Kitabı oku: «Mavericks at Work: Why the most original minds in business win»

Contents

INTRODUCTION

The Maverick Promise

PART ONE

RETHINKING COMPETITION

Chapter 1

Not Just a Company, a Cause: Strategy as Advocacy

What ideas is your company fighting for? • Can you play competitive hardball by throwing your rivals a strategic curveball? • Changing the channel: The one-of-a-kind network that transformed television.

Chapter 2

Competition and Its Consequences: Disruptors, Diplomats, and a New Way to Talk About Business

Can you be provocative without provoking a backlash? • Why strategic innovators develop their own vocabulary of competition. • Winning on purpose: The values-driven ad agency that carves its beliefs into the floor.

Chapter 3

Maverick Messages (I): Sizing Up Your Strategy

Why “me-too” won’t do: Make-or-break questions about how you and your organization compete.

PART TWO

REINVENTING INNOVATION

Chapter 4

Ideas Unlimited: Why Nobody Is as Smart as Everybody

How to persuade brilliant people to work with you, even if they don't work for you. • Why grassroots collaboration requires head-to-head competition. • Eureka! How one open-minded leader inspired the ultimate Internet gold rush.

Chapter 5

Innovation, Inc.: Open Source Gets Down to Business

Have you mastered the art of the open-source deal? • Why smart leaders “walk in stupid every day.” • Bottom-up brainpower: How a 170-year-old corporate giant created a new model of creativity.

Chapter 6

Maverick Messages (II): Open-Minding Your Business

Shared minds: The design principles of open-source leadership.

PART THREE

RECONNECTING WITH CUSTOMERS

Chapter 7

From Selling Value to Sharing Values: Overcoming the Age of Overload

If your products are so good, why are your customers so unhappy? • How to build a cult brand in a dead business. • “Our customer is our category”—the retailer that sells a sense of identity.

Chapter 8

Small Gestures, Big Signals: Outstanding Strategies to Stand Out from the Crowd

Do you sell where your customers are—and your competitors aren’t? • Warm and scuzzy: How Howard Stern became the world’s most unlikely teddy-bear salesman. • Why the company with the smartest customers wins.

Chapter 9

Maverick Messages (III): Building Your Bond with Customers

Brand matters: The new building blocks of cutting-edge marketing.

PART FOUR

REDESIGNING WORK

Chapter 10

The Company You Keep: Business as if People Mattered

Can you attract more than your fair share of the best talent in your field? • How to find great people who aren’t looking for you. • Building the character of competition: Why the world’s friendliest airline unleashes the “warrior spirit” in its workforce.

Chapter 11

People and Performance: Stars, Systems, and Workplaces That Work

The first law of leadership: “Stars don’t work for idiots.” • How free agents become team players. • From bureaucracy to adhocracy: The many merits of a messy workplace.

Chapter 12

Maverick Messages (IV): Practicing Your People Skills

Hiring test: Is your design for the workplace as distinctive as your designs on the marketplace?

APPENDIX

Maverick Material

ENDNOTES

ACKNOWLEDGMENTS

INDEX

COPYRIGHT

ABOUT THE PUBLISHER

Introduction

The Maverick Promise

Nearly 25 years ago, the beloved and influential historian Daniel J. Boorstin wrote a much-praised book called The Discoverers—A History of Man’s Search to Know His World and Himself. The book is an exhaustive study of the human capacity to challenge conventional wisdom and move forward—in the arts, in the sciences, in technology. As he told the stories of world-shaping advances, Boorstin reminded his readers of “the courage, the rashness, the heroic and imaginative thrusts” of those who seek to break new ground, and of their “battle against the current ‘facts’ and dogmas of the learned.”

Much of Boorstin’s story-telling features the great explorers (Portugal’s Bartolomo Dias and Vasco da Gama, Italy’s Marco Polo and Christoper Columbus) as well as breakthrough tools such as the microscope and the telescope, which provided new windows into the world and transformed how we made sense of it.

But one of Boorstin’s most likeable characters is the little-known Henry Oldenburg, an early hero in the formation of the Royal Society of London. Today, of course, the Royal Society serves as the national academy of science in the United Kingdom, and is an establishment institution of the first order. Nearly 350 years ago, however, at the time of its formation, the Royal Society represented a deep-seated challenge to the British establishment’s bias against innovation, experimentation, and new ideas—a much-needed triumph of curiosity over received wisdom. The Royal Society’s motto, Nullius in Verba (“Take nobody’s word for it; see for yourself”) captured the restless spirit of Oldenburg and his colleagues, whom Boorstin dubs “the defenders of novelty.”

That restless spirit is what animates the great modern adventure of innovation and entrepreneurship. There is nothing more powerful in business today than a genuinely new idea, and the sense of experimentation that goes along with turning a new idea into a marketplace reality. In an era of hyper-competition and non-stop change, the only sustainable form of market leadership is thought leadership. Ideas matter: the only way to stand out from the crowd is to be a creator and defender of novelty.

This is the message at the heart of our book, Mavericks at Work. In industry after industry, organizations and executives that were once dismissed as upstarts, as outliers, as wildcards, have achieved positions of financial prosperity and market leadership. There’s a reason the young billionaires behind the most celebrated entrepreneurial success in recent memory began their initial public offering (IPO) of shares with a declaration of independence from business as usual. “Google is not a conventional company,” read their Letter from the Founders. “We do not intend to become one.”

Nor does the unconventional cast of characters you will encounter in this book. From a culture-shaping television network with offices in sun-splashed Santa Monica, California, to a little-known office- furniture manufacturer rooted in the frozen tundra of Green Bay, Wisconsin, from glamorous fields such as advertising, fashion, and the Internet, to old-line industries such as construction, mining, and detergent, they are winning big at business—attracting millions of customers, creating thousands of jobs, generating tens of billions of dollars of wealth—by rethinking the logic of how business gets done.

Alan Kay, the celebrated computer scientist, put it memorably some 35 years ago: “The best way to predict the future is to invent it.” We believe the companies, executives, and entrepreneurs you’ll meet in the pages that follow are inventing a more exciting, more compelling, more rewarding future for business. They have devised provocative and instructive answers to four of the timeless challenges that face organizations of every size and leaders in every field: how you make strategy, how you unleash new ideas, how you connect with customers, how your best people achieve great results.

We’ll be the first to admit that most of the case studies and examples in Mavericks at Work are situated in companies with operations in North America. That’s a reflection of where we are based, and the organizations and leaders we know best. But as we’ve traveled the world spreading our maverick messages, we’ve become convinced that the ideas these case studies illuminate are just as relevant in Birmingham as they are in Boston, Massachusetts, that maverick strategies and practices are just as likely to be hatched in London as they are in San Francisco or Austin, Texas.

Last September, for example, as part of our lecture tour for Mavericks at Work, we spent a day at London’s Tate Modern gallery, not to admire the exhibitions (although we did a bit of that) but to participate in an idea summit organized by WPP, one of the world’s leading marketing- communications groups. The highlight of the day was a talk by Sir Martin Sorrell, WPP’s founder and CEO, and a force to be reckoned with in the realms of marketing, media, and global strategy.

Sir Martin painted a mesmerizing picture of the still-underestimated power of China. The country is producing 465,000 engineers per year, while the US produces 56,000 per year. China Telecom alone has 340 million subscribers, he noted. That’s more than five times the number of customers than there are people in the United Kingdom.

He also emphasized a defining strategic challenge for big companies everywhere. On the one hand, there is vast oversupply of products. From cars to computers, dishwashers to disk drives, there are too many makes, models, and brands chasing too few customers. At the same time, there is a worsening shortage of talent—making it tougher for giant companies, who are getting their brains beaten out in the product market, to find the brainpower they need to win.

But for us, the most striking insight came from Sir Martin’s discussion of the competitive dynamic between his firm—a global marketing powerhouse—and digital powerhouses such as Google. One participant wondered: Are the new Internet giants allies of or rivals to marketing giants such as WPP?

Certainly, Google is a business partner of WPP, he replied. (In fact, WPP is Google’s biggest customer.) But Google also aspires to play a bigger and bigger role in how advertising works, from print to radio to the Web. In other words, the Internet giants are both friends and foes—or “froes,” to use Sir Martin’s phrase. They are both friends and enemies—or “frenemies,” to use his other phrase.

Froes. Frenemies. These simple terms capture a huge transformation in the logic of business competition and organizational performance. Think of the relationship between Apple and the music labels, or between semiconductor companies and personal computer makers, or between Chinese manufacturers and the Western companies they supply.

Each side can’t live without the other—they have to be friends, allies, business partners. Still, each side is intensely wary of the other. The music labels resent Apple’s insistence on how prices should be set for iTunes downloads; Western companies understand full well that even as they avail themselves of China’s low wages in the short term, they are creating a new generation of competitors in the long term.

Indeed, everywhere you look, the dividing lines of business are being erased and redrawn. No wonder there is so much turnover in the executive suite—the dynamics of competition keep getting more complicated. As do the dynamics of life inside organizations. There’s a reason that the TV program The Office has been a runaway hit on both sides of the Atlantic. All of us have experienced the twists and turns of office politics (not to mention the incompetence of many people in positions of authority). But the same dividing lines that are being erased between companies are also being erased within companies. It’s more complicated (and thus more maddening) than it’s ever been to be part of a big organization.

The official “org chart” has less and less to do with how work actually gets done. Life inside companies is an ever-changing mix of projects, teams, and deadlines. Colleagues whom you need to recruit for your big assignment may try to recruit some of your prized team members for their big assignment. It’s nothing personal, it’s just the way things work today. And as writers and thinkers, we understand it now better than we did before, thanks to that fresh insight by Sir Martin and his colleagues at WPP.

We hope that the ideas and insights in our book will have an impact on how you make sense of the world around you. We’ve always believed that the first step in any successful venture—starting a company, launching a product, even writing a book—is to establish a clear definition of what it means to succeed. Our definition of success for this book begins and ends with its impact on you. We will consider Mavericks at Work a success if it opens your eyes, engages your imagination, and encourages you to think bigger and aim higher. Most of all, we will consider it a success if it equips to you act more boldly as a leader and win more decisively as a competitor. We will measure our success by how much we contribute to yours.

That said, this is more than a how-to book. It is also a what-if book. Business needs a breath of fresh air. We aim to restore the promise of business as a force for innovation, satisfaction, and progress. Indeed, despite the many bleak headlines, blood-boiling scandals, and calamitous financial meltdowns over the last five years, the economy has experienced a period of transformation and realignment, a power shift so profound that we’re just beginning to appreciate what it means for the future of business—and for how all of us go about the business of building companies that work and doing work that matters.

To this end, we approached our work in the spirit of the Royal Society. We didn’t take anybody’s word for what was happening in business. We ventured out to see it for ourselves. We immersed ourselves in organizations that have shaped the course of their industries by reshaping the sense of what’s possible among employees, customers, and investors. We spent countless hours with leaders at every level of these organizations, from CEOs to research scientists, who understand that companies with a disruptive point of view in the marketplace also need a distinctive approach to the workplace.

We went deep inside these organizations, looking to understand the ideas they stand for and the ways they work. We participated in a filmmaking class at one of the world’s most successful movie studios. We attended a closed-to-the-public awards ceremony at Radio City Music Hall, where employees of what has to be the world’s most entertaining bank sang, danced, and strutted their stuff. We sat in on a crucial monthly meeting (the 384th such consecutive meeting over the last 32 years) in which top executives and front-line managers of a $600-million employee-owned company share their most sensitive financial information and most valuable market secrets. We walked the corridors of a 120-year-old research facility where a team of change-minded R&D executives is transforming how one of the world’s biggest companies develops new ideas for consumer products. We walked the streets of Manhattan with teams of employees from a hard-charging hedge fund, who were sizing up ideas about stock-market picks.

This book is our report back to you from the front lines of the future—an account of what we saw, what it means for business, and why it matters to your company, your colleagues, and your career. It is not a book of best practices. It is a book of next practices—a set of insights and a collection of case studies that amount to a business plan for the 21st century, a new way to lead, compete, and succeed.

Our basic argument is as straightforward to explain as it is urgent to apply: when it comes to thriving in a hyper-competitive marketplace, “playing it safe” is no longer playing it smart. In an economy defined by overcapacity, oversupply, and utter sensory overload—an economy in which everyone already has more than enough of whatever it is you’re selling—the only way to stand out from the crowd is to stand for a truly distinctive set of ideas about where your company and industry can and should be going. You can’t do big things as a competitor if you’re content with doing things a little better than the competition.

There’s another well-known bit of philosophy, this one made famous by Hall of Fame basketball coach Pete Carril, that captures the competitive spirit at the heart of this book—and the maverick mindset that guides the companies we visited. During his 29-year tenure, Carril’s Princeton Tigers regularly squared off against (and often beat) teams whose players were bigger, faster, and more physically gifted than his team. “The strong take from the weak,” his coaching mantra went, “but the smart take from the strong.”

This book is devoted to the proposition that in business, as in basketball, the smart can take from the strong—that the best way to outperform the competition is to out-think the competition. Maverick companies aren’t always the largest in their field; maverick entrepreneurs don’t always make the cover of the business magazines. But mavericks do the work that matters most—the work of originality, creativity, and experimentation.

Who are these mavericks? The core ideas in this book are rooted in the strategies, practices, and leadership styles of 32 organizations with vastly different histories, cultures, and business models. Half of them are publicly traded companies or business units inside public companies. The other half are divided among privately held companies, venture- backed startups, even not-for-profits. Some of them are giants, with thousands of employees and billions of dollars of sales. Some of them are pipsqueaks, with a few hundred employees and sales in the tens of millions of dollars. But all of them are business originals, based on the distinctiveness of their ideas and the power of their practices. They are rethinking competition, reinventing innovation, reconnecting with customers, and redesigning work. In short, they are creating a maverick agenda for business—an agenda from which every business can learn.

Taken together, these companies demonstrate that you can build winning organizations around high ideals and fierce competitive ambitions, that the most powerful way to create economic value is to embrace a set of values that go beyond just amassing power, and that business, at its best, is too exciting, too important, and too much fun to be left to the dead hand of business as usual.

Here’s one small example of the death of business as usual—an example we encountered after the first edition of Mavericks was published. Earlier this year, Dave Balter, founder and CEO of a Boston-based company called BzzAgent, decided that his fast-growing firm was ready to enter the UK. BzzAgent (pronounced “Buzz Agent”) is a pioneer in the field of word-of-mouth marketing. It recruits volunteers (312,000 at last count) to sample products, share their opinions with friends and neighbors, and report back to the company. BzzAgent has been a phenomenon in the United States, with high-profile press coverage, generous venture-capital funding, and lots of blue-chip clients.

But its first big step into London was a misstep. Balter hired a UK executive to run the operation, and it was a clash of cultures from the outset. Balter and his US colleagues are passionate, high energy, messianic. Their new British colleague was cautious and laid-back. After 60 days, by mutual agreement, BzzAgent and its first-ever British hire parted ways.

This hiring miscue is hardly unusual; companies often stumble when they enter new markets. What is unusual is that BzzAgent shared this episode with anyone who was interested—employees, investors, clients, volunteer agents, the media—through its company blog, called the BeeLog. Balter wrote a long entry that described his travels to the UK, his decision to hire this executive, and why things didn’t work out. “We failed,” he concluded. “But we failed fast.”

This is a small taste of the new world of radical transparency. It’s one thing to read essays by pundits about how the Internet eliminates secrecy in business. It’s quite another to encounter a company like BzzAgent that has chosen to throw itself open to outsiders, share its inner workings, and let the chips fall where they may. “Our business is built around the power of people sharing their honest opinions,” Balter says. “We decided to show the world that we could work the same way.”

To be sure, the BeeLog has its share of cute stories about office pranks and new hires. But there’s some pretty edgy stuff as well. For example, BzzAgent, like lots of companies, has an advisory board of gurus who (in theory at least) take an interest in its strategy and operations. Indeed, every quarter, the company prepares a confidential report for its board of directors, and then sends the report to its advisory board as well.

Balter always wondered whether these advisors paid much attention to the briefings. So one quarter he slipped a phony slide into the middle of the report. The slide suggested that members of the advisory board were each about to be sued for millions of dollars. Only three of the company’s 15 advisors responded to the report—a sure sign they weren’t reading it.

Balter posted an entry about his experiment on the BeeLog (complete with the phony slide) and invited visitors to share their advice about what he should do about his disengaged advisors.

Why is Balter willing to be so open about how his company works? For one thing, it’s a matter of authenticity. People want to do business with companies that share their values, and one way to demonstrate your values is to lift the veil of secrecy around your operations. “Openness is in our life blood,” he says.

It’s also a matter of connection. Business is no longer just about transactions, it’s about relationships—real bonds between companies and their customers. What better way to strengthen a relationship than to be honest about your shortcomings?

Finally, it’s about learning—getting smarter faster. Indeed, when Balter phoned us back to do our interview, he was at lunch in London with the new head of his UK office. This executive had read his post about the hiring miscue, and was clear about why he was a better fit. Today, BzzAgent’s UK business is booming, with 26,000 volunteer agents and a long list of clients.

“It may seem scary to share your problems with the outside world,” Balter says, “but it’s also the best way to solve them. You get to the root of the issues so much quicker.”

We can’t promise that Dave Balter’s maverick company—or any of the companies you meet in these pages for that matter—will thrive, without setbacks or reversals, for years to come. (The realities of competition are too treacherous for that.) We can’t promise that every technique or business practice we highlight will work as well in your organization as it does in the organizations we describe. (There’s a difference between learning from someone else’s ideas and applying them effectively somewhere else.)

What we can promise is that we’ve written a book that is as eye-opening, as energetic, as flat-out useful as we know how to make it, a book that aims to be true to the maverick spirit of the agenda it champions and the leaders it chronicles. To that end, we thought it would be useful for us to take the time, at four separate moments in the book, to highlight a set of Maverick Messages—the action-oriented essence of the ideas we explore and the stories we tell. We also thought it would be valuable to end the book with a collection of Maverick Material—resources that will help you keep learning long after you’ve finished reading.

We’re not sure what Henry Oldenburg and the seventeenth-century mavericks behind the Royal Society would think of the ideas and leadership practices we chronicle in Mavericks at Work. But we do know that the spirit of innovation and experimentation that they celebrated nearly 350 years ago feels alive and well in business today. We hope that the material in our book provides you with some guidance on your journey into the future. Good luck!

William C. Taylor

Polly LaBarre

www.mavericksatwork.com

November 2007

NOTES - INTRODUCTION
THE MAVERICK PROMISE

1. Alan Kay uttered his immortal words at an early meeting of the Xerox Palo Alto Research Center (PARC). He spent the 1970s at this hothouse of innovation. The full quote is even more instructive: “Don’t worry about what anybody else is going to do…. The best way to predict the future is to invent it. Really smart people with reasonable funding can do just about anything that doesn’t violate too many of Newton’s Laws.” For more on Alan Kay, see his organization’s Web site (www.viewpointsresearch.org).

2. Pete Carril’s career record at Princeton was 514–261. His teams won 13 Ivy League crowns and held their own against many powerhouse programs. See The Smart Take from the Strong: The Basketball Philosophy of Pete Carril by Pete Carril with Dan White (University of Nebraska Press, 2004).

3. There’s more than a little mythology surrounding the origins of the word “maverick.” In The New Language of Politics (Random House, 1968), word maven William Safire repeats a colorful (but wholly inaccurate) story about Samuel Augustus Maverick: “Old man Maverick, Texas cattleman of the 1840s, refused to brand his cattle because it was cruelty to animals. His neighbors said he was a hypocrite, liar, and thief, because Maverick’s policy allowed him to claim all unbranded cattle on the range. Lawsuits were followed by bloody battles, and brought a new word to our language.”

In fact, Samuel Augustus Maverick (1803–70) was a graduate of Yale, a signer of the Texas Declaration of Independence, and a fabulously successful land speculator who cared little about cattle. (Maverick County in southwest Texas is named in his honor.) 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 unbranded cattle 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. (Not to mention Tom Cruise’s fighter-pilot character in Top Gun.)

In a neat twist of fate, several of Samuel Maverick’s descendants became legendary political figures in Texas with an undeniable, well, maverick streak. His grandson, Maury Maverick Sr., was a pro-FDR congressman during the New Deal and one of San Antonio’s most controversial mayors. (Maury Maverick Sr. famously coined another term—“gobbledygook”—to describe his interactions with New Deal agencies.) Samuel Maverick’s great-grandson, Maury Maverick Jr., was a crusading lawyer, legislator, and newspaper columnist who championed free speech and civil rights. In many respects, the Maverick tradition is to San Antonio politics what the Kennedy tradition is to Boston politics—colorful, influential, and impossible to ignore.

For accurate information on the Maverick family and the term itself, see these sources: Turn Your Eyes Toward Texas: Pioneers Sam and Mary Maverick by Paula Mitchell Marks (Texas A&M University Press, 1989); “Mavericks Are Texas-Grown” by Leon Hale, Houston Chronicle, January 23, 2004; “The Last Maverick” by Jan Jarboe Russell, Texas Monthly (July 2003). Another go-to source is The Handbook of Texas Online (www.tsha.utexas.edu/handbook/online), which has entries on multiple generations of the Maverick family as well as on the terms “mavericks” and “mavericking.”

PART ONE

Rethinking Competition

Chapter One

Not Just a Company, a Cause: Strategy as Advocacy

One reason we’re in Wilmington, Delaware, is because this is home to so many credit card companies. Every morning, when I drive to work, I see their signs and it makes me angry. They provide the opium of consumerism in American finance. There are restaurants in town that won’t take my reservation, because they know I might offend people. But that’s what keeps me motivated. That’s what gets me charged up to do battle.

—ARKADI KUHLMANN, PRESIDENT AND CEO, ING DIRECT USA

At times, Arkadi Kuhlmann can sound a lot like consumer activist Ralph Nader or crusading reformer Eliot Spitzer. He rails against the banking industry’s exorbitant fees. He expresses contempt for the needless complexities and hidden charges that infect the home mortgage business. And don’t even get him started on credit cards. He’s fed up with a financial culture that encourages people to save too little, invest too recklessly, and spend too much.

“In the beginning, people loved credit cards,” Kuhlmann declares. “Customers were proud to pull them out of their wallet. Today people hate credit cards—the nonstop marketing, the sky-high interest rates, companies pushing cards at kids in college. Everybody knows that credit card excess isn’t good. That’s not a popular message here in Wilmington, of course. As I explained to the local newspaper, ‘It’s sort of like preaching, and why not preach among the heathens?’”

But Kuhlmann is not a consumer activist or a politician, and he’s certainly not a preacher. He’s a banker. In fact, he’s the founder of one of the fastest-growing retail banks in the country, which happens to be a subsidiary of ING Group, a 150-year-old company headquartered in Amsterdam that ranks as one of the largest financial services conglomerates in the world. His operation, ING Direct USA, opened for business in September 2000. By the end of 2006, it had signed up 5.5 million customers, attracted nearly $60 billion in deposits, and begun generating consistent (and rapidly increasing) profits. During its first two years, the start-up absorbed losses of $56 million as it banked on future growth. Over the next two years, it posted profits of $127 million. In 2006, with just 1,500 employees, the operation generated profits of $250 million.*

Sometimes it seems that righteous indignation can pay handsome dividends. But Arkadi Kuhlmann is more than a banker with a brash attitude. He is a hard-charging maverick with a full-throated message about the future of his industry. He and his colleagues insist that they are not just building a bank. They are challenging the common (and misguided) practices of the whole banking business—a business that they believe is ripe for change and renewal. “People want to do business with companies that share their values,” Kuhlmann says. “We speak with a new voice—a different kind of voice for business.”1

Expressing that voice often puts Kuhlmann’s company at odds with its bigger, richer, more traditional rivals. We paid one of our many visits to Wilmington in June 2005, two months after President George W. Bush signed the laughably misnamed Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The law, the most sweeping revision of U.S. bankruptcy procedures since the 1970s, cracked down hard on cash-strapped individuals and families seeking protection from creditors. Its passage was met by howls of protest from consumer groups, law professors, even many bankruptcy judges, but inspired squeals of delight from banks, credit card companies, and giant retailers—powerful organizations whose executives and lobbyists had marched in lockstep for years on Capitol Hill. Virtually everyone who was anyone in the financial services sector applauded their glorious political victory.

Everyone, that is, except Arkadi Kuhlmann. He was the only CEO of a U.S. bank to oppose the bill publicly, comparing it to “using a cannon to kill a mosquito.” He submitted written testimony to a U.S. Senate committee, participated in a press conference with liberal Senate stalwarts Ted Kennedy and Russ Feingold, and took out a full-page ad in the Washington Post. Time and again, he raised the ire of his industry colleagues by raising a host of uncomfortable questions about their pet project on Capitol Hill. What about the tens of thousands of families who go bankrupt because of catastrophic illnesses and huge medical bills? What about the 16,000 military personnel who declared bankruptcy in 2004? What about the credit card industry’s stubborn refusal to curb its most aggressive marketing practices?2

“To the banking establishment, I’m sort of the bad guy,” Kuhlmann declares with undisguised relish. That reputation applies far beyond its challenge to the industry’s political strategy. Indeed, it’s at the heart of ING Direct’s business strategy. “Before we launched the company, we looked around and said, ‘The banking industry is bust. The consumer always loses.’ Then we said, ‘How can we do something radically different? How do we re-create and re-energize an industry? How can we build a company around a big new idea?’”

That big idea involves using the future-forward power of the Internet to champion the timeless virtues of thrift and financial security. ING Direct USA, essentially an Internet-based savings bank, is a direct-to-the-customer operation. (Customers can also bank by mail or phone, but more than 70 percent use the Web.) Everything about its operations emphasizes speed, simplicity, and low overhead. ING Direct has no brick-and-mortar branches, no ATM machines, no highly paid commercial bankers or smooth-talking financial advisers. It also charges no customer fees, requires no minimum deposits, and avoids paper like the plague. Most importantly, the bank offers a limited number of easy-to-understand product offerings: old-fashioned savings accounts (with no minimum balances), a selection of CDs (with no minimum deposits), nine easy-to-understand mutual funds (which can be combined into portfolios described as conservative, moderate, and aggressive), and no-frills home mortgages with an online application that takes less than ten minutes to complete.

The intentional simplicity of the company’s products and business model keeps ING Direct’s costs extremely low: in some parts of the business, they are one-sixth the costs of a conventional bank. Low costs enable ING Direct to guarantee higher interest rates to depositors (with some basic savings products, as much as four times the industry average) and charge lower rates to its mortgage customers. The end result is an online money machine that adds 100,000 customers (40 percent of whom are referred by word of mouth) and $1 billion in deposits every month. Indeed, by the end of 2004, ING Direct had become the country’s largest Internet-based bank, the fourth-largest thrift bank, and one of the forty largest banks of any sort.

But the bank’s animating spirit isn’t about low costs or fast growth. It’s about an agenda for reform. Kuhlmann and his colleagues declare that they are “leading Americans back to savings”—presenting a clear-cut business alternative to the excesses and shortcomings of how the financial sector does business. “Everything we do starts with our big idea,” the CEO says, “which is to bring back some fundamental values: self-reliance, independence, having a grubstake. One way or another, most financial companies are telling you to spend more. We’re showing you how to save more. What’s better than apple pie, the little guy, fighting for the underdog? We want to own that space.”

WHAT IDEAS DO YOU STAND FOR? STRATEGY THAT MAKES A STATEMENT

For decades, a well-defined set of parameters governed the logic of business competition. Strategy was about delivering superior products: Is your company’s automobile or appliance or computer cheaper, better, nicer to look at? Strategy was about selecting attractive markets: What demographic segments or customer categories matter most to your organization? Strategy was about mastering economics: What advantages in scale, costs, margins, and pricing allow your company to deliver superior performance in productivity, profitability, and shareholder returns?

Which is why, truth be told, so much of strategy has been about mimicry. Big companies in most industries have been content to compete from virtually identical strategic playbooks and to vie for advantage on the margin: Whose products can be a little better? Whose costs can be a little lower? Whose target markets can be a little more attractive? Think General Motors versus Ford, CBS versus ABC, Coke versus Pepsi. Every once in a while, of course, something genuinely new alters the trajectory of an industry: the rise of sport utility vehicles or zero percent financing in the auto business, the creation of reality programming in the television business, the ubiquity of bottled water and natural drinks in the beverage business. But inevitably (and almost immediately), innovation gives way to duplication. Every big player is quick to copy the original creative impulse (or acquire one of the creators), so that strategy returns to its familiar and predictable formulas.

In the 1990s, with the explosion of the Internet and the rise of a generation of ambitious, venture-funded start-ups, business competition took on a more heated, more frenetic, less copycat tone. Strategy was about designing radically new business models that would overthrow decades of perceived wisdom on how specific industries worked: Who could apply high-speed computers and networked communications to slash production costs, vastly increase consumer choice, and otherwise do violent harm to established economic models? Who could, in the dot-com-driven lingo of the era, “Amazon” their rivals or “Napsterize” their industry?

No book better summed up this revolutionary fervor than the aptly titled Leading the Revolution by Gary Hamel, the celebrated strategy guru. Hamel is one of the most influential business thinkers of his generation, a brilliant speaker, consultant, and professor who’s been affiliated with the London Business School and the Harvard Business School. Hamel’s core constituency is senior executives in the world’s most powerful companies, and his book took these power players to task for the groupthink that afflicts so many of them in the executive suite. “Most people in an industry are blind in the same way,” Hamel warned. “They’re all paying attention to the same things, and not paying attention to the same things.”

So what’s the solution? Revolution! Hamel urged aspiring “corporate rebels” and “gray-haired revolutionaries” to “start an insurrection” in their industries. “You can become the author of your own destiny,” he thundered to his readers. “You can look the future in the eye and say: I am no longer a captive to history. Whatever I can imagine, I can accomplish. I am no longer a vassal in a faceless bureaucracy. I am an activist, not a drone. I am no longer a foot soldier in the march of progress. I am a Revolutionary.”3

Phew! Of course, this period of explosive innovation ended the way most revolutions do—badly and bloodily, choked on its own excesses. Some of the most celebrated business revolutionaries of the 1990s—Enron and Worldcom leap to mind—became some of the most notorious corporate outlaws of the early 21st century.

This is the backdrop for the emergence of a new generation of maverick companies and the arrival of what we believe is the next frontier for business strategy. The logic of competition has evolved from the imitative world of products versus products to the revolutionary fervor of business models versus business models to, now, the promising realm of value systems versus value systems. Call it strategy as advocacy: Who can redefine the terms of competition by challenging the norms and accepted practices of their business before disgruntled customers or reform-minded regulators do it for them? Who has the most persuasive and original blueprint for where their business can and should be going—not just in terms of economics but also in terms of expectations? Who can unleash a set of ideas that shapes the future of their industry and reshapes the sense of what’s possible for customers, employees, and investors?

To be sure, these questions are hardly without precedent. More than a decade ago, Jim Collins and Jerry Porras published Built to Last, which became one of the best-selling business books of all time. As Collins and Porras examined the success of venerable companies such as Johnson & Johnson, 3M, and Procter & Gamble, they discovered a sense of purpose at each of the companies, a “set of fundamental reasons for a company’s existence beyond just making money.” And this sense of purpose, they added, tends to be timeless and enduring—“a good purpose should serve to guide and inspire the organization for years, perhaps a century or more.”4

Each of the maverick companies you’ll meet in the next two chapters exudes an undeniable sense of purpose. But it’s a sense of purpose that provokes: each company’s strategy tends to be as edgy as it is enduring, as disruptive as it is distinctive, as timely as it is timeless. In an era defined by the business, cultural, and social hangover from the excesses of the nineties boom—a period of Wall Street scandal, CEO misconduct, and unprecedented levels of mistrust between companies and their customers and employees—the most powerful ideas are the ones that set forth an agenda for reform and renewal, the ones that turn a company into a cause.

Roy Spence, cofounder and president of GSD&M, the free-spirited ad agency based in Austin, Texas, is a colorful and charismatic voice on the future of business strategy. Spence has been a guiding force behind some of the most visible brands and high-impact organizations in America, from Wal-Mart to the PGA Tour to the U.S. Air Force. But the client that first put his agency on the map was Southwest Airlines. According to Spence, Southwest’s remarkable climb to industry leadership (it carried more domestic passengers in 2005 than any other airline) is not just about low-cost economics or high-touch service. Ultimately, it’s about the edgy and disruptive sense of mission that drives every aspect of how it does business.5

Southwest has become such a mass-market icon that it’s easy to lose sight of the utter distinctiveness of its approach to the airline business. The company’s direct point-to-point route system avoids the high costs and endless delays of the hub-and-spoke system around which the mainstream industry is built. The company has never offered first-class service or assigned seating or in-flight meals, and it was a late (and reluctant) participant in frequent-flier programs. Southwest’s no-frills approach to interacting with customers keeps fares low and makes for easy-to-understand offerings.

Yet low fares don’t mean sullen service. Quite the opposite: the company’s gate agents, flight attendants, even its pilots, are famous for their flashy smiles, showy personalities, and corny sense of humor. Anyone who has flown Southwest on Halloween, an almost-sacred holiday at the fun-loving airline, and marveled at the costumes worn by everyone from baggage handlers to mechanics, understands that this is an airline that flies on a different kind of fuel from its competitors. Indeed, Southwest may be the most colorful and instructive example ever of the power of strategy as advocacy. This is a company whose distinctive value system, rather than any breakthrough technology or unprecedented business insight, explains its unrivaled success.

GSD&M signed on with Southwest in 1981, back when the ten-year-old airline, cofounded and run by Herb Kelleher, a gutsy, chain-smoking, whiskey-swilling adopted Texan (one of the Lone Star State’s most legendary entrepreneurs was born in New Jersey), was considered a flighty sideshow to the blue-chip companies that ruled the sky. Today, in an industry that hovers on the brink of disaster (the old guard lost a collective $30 billion from 2001 to 2004), Southwest soars alone as a consistent moneymaker and fast-growing enterprise. A few years back, Money celebrated its 30th anniversary by identifying the best-performing stock over the magazine’s three-decade history. The winner wasn’t General Electric, IBM, Merck, or some other revered name. It was Southwest Airlines, a maverick force in one of the least attractive industries in the world. (It does pay to be a maverick. According to Money, a $10,000 investment in Southwest shares in 1972 was worth more than $10.2 million 30 years later.)6

Spence is adamant about the strategic lessons behind his client’s remarkable flight path. Southwest didn’t flourish just because its fares were cheaper than Delta’s or because its service was friendlier than the not-so-friendly skies of United. Southwest flourished because it reimagined what it means to be an airline. Indeed, Spence insists that Southwest isn’t in the airline business. It is, he argues, in the freedom business. Its purpose is to democratize the skies—to make air travel as available and as flexible for average Americans as it has been for the well-to-do.

That unique sense of mission is what drives Southwest’s business strategy, from the cities it serves to the fares it charges right down to whom it hires and promotes. There is, Spence argues, a direct connection between the economics of Southwest’s operating model, the advertising it aims at its customers (“You are now free to move about the country”), and the messages it sends to its 30,000-plus employees (“You are now free to be your best”). Spence explains the connection this way: “Business strategies change. Market positioning changes. But purpose does not change. Everybody at Southwest is a freedom fighter.”

Obviously, all this talk of freedom is in part an exercise in product marketing and employee morale-boosting. But anybody who’s flown Southwest understands that there’s more to the airline’s performance than low costs and high productivity. There is, in fact, a genuine sense of purpose (and a one-of-a-kind sense of humor) that animates the company. Libby Sartain spent 13 years in the People Department at Southwest, the last 6 in charge of the department as its vice president. (We’ll meet her again in chapter 7, where we explore her new agenda as Chief People Yahoo—the senior HR strategist at one of Silicon Valley’s flagship companies.) Sartain is adamant that the advocacy mission that defined Southwest in the marketplace reflected, and was driven by, an equally palpable sense of purpose in the workplace. “We examined the company at the most detailed level,” Sartain explains, “and asked, ‘From the minute you think of working here to the minute you leave, what makes this experience unique? What is it about our workforce that separates us from the competition?’”

In the workplace, employees took up a battle cry designed to connect the company’s disruptive business strategy to daily life inside the organization: “At Southwest, Freedom Begins with Me.” Sartain and her team went so far as to identify the “Eight Freedoms” that defined the working experience at the airline—from “the freedom to learn and grow” to “the freedom to create financial security” to “the freedom to work hard and have fun” to “the freedom to create and innovate”—and she created a traveling “freedom exposition” to recruit employees to the cause behind the company.

Over time, the Eight Freedoms “got to the very core of what the experience of working at Southwest is about,” Sartain says. “The message was, ‘You’re not just loading a bag in the belly of that plane, you’re not just serving cocktails, you’re not just creating a budget or writing software. You are giving people the freedom to fly. It’s your efficiency and ingenuity that allows us to keep offering low fares and keeps our planes in the sky.’”7

What ideas is your company fighting for? What values does your company stand for? What purpose does your company serve? Those are the questions that Roy Spence seeks to answer for every organization with which he works. “Anybody who’s running a business has to figure out the higher calling of that business, its purpose,” he insists. “Purpose is about the difference you’re trying to make—in the marketplace, in the world. If everybody is selling the same thing, what’s the tie-breaker? It’s purpose.”

There’s no doubt that Spence is a master at using clever language to define and position companies in compelling ways. (He’s in the ad business, after all, and his nickname inside the agency is “Reverend Roy.”) Language, as we’ll explore in chapter 2, counts for a lot when it comes to strategy. How you talk about your company speaks volumes about how you think about your business. And ultimately, how you think about your business determines how well it performs.

“Sure, you could say that Southwest Airlines really wants to get more people to fly,” Spence explains. “Or you can say that the company is in the business of democratizing the skies. Would you rather be in the airline business or the freedom business? Language is what creates the edge—and operating on the edge leads to more creativity in the business.”

GSD&M’s best-known bit of language may well be “Don’t Mess with Texas,” which has become the unofficial slogan of the agency’s famously maverick home state. Remarkably, GSD&M coined the phrase in 1985 as the centerpiece of an anti-litter campaign it devised for the Texas Department of Highways. Over the years, the message was adopted by musicians, good old boys, and politicians and became a rallying cry on a par with “Remember the Alamo.” “We took them out of the litter business and put them in the pride business,” says Spence. “It became a big, macho, Texan kind of deal. That’s an edgier place to play. And that edge is why litter went down so much. We made it anti-Texan to litter.”

Roy Spence is so committed to the power of purpose (his agency defines its business as purpose-based branding) that one of his GSD&M colleagues, Haley Rushing, actually has the title of “Chief Purposologist.” Rushing, who is trained in cultural anthropology, immerses herself in the history, economics, values, and practices of existing and potential clients to unearth the advocacy agenda (or lack thereof) at the heart of their strategy.

“We don’t create the purpose of an organization,” Spence says. “Our job is to bring it to life and create the language of leadership. In the nineties, we saw that a rising tide lifts all boats. Now we see that a changing tide tests the strength of your anchor. What you stand for is as important as what you sell.”