Posted by Bill - February 21st, 2009
Undaunted: Three Views to the Future
Posted by Polly - February 16th, 2009There’s either something terribly wrong or hearteningly right with the world when the stock jocks in shirtsleeves on CNBC’s Fast Money turn to Muhammad Yunus, the Nobel Prize-winning founder of Grameen Bank, for advice on how to fix America’s broken banking system.
The segment makes for entertaining viewing as the unflappable Yunus flips every question from the aggro panel on its head and makes a compelling case for his maverick approach to banking for the poorest of the poor as a more viable model than the relatively “primitive” system of first world finance. The anchors’ conclusion is deflatingly Gekko-esque: “greed can be used for good.” Don’t they mean good can be used to create wealth uninfected by greed? Yet, the bigger lesson is clear: our challenges are so vast and crushing that we must commit ourselves to actively discovering and genuinely listening to even the most unlikely voices and the most radical solutions.
While Yunus is already an established hero of our time, 21st-century “solutionaries” (as Hip Hop Caucus president Reverend Lennox Yearwood calls them) continue to emerge around every corner. Showcasing those fresh new voices and their powerful new ideas is what Pop!Tech is all about. As part of my duties as “storyteller-at-large” for Pop!Tech, I recently interviewed a collection of thinkers and leaders who offer up original and important points of view that just might help shape the future.
Van Jones is fast-emerging as the leading voice of an aggressively inclusive environmentalism. The founder of Green for All and author of the newly published The Green Collar Economy, Van is a relentlessly articulate and breathtakingly effective advocate for a 2-for-1 approach to environmental stewardship and social uplift. He argues for a more muscular environmentalism—one that doesn’t just appeal to elite guilt over the extinction of “charismatic megafauna” but charts a course for Joe Sixpack to become Joe Solar Engineer. In making the link between a society that treats certain people as disposable and an economy that is fast disposing of the planet, Van makes a compelling case for upending the logic of both at once. (For a more in-depth take on that case and the inevitable pushback against it, check out Elizabeth Kolbert’s recent New Yorker piece on Van.) Van and I spent a few hours talking about his vision of the green collar economy, what a New Green Deal would look like, greening the bailout, what it means to be an eco-preneur—and how the double meltdown of the economy and the ice caps offers a real opportunity for America to assert itself as a new kind of global leader.
As the world’s first peer-to-peer microlending operation, Kiva has become the poster child for successful social entrepreneurship. Just over three years old, Kiva has enlisted nearly half a million citizen lenders to fund some 85,000 loans to the tune of $60 million. The velocity of lending on Kiva.org is matched only by the ferocity of passion within the global Kiva community of lenders, borrowers, on-the-ground microfinance institutions, and volunteers. Kiva’s viral success has earned it breathless praise from President Clinton to Oprah to Forbes, which recently declared it the love child of Google and Bono. Much of the credit is due to the contagious enthusiasm and unflagging persistence of co-founder Jessica Jackley Flannery (though she would immediately point to the Kiva team and the participatory energy of Kiva’s community). In a continuing series of conversations about the big ideas and bold ideals behind Kiva, Jessica and I sat down to talk about both the low-to-the-ground lessons of making a new idea come alive in the world and the lofty ambitions of a small team of passionate entrepreneurs aiming to erase the boundaries between rich and poor.
Last but not least, I sat down with Wired editor-in-chief Chris Anderson, who continues to define the logic of the 21st-century “bit economy” with his follow-up to The Long Tail: a new theory of Free-conomics. Free is more than just a really appealing price point at a time when everybody’s feeling the pinch—it’s a whole new competitive logic that, Chris argues, every business will either have to adopt or compete with. There’s no fighting the “law of digital gravity”, and those who manage to execute the mindflip from fear of demonetization to embrace of free will not only win, but possibly transform the world in the process. The book, Free: The Past and Future of a Radical Price, comes out this summer.
You can check out the videos of my interviews here. (Apologies: we’re the last bloggers on earth to figure out the embedded video thing).
Can We Please Stop Going Ga-Ga Over Google?
Posted by Bill - February 5th, 2009Over on my “Practically Radical” blog at HarvardBusiness.org, I offer some thoughts on the surprising (and slightly unnerving) book by new-media pundit Jeff Jarvis. The book, called What Would Google Do?, basically makes the case that in a world full of problems, Google is the answer—to everything! I am as impressed as the next guy by Google’s spectacular performance, but really….
You can read the post here.
Hey, Davos Man: If You’re so Smart, Why Didn’t You See this Coming?
Posted by Bill - January 30th, 2009I’ve never attended the annual meeting of the World Economic Forum in Davos. I’m not much of a skier, and part of me worries that all the hot air will melt the snow on the mountains and trigger an avalanche that wipes out the village.
But I like to follow the daily dispatches from a safe distance, and the diarists on places like HarvardBusiness.org have done a great job capturing the goings-on. Yet I must confess, something about this year’s proceedings have left me cold (pun intended)—and now I know why, thanks to Slate and Newsweek columnist Daniel Gross.
Dan’s recent post from Davos captured the glaring (and self-serving) intellectual blind spot among the participants. Here’s how he put it: “At least with regard to finance and business, the consensus [at Davos] seems to be clear: Success is the work of Great Men and Great Women, while failure can be pinned on the system.”
In his dispatch, Dan nicely captured the contrasting treatments of success and failure. One lunch, he said, celebrated the “transformative power of the individual,” shining a spotlight on the work of Bill Gates, Richard Branson, and Nobel Peace Prize winner Mohammed Yunus. Yet when CNBC organized a discussion of the financial crisis, there were three questions on the table: Which policy assumption failed? Which regulatory failure was the biggest shock to the system? Which market failure was worst?
Notice the difference in cause and effect: “Just as financial markets in the United States privatize profits and socialize losses,” Dan comments, “Davos and other conferences privatize success (by chalking it up to individuals) and socialize failure (by blaming it on large systemic problems).”
So it goes for the world’s economic elite: We’ll gladly take the credit (and the pay) for good times, but don’t blame us (or deny us our bonuses) when things go sour. Welcome to the no-fault economy!
If I were organizing Davis, I’d require that each CEO speaker begin his or her presentation with answers to the following questions:
What’s one major strategic mistake you made over the last two years—and what did you learn from that mistake?
Did you see the financial meltdown approaching? If not, why not? If so, how did you prepare your company for it?
What personal sacrifices are you making to respond to the sobering realities of the economy?
What personal responsibility as a leader do you bear for not acting boldly enough, or speaking out loudly enough, to have helped avert this catastrophe?
Actually, those are pretty good questions for any leader to ask himself or herself—whether they’re about to hit the slopes in Switzerland or just looking in the mirror before heading in to the office.
Is Pfizer’s Jeffrey Kindler Brave or Crazy?
Posted by Bill - January 28th, 2009Back in September, my colleagues at HarvardBusiness.org asked if I had any reaction to the decision by Bank of America CEO Kenneth Lewis to pay $44 billion for Merrill Lynch in the middle of the Wall Street meltdown. My initial reaction was the sort of thing one can’t say in polite company, so instead of offering a four-letter epithet, I wrote a post entitled, “Is Bank of America’s Ken Lewis Brave or Crazy?”
Based on the events of the past few weeks, I think we have our answer. Here’s what I wrote at the time of the deal: “It sounds great on paper as a high-testosterone business strategy. But my concern is that what makes Ken Lewis and his company tick runs counter to almost every major trend in business I’ve seen over the last five years–and are at odds with what customers are looking for in the companies with which they do business…This week, Lewis and his colleagues took a big step forward. Let’s see how long it takes for them to take two steps back.”
Make that ten steps back! What an absolute disaster—for shareholders, for Lewis’s track record as a leader, for one-time Merrill CEO John Thain’s reputation (although he may have a future as an interior decorator), and for the country as a whole, which is on the hook for the fallout from this disastrous deal.
Of course, one of the other big headlines of the last few days has been the decision by Jeffrey Kindler, CEO of pharmaceutical giant Pfizer, to pay a staggering $68 billion to acquire Wyeth, another giant in the field. Same you-know-what, different day.
So let me pose the question anew: Is Pfizer’s Jeffrey Kindler brave or crazy?
Kindler offers all the standard strategic rationales for the deal: Buying Wyeth allows Pfizer to round outs its product portfolio, expand into entirely new lines of business, add state-of-the-art manufacturing. I wish Kindler and his colleagues nothing but the best, but I fear they too will come to regret this monster move.
When will big-company CEOs ever learn that using acquisitions to get bigger almost never makes their companies better? It would be funny if the consequences weren’t so depressing. Giant hookups make so much sense on paper—and yet the minute the ink dries on the contracts, all sorts of nonsense gets in the way. There’s nothing wrong with these acquisition driven behemoths other than the fact that talented people don’t want to work for them (the politics and bureaucracy are paralyzing), customers hate doing business with them (they lose any sort of human touch), and investors don’t trust them (which is why the stock price of the acquirer almost always drops on news of a deal).
So let me take another shot at making a point I made back in September, during the Merrill Lynch deal. There’s nothing intrinsically wrong with being big. There are advantages to having the deepest pockets and the biggest market share. But size itself is not a strategy. How many industries can you name in which the biggest player is also the best in terms of productivity, customer satisfaction, or financial performance?
Sure, we live and compete in a world in which the strong often take from the weak. But the real story of our times, the logic of business moving forward, is not that the strong take from the weak. It’s that the smart take from the strong. And getting bigger, especially through mega-acquisitions, almost always makes you dumber.
So good luck, Jeffrey Kindler. But if Pfizer needs additional financing a year from now, because the merger isn’t going as planned, I wouldn’t bother asking Ken Lewis for a loan.
Depressed? Summon Your “Animal Spirits”
Posted by Bill - January 8th, 2009You know things are dire when one of the country’s most influential columnists devotes several articles (and a new book) to parallels between what’s happening now and the Great Depression.
Here’s Nobel laureate Paul Krugman in his latest New York Times column: “Recent economic numbers have been terrifying, not just in the United States but around the world…Banks aren’t lending; business and consumers aren’t spending. Lets not mince words: This looks an awful lot like the beginning of a second Great Depression.”
How do we, as leaders and company builders, react to such a depressing environment? One option is to go with the downward flow: to cut back, stop taking chances, downsize our ambitions. The other option is to stare the grim economy in the eye and use it as a catalyst for innovation and change.
Economic downturns are as much about psychology as about GNP, as much about withering confidence as about shrinking employment. As individual leaders, we have no control over whether banks will lend or consumers will spend. But we do control our own mindsets and “animal spirits”—the memorable phrase coined by an even more influential economist, John Maynard Keynes, in the depths of the Great Depression.
Here’s Keynes: “A large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive. . .can only be taken as the result of animal spirits —a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.”
Translation: If all you’ve got is a spreadsheet filled with red ink and grim forecasts, it’s easy to be paralyzed by fear. But if you’ve got some leadership nerve, if you can summon those “animal spirits” of which Keynes writes, then hard times can be a great time to separate yourself from the pack and build advantages for years to come.
In part this is a matter of faith—“a spontaneous urge to action rather than inaction.” But it’s also a matter of record. The Great Depression was in fact a springboard to a number of enduring product and business innovations that delivered great rewards to those with the courage to unleash them.
In a recent article titled “Design Loves a Depression,” Michael Cannell chronicled how the dark days of the 1930s were a golden age of design. For the best designers, the uniquely difficult circumstances were a spur to unprecedented creativity. They used new materials, new forms, new functions to create products and looks that were relevant to a new era and culture.
A case in point: Designer Russel Wright, who, according to Cannell, “acted as the Depression’s Martha Stewart,” creating cheap and beautiful furniture that addressed a more frugal and informal consumer sensibility. His American Modern dinnerware still ranks as the best-selling dinnerware in US history, and his signature, on the bottom of his mass-produced creations, was the first time a designer’s name came to be a recognized brand in the mass market. He was the first Martha Stewart or Ralph Lauren or Michael Graves. (Wright has a special significance for me, as the coauthor of Mavericks at Work, because he was an enthusiastic participant in a crazy event called the Maverick Festival, an annual summer gathering of artists, musicians, and dancers near Woodstock, NY that made the “other” Woodstock look tame by comparison.)
Wright’s official biography describes his legacy this way: “Russel Wright revolutionized the American home and the way people lived there. His inexpensive, mass produced dinnerware, furniture, appliances, and textiles were not only visually and technically innovative, but were also the tools to achieve his concept of ‘easier living,’ a unique American lifestyle that was gracious yet contemporary and informal.”
Cannell also highlights the legendary husband-and-wife team of Charles and Ray Eames (Ray’s full name was Ray-Bernice Alexandra Kaiser Eames), who, “in the scarcity of the 1940s,” produced “furniture and other products of enduring appeal from cheap materials like plastic, resin, and plywood.” During an era of limited resources, the work of the Eames brothers, in the words of the Library of Congress, “gave shape to America’s twentieth century.”
Cannell’s ultimate conclusion: “Design tends to thrive in hard times.”
And it’s not just design. A fascinating white paper by Bradley Johnson, director of data analytics with Advertising Age, makes the connection between dark times and bright opportunities in so many fields.
Johnson looked at the lowest point of the Great Depression (August 1929-March 1933), the Great Stagflation of 1973-1975, and the Carter/Reagan recession of 1980-1982. What’s remarkable about these three periods of economic trauma, he reminds us, is that the problems they posed inspired creative responses that reshaped markets for decades to come.
One representative example from the Depression: General Motors had to figure out how to maintain its upscale Buick brand in a sinking economy. The solution? Persuade consumers to buy a used Buick rather than a cheaper new car—a way to keep struggling dealers afloat and hold back the progress of rival brands. It was an unheard-of idea at the time—and it reshaped the automobile business and dealer economics to this day.
Johnson also reminds us that it was the upheaval in the airline business during the early 1980s—a frightening combination of severe recession and industry deregulation—that inspired American Airlines to introduce the exotic concept of the “frequent-flyer” program in May 1981. Sure, it was a creative short-term move to promote brand loyalty. But it forever changed the logic of competition in the airline business.
There are so many other example of the power of “animal spirits” in a dispirited economy. Henry Luce launched the lavish and super-expensive ($10 per year!) Fortune magazine in February 1930, just months after the Great Crash. It was a counter-intuitive move that became an immediate success—and went on to become a publishing icon. Luce’s successors at Time Inc. launched the frivolous People magazine in March 1974, into the teeth of the worst media recession since the Depression. It too was a hit—and remains the leading magazine in America measured by ad pages and revenues.
Or consider this reminder from Johnson: “A deep recession can be a perfectly good time to launch an innovative company, putting the startup in a position to move when the economy recovers. Frederick Smith launched Federal Express in 1973 even as jet fuel prices were rocketing. Re/Max, now a major force in residential real estate, began in 1973, just as the housing market was entering a severe downturn…Bill Gates and Paul Allen started Microsoft Corp. in [the recession of] 1975.”
So here’s my message for 2009: Don’t let risky times dull your appetite for taking risk. More then ever, companies and their leaders have to offer a positive alternative to a demoralizing status quo. So why wouldn’t you move now to shake up your market and transform your company, especially when rivals are too timid to respond?
All it takes is a good idea—and some animal spirits.
In 2009, Match the Urge to Purge with the Zest to Invest
Posted by Bill - December 26th, 2008It’s become the mantra of the moment: “A crisis is a terrible thing to waste.” Leaders everywhere are struggling to make sense of the worldwide economic crisis, to learn lessons that will guide them and their companies going forward. My worry is that too many leaders are learning the wrong lessons—they are becoming conservative and risk-averse, they are searching for every opportunity to scale back and do less, they are cutting first and asking questions later.
It’s a natural response—and a huge mistake. Yes, a crisis has a way of concentrating the mind. Economic crises tend to focus the minds of business leaders on inputs: labor costs, capital spending, marketing budgets. My one plea to leaders in 2009 is that they not lose focus on the most critical output of their organization—the strength of its bonds to customers.
As the business environment gets tougher, meaner, more unforgiving, customers are going to get even more selective about whom they do business with. And what’s more important, in a world of shrinking demand, smaller margins, and scarce resources, than the depth and quality of your connections with customers? Now more than ever, companies and their leaders have to figure out how to stand out from the crowd, how to stand for something special, how to offer a positive alternative to the status quo. Customers want to do business with companies that share their values—and customers look to how organizations behave in dark times as a test of their values and character.
Am I suggesting that leaders rule out layoffs, investment reductions, or budget cuts? Of course not. But I am proposing one simple discipline, to balance out the urge to purge with a zest to invest. Make it mandatory that every time a brand or department or business unit moves to scale back and reduce costs, it also moves to stand out and strengthen relationships. Every tangible cost cut must be matched by a tangible burst of creativity that makes a meaningful statement to customers about what the company stands for. The good news: The best ideas cost little or no money, so it’s possible to satisfy budget demands without disappointing customers. Not easy, but possible. Small gestures of kindness, good cheer, surprise and delight, can send huge signals—especially in perilous economic times.
For years now, as I have address executive audiences around the word, I have urged leaders to ask themselves one simple question: If your company went out of business tomorrow, who would really miss you and why? I first heard this question from advertising genius Roy Spence, who says he got it from strategy guru Jim Collins. Whatever the original source, the question is as profound as it is simple—and worth taking seriously as you evaluate how to navigate through this economic crisis.
Why might a company be missed? Because it’s providing a product or service so unique that it can’t be provided nearly as well by any other company. Because it’s forged a uniquely emotional connection with customers that other companies can’t replicate. Precious few companies meet any of these criteria—which may be why so many companies feel like they’re on the verge of going out of business, even in good times.
Today, with times as bad as they’ve been in decades, this simple question becomes more urgent than ever. So eliminate waste, slash budgets, reduce headcount if you must. But balance every financial cut with an investment of creativity aimed at customers. Remember, in an age of excess supply and shrinking demand, if your customers can live without you, eventually they will.
“We should be angry”
Posted by Polly - December 15th, 2008As we head into a downsized holiday season of forced vacations, canceled holiday parties, and austerity measures, I can’t help wondering just how wholeheartedly we’ve embraced our newfound restraint. Even as the tryptophan-induced torpor of Thanksgiving has given way to Christmas tree lightings and street corner Santas, there’s one data point I haven’t been able to fully digest: the appalling turn of events during that post-stuffing mad dash for stuff known as “Black Friday.”
Black Friday, of course, is a marketing invention-turned-cultural ritual that kicks off a season of serious shopping with breathless promotions, can’t-miss deals, and extended hours. Endless column inches are spilled in anticipation of what has become both a national pastime and a crucial bellwether of the health of the retail sector (and thus, the whole economy). Ever year we can look forward (with delight or disgust) to front-page pictures of “middle America” lined up in the wee hours, dozens deep, nose pressed against the glass of the local big box store, poised to rush the towering displays of flat screen TVs and videogames.
This year, the picture was grim—not so much due to dissolving margins, but because bargain hunting became more than a metaphor when a deal-seeking mob trampled a hapless Wal-Mart temp worker to death in Long Island, NY. (One analyst opined that the worker was simply “not prepared” for the violent intensity of Black Friday. Isn’t the real tragedy that so many of us are?)
It truly was a black Friday—and what that mob scene throws into broad relief is just how inextricably bound together our thrift and our greed are. Black Friday has always been a particularly spendthrifty display of thrift. But the interplay between spending and scrimping (not to mention stimulus) is particularly striking now, as the deep shadow of scarcity darkens the traditional season of abundance. Austerity itself has become a powerful sales pitch. In a holiday ad blitz, De Beers has recast extravagance as an austerity measure. Images of sparkling diamond jewelry are accompanied by the copy:
“Fewer, better things. Our lives are full of things, disposable distractions, stuff you buy but do not cherish, own yet never love. Thrown away in weeks rather than passed down for generations. Perhaps things will be different now. Wiser choices made with greater care.”
It’s no wonder we’re struggling to find a workable balance between the virtues of abstention and the necessities of consumption. At least we can count on the new leader of the free world to expand the definition of civic duty beyond “go shopping.” That’s a start, but it’s going to take a lot more to temper the most powerfully animating drive in American culture: the desire for more. More stuff. More success. More growth. It’s embedded in the DNA of democracy and at the heart of the American Dream: every person gets an equal chance to make it and it’s our responsibility to take it.
The problem, of course, is that more is never enough. That’s what turns subprime mortgages into CDOs and fecund forests into fetid landfill. And that’s why making do with less is just a baby step out of the fix we’re in. It’s time to embrace an entirely new game.
That was the forceful argument made by a pair of leaders I sat down with at the Wavelength100 event I’ve been chronicling here. Tim Smit and Reed Paget are both passionate advocates and successful practitioners when it comes to harnessing entrepreneurial drive and innovative energy toward a more sustainable form of success. Neither hesitates to frame the challenges we face in the starkest of terms.
Paget is the founder of Belu, a bottled water company created to raise concern and drive change around the global water crisis—and to provide a compelling new model of purpose-driven profit in the process. Launched in 2004, Belu is on a growth tear, selling some 500,000 bottles a month. Those bottles, by the way, are made of corn (the UK’s first compostable bottle) and the company donates 100% of profits to clean-water initiatives around the world. Belu is also approaching its goal of becoming the world’s first carbon neutral bottled water—and Paget and his colleagues remain outspoken advocates of tap water as the most environmentally friendly source of hydration (the company has extensive tap water filtration projects in the works).
Why start a bottled water company—or any company for that matter—to send a message about the evils of unchecked growth and consumption? Paget, who grew up in the heart of the Pacific Northwest’s abundant natural beauty (and in the shadow of a nuclear power plant and the ravages of the lumber industry), says “What pushed me into the business world is that, while I’ve always admired the green community, we were still on the outside pointing fingers and begging, ‘Won’t you please clean up your act Mr. Exxon or Mr. McDonald’s?’” His idea: “What if we set up a green business and put them out of business? Business is too important to be left to business people.”
Tim Smit had a similarly outsize ambition: to create the eighth wonder of the world in Cornwall. To take, in his words “the most derelict place we could find and create life in it.” That is exactly what he did with the extravagantly visionary Eden Project, an entirely original hybrid of botanical garden, science center and cultural attraction grown out of a clay pit in one of the poorest regions in England. The grounds feature several enormous biomes filled with the plants of the all the world’s forests. The experience includes emotionally-resonant performances and storytelling designed to communicate our deep connection with nature in a way no science center ever could.
In the last few years, the Eden Project has attracted some 10 million visitors and poured nearly £900 million into the local economy (more than the double the government’s budget for the entire Southwest of England). Eden employs hundreds of people from the local community and sources the majority of its food and goods from Cornish producers.
In the process, Smit has become a powerfully honest voice when it comes to what it takes to create and lead more sustainable businesses and more business-like social enterprises. He says, “I think there’s going to be greater change in our culture in the next five years than at any time in the last 300, 400 years.” As the De Beers advertisement suggests, “things will be different now”—but perhaps a lot more different than is comfortable for anyone hawking diamond stud earrings (or anything else for that matter.)
And that’s exactly the point. We’re confronting change at the cellular level when it comes to how we run our businesses and live our lives. That’s why sobering terms like “financial meltdown,” “recession” and even “depression” seem inadequate to the moment—to its challenges and its opportunities.
As Paget says, “We’ve all been sold a dream—that we need things that we don’t need. We’ve reached the ends of the earth, literally. We need to rethink our very concept of consumption on all levels. The biggest culprit is this idea that we can profit endlessly and that the growth of every business must continue like it’s a religion. But it can’t. So the key question is: how can businesses profit by selling less?
Smit’s answer is simple—and bracing. Get angry. Not Facebook cause-angry. But truly, blood-boilingly angry. “We should be angry about the things we don’t like. We should be angry that as a race we abuse the resources around us, that we don’t care for our environment, that we have no proper understanding of what a sustainable future looks like, that commerce is all too often unethical. . . I blame, predominantly, people like me. Men, usually middle-aged men who reach a level in the establishment where they no longer remember to be angry. They forget to say that something is wrong because they want to be accepted. In their hearts they know it’s wrong to cut this down, to pollute this. How can we say we didn’t know? We all knew. We were just craven. Absolutely craven. And we’ve got a chance to redeem ourselves.”
For more of Smit’s and Paget’s refreshingly uncompromising points of view, check out the video here.
Memo to Detroit’s CEOs: Less Head, More Heart
Posted by Bill - December 9th, 2008Today, The Washington Post debuts a new Web-based discussion series called “On Leadership,” and I am pleased to be part of a panel of thinkers who will weigh in every Tuesday on a timely question or challenge. This morning’s question: What should Detroit’s CEOs have done differently to make their case in Washington about a rescue package for their companies?
You can read my contribution here. On the Mavericks blog, I’d like to offer an “annotated” version of the argument, with some good links to other material. So here goes…
As a leader, how you make an argument can be as important as the argument itself. I’ll leave it to others to critique the economic arguments that the Big Three CEOs made to Congress in defense of an auto-industry bailout package—the “rational” component of leadership. What mystifies me is why the presence of the CEOs was so lacking in any sort of emotional component, or certainly any positive emotional component.
In times of turmoil and uncertainty, in an environment where anyone who claims definitive knowledge about anything is suspect, people don’t just (or even primarily) respond to costs and benefits, investments and returns. They support causes that they believe in, leaders whom they respect, arguments that appeal to their hearts as well as their heads. By-the-numbers CEOs often have little patience for such “emotional intelligence”—which is why they have such trouble inspiring their own employees, let alone members of Congress who have difficult decisions to make.
So what else could the auto executives have done? Above all, they could have designed a format for their Congressional testimony that did not make them “the face of the auto industry.”
Even if they came to Washington with the best-crunched numbers the financial world has ever seen (and they didn’t), why would the CEOs of the Big Three have expected Congress and the country to rally around them? Help Bob Nardelli? Wasn’t he the guy who lost the race to succeed Jack Welch at GE, paid himself hundreds of millions of dollars at Home Depot, got run out of town, and then signed on with a hedge fund to run Chrysler? Help Alan Mulally? He seems to be doing an okay job at Ford, but didn’t he spend much of his career at Boeing? Help Rick Wagoner? He’s a GM lifer who’s been in the senior executive ranks for 16 years. Either he hasn’t been trying very hard to change GM, or he’s not very good at it, but sixteen years in the top ranks, including eight as CEO, is a pretty long time under the hood.
Here’s what I would have done, working with sympathetic members of Congress. I would have figured out what elements of the auto business people respond most positively to, and made those elements the “face of the industry” in Washington. For example, Americans don’t much like car executives these days, but we still love our cars. What are the cars of which Detroit is most proud, about which the industry is most excited, and why weren’t those cars on display in the halls of Congress? Pictures of sleek, fuel-efficient, well-designed cars send a much more inspiring message than pictures of a middle-aged white guy with reading glasses perched on his nose. In the same way that politicians love to give speeches surrounded by soldiers or firefighters or cops, I would have made sure that the CEO testimony was delivered against a backdrop of the best products that Detroit has to offer—let the cars speak as loudly as the suits.
Car dealers also have a special place in American folklore—not to mention in local economies across the country. Sure, we’ve all tangled with a fast-talking car salesman at some point. But every city in America has a handful of dealers who are larger-than-life figures, by virtue of decades’ worth of humorous advertising, visibility at community events, charitable giving at holiday times. These are the kinds of leaders that rank-and-file Americans respond to—leaders who, by their nature, are persuasive, likeable, charming. If I were one of those CEOs, I would have made sure there was a top-dog car dealer from every state at those hearings. I would have introduced them, deferred to them, made sure they got airtime.
Finally, where were the engineers? Anyone who has spent any time in Detroit knows that it is a place teeming with smart technical people who have gasoline in their veins, people who have devoted their lives to making cars safer, better, higher-performing and more stylish. These engineers—many of whom, over the years, have had to battle top executives to get their innovations approved and installed—are precisely the kinds of unsung heroes that Americans love to celebrate and support. Whom do you think Congress would find more persuasive about the future of eco-friendly cars: A fat-cat CEO like Bob Nardelli, who parachuted into the business less than 18 months ago, or a gifted engineer who has devoted his or her professional life to the green technology?
My message for the Big Three CEOs going forward: The less we see of you, the more likely we are to support the companies you lead.
The Secret of Success in a Failing Economy
Posted by Bill - December 4th, 2008It goes to show that timing isn’t everything. Here we are, amidst the greatest economic failure since the Great Depression, and two high-profile writers are out with big new books on the surprising secrets of what makes people successful. What’s more, both of these students of success are enamored of the same secret—a lesson drawn from research on super-successful violinists at Berlin’s Academy of Music.
One of the stars of Outliers, the bestseller from Malcolm Gladwell, staff writer for The New Yorker, is a psychologist named K. Anders Ericsson, who did an investigation of three different groups of violin students: the unquestioned stars, those who were good but not great, and those who had no hope of becoming professional musicians. What separated the stars from everyone else? It wasn’t raw talent, Ericsson concluded. (Every student had huge talent.) It was sheer persistence—those who practiced harder did better, and those who practiced insanely hard became wildly successful.
Gladwell dubs this phenomenon the “10,000-hour rule.” Becoming great at anything—sports, science, business—requires ten years of practice and 1,000 hours of practice per year. “Ten thousand hours is the magic number of greatness,” he argues.
Geoffrey Colvin, a high-profile editor at Fortune magazine, is equally smitten by Ericsson’s research. In his new book, Talent is Overrated, Colvin doesn’t just embrace the importance of ten years of practice. He explains just what sort of practice is required—a regimen that he calls “deliberate practice.” What are the elements of deliberate practice? It’s designed explicitly to improve performance—the little adjustments that make a big difference. It’s repetitive, which means that when it’s time to perform for real (sinking a putt, pitching a product) , you don’t feel the pressure. It’s informed by continuous feedback; practice only works if you can see how you’re improving. And it isn’t much fun, which isn’t all bad. “It means that most people won’t do it,” Colvin says.
So what does this thinking about success tell us about how to succeed in perilous times? For individuals, one message is that practice does make perfect. So if you’re a computer programmer who’s spending fewer hours writing code, or a product designer whose portfolio of projects is shrinking, or a customer-service specialist with fewer customers to serve, don’t let down time become wasted time. Turn it into practice time—find ways to work intensely and deliberately on your technical and business skills, confident that hard work will pay off in the long run.
The more jarring message comes for companies and their leaders. We’re still early into the downturn, but already big companies are reacting the way they always do. They are encouraging their highest-paid, most-experience performers—that is, those with the most practice—to be the first to leave. Last year, in perhaps the most famous example of this brain-dead, knee-jerk policy , Circuit City, the giant electronics retailer, announced its so-called “wage management initiative.” The plan: fire its most talented and experienced employees in favor of younger workers making less money. Of course, customers who visited the stores looking for advice got much less of it, which meant they took their business elsewhere. The result? Last month, Circuit City filed for bankruptcy.
It would be funny were it not so common—and so wrong-headed. Indeed, New York Times media columnist David Carr recently looked at the Circuit City fiasco and asked an uncomfortable question: How is what the widely derided leadership of Circuit City did any different from what the leaders of our most respected media companies are doing? The media business—print, national TV, local news—isn’t just downsizing. It is inviting its best-known, most-experienced (and thus, highest-price) talent to be the first out the door. Legendary sportswriters, iconic anchormen and anchorwomen, influential columnists and pundits—all are heading for the exits with the blessing of management, replaced (if at all) by inexperienced newcomers who can’t hope to meet the standards of their predecessors.
How’s this for a secret of success? You don’t survive a downturn by encouraging your most experienced people to leave. Perhaps more business leaders can resist this wrong-headed practice—and hold on to those employees who have had the most practice in their careers.
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