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

Chapter Three (#ucd4ce15f-3da9-5088-b5f6-d4debdd79c18)

Maverick Messages (I): Sizing Up Your Strategy (#ucd4ce15f-3da9-5088-b5f6-d4debdd79c18)

Few companies consciously set out to be just another me-too player with another ho-hum business model, following a bland formula that’s hard to distinguish from everyone else’s. But in industry after industry, that’s precisely how most companies wind up competing, which is why competition feels so unforgiving.

In his hugely influential book The Innovator’s Dilemma, Clayton M. Christensen awakened business to the power of “disruptive technologies”—digital breakthroughs that reshaped the governing economics of entire product segments, sometimes whole industries. We believe that a new wave of strategic innovation is being built around disruptive points of view. Maverick leaders don’t just strive to build high-performance companies. They champion high-stakes agendas. They create a competitive edge around an edgy critique of their industry. They present a fresh take on the world that clicks with customers, energizes employees, and shapes their business, from the markets they target to the customers they serve and the messages they send. They understand that the only sustainable form of market leadership is thought leadership.1 (#ulink_242b44e8-de5b-5dfe-b6c2-f538e29df23a)

Roy Spence of GSD&M calls his ultimate goal “positioning beyond defeat”—being so clear about a company’s purpose and so relentless about turning that purpose into a collection of business strategies and operating practices and a set of messages to the marketplace that traditional competitive responses are rendered largely ineffective. “People don’t have time for companies to be confused,” he argues. “Neiman Marcus knows it’s for rich people. Deal with it. Nike is in the business of crushing the competition. So be it. The companies that get in trouble are the ones that are mushy about who they are.”

As you work on positioning beyond defeat—as you think about the values you stand for as an organization and as a leader—ask these five questions about your company’s strategy.

1. Do you have a distinctive and disruptive sense of purposethat sets you apart from your rivals? That’s the defining question at the heart of these first two chapters, and it’s what separates the mavericks we’ve highlighted from their me-too competitors. The founders of DPR Construction were determined, from the moment they started the company, to reckon honestly and openly with the designed-in flaws of their industry and to build an organization that would prosper by fixing those flaws. The founders of Cranium didn’t launch their company because they had one good idea for a single board game. Instead, they had a wide-ranging critique of what was wrong with family entertainment—and an unapologetic sense of mission about providing a clear alternative, through board games but also through book publishing, TV shows, and other lines of business that Cranium has begun to enter after its runaway success with games.

Even when their company was a tiny start-up, the Cranium founders believed and acted as if they were playing for high stakes—not just thinking about games, but rethinking how parents could relate to their kids and how families could relate to one another. “We’ve always acted as if we’re a much bigger company than we really are,” says Grand Poo Bah Richard Tait. “We’re still a fairly young player in our industry, but we conduct ourselves as if we are a global movement. This isn’t a job. It’s the pursuit of a dream, to give everyone a chance to shine. It’s a big, ethereal goal, but we won’t stop until we’re convinced that we’re making progress against that goal.”

High ideals, to be sure. But don’t confuse high ideals with modest ambitions. Companies with the most values-based critiques of their industries often turn out to be the savviest and most aggressive competitors. The stock market value of fun-loving Southwest Airlines exceeds the stock market value of every other U.S. airline puttogether. Quality-obsessed HBO was the first network in TV history to generate more than $1 billion in annual profits. ING Direct holds assets of more than $40 million per employee; the average for U.S. banks is about $5 million per employee. In other words, Arkadi Kuhlmann’s outfit is eight times more productive than the competition at generating assets. Who says high-minded values can’t drive cutting-edge performance?

2. Do you have a vocabulary of competition that is unique toyour industry and compelling to your employees and customers? And we mean a real, honest-to-goodness, only-spoken-here business language. Commerce Bank, a fabulously successful financial services company that we’ll visit in chapter 7, has such a unique strategy, and such a homegrown vocabulary, that it actually publishes a dictionary of “Commerce Lingo.” New employees learn the meaning of “One to Say Yes, Two to Say No”: “The rule that states all employees can say ‘yes’ to a customer, but must first check with their supervisor before saying ‘no.’” They learn the essence of “retailtainment”: “The art of engaging customers and creating moments of magic so that every customer leaves Commerce with a smile.” And on it goes for pages, explaining terms that eventually become second nature and ultimately make Commerce a one-of-a-kind competitor.

Or consider the most exciting and fast-growing company in one of the world’s dullest and slowest-growing businesses. Much as Southwest Airlines has registered gravity-defying performance in a deadweight industry, Whole Foods Market has brought a fresh model of competition to a stale business mired in copycat strategies. The famously high-end grocer (nickname: Whole Paycheck) opened its first store in 1980 and went public in 1992. As of 2007 it had 190-plus stores, 42,000 employees, $5.6 billion in revenue—and a stock market performance that looks more like Google’s than that of its notoriously low-return rivals in the grocery business. (Investors who put $100,000 into the IPO had $3.5 million 13 years later.)

But the success of Whole Foods isn’t just about organic produce or high-priced fish. It’s about a truly original business strategy that sets it apart from the competition and shapes what the company sells and how it operates. Whole Foods chairman and CEO John Mackey has developed a business ideology that blends a taste for libertarian politics, a commitment to selling healthy foods and ensuring the compassionate treatment of animals, an eagerness to share financial information and decision-making authority up and down the organization, and a true zest for growth.2 (#ulink_83f0a74a-e410-5f5a-a9a4-ac047ce1b478)

That competitive ideology shapes how the company communicates with employees, customers, and even investors. Whole Foods has issued a “Declaration of Interdependence” that will never be confused with the bland, generic-sounding mission statements that most companies paste on cubicle walls and forget immediately. The Declaration, which was developed in 1985 and revised in 1988, 1992, and 1997, is a richly worded, painstakingly crafted document that is both aspirational and candid.

Indeed, the statement ends with the rare (and refreshing) admission that the company, like any organization, doesn’t always live up to the ideals it espouses. The Declaration “reflects the hopes and intentions of many people,” it reads. “We do not believe it always accurately portrays the way things currently are at Whole Foods Market so much as the way we would like things to be. It is our dissatisfaction with the current reality, when compared with what is possible, that spurs us toward excellence and toward creating a better person, company, and world.”

Companies that think differently about their business invariably talk about it differently as well. What language does your company speak?

3. Are you prepared to reject opportunities that offer short-term benefits but distract your organization from its long-term mission? At every company we’ve explored in these first two chapters, the road to prosperity has been determined in part by the road not taken—choices not to pursue markets that looked seductive but were at odds with the company’s advocacy agenda, decisions to turn down customers who could pay the bills but didn’t fit the strategic bill.

Scott Bedbury, a marketing wizard who played a key role in brand-building for Nike and Starbucks, and whom we’ll meet again in chapter 8, likes to say that some of the best moves he ever made were the growth opportunities he passed up. He calls it the “Spandex Rule of Branding,” and it applies to strategy as well as marketing: “Just because you can doesn’t mean you should.”

The Spandex Rule helps to explain why ING Direct passes on business opportunities that would make traditional bankers salivate. It explains why Craig Newmark and Jim Buckmaster of Craigslist are determined to keep looking for reasons not to charge visitors, even though the site’s devoted users, both buyers and sellers, are certainly prepared to pay for some services. It explains why Southwest Airlines has never adopted some of the most common practices of its rivals.

“The ‘invisible’ decisions that you make to stay on purpose can be ten times more important than your visible decisions,” argues Roy Spence. “Nothing’s more difficult than saying no to an attractive opportunity. And nothing’s more important.”

4. Can you be provocative without provoking a backlash? One key test of any would-be disruptor is whether he or she can also be a convincing diplomat. That insight may be the most enduring contribution of the rise and fall of Netscape, the company that single-handedly defined the revolutionary fervor of the dot-com boom. Eventually, waving a red flag at Bill Gates and his colleagues is Redmond, Washington, forced Netscape to wave the white flag as an independent company.

Even a fire-breathing maverick like Arkadi Kuhlmann appreciates the virtues of diplomacy. Not with his competitors, mind you, but with his colleagues. After all, ING Group operates in many of the businesses that Kuhlmann loves to critique, from home mortgages to credit cards. So he is careful to reassure his Dutch brethren that he’s a team player as well as an industry reformer. Back in the 1990s, when he launched ING Direct Canada, Kuhlmann named the conference rooms at bank headquarters after Dutch villages—a symbolic gesture that received a warm welcome in Amsterdam. Indeed, Kuhlmann’s diplomatic skills are so well developed that when Fortune surveyed the parent company’s American presence, it concluded that the operation that felt most Dutch was ING Direct USA.3 (#ulink_3a303d26-e9a4-5186-917d-54f7523b110c)

5. If your company went out of business tomorrow, who would really miss you and why? We first heard this question from advertising maverick Roy Spence, who tells us that 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 your approach to strategy and competition.

Why might a company be missed? Because it’s providing a product or a service so unique that it can’t be provided nearly as well by any other company. Because it’s created a workplace so dynamic that most employees would be hard-pressed to find a similar environment somewhere else. Because it has 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.

HBO is not one of those companies. In today’s 500-channel cable universe, it’s hard to argue that TV viewers would be left staring at blank walls (or, gasp, reading a book) if HBO were to disappear from the small screen. But one vital constituency would suffer irreparable harm—the ever-growing collection of writers, directors, actors, and producers who believe they have no other outlet on television for their most daring work. “They say, ‘We want your voice. We want your vision. We want the story that you see.’ And they mean it,” marvels Six Feet Under creator Alan Ball. “That might seem obvious, but at the networks every decision is second-guessed by every single executive. At HBO they leave you alone for the most part and trust your instincts.” (Instead of returning to film after SixFeet Under went, well, six feet under, Oscar-winner Alan Ball has re-upped with the network on two major projects.)

Forget HBO’s programming library and technology strategy. The network’s hardest-to-duplicate advantage (and thus, the piece of its business that would be most sorely missed) is its ability to attract and unleash Hollywood talent that once shunned TV. “People always fixate on the content freedoms at HBO as a kind of unfair advantage,” says Carolyn Strauss, a network lifer who is president of HBO Entertainment, “but the freedoms that are really important aren’t the freedom to swear, or to be naked, or to blow somebody’s head off. They’re about expressing a distinct point of view and allowing the creator’s voice to come through in as unencumbered a way as possible.”

Those freedoms, carefully guarded by the network’s leadership team, are why some of the world’s biggest stars and most-respected filmmakers—from Paul Newman to Tom Hanks to Mike Nichols—bring their passion projects to HBO. Albrecht understands that there is a “limited supply of supremely talented people who can create successful television,” and that most of them “have a better chance of getting rich and famous elsewhere.” So he focuses on making the experience of working with HBO memorable—the kind of experience that writers, directors, and actors would miss if it went away. “If you’re interested in the work itself,” he says, “there are very few other places in the broadcast business where you can call your own shots as a creator.” These creative freedoms are an essential part of HBO’s competitive strategy.

Can you identify one piece of how your company operates that, if it were to disappear, would be sorely missed in the marketplace? If not, can you identify one good reason why your company is not at risk of disappearing?

NOTES - CHAPTER THREE

MAVERICK MESSAGES (I): SIZING UP YOUR STRATEGY

1 (#ulink_334f677d-46b2-52a1-8058-99676529c853). The Innovator’s Dilemma: When New Technologies Cause Great Firms toFail by Clayton M. Christensen (Harvard Business School Press, 1997). See also The Innovator’s Solution: Creating and Sustaining Successful Growth by Clayton M. Christensen and Michael E. Raynor (Harvard Business School Press, 2003).

2 (#ulink_50fae876-4df5-55a0-b6c9-d68c42ccdf89). For more background on the distinctive sense of purpose at Whole Foods, see two articles by Charles Fishman (“Whole Foods Is All Teams,” Fast Company, April-May 1996, and “The Anarchist’s Cookbook,” Fast Company, July 2004), along with “The Virtue in $6 Heirloom Tomatoes” by Jon Gertner, New York Times Magazine, June 6, 2004. The company’s Web site offers a presentation by CEO John Mackey called “Creating a New Business Paradigm,” which explains his mind-altering perspective on the ideas that drive the company, from the “paradox of shareholder value” to the power of “creative love” in business (www.wholefoodsmarket.com/investor/presentation_ SAR. html).

3 (#ulink_2369efc7-554b-5b27-9e16-85ee1b4b312f). See “Banking on America” by Richard Tomlinson, Fortune (November 24, 2003).

PART TWO (#ucd4ce15f-3da9-5088-b5f6-d4debdd79c18)

Reinventing Innovation (#ucd4ce15f-3da9-5088-b5f6-d4debdd79c18)

Chapter Four (#ucd4ce15f-3da9-5088-b5f6-d4debdd79c18)

Ideas Unlimited: Why Nobody Is as Smart as Everybody (#ucd4ce15f-3da9-5088-b5f6-d4debdd79c18)

Gold mining is an old industry, a tired industry. The pace of change is glacial. Traditionally, mining companies have worried about how strong your back is, not how big your brain is. We wanted to do something that no one in the industry had done, to tap into the intellectual capital of the whole world.

—ROB MCEWEN, FORMER CHAIRMAN AND CEO, GOLDCORP, INC.

Rob McEwen was running out of ideas—and out of patience. It had been more than five years since he’d made a gamble that most executives in his business thought was fool’s gold, acquiring a mine with a history of low productivity, bare-bones investment, and bitter labor relations. But McEwen’s mine was in the Red Lake district of northwest Ontario, which, since the discovery of gold there in the 1920s, has produced more than 24 million ounces, nearly 10 percent of gold-rich Canada’s total output. And this out-of-favor property bumped up against the reliably productive Campbell Lake mine, which had churned out 9 million ounces over the years.

There had to be rich deposits of ore somewhere below his 55,000-acre site, McEwen reasoned. But where? So he raised the stakes and provided his geologists at Goldcorp, Inc., with a fresh $10 million to spend on exploration at the capital-starved Red Lake mine, situated more than 1,300 miles from company headquarters in downtown Toronto. Soon, the geologists reported some tantalizing news: in nine of the exploratory holes they had drilled, the average concentration of ore was 30 times richer than what Red Lake was currently producing. Eureka! Goldcorp had discovered gold. But the discovery raised as many questions as answers. How big was the deposit? McEwen and his geologists didn’t know. Where were the best spots to transition from exploration to deepdrilling? The team couldn’t say. How much time and money would it take tofigure it out? No one was prepared to offer a firm estimate.

Another year went by as Goldcorp struggled to make sense of its promising find and to understand just what it was sitting on. Tired, frustrated, and eager for a break from the grind, McEwen, an unabashed science and technology enthusiast, decided to spend a week at MIT with a delegation of presidents and CEOs from other companies, learning about trends in information technology. Part of the weeklong program focused on Linux and open-source software—computer code written by programmers scattered all over the world, people who are passionate enough about their craft, or who have a strong enough stake in the success of the project on which they work, to volunteer their time and expertise to write software that no company owns but millions of people can’t live (or at least work) without. For years open-source programs such as Apache, Perl, and Sendmail have been the unseen, mission-critical backbone of the Internet. It’s a taken-for-granted part of life among the Internet cognoscenti, but something of a mind-bender for us civilians: the world’s most important technology platform relies on ideas and computer code generated largely by a decentralized corps of volunteer programmers, most of whom have never met one another and few of whom work together in any formal setting.* (#litres_trial_promo)

In the case of Linux, a worldwide collection of grassroots, self-directed teams have built an operating system that powers a fast-growing share of the world’s computer servers—and has become a power player in the software industry. Some of the biggest technology companies in the world, including IBM, Hewlett-Packard, and Intel, devote hundreds of programmers and major financial resources to the Linux cause. But the real action is with the grassroots volunteers who cook up features, write code, fix bugs—and share their ideas with everyone else on the project.

The more McEwen learned about the open-source phenomenon, the more intrigued be became. People didn’t have to work for his company, he realized, in order to work with his company. He could prospect for drilling strategies from the farthest reaches of the world. “All of a sudden a light went on,” he recalls. “It was like a flash: this is the template I’ve been searching for! I went running back to Toronto convinced that we had to change how Goldcorp thought about mining. I wanted us to create a new approach to exploration at Red Lake.”

McEwen sketched the outlines of his idea to Goldcorp’s geologists and executives. The company would use the Internet to post all of its data on the mine—50 years worth of maps, reports, and raw geological information—along with software that displayed the data both in two dimensions and three dimensions. It would then invite scientists and engineers from anywhere in the world to download the data, analyze it as they saw fit, and submit drilling plans to Goldcorp, which would convene a blue-ribbon panel of judges to evaluate the submissions. The goal would be to help the company find its next 6 million ounces of gold.* (#litres_trial_promo)