhood in Indonesia. A community organizer. A constitutional-law professor. And don’t forget that middle name!
Early on in the campaign, the pundits warned that Obama’s unusual background made him too “exotic” to win the Presidency. In fact, it is that which made him different that made him so unstoppable. Obama didn’t win despite the fact that he is so different. He won precisely because he is so different.
Much the same can be said of business today. Think of the best-performing and most-beloved companies and brands, from Southwest Airlines and Apple Computer to Zappos and the Geek Squad. What do they all have in common? They are outliers, innovators, weirdos—they don’t look, talk, act, compete the same way as everyone else in their industry does. They are as “exotic” in their field as Barack Obama is in his—and they, like Obama, are winning votes that the competition isn’t.
My friend Seth Godin, one of our most popular marketing gurus, once wrote a funny line that I take pretty seriously: “Tastes like chicken,” he said, “is not a compliment.”
That’s what’s wrong with how so many of us compete today, whether it’s in business or politics. We are comfortable in the middle of the road, playing the game the way everyone else does. We all “taste like chicken”—and then we wonder why so few people get excited about what we have to offer.
There’s a second lessons that we can learn. Just because you’re different doesn’t mean you can’t be disciplined. What struck me so strongly about the Obama campaign was, from the very first day, how ruthlessly “on message” it stayed, no matter the twists, turns, and psychodramas from the other candidates or the media gasbags. Bill and Hillary Clinton took some awfully tough shots at Obama during the Democratic primary, and he never took the bait. John McCain and Sarah Palin unleashed some highly charged assaults on Obama’s character and patriotism, and he never challenged their integrity.
Obama didn’t take the bait because, again, unlike the political establishment, he didn’t spend most of his time thinking about the competition. He spent most of his time thinking about how to connect with his core constituencies. He was less concerned about what other candidates were saying about him than what he was saying to voters—and he didn’t let the “noise” on the campaign trail interfere with the “signals” he was sending to his supporters.
What a contrast with John McCain, a noble leader who seemed to change personalities, let alone campaign tactics, on a weekly basis. Again I am reminded of some wisdom from a management guru, this time Jim Collins. “The signature of mediocrity,” he likes to say, “is not an unwillingness to change. The signature of mediocrity is chronic inconsistency.”
It was “chronic inconsistency” that took a difficult challenge for McCain and made it impossible. The same goes for so many companies. They lurch from one strategy to the next, one consulting fad to another, because, deep down, their leaders don’t really understand what makes them different, better, special. When you do understand that, it gives you the confidence to stick to your messages and strategy—no matter what your rivals say and do.
Don’t trust me, or Seth Godin, or Jim Collins on that score. Henry Ford put it best many decades ago: “The competitor to be feared is the one who doesn’t bother about you at all, but goes about making his own business better all the time.”
Sure it’s more complicated than that, but these simple principles seem pretty darn powerful to me. Embrace what makes you different, don’t apologize for it. Develop a message that sticks, and stick with it regardless of what your rivals say and do. Above all, stay focused on your constituents rather than your competition.
It’s a formula that helped Barack Obama become CEO of the USA, and it can help you become a more effective CEO in your organization.
Higher Aims: From Poverty of Ambition to Audacity of Imagination
Posted by Polly - November 4th, 2008It’s election day, and while most of us are glued to the Web and cable news eagerly awaiting each crumb of data, I thought it might be eye-opening to travel further afield to look at some remarkable examples of change just about anybody can believe in.
A couple weeks ago, while the financial markets roiled and economic meltdown gripped the globe, I spent three days nestled in the bucolic tranquility of the English countryside at an event called Wavelength100. While that might seem like an attempt to escape reality, it turned out to be an opportunity to engage in some of the most crucial questions on every leader’s plate today—and to advance a conversation that just might offer a productive way out of the mess we find ourselves in.
No, I wasn’t hunkered down with a bunch of financial wizards and Nobel economists. I was mixing it up with an incredible collection of progressive business leaders and social innovators brought together to create some productive collisions between the world of business and the world of social entrepreneurship (and to perhaps erase the boundaries between the two). The founders of Wavelength, my friends Adrian Simpson and Liam Black, brought me on as “chief storyteller” to conduct a series of video interviews with several of the leaders and thinkers at the event and to moderate a session with the folks behind the Grameen Danone Foods initiative (which has become a poster child for the future of social businesses, and which I’ll blog about soon). Here’s my first installment of notes from the event. I’ll post the video interviews as soon as I work out a little technical glitch!
Over the course of three days of conversation about the best of business and the business of creating a better world, I became more certain than ever that the current crisis of capitalism is not the result of aiming too high, but of what one of our presidential candidates so elegantly calls “a poverty of ambition.” That may seem strange, given the outsize rewards and Gilded Age excesses now subject to so much anger and recrimination. While it’s hard to equate hedge fund paydays and investment banker bonuses with “poverty”, I’m referring to a fundamental deficit when it comes to defining what winning is in the first place. For far too many companies and individuals at the heart of this crisis (and in the business world in general) the operating principle has been that in order for them to win, others had to lose.
I’m much more interested in a future led by people with what philosopher and reformer John Dewey called “audacity of the imagination.” Individuals and organizations who not only see a new way to win in their industry or area of endeavor (true innovators), but whose greatest ambition is to win precisely by figuring out a way for everybody to win.
That audacious ambition was on glorious display as nearly all of the 100+ participants took the floor, one after the other, to breathe fresh air into that tired cliché, the “win-win solution:”
—A cleaning company that turns low-wage, low-skill, uninspiring work into a vibrant profession and a wildly successful business.
—A vision to take the most derelict place on earth and create an Eden out of it, which is reframing the conversation around climate change and revitalizing an entire regional economy to the tune of £900 million.
—An educational institution that turns barefoot and illiterate grandmothers from the most remote places on earth into accomplished solar engineers who power up villages by the hundreds (and debunks the idea that the poor are without resources in the process).
—A construction company that makes a community out of its workers and views its workers as a vital part of the local communities in which they work.
—An enterprise that imagines a world without poverty—and relentlessly invents new business models to make that audacious goal a reality (and has managed to deliver affordable credit to nearly 9 million people in a way that ensures they’ll repay their loans).
It would be impossible to boil down all of the insights and threads of conversations at the event into neat conclusions, but a few themes emerged:
*If it’s wild success you’re after, start with wild dreams. I can’t keep track of the number of leaders and innovators who began their story with, “they thought I was mad. . .”
*CSR is so last year. If you believe that the challenges we face as a global community are so vast, our responsibility is so indisputable, the demand is so urgent, and the rewards of tackling them so apparent, then you also have to believe that, going forward, all innovation is social innovation. Which makes drawing a line between “business” and “social enterprise” or “entrepreneurship” and “social entrepreneurship” less and less productive. Indeed, the room was filled with social innovators from the corporate world and entrepreneurs of all stripes focused on creating self-sustaining, scalable solutions with measurable impact. In other words, we’re all in this together.
*Ultimately, it all comes down to unleashing people. The only resource we have in unlimited (and vastly under-utilized) supply is human potential. At the heart of nearly every Wavelength organization is a clever mechanism for tapping into and leveraging that force.
I’ll take a deeper dive into these themes and others in the coming weeks—and will post the video interviews we managed to produce during a few stolen moments at the event. They’re representative of the often-surprising, always-productive collisions we all experienced at Wavelength. First up:
Creating the Future out of Your Past
Jorgen Vig Knudstorp, CEO LEGO
with Garvis Snook, CEO Rok
We paired up the CEOs of the 75-year-old iconic toy company and England’s £1 billion construction company, not just because both are ostensibly in the “construction” business, but because both have reimagined the future of their business by delving into the deep roots of their past.
In LEGO’s case, Jorgen Vig Knudstorp was brought on as the first leader from outside the family in 2004 to engineer a turnaround in the struggling business. After getting the company’s financial house in order, Knudstorp turned to the infinitely trickier task of reclaiming the LEGO identity—lost to flailing attempts to catch up with a marketplace reconfigured by globalization and digital technology.
Knudstorp discovered that sense of identity in an unlikely place. First, the ex-McKinsey consultant cautioned, “never use a consultant for figuring out what you’re all about.” Next, he turned to LEGO’s legions of fans. The leadership team created a process to engage the LEGO community in answering the question: “what makes us totally unique?” The iconic LEGO brick, of course. But the answer was deeper than that: “They said, you are creativity. You can say ‘cool’, you can say ‘fun,’ but creativity is your unique position—coupled with systematic thinking.” Knudstorp wrote the words “systematic creativity” in his notebook and set off to rebuild the brand around that idea.
While the customer got that idea immediately, recalls Knudstorp, it was a tougher sell for the leadership team. “I came to the conclusion that we are about hard fun,” he says. “ As opposed to passive fun. We are not easy entertainment. This is not easy listening. We are deep involvement. We’re like reading a god damned book!” The immediate reaction was fear: “Okay, but please don’t tell anybody. . . If it takes more than 30 seconds to explain what our product is about then nobody’s going to buy it.” But ultimately that clarity of purpose—rooted in the original success of the company—unleashed a torrent of new ideas and energy inside LEGO. (It didn’t hurt to have Google co-founder Larry Page on the cover of Time magazine lauding LEGO as the most important technology in his life—the one that taught him to be a creative problem solver.)
That included opening up the notoriously proprietary and vertically-integrated company to a vast community of talent. LEGO’s 120 in-house designers now collaborate with some 120,000 unpaid designers, programmers, and testers from the user community. Says Knudstorp, “We were defined by the community and through that we found our way home again. . . It’s that idea that when you end all your exploring, you end up in the very place you began.”
That sentiment resonated deeply with Garvis Snook, CEO of Rok (pronounced “rock”), the £1 billion construction company that he took over eight years ago when it was a struggling regional firm with characterized by tight, top-down controls (the then-CEO approved every holiday and every expenditure over £25) and the testosterone-driven style of the industry.
Snook, a son of a scaffolder who started his own career in demolition, set about reimagining the business—indeed, the whole industry—as one based on service and people, rather than broken relationships (between frustrated customers and contractors and between individual builders, called “skins” and employers) and products. Snook’s drew his inspiration for the future of Rok from the past of the industry. The idea for the “Nation’s Local Builder” was “based on a model that’s been around for centuries,” says Snook. “The local builder was often the local carpenter, right back to the middle ages. He built your house, made wooden carts, and eventually put you in a wooden box and buried you. He was an essential part of that community.” Today, that’s true for the nearly 6,000 builders and tradespeople employed by 63 Rok branches around the country. They live and work in the communities they serve and focus on creating a genuine emotional bond with their neighbors and customers, doing everything from general repairs to medium-size construction. (Rok doesn’t do big, showy projects and shuns subcontracting.)
The secret to Rok’s award-winning approach to customer service is simple: it’s a business that focuses on service and people first in an industry that relegates those items to the bottom of the punch list. “We’re a service business,” says Snook. “We’re about other people achieving their dreams, their ambitions. We come from a very simple place: if we make the employment experience for our people very special . . . whereby they feel value, recognized, rewarded and engaged in something bigger than themselves, and through them we deliver a much better experience for our customers, that will result in a much better bottom line in the long term. And it works.”
Snook truly understands and exercises the iron-clad connection between distinguishing the company in the marketplace and designing a distinctive approach to the workplace. Snook and his team (who, incidentally don’t occupy a headquarters and spend most of their time “hot-desking” and traveling the country to talk about the company’s vision, values, and work experience) are rigorous and relentless when it comes to designing people practices. Instead of the standard two-tier system for white- and blue-collar workers, every Rok person enjoys the same terms and conditions of employment. Every new hire participates in a multi-day orientation called “A Taste of Rok”, and every employee spends days in career development and training sessions (from “Rok Climbing” to the “School of Rok”). Snook participates in nearly every orientation session and many of the training sessions.
The company is so far off the map of industry standard practices that Snook tells every new employee: “You may think you’ve joined a building company and after two days here you’re probably in shock. If you think ‘It’s not for me’ let us know and we’ll pay you for the two weeks and help you find another job. No one has ever taken me up on it.” What’s more, the democratically elected “Rok Citizen’s Forum” meets regionally and nationally regularly, reports to the board, publishes a newspaper, and controls the employee feedback process. Snook maintains an “Ask Garvis” section on the company intranet and promises to answer any question posed by an employee by the following Monday.
It’s a truly remarkable approach to organizing work that has cultivated a unique emotional bond with customers, transformed Rok into an unlikely talent magnet, and delivered results that are nothing short of extraordinary. Snook expects to double the number of branches and revenues in the next 5 years.
Hard Cases into Worldclass Talent
Mel Young, founder & president Homeless World Cup
Maria Bobenrieth, global director of community investment, Nike
Shifting gears to a completely different world with equally extraordinary impact, the Homeless World Cup is a model of a stunningly simple approach to an overwhelming problem: There are one billion homeless people in the world today. HWC seeks to get the hardest cases off the streets and back on track with a simple proposition: “do you want to play football for your country.” The 5th HWC took place in Copenhagen this summer with 48 nations and 500 top players from around the world.
The story is too colorful to be described at length here (for that, check out HWC’s excellent collection of web videos and short films here), but a few quick observations:
Mel Young, founder and president of HWC is insistent when it comes to measuring impact—partly because he was so astonished at the results of his simple solution for homelessness. It turns out that nearly 80% of players who get involved in HWC (from its entry-level training programs to the final cup) find a path out of homelessness, get a job, go to college, and generally improve their lives for the better. Today, HWC has engaged more than 30,000 homeless people around the world—many of them “hard cases” who had resisted all previous job training and shelter programs. “It’s way beyond our wildest dreams—and we have pretty wild dreams,” says Young.
But those numbers don’t tell the whole story. Young describes two critical mindflips. The players themselves undergo a deep psychological change as they shift from a world of “selfish survival” to teamwork and, more importantly, when they observe the lot of homeless people who are far worse off than they. “Being homeless in one country is very different from being homeless in another,” says Young. “But there’s one commonality: exclusion. You can see it in people’s eyes and when they look at each other, they become one. It’s very profound what’s happening.” The crowd gets a new perspective on homelessness too: “Normally homeless people are viewed as outcasts,” says Young. “People cross the road rather than go near them, ignore them, spit at them. And yet, we take the same people and create a football pitch in the middle of the city and the crowds are all cheering them and allowing their children to go up to them and get signed autographs.” What’s more, the HWC players tend to behave much better on the field than most professional athletes.
A second takeaway from the HWC story is the nature of its partnership with Nike. Instead of the usual sponsorship model, it’s a two-way street of innovation and inspiration. When Nike approached Young and asked what he might want from them, he never asked for money, says Maria Bobenrieth, Nike’s global director of community investment. “Mel said, ‘I’m building a worldclass sporting event and a worldclass brand and I need you guys to be my partner in that. Transfer those skills over to us.’” Bobenrieth’s team jumped at the opportunity. While HWC is the recipient of Nike’s considerable brand- and sport-building talents, Nike stands to win even more. According to Bobenrieth, Nike’s association with HWC pushes it along the path to its original mission: “to bring inspiration and innovation to every athlete.” She says, “we used to have slogans like, ‘If you win silver, you lose gold.’ And recently we’ve gone back to the original idea that ‘if you have a body, you’re an athlete.’”
What’s more, the HWC partnership has unleashed a flood of participation and passion among Nike’s people when it comes to social innovation. The HWC partnership has inspired what Bobenrieth calls “employee engagement 2.0”—a platform for Nike people to work with social entrepreneurs and exercise their own intrapreneurship. “At the end of the day,” she says, “It’s not just the business but the social challenges that are going to require all of us to access the wealth of wisdom in all of our people. We know it’s there and we know this is just the tip of the iceberg.”
What We’ve Lost, What We Stand to Gain (and Camden, Maine)
Posted by Polly - October 23rd, 2008While heads (and the news cycle) are spinning in contemplation of what (and how much) we’ve lost, it would be a serious squandering of opportunity to lose focus on what we have yet to discover—in terms of untapped insight, human capital, and entrepreneurial energy.
I can think of no better place to immerse myself in the latter than Pop!Tech, the annual gathering of 600+ executives, entrepreneurs, artists, activists, and thinkers in Camden, Maine’s 19th-century opera house. The Pop!Tech program doesn’t just offer up a dizzying density of ideas, it invariably punches out new windows on important questions and, increasingly, provides a platform for acting on those ideas and unleashing positive change in the world.
This year the theme, appropriately enough, is “Scarcity and Abundance:”
. . . we will pay particular attention to the 21st century dynamics between systems based on scarcity and those based on abundance, in areas ranging from digital social networks to environmentalism, from biology to business, from peacemaking to politics. We’ll chart the core scarcities that humanity will face in this century, and how a wealth of new innovations, new bottom-up approaches to collaboration, and new insights into collective wisdom might hold the key to addressing them.
Rather than just sit in the audience this year, I’m trying out a new role: Pop!Tech’s storyteller-at-large. I’ll be popping up at various moments throughout the event with a camera crew, making sense of emerging themes, interviewing speakers and participants, and offering up a little commentary. You can watch the entire event, along with my updates, live on Pop!Tech’s website or Yahoo!’s streaming site. Some of my interviews and commentary will be archived and I’ll be blogging in greater depth about the event in the coming days.
Dollars and Sense—Worthwhile Moves for Tough Times
Posted by Bill - October 21st, 2008There may be a shortage of banks willing to make loans and a shortage of investors willing to buy stocks, but there’s no shortage of advice on how CEOs and other business leaders should respond to these uncertain times. Silicon Valley’s venture capitalists, famous for moving in lockstep with one another, are now busy sending emails and making presentations to their portfolio companies, filled with advice on how to weather the economic storm.
Two weeks ago, the partners at Sequoia Capital organized a meeting of their portfolio companies to offer their advice on surviving the financial crisis. Among their words of wisdom: use zero-based budgeting, review salaries, spend every dollar as if it were your last. Shortly thereafter, Benchmark Capital sent an email to its portfolio companies with advice such as: don’t spend money until you have to, don’t hire incremental employees until you can’t stand it, don’t move out of your office until you are sitting on top of one another.
It’s all perfectly unremarkable, utterly predictable, and thoroughly unsurprising—as if leadership in difficult times is best practiced with a green eyeshade and a calculator. So, with apologies to my friends in the VC community, here’s some additional advice that I hope makes sense, even if it doesn’t obsess about dollars and cents.
1. Don’t just remake your balance sheet, reassert your mission statement. This crisis is as much about values, trust, and business integrity as it is about declining stock prices and limited credit. Be sure to remind your colleagues, your customers, and the world at large why what you do matters, why you started the company in the first place, and what kind of impact you’re trying to have on the world. Here’s a question I always ask CEOs to think about: “If your company went out of business tomorrow, who would miss you and why?” Well, since plenty of companies may go out of business, remind everyone around you why staying in business matters.
2. Have a fresh and original take on what’s happening now, and be sure to offer as much hope as you do fear. No one’s going to be surprised to learn that you plan to cut costs, solidify financing, figure out what projects can be delayed. But no one’s going to be inspired by those moves either. Some of the most brilliant leadership decisions have come at the darkest times for the economy. How did Milton Hershey, the candy giant, respond to the Great Depression? With a “Great Building Campaign” that kept all his people employed, resulted in such legendary structures as the Hotel Hershey and the Hershey Theater—and laid the foundations for a resilient corporate culture. Think more like Milton Hershey than “Chainsaw Al” Dunlap.
3. Sure, you should manage your financial capital carefully. But you should manage your “relationship capital” even more carefully. If you’re anxious and uncertain about the future of your business, just imagine how anxious and uncertain your customers are about the future of their business. Call them. Visit them. Find out what they’re struggling with. Is there a gesture you could make towards them—even a symbolic gesture—to communicate that you have a stake in their success?
4. Invite your people to help figure out the future. There’s something about tough times that brings out the rugged individualist in most CEOs: “It’s up to me to get us out of this mess.” But with economic problems this complex, and the stakes this high, the “lone genius” model of leadership doesn’t cut it. Don’t think of yourself as a problem-solver, think of yourself as a solution-finder. And assume that you’ll find some of the best ideas in the most unexpected places. There is “hidden genius” all around you, from the quiet genius of your colleagues to the collective genius that surrounds your organization. Seek it out, invite it in, put it to work.
Oh, and one last thing: Don’t listen too closely to advice from venture capitalists.
Wisdom of Warren Buffett: On Innovators, Imitators, and Idiots
Posted by Bill - October 9th, 2008I’m not sure who said it first, but I agree with the sentiment: “A crisis is a terrible thing to waste.” We’re all struggling to make sense of the financial crisis that has spread around the world, to learn some lessons that will guide us as we go forward. One of my worries is that many of us will learn the wrong lessons—specifically, that we will become too conservative and risk-averse, that we will learn to fear creativity rather than embrace it.
It’s easy to portray the credit crunch as a case study of creativity run amok. Who’s the genius that invented subprime loans? Weren’t we all better off before the creation of a $500-trillion market in derivatives, hard-to-understand financial contracts that are at the root of so much of what’s gone wrong? Shouldn’t we declare, once and for all, that our fascination with “disruptive” technologies, “breakthrough” innovations, and financial “reengineering” does more harm than good?
Leave it to Warren Buffet, one of the world’s richest men, to offer the most valuable advice on this score. In a recent hour-long television interview with Charlie Rose, Buffet gave a masterful course on how the world got into this financial mess.
At one point, Charlie Rose asked the question that is on all our minds: “Should wise people have know better?” Of course, they should have, Buffet replied, but there’s a “natural progression” to how good new ideas go wrong. He called this progression the “three Is.” First come the innovators, who see opportunities that others don’t. Then come the imitators, who copy what the innovators have done. And then come the idiots, whose avarice undoes the very innovations they are trying to use to get rich.
The problem, in other words, isn’t with innovation—it’s with the idiocy that follows. So how do we as individuals (not to mention as companies and societies) continue to embrace the value-creating upside of creativity while guarding against the value-destroying downsides of imitation? The answer, it seems to me, is about values—about always being able to separate that which is smart from that which is expedient. And that takes discipline. Can you distinguish between a genuine innovation and a mindless imitation? Are you prepared to walk away from ideas that promise to make money, even if they make no sense?
It’s not easy—which is why so many of us fall prey to so many bad ideas. “People don’t get smarter about things that get as basic as greed,” Warren Buffet told his interviewer. “You can’t stand to see your neighbor getting rich. You know you’re smarter than he is, but he’s doing all these [crazy] things, and he’s getting rich…so pretty soon you start doing it.”
Andrew Oswald, a professor of economics at the University of Warwick, has a more poetic way of making the same point. Oswald is a pioneer of a field that might be called “happiness economics”—the study of the interplay between money and human satisfaction. His rigorous academic work confirms the advice that we hear in our churches and from our shrinks—the relentless pursuit of wealth may fill your bank account, but it will leave you empty as a human being.
“The curse of humanity is that people feel compelled to look over their shoulders,” Professor Warwick told Polly a few years ago when she wrote a great essay for Fast Company. “Happiness and self-esteem depend on rank and relative income. We are consumed by relativism. If your neighbor drives up in a new Lexus, and you’re still driving the Toyota that you were perfectly satisfied with yesterday, you start to become dissatisfied.”
So don’t use the financial crisis as an excuse to stop taking chances or downsize your ambitions. But do use the crisis as an opportunity to take stock of what really matters—and to stop looking over your shoulder.
Who You Callin’ a Maverick?
Posted by Polly - October 8th, 2008Lately, it seems that nearly everywhere I go, someone asks me how I feel about the aggressive adoption of the “maverick” brand by a certain presidential campaign. I usually use it as an opportunity to offer up my definition of a maverick leader:
an individual with a distinctive (and often, disruptive) point of view—a bold new line of sight into the future of their industry or realm of endeavor, a set of ideas that fundamentally reshape the sense of what’s possible for customers, employees, the wider world. And, of course, these mavericks don’t just stand for an important set of ideas, they act on them time and time again—even when (especially when) it’s tempting or expedient to stray from them to run with the herd. And I’d add one more layer to the portrait of a true maverick: not only do mavericks re-invent the logic of competition in their chosen field, they also think differently about competition itself. The ultimate hallmark of a maverick leader today is someone who wins by figuring out a way for everybody else to win.
But you don’t need to rely on my definition to make your judgment on which leaders today fit the bill. Just go back to the original source, as we did in the book: The rap on Samuel Augustus Maverick (1803-70) is that he craftily refused to brand his cattle—citing cruelty—which allowed him to then claim all the unbranded cattle on the range. The truth is: Maverick was a Yale graduate, signer of the Texas Declaration of Independence, and a successful land speculator who cared little about cattle. When someone repaid a debt with 400 head of cattle rather than cash, Maverick’s caretakers allowed them to wander unbranded. Over time, locals who saw them would say, “Those are Maverick’s”—and a term was born that today refers to politicians, entrepreneurs, and innovators who refuse to run with the herd.
The self-branding of one politician as a maverick has the Maverick family (which includes several legendary progressive political figures in Texas) up in arms, as reported in a lively New York Times article this weekend:
“I’m just enraged that McCain calls himself a maverick,” said Terrellita Maverick, 82, a San Antonio native who proudly carries the name of a family that has been known for its progressive politics since the 1600s, when an early ancestor in Boston got into trouble with the law over his agitation for the rights of indentured servants.
Considering the family’s long history of association with liberalism and progressive ideals, it should come as no surprise that Ms. Maverick insists that John McCain, who has voted so often with his party, “is in no way a maverick, in uppercase or lowercase.”
“It’s just incredible — the nerve! — to suggest that he’s not part of that Republican herd. Every time we hear it, all my children and I and all my family shrink a little and say, ‘Oh, my God, he said it again.’ ”
“He’s a Republican,” she said. “He’s branded.”
Politics aside, that’s an instructive insight into the power of maverick leaders and companies: their originality defies conventional categories. They don’t act according to party, industry, or any other rule set (they also don’t defy the rules just to be unruly). Instead they follow their unique and clearly articulated set of values. And that always gets my vote.
Reckoning with Wall Street: From Fear to Outrage to Cynicism
Posted by Bill - September 22nd, 2008We’re all familiar with Elisabeth Kubler-Ross and her model of the five stages of grief. Over the last few days, as I’ve watched the near-meltdown of the world financial system, I’ve experienced a few stages of my own—from fear (are we going to have another Great Depression?) to outrage (How could so many smart people do so many stupid things?) to what I worry what may be the worst stage of all: flat-out cynicism.
Put yourself in the position of a middle-class family of five, where both parents work in order to make the mortgage, pay the car loans, and perhaps take a week’s worth of vacation each year.
Could you answer three simple questions for this middle-class family? I know I can’t….
How as a country do we decide what we can afford? For decades we’ve been told that we “can’t afford” to provide basic health insurance to tens of millions of people—including millions of children—who must somehow do with out it, even though they work at full-time jobs. And yet, over the course of a weekend, we’re told that we “can’t afford” not to provide a Wall Street bailout worth some $700 trillion? If we can come up with money to rescue bankers, why can’t we come up with money to provided minimal health care for kids? Funny what we can afford to do when we put our minds to it.
How as a country do we decide what’s fair? For example, why is welfare reform good for the poor, but not for the rich? During the 1990s, the cry for welfare reform, embraced by everyone from New Gingrich to Bill Clinton, resulted in a wave of policies designed to break the dependence of poor people on public subsidies and to stop reinforcing destructive social behaviors.
Fair enough. But if welfare reform makes sense for poor people in Bridgeport, Connecticut, doesn’t it make sense for rich people in Greenwich, Connecticut? Talk about a culture of dependency! First there was the S&L bailout. Now there is the mortgage mess. Let’s call these bailouts what they are: corporate welfare. And if government is within its rights to impose conditions on poor people before they can collect payments for food and shelter, isn’t government within its rights to impose conditions (such as limits on salaries and bonuses) on investment bankers who are turning worthless mortgage bonds into financial food stamps?
And now for the biggest question of all: Why do our leaders demand so little of themselves? Today’s edition of The Independent, the London newspaper, reports that the New York office of Lehman Brothers set aside a bonus pool of $2.5 billion just a few days before the firm filed for bankruptcy. Not only has Barclays Bank, which is going to buy Lehman’s New York office, agreed to pay out the funds, but it is negotiating with what it considers to be Lehman’s top 30 executives for contracts worth tens of millions of dollars more.
Meanwhile, Jake Tapper of ABC News reported some startling figures on his blog. In 2007, Wall Street’s five biggest firms paid out a record $39 billion worth of bonuses to themselves. (That’s $10 billion more , Tapper noted, than the $29 billion the US government is lending JP Morgan to save Bear Stearns.) And by the way, he adds, those Big Five firms lost $74 billion in shareholder value in 2007—their worst year since 2002.
Business schools are teaching more courses than ever in ethics and values. Did the leaders on Wall Street skip those classes? Isn’t anyone going to offer to work for free to clean up the mess they helped to create? Won’t someone repatriate a fraction of the bonus money they earned from bad deals that taxpayers now have to absorb? Is this what leadership has come to? Enjoy the ride on the way up, pass the buck on the way down?
Is this the best we can do as leaders, as companies, as a country? If so, I fear this crisis is less financial than it is moral—and the costs will be impossible to measure.
Why Smart People Do Dumb Things—Personal Lessons from the Financial Meltdown
Posted by Bill - September 15th, 2008How do you keep your head when all those around you are losing theirs? This has become the question for executives managing companies and people managing their careers in an age of technology bubbles, private-equity overreach, and, now, the meltdown in the mortgage market.
Failure, we like to tell ourselves, is an opportunity to learn. If that’s the case, there must be lots of executives learning some valuable lessons these days—as investment bankers make the transition from Masters of the Universe to the Gang that Couldn’t Shoot Straight.
What can the rest of us learn from the heartache and misery on Wall Street and in financial capitals around the world? To me, the most valuable insights come from those few leaders who, while tremendously creative in much of how they did business, decided that when it came to the “financial engineering,” they would sit on the sidelines.
One case in point is Hudson City Bancorp, a 140-year-old company based in Paramus, New Jersey that has managed to avoid the mortgage meltdown and continues to post tremendous results. Business journalists have discovered this quiet little outfit and marveled at its strategic insights. Its shares are up 50 percent since last August, when the credit crisis really kicked in. (A leading index of bank stocks is down 40 percent over the same period.) “Hudson City banks the old-fashioned way,” Newsweek marveled. “It takes deposits and makes mortgages to people who buy homes in which they plan to live. And then it hangs on to” the mortgages, rather than sell them in the secondary market.
Imagine the brilliance! Take deposits. Make sensible loans. Repeat over and over again, until your market cap approaches $10 billion.
The New York Times tried to unpack the secrets of Hudson’s success and offered this analysis: “The bank carefully screened loan applicants to ensure they would be able both to afford a new house and reside there, rather than flip it. And the bank demanded hefty down payments…as a cushion against any sharp drop in home prices, because it planned to hang on to the loans.”
What a formula! Make sure borrowers can afford their loans. Insist that they make a big down payment. Favor owners over speculators.
Hudson City’s mindful approach to banking only looks remarkable because so many established banks lost their minds. ING Direct, a cutting-edge banking innovator that was featured in Mavericks at Work, also managed to avoid the march of folly in its industry. The bank avoided the subprime meltdown because it stuck to simple, plain-vanilla mortgages rather than exotic instruments that sounded too good to be true (and were). The bank has written 100,000 mortgages worth $26 billion and has a grand total of 15 foreclosures. Not 15 percent, just 15 mortgages out of 100,000.
Arkadi Kuhlmann, ING Direct’s founder and CEO, is one of the most creative business leaders I’ve ever met. But he was able to distinguish between get-rich-quick industry fads and real innovation. “Every person who tries to do real innovation is going to be tempted by money, greed, acceptance, being in the middle of the action,” Kuhlmann says. “But at the core there is one fundamental difference: I know why I’m here. I want to make a difference. If I was into this just for making money, being a big accepted banker, I would have been tempted. But that’s not why I’m here. I am trying to build something that changes the business, that allows me to stay on the right side of the discussion.”
Kuhlmann’s skepticism about mortgage fads speaks to one of the unappreciated elements of strategy and creativity. Sometimes, the most important form of leadership is resisting an innovation that takes hold in your field when that innovation, no matter how popular with your rivals, is at odds with your long-term point of view. The most determined innovators are as conservative as they are unique. They make big strategic bets for the long term and don’t hedge their bets when strategic fashions change.
“We as individual leaders operate inside a cultural context,” Kuhlmann explains. “The question is, Do you want to try to influence the culture that you’re in, or do you want the culture that you’re in to overwhelm you?”
That insight applies to careers as well as companies. This past week, as the financial markets were melting down, I finished a new book called Ahead of the Curve. The British journalist Philip Delves Broughton, a one-time bureau chief for The Daily Telegraph, has published a warts-and-all account of his two years at Harvard Business School. The most riveting sections of the book describe the desperate efforts of HBS students to land jobs with the most elite hedge funds and private-equity firms—the very firms suffering today from the credit meltdown.
It’s amazing, really. The 900 students in Broughton’s class could do just about anything—and yet most of them, for reasons they can’t really explain, are all desperate to do the same thing. A student named Cedric described it this way: “We have so many choices, and yet so few people seem happy about that. It just makes them anxious. And then they make terrible decisions about their lives.”
I don’t have any fail-safe advice to help you avoid making terrible decisions about your life. But as we deal with the fallout from so many executives making such terrible decisions, the simplest advice seems the most appropriate. Figure out what you care about and devote yourself to that purpose. Stay the course, even when your colleagues wander off course. And never forget that if something sounds too good to be true—from no-money-down-mortgages to instant riches with a hedge fund—it probably is.
“When you run with the pack, what you generally see are other people’s backsides,” Arkadi Kuhlmann says. “We know why we’re here, and it’s not to copy other people’s bad ideas.”
Words to live by—in your company and in your career.
Leaders as Learners: Back to School Edition
Posted by Polly - September 3rd, 2008We’ve noted here (and here) many times before that the most successful innovators are relentlessly inventive and energetic when it comes to cultivating fresh eyes—their job (and their joy) is to learn and they make it a personal discipline to get out of their comfort zone, mix it up with all kinds of people, and try all sorts of new things.
Now, I don’t know any leader who would cop to anything less than an enthusiastic embrace of “lifelong learning“, but it’s always refreshing to come across one who makes a real practice of the platitude. That’s why I was delighted to see the WSJ serve up a two-fer yesterday on that front, with profiles of two leaders from vastly different realms—John Maeda, the incoming president of Rhode Island School of Design and Philip A. Newbold, CEO of Memorial Hospital in South Bend, Indiana—whose approaches to learning and leadership are equally inspiring and instructive.
While Newbold is working to create a culture of innovation in an industry notoriously hostile to creativity, Maeda is seeking to expand the impact of one of the most respected arts institutions in the world. Both offer up a set of lessons to any leader hoping to hit the ground running with an innovation agenda this fall. Here are three I found particularly striking (you can read the full profiles here and here):
1. Operate on open channels: These guys get that the more transparent, open, and omnivorous they are when it comes to seeking out new ideas and insights, the better. As part of Memorial Hospital’s “Innovation Everywhere” initiative, Newbold created an “Innovation Cafe“—a former delicatessan refitted as a teaching lab—in which he conducts all kinds of training, brainstorming, and prototyping sessions with folks from inside and outside the organization. Maeda has declared an “open source administration” and has personally opened up multiple channels for communicating with the RISD community (from his blog to text messaging to a network of video bulletin boards around campus).
2. Advocate a strongly-held point of view: Just because Newbold and Maeda are open to ideas from everywhere doesn’t mean they don’t have a strong point of view. Newbold sees himself as “a champion of innovation” at Memorial and in his industry. Maeda is on a mission to “make a justifiable case for creativity in the world”—to turn out a new class of entrepreneurial artists who both contribute to and benefit from the commercial world.
3. Create rituals: One strong indicator of a culture of innovation that we discovered time and again during our research on maverick organizations is a richly developed set of rituals (usually described in a robust, homegrown language) that inspire and energize people at all levels. Newbold has unleashed a set of cruncy practices around innovation: from “good try” rewards for failed ideas (recognition and perks like 4 weeks of free house-cleaning services) to the digital “cryo tank” for ideas that are ahead of their time and may be brought back to life down the road. One of Maeda’s first acts as president of RISD was to send out blank muslin Tibetan prayer flags to students, faculty, and alums with the assignment to return them with any sort of creative expression added. They will be strung about the streets of Providence for an upcoming ceremony.
The larger lesson for leaders looking to inspire innovation? When back-to-work feels like back-to-school, it makes the transition from dog days to working like a dog a lot more energizing—for everybody.
A Geek’s Guide to Great Service
Posted by Bill - August 11th, 2008There are two sides to the technology-fueled revolution that shapes how we live and work. There’s the miracle of the products themselves, from super-sleek laptops to ultra-cheap digital cameras. Then there’s the misery of trying to install those products, connect them, or figure out how to use them in the first place.
It is this blend of the miraculous and the miserable that has propelled the rise of Robert Stephens and his colleagues at the Geek Squad—tech-support specialists who travel to your home or office, or help you in a Best Buy store, with a troublesome computer, mobile phone, home-theater system, or any other gadget.
There’s no denying the Geek Squad has style. The company’s field agents wear a recognizable uniform: white short-sleeve dress shirts, black clip-on ties, black pants, white socks, and black shoes (with the Geek Squad logo in the sole). They drive to client locations in identical cars: black-and-white VW Beetles with the Geek Squad logo on the door. And their job titles speak for themselves. Robert Stephens is chief inspector. His rank-and-file colleagues are “special agents.” Geeks who work inside the stores are “counter-intelligence agents.”
There’s also no denying the Geek Squad’s growth. Stephens started the company in 1994, when he was in college. Best Buy acquired Geek Squad back in 2002, when it had 60 employees and annual revenues of $3 million. Today, still under the founder’s leadership, the Geek Squad employs more than 15,000 agents, generates more than $1 billion in annual revenue, and is a crucial part of Best Buy’s strategy to provide high-touch service as well as high-tech gadgets.
Still, when I sat down with Robert Stephens at Best Buy headquarters, I was not prepared for how savvy and tough-minded he is about the right way to deliver unforgettable service. I wanted to talk about how a young entrepreneur could shake things up inside a giant company like Best Buy. He wanted to talk about the discipline it takes for young employees to deliver great results inside the homes of confused and frustrated customers.
Stephens is obsessed hiring right—especially given how fast the Geek Squad is growing. “Training is a tax you pay for a lousy hiring environment,” he says. So what traits does Stephens look for in aspiring Geeks? “Curiosity, ethics, and drive. Those are the things we can’t teach.” As for training, he says, “Our most important training program is the employee discount.” Geeks can buy the latest and greatest technology at discounts of 50-60%. The more they use it, play with it, and push it, the better they get at installing and repairing it.
Stephens may not be a fan off old-fashioned, HR-driven training, but he’s a big believer in ritual, tradition, and cultural indoctrination. There is, for example, the matter of the uniform. “It’s a litmus test for some people,” Stephens reports. “They say, ‘I’m not wearing that!’ In which case we know they’re not ready to sign on.”
The uniform is also a symbol of well, uniformity. It reinforces the message that there are consistent ways in which the 15,000 Geeks are expected to behave with customers and among themselves. “Wearing a tie used to be a sign of conformity,” says Stephens. “Now it’s like an act of rebellion—nobody dresses up anymore. The uniforms are visible and distinct. Plus, those ties let me apply a little pressure around the neck!”
To make his point, the Chief Inspector hands me a copy of The Little Orange Book, a truly remarkable guide to great service (produced by the squad’s Ministry of Propaganda) that Stephens intends as a bible of sorts for how Geeks do their work. Here’s the six-point pledge that every Geek is expected to sign. I will:
1. Never violate the trust of my clients or disrespect their property.
2. Never say, “I don’t know. Instead, say “I’ll find out.”
3. Always understand that my clients’ time is more valuable than my own.
4. Assume every problem is my fault, unless proven otherwise.
5. Consider my job done only when my client is completely overwhelmed with joy. And instead of assuming they’re happy, I’ll ask them.
6. Keep every promise I make. Including this one.
Lofty goals—which Geeks are expected to fulfill with great attention to detail. It is official policy that employees drive their Geekmobiles at 5 miles per hour below the speed limit. They are also expected to arrive for appointments five minutes before the designated time, and offer to take off their shoes before entering the client’s home. And don’t even think about pocket protectors! Geeks are forbidden to put anything—pens, eyeglasses, screwdrivers—in the pocket of their white shirt.
Geeks who commit egregious violations of these policies wear the Mother Board of Shame (MBoS)—a big circuit board with a painted S that hangs around the neck. “The MBoS is a rite of passage,” explains The Little Orange Book, “similar to the squeaky voice and foul body odor that accompany puberty.”
If it all seems a touch fanatical, well, maybe that’s what it takes to do something remarkable for customers. And that’s the ultimate goal for Robert Stephens, who also likes to say that “marketing is a tax you pay for being unremarkable.”
What are you doing to be remarkable for customers? How is your company unleashing its inner Geek?
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