Mavericks at Work: Why the most original minds in business win

Above all, Craigslist has a distinctive approach to economics—it keeps finding reasons not to charge customers. It imposes modest fees on companies that post job listings in seven major cities, including Los Angeles, San Francisco, and New York City. The company also imposed a modest fee for apartment listings in New York City—an effort to pare back on the 500,000 listings it receives per month, many of which are duplicates. Newmark and Buckmaster have also discussed plans to charge for job listings in a few other cities, including Boston, San Diego, and Washington, D. C., in an effort to reduce the number and increase the quality of the posted openings for apartments and jobs. Other than that, though, the site is free. Yet Craigslist generates healthy profits, and Internet titan eBay bought a 25 percent stake in 2004 so it could learn more about the company and its mastery of classifieds.

That’s the ultimate irony of Craigslist—and the powerful logic of strategy as advocacy. By building a company around a unique set of anticommercial values and practices, Craigslist has built a flourishing commercial property. “We have to run a strong business, we have to have cash reserves, we want to be here over the long run,” Buckmaster says. “But we don’t view the Internet as being subject to a ‘land grab’ or ‘first-mover advantage.’ Companies that want to dominate in a hurry—they’re the ones that spend all the money. We’re definitely oddballs in the Internet industry, and we always have been. Lots of people made fun of us, especially at the height of the dot-com boom. Most of those people are out of business now.”

WHAT YOU THINK SHAPES HOW YOU TALK—CREATING A STRATEGIC VOCABULARY

Listen closely to maverick entrepreneurs like Arkadi Kuhlmann and Jim Buckmaster, and you quickly realize that they don’t sound like traditional executives. They almost never use conventional jargon to explain how they do business. They almost always describe their strategies and practices—the ideas that animate their companies—in ways that sound unique, authentic, even a bit strange. How many bankers tout the virtues of “agitating” their customers? How many Internet CEOs discuss “the ironies of unbranding, demonetizing, and noncompeting”?

One sign that a company is pursuing a truly original competitive strategy is that it has created its own vocabulary. Not buzzwords, acronyms, and the other verbal detritus of business-as-usual, but an authentically homegrown language that captures how a company competes, how its people work, why it expects to succeed, and what it means to win. You can’t judge a book by its cover, but you can evaluate a company by its language. Because they think about their business differently, maverick organizations almost always talk about their business differently. They devise a strategic vocabulary that distinguishes them from their rivals and sets expectations in the marketplace and for everyone in the organization.

The best way to appreciate the power of language in business (and to evaluate how your own vocabulary stacks up) is to visit a company that speaks a language all its own. Consider our visit to the Seattle headquarters of Cranium, a seriously important young player in the deeply troubled world of toys and games. It’s a bit overstated (but only a bit) to suggest that Cranium is to board games what Pixar is to animated films—a maverick newcomer that has produced a string of hits by infusing a tired industry with fresh energy and a different perspective on how to compete. Since November 1998, Cranium has released a stream of games aimed at adults, preschoolers, and just about every age in between. The games have won rave reviews and millions of loyal fans. Cranium, its namesake title and the Toy Industry Association’s 2001 Game of the Year, ranks as the fastest-selling independent board game of all time. (It is now available in 10 languages and 20 countries and has sold a staggering 5 million copies.) Cadoo, the company’s second title, won Game of the Year in 2002, and Hullabaloo was Game of the Year in 2003 and again in 2006.

All told, in less than ten years, Cranium has won more than 80 industry awards, sold more than 22 million copies of its products, and attracted an estimated 30 million players for at least one of its games. This is, quite simply, a performance without precedent in a $20 billion industry that is actually shrinking, torn apart by kids’ fascination with computers, the Internet, video games, and all forms of electronic entertainment and by Wal-Mart’s stranglehold over the distribution of traditional toys and games, which has resulted in the bankruptcy of fabled retailer F. A O. Schwarz, the humiliation of Toys “R” Us, and other devastating shocks to the retail system. There hasn’t been much fun in toyland for an awfully long time—unless, that is, you work at Cranium.

In the media, Cranium’s track record has been a source of both celebration and mystification. Is it the latest in a line of press-savvy consumer companies that have mastered the art of good PR? (When Julia Roberts appeared on Oprah and declared herself a Cranium enthusiast, the game’s popularity went into overdrive.) Is its unrivaled sales record a testimony to the power of clever packaging and smart design? (All of the company’s artwork, from the games themselves right down to its business cards, feature distinctive illustrations by Gary Baseman, creator of the TV series and feature film Teacher’s Pet.)

Or is the Cranium phenomenon about something deeper, an emerging New Age ethos gripping society? In a long essay for the New YorkTimes Magazine, writer Clive Thompson deconstructed Cranium’s unparalleled performance in the marketplace and concluded that the company’s games have become an emblem of “America’s insatiable thirst for self-esteem.” Why has the company won in the marketplace? Thompson asks. Because, he argues, “Cranium appears to have discovered the paradox that gets kids and families playing together: a game where no one loses.”3 (#ulink_2efd0a46-5174-5c49-a390-b7f19e976dad)

Richard Tait, Cranium’s cofounder and “Grand Poo Bah” (yes, that’s the title on his business card), is adamant that at the heart of the company’s consistent growth is a disruptive business strategy—and that at the heart of the strategy is a homegrown language that communicates the ideas that define the company. How Cranium thinks about its business shapes how everyone at the company talks about the business, both among themselves and to the outside world. And the fact that everyone at the company talks about the business in the same way allows it to keep introducing new games, targeting new slices of the market, even venturing outside board games to book publishing, television, and other fields, without straying from its core values.

“This wasn’t about games at the beginning,” explains Tait, who was a rising star at Microsoft (where he won Employee of the Year honors) before he and cofounder Whit Alexander (also a decorated Microsoft veteran) decided to trade the rigors of software for the fun of games. “We wanted to provide an alternative to the entertainment choices people have, to create a movement around that alternative. So much of entertainment is destructive and demeaning. Look at television: ‘You’re fired!’ ‘You are the weakest link.’ Who’s going to sleep with whose girlfriend on the island? Our disruptive moment was when we said, ‘We’re going to create lighten-and-enlighten experiences, a unique combination of laughter and learning that gives everyone a chance to shine. People will laugh and feel and connect, but at the same time they are going to be getting smarter. That was our disruptive idea.”

The language of “lighten and enlighten” and “shine”—reflecting a genuine sense of mission and a feel for the interplay between seriousness of purpose and flat-out fun—infuses every aspect of how Cranium operates. Life here just sounds different from life at most companies. Executives have job titles that make perfect sense to their colleagues, but not to many other people. Whit Alexander is Cranium’s “Chief Noodler.” The business card of Jack Lawrence, the company’s CFO, identifies him as “Professor Profit.” Catherine Fisher Carr, the person responsible for the content of the games, has the title “Keeper of the Flame.” Customers aren’t just customers, they’re Craniacs—game players who share the passion and values that animate the company that makes the game. “I get e-mails from customers that say, ‘Proud to be a Craniac,’ ‘I am a Craniac,’” says Richard Tait. “This really is a movement.”

Even hard-core business operations are described in unusual ways. Scattered around Cranium headquarters are “Pulse” stations—fun, colorful, visual representations of key financial indicators, including sell-through numbers at retailers, operating profits, and on-time delivery of products. These stations (which measure the “pulse” of the company) are updated regularly and keep everyone posted on the guts of Cranium’s business results. Meanwhile, the watchwords of the product development process are “Gather-Grow-Glow.” Gather—which friends or family members are expected to play the game? Glow—what are the moments of success and celebration (of “shine”) that the game is meant to unleash? Grow—what are the players going to learn from the game?

To outsiders, Cranium’s offbeat titles and homegrown vocabulary may sound forced, hokey, even off-putting. But for Richard Tait this vocabulary is vital to the company’s business strategy and operating success. “Every great company has a distinctive culture,” Tait says, “and every culture has a language, a shared sense of values. We’ve established a culture in the company that is impregnable. We defend it, we rally around it, we refine it. And as part of that culture, there is a vocabulary. Everyone you meet at Cranium can talk to you about lighten and enlighten, about shine, and about what it means to bring that into people’s lives.”

Everyone you meet at Cranium can also talk about CHIFF, perhaps the centerpiece of the company’s strategic vocabulary. CHIFF stands for Clever, High-quality, Innovative, Friendly, and Fun. The acronym is meant to explain the games’ personality and performance—how they should look, how they should be built, and how the product brochure should read. In fact, if you spend any amount of time at Cranium headquarters, you can’t help but chafe under the relentless drumbeat of CHIFF. Do the company’s new TV ads feel CHIFF? Do the latest changes to the Web site look CHIFF? Are the instructions for the newest game CHIFF enough?

The company has a senior executive, Jill Waller, whose title is actually “CHIFF Champion.” Her job is to make sure that the product development process stays true to this crucial element of Cranium’s vocabulary. Waller’s CHIFF checklist involves a detailed methodology that shapes everything from how to vet ideas for new games (a process called “the Cranium Cuisinart”) to how to make detailed production plans (“the Manufacturing Mindmeld”) to how to revise games once they’re in the market (“Operation Big Ears”). “Everyone knows what a game has to be like, what the experience of playing it has to be like,” Waller says. “Everything we do has to be CHIFF.”

Some readers may be rolling their eyes at the colorful language spoken at Cranium. This is, after all, a young, offbeat (albeit phenomenally successful) company that is literally in the business of fun and games. But time and again, as we immersed ourselves in companies with original, break-the-mold business strategies, we discovered an only-spoken-here strategic language, a vocabulary of competition designed to capture what the company stood for and how its people worked together to advance its agenda.

Go back to Austin, Texas, and Roy Spence’s ad agency, a creative place to be sure, but a hard-nosed competitor as well, one whose clients include some of the world’s most powerful companies and best-known advertisers. As we’ve seen, Spence believes that his agency’s purpose-based strategy is distinctive enough that his bustling firm, with annual billings of $1.5 billion, needs an executive with the title “Chief Purposologist.” (She is, in some respects, GSD&M’s version of Cranium’s “CHIFF Champion.”)

But that title is just a tiny part of the agency’s strategic vocabulary, and that vocabulary is what keeps new generations of employees connected to the 35-year-old agency’s original and unwavering purpose. Spence’s colleagues have gathered a collection of “Royisms” that they believe define how GSD&M operates—the genetic code for the agency’s competitive spirit. “We are curious and restless—a safe haven for misfits that somehow fit here,” reads one. “We like who we are. We like people who like us. When people come in to change our core culture, the body rejects them,” reads another. “We are not like the big boys, and we don’t want to be,” reads a third. “We must never play by their rules—it’s a trap.”

Expressive language, to be sure. But where GSD&M’s business vocabulary most comes to life is in the design and personality of the agency’s headquarters building. If what you think shapes how you talk, the logic goes, then where you work should reflect how you think as well. Spence and his colleagues are true believers when it comes to the power of disruptive business ideas, and their beliefs are evident the moment you arrive at the GSD&M offices. The strikingly original facility, called Idea City, has become a defining landmark of the Austin business scene and a source of fascination among business commentators around the world. Nothing about the place is standard-issue office building. The three-story, 137,600-square-foot headquarters is overflowing with offbeat art and wild decor. There’s also a movie theater, a classic diner, and a bookstore.

But the most telling aspect of Idea City is that it is actually organized as a city—on the theory that the energy, diversity, and barely controlled chaos of urban environments produce the most exciting ideas. The complex is divided into districts, each of which has its own personality. There’s the Financial District, where the agency’s business types congregate. There’s Greenwich Village, where the agency’s creative types work. Each major client gets its own neighborhood, sort of an immersion zone for the company’s products, personality, and purpose. There are War Rooms, Hot Shops, Idea Teams—ways of describing how and where people work that are unique to GSD&M.

In the middle of it all is the Rotunda, the town square through which the 540 residents of Idea City pass on a daily basis. (Company wags call it the Roytunda, an homage to their silver-tongued president.) And on the floor of the Rotunda, written in concrete, are the values that animate the agency: community, winning, restlessness, freedom and responsibility, curiosity, integrity. These words appear in plenty of other places at GSD&M headquarters as well—the building is overflowing with visual reminders of what makes the agency tick.

Some people wear their hearts on their sleeve. Why does GSD&M carve its values into the floor? “It sounds hokey, but it’s not,” explains Spence. “People understand that these values are not temporary. They are literally etched in the concrete of the town square. Those values are the common drivers of our purpose. People want to work at companies that know what they stand for. Everybody at this company knows what we stand for.”

WHAT IT MEANS TO SUCCEED—BUILDING THE FUTURE BY REBUILDING AN INDUSTRY

It’s a long way from Austin, Texas, to Redwood City, California, and there’s a vast gulf separating the freewheeling spirit of the ad business from the backbreaking demands of the construction business. But when you walk into the offices of DPR Construction, Inc., and visit with cofounder and president Doug Woods, it feels like you’ve traveled 1,800 miles to arrive at another Idea City—and another company that speaks its own language.

Doug Woods doesn’t sound like a nail-pounding, lunch pail–toting construction boss. But he’s spent his entire career building office complexes, high-tech factories, and research labs. DPR’s enviable track record of success (it generates annual revenues of more than $1.5 billion and wins raves from construction industry gurus as a best-in-class operation) has been driven by an explicit commitment to re-building an out-of-date, dysfunctional sector of the economy. From day one, DPR has embraced the power of strategy as advocacy: it aspired to grow as a company by becoming a disruptive force in its industry.

“This industry hasn’t changed the way it does business a whole lot in the last hundred years,” says Woods, sitting in the Patsy Cline conference room at company headquarters. (DPR headquarters, which exudes the slick feel of its Silicon Valley neighbors, is filled with rooms named after pop-culture notables.) “From the very beginning, we wanted to be quantifiably different and better. We wanted to be a truly great construction company.”

Indeed, back in 1990, before Woods and his cofounders, Peter Nosler and Ron Davidowski (the “P” and “R” in DPR), hammered their first nail, they hammered out a “core ideology” designed to set them apart from their peers—and to announce their intention to challenge convention in their industry. “We exist to build great things,” the ideology declares. “We must be different from and more progressive than all other construction companies. We stand for something.”* (#ulink_4bb1a235-8658-5ec9-baa8-fc61c24d68a9)

What DPR stands for is an approach to the business that takes on and remedies some of the most notorious pitfalls of construction, the designed-in headaches that give the industry such a bad name: unreliable price estimates, endless cost overruns, delays and slipped schedules, completed projects with a never-ending list of fixes, and lawsuits and recriminations between builders and clients. Woods and his colleagues have been unblinking in their critique of what’s gone wrong with the industry to which they have devoted their professional lives. They have also made it clear that they would not look to the powers-that-be in their industry for ideas or inspiration about how to fix what ailed the business. “We’ve tried to emulate some of the high-tech companies and what propelled them,” Woods says. “Silicon Valley has been a proving ground for people who created new ways of doing business. That’s what we wanted to do in construction.”4 (#ulink_403f8b60-4c49-5daa-8fdb-8f9ffbbb9668)

Little wonder, then, that DPR, by virtue of its technology-inspired approach to the business, has become the contractor of choice for many of the country’s technology darlings. For example, it built Pixar Animation Studio’s lavish headquarters, the dream factory where Steve Jobs and his colleagues turn out blockbusters like Finding Nemo and The Incredibles. It has built big corporate campuses for some of the biggest names in Silicon Valley. It has built vast computer-chip factories across the country. And it has become a leading force in biotechnology and pharmaceuticals, building offices, laboratories, and state-ofthe-art manufacturing complexes. These are all buildings that require fierce attention to detail, have huge budgets, and allow no margin for error. For Charles Schwab, DPR built a mission-critical data center inside an existing building while stock-trading operations continued on the floor above. For Motorola, it built a state-ofthe-art semiconductor plant in Austin, Texas, without interrupting operations at the other ultrasensitive chip lines that surrounded the new factory. For Pixar, it transformed the site of a run-down Del Monte cannery into an exquisitely stylish filmmaking complex that is downright breathtaking in its blend of high-tech wizardry and quirky personality. (We’ll visit the Pixar complex for other reasons in chapter 11.)

DPR didn’t just build its business (and these buildings) in accordance with its aim-high ideology. The founders also established “tangible images” and “vivid descriptions” of the future—rich, easy-to-visualize portraits of what success would look like if the company lived up to its ideology. Early on, success meant being recognized as a different kind of company, a change-minded maverick in a slow-moving industry. “Our families will say we work for a great company,” reads one of the company’s first 12 descriptions. “Our friends back East will mention that they have heard about DPR’s greatness,” says another.

As DPR grew and prospered, its strategy and ideology remained constant, but its definitions of success grew decidedly more ambitious. “Over the next 30 years,” reads one of its more recent “vivid descriptions” of the future, “our people practices will be recognized as being as progressive and influential as Hewlett-Packard’s were over the last 50 years.” Reads another, “When it comes to quality and innovation, we will do for the construction industry what Toyota did for the auto industry.” And another: “Like Microsoft and Sun Microsystems, our people and company will be known for being aggressive and ‘bullet smart.’”

A construction company that aims to be thought of in the same breath as Toyota, Microsoft, and some of the legends of Silicon Valley? This is hardly conventional language in a business whose stereotype image includes the salty language of its employees—and that’s the point. “I’ve never wanted to be like everybody else,” says Woods. “I don’t want DPR to be like everybody else. We wanted to create a new culture, a new way of doing business in this industry.”

Like Roy Spence’s ad agency, DPR is a company that believes firmly in the power of language and symbols. Painted on the walls of its offices in Redwood City are the slogans and rallying cries that get repeated at all the company’s offices around the country. “We exist to build great things,” one wall declares. “Smarter, faster, better, safer,” exclaims another. “Exceed all expectations,” urges a third.

This strategic vocabulary is about more than just talk. One of the company’s core values is “ever forward”—basically, a commitment to keep pushing to get better, whether or not the marketplace demands it. “We believe in continual self-initiated change, improvement, learning, and the advancement of standards for their own sake.” To help translate that core value into an operating reality, the company named two “Ever Forward Champions”—staffers whose job is to measure DPR’s performance along its target goals, to share those results widely, and to keep developing new ways to improve the scores. The Ever Forward Champions play a key role in DPR’s “Global Learning Group,” an ambitious training program that steeps all 2,400 employees in both technical skills—budgeting, planning and scheduling, project management—and the fine points of DPR’s culture. Each employee is expected to spend at least 80 hours per year in these courses—again, not exactly standard operating procedure at most construction companies.

It’s hard to overstate just how richly descriptive DPR is about virtually all aspects of its business and day-today work practices. It seems to have invented a piece of vocabulary to describe every nook and cranny of its strategy and future. DPR’s latest future-defining exercise is Mission 2030—a vivid picture of what the company will look like in 25 years—and a clear set of benchmarks along the way, defined as Base Camp 2010. (DPR will establish other interim Camps on the path to 2030.) One of the most ambitious goals: to increase each year the percentage of business DPR lands “without competition”—that is, clients who consider no other company to build their project. At present, that percentage stands at 33 percent of DPR’s business, a striking figure in an industry where competitive bids are as routine as coffee breaks.

Why invest so much energy in building a vocabulary as opposed to just, say, building factories and laboratories for clients? “Because at the heart of every great company is a clear sense of purpose,” answers Peter Salvati, a senior DPR executive who works out of the company’s San Diego office and has played a lead role in Mission 2030. “One of the things I always have fun with—and I’ve probably done this with a hundred clients—is to suggest that they ask other construction companies, ‘Why does your company exist?’ You ought to be able to answer that about your own company. But so many people just look at one another, shrug their shoulders, and say, ‘To make money, I guess.’ It’s different for us.”

Being different has made all the difference at DPR. There’s no question that the company has prospered by unleashing a disruptive business strategy in its industry. But the ultimate gauge of its performance, says Doug Woods, is how much influence it has on the rest of the industry. It all goes back to strategy as advocacy. Indeed, another goal for Base Camp 2010 is for DPR’s internal scorecard—detailed metrics about schedules, budgets, change orders, and the like—to become a generally accepted benchmark for the construction business as a whole.

In other words, DPR wants its definitions of success to be adopted by its rivals as standard operating procedure. “If you really are building great things,” says Peter Salvati, “then people ought to be benchmarking themselves against you. They ought to be trying to emulate what you do.” Adds Doug Woods, “This is not about something internal at DPR. This is about being a force for transformation. We want to lead the industry to a different place.”

That’s the essence of strategy and the logic of competition at every company we’ve visited in these two chapters—from ING Direct’s campus in Wilmington, Delaware, to Cranium’s fun-and-games headquarters in Seattle, to HBO’s building near the beach in Santa Monica, to our many stops in between. Sure, it may seem safer, more prudent, more conventional, to devise a game plan for your company that conforms to the generally accepted rules of how your industry works. But if that’s such a winning formula, why are so many industries in such dire straits? That simple question speaks to the long-term futility of a business formula based on strategy as mimicry. Back in chapter 1, ING Direct’s Arkadi Kuhlmann said it best with a question of his own: if you do things the way everybody else does them, why do you think you’re going to do any better?

NOTES - CHAPTER TWO

COMPETITON AND ITS CONSEQUENCES: DIRUPTORS, DIPLOMATS, ADN A NEW WAY TO TALK ABOUT BUSINESS

1 (#ulink_da834194-8776-5838-ad29-73118431c0c9). For a lively discussion of the most profound and productive lessons of the Internet boom, see the interview by George Anders, “Marc Andreessen, Act II,” Fast Company (February 2001). Another valuable interview is “On the Record: Marc Andreessen,” San Francisco Chronicle, December 7, 2003. For helpful background on Tellme, see “A Telemarketer You Can Talk To” by Steve Rosenbush, BusinessWeek, June 22, 2004, and “Tech IPOs: Here Comes the Next Wave” by Justin Hibbard, BusinessWeek, March 7, 2005.

2 (#ulink_e301103e-bf37-5db4-840c-ac20e6a91e3d). For a soft-spoken guy who doesn’t seek attention, Craig Newmark attracts plenty of it. Here is our list of the best writing about the company: “Craig$list.com” by Ryan Blitstein, San Francisco Weekly, November 30, 2005; “Guerilla Capitalism” by Adam Lashinsky, Fortune (November 29, 2005); “Web Board Craigslist Makes a Name for Itself ” by Janet Kornblum, USA Today, September 28, 2004; “Craig’s To-Do List: Leave Millions on the Table” by Matt Richtel, New York Times, September 6, 2004; and “The Craigslist Phenomenon” by Idelle Davidson, Los AngelesTimes Magazine, June 13, 2004.

3 (#ulink_41eac1ea-860b-5ffc-b0c8-8f4cec5acab4). For an unblinking assessment of the turmoil facing the toys and games business, see “More Gloom on the Island of Lost Toy Makers” by Constance L. Hays, New York Times, February 23, 2005. For a case study on the birth and growth of Cranium, see “Inside the Smartest Little Company in America” by Julie Bick, Inc. (January 2002). For some philosophy on fun, families, and the Cranium formula, see “The Play’s the Thing” by Clive Thompson, New York Times Magazine, October 28, 2004.

4 (#ulink_9fe6a59f-1009-5b9c-8b4c-e10885368161). The Wall StreetJournal’s Jim Carlton revels in the company’s Silicon Valley sensibilities in “Taking Lessons from a Tech Book,” June 2, 1999. In “Building the New Economy” (Fast Company, December 1998), Eric Ransdell offers a must-read for anyone interested in DPR. After the company won a Sacramento Workplace Excellence Award, the SacramentoBee provided a smart take on how DPR works in “Looking Up” by Loretta Kalb (April 1, 2004).

* (#ulink_3b8b74f9-491b-53eb-afb5-688313a6328a) Not that Netscape should be thought of as a failure. The acquisition by AOL, when finalized, was valued at $10 billion—not a bad price for a company that was less than five years old.

* (#ulink_8b01d279-5528-5252-a258-f26f1700f074) In a neat twist, Microsoft paid to acquire McCue’s company. In March 2007, the Redmond-based giant announced a deal worth a reported $800 million.

* (#ulink_9821b476-59b8-568c-9412-458fcf4adafe) As impressive as these figures seem, they’ll be out of date by the time you read them. Craigslist is growing so fast, in so many places around the world, that it’s almost impossible to publish data about the operation that isn’t obsolete by the time it appears in print. Fortunately, the site itself maintains reasonably up-to-date statistics for those who are interested.

* (#ulink_7b4c8f15-5625-5852-82ef-15d3fed9508f) Fans of Jim Collins’s will notice the obvious influence of his ideas at DPR. The company’s founders spent time with the celebrated business guru early on in the company’s history and worked to apply many of the ideas from Built to Last as they built their organization. It’s a fascinating case study—translating timeless ideas honed at blue-chip companies, from 3M to Disney, to a young company in the rough-and-tumble world of commercial construction.