September 8, 2008
The Tao of Sustainability
We've seen a large increase in the number of books on sustainability and "greening" this year, including this new one from Yale University Press: Sustainability by Design: A Subversive Strategy for Transforming Our Consumer Culture by John R. Ehrenfeld. You'll read more about these books in our forthcoming 2008 annual review, In the Books (links to inaugural 2007 edition), but here's a look at this book, which is based on the premise that "sustainability is the possibility that humans and other life will flourish on Earth forever."
Don't dismiss that premise as lofty and unrealistic, though. The success of sustainability efforts in this world depends on our adoption of idealistic standards and a vision for a healthier world. Ehrenfeld addresses the obstacles and problematic attitudes to this vision, and offers practical steps to adopting a sustainability mindset on both the personal and corporate levels. He suggests new, holistic approaches to sustainable design that won't act, as others have in the past, as Band-Aids. Instead, Ehrenfeld focuses on the routes we should take to ensure success.
Here is John Ehrenfeld on The Tao of Sustainability:
Flourishing can occur only if we pay close attention to the three critical domains that the forces of modernity have dimmed:
- Our sense of ourselves as human beings: the human domain.
- Our sense of our place in the [natural] world: the natural domain.
- Our sense of doing the right thing: the ethical domain.
And here are his suggestions about the Special Role of Business in becoming a sustainable society:
- Replace the rubric of sustainable development with that of sustainability as flourishing
- Stop publishing misleading advertisements hinting that ecoefficiency will solve the world's problems and save money at the same time
- Use the "Tao of Sustainability" as a strategic and operational template
- Create a culture of sustainability in the workplace
- Businesses should design their offerings to guide behavior toward ethical responsibility
- Social responsibility, like charity, begins at home.
You can read more about John and Sustainability by Design at: http://johnehrenfeld.com/index.html
at 9:27 AM
| Comments (0)
| TrackBack (0)
Categories: Big Ideas, Current Events, Personal Development, Safety, Health, and Wellness, Social Responsibilty
September 6, 2008
Remembering Michael Hammer
If the book of the 80's was In Search of Excellence by Peters and Waterman, then book of the 90's was Reengineering the Corporation by Michael Hammer and Jim Champy.
We were saddened to hear Michael Hammer died this week at age 60.
The best way we can think of to acknowledge his impact is by announcing the inclusion of Reengineering The Corporation in our upcoming book. Here are the opening paragraphs to our review of Reengineering the Corporation, which give perspective to the work that Hammer and Champy started fifteen years ago:
"Reengineering became the magic managerial term of the 1990s. Cover stories in business magazines touted Michael Hammer and Jim Champy as the strategic gurus of the moment. Companies like Deere, Ford, and Duke Power all found huge success using the concepts. Even Lou Gerstner in his autobiography, Who Says Elephants Can't Dance?, calls out reengineering as having played a role in his turnaround of IBM. The trouble with every fad is the ridicule that follows.
In the 1990s, the term "reengineering" became an easy substitute for the prior decade's "reorganizing,""restructuring," "delayering," "downsizing." The popularity of the term gave embattled executives needed cover when faced with media scrutiny and stock market pressure. The mere mention of a new reengineering initiative acknowledged the severity of a problem and indicated to shareholders that proper steps were being taken. But the actual results varied widely, and business leaders and journalists were quickly off to find and report on the next silver bullet. What's left is general ambivalence for one of the most important business concepts in the second half of the 20th century."
Writing About Numbers
In watching the del.icio.us feed for the business+book this week, there have been a number of webizens that are paying attention to Stephen Baker's The Numerati.
The Sept 8th cover story of BusinessWeek titled "Managing By The Numbers" was an excerpt adapted from the book about amazing work being done at IBM:
"I'm here to find out how Takriti and his colleagues go about turning IBM's workers into numbers. If this works, his team plans to apply these models to other companies and to automate much of what we now call management."
You can find the introduction excerpted and an active weblog on The Numerati website.
The book I would correlate this with is last year's Super Crunchers by Ian Ayres, which is out in paperback now.
September 5, 2008
Business Books Recommended by and for The Business Journalist
I posted last week on the amazing number of blog posts that have been appearing lately with lists of business books. The latest comes from BusinessJournalism.org, a site that is a part of National Center For Business Journalism at Arizona State University.
In a post titled "A Must Read", Kelly Carr starts with two titles from other business journalists meant to help reporters write stories: Michelle Leder's "Financial Fine Print: Uncovering a Company's True Value" and Chris Roush's "Show Me the Money: Writing Business and Economics Stories for Mass Communication"
In an effort to further prep interns, Carr gathered up a set of recommended from practicing business journalists. These suggestions will look a little more familiar (thought I just ordered the third rec):
- "Barbarians at the Gate: The Fall of RJR Nabisco," by Bryan Burrough and John Helyar
- "24 Days: How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America," by Rebecca Smith and John R. Emshwiller
- "200% of Nothing: An Eye Opening Tour Through the Twists and Turns of Math Abuse and Innumeracy," by A.K. Dewdney
On the extended list, you'll find even more of what we normally recommend, but Good To Great is the only true "business book to solve problems" book on the list.
- "The Power Broker: Robert Moses and the Fall of New York," by Robert A. Caro
- "Liar's Poker" and "Moneyball" by Michael Lewis
- "Stealing Time: Steve Case, Jerry Levin, and the Collapse of AOL Time Warner," by Alec Klein
- "The Big Squeeze: Tough Times for the American Worker," by Steven Greenhouse
- "Nickel and Dimed: On (Not) Getting By in America," by Barbara Ehrenreich
- "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron," by Bethany McLean and Peter Elkind
- "Good to Great: Why Some Companies Make the Leap…and Others Don't," by Jim Collins
[hat tip: DataJoe and Addictomatic]
September 4, 2008
InBubbleWrap Returns
You may have missed the news we buried inside the Kotter post from yesterday.
InBubbleWrap is back.
If you are new to us, we have a sister site that gives away free books. We post the book and a description. If you are interested, you can put your name in the electronic hat. We random choose people and they get sent free stuff.
If you remember the first incarnation, we have changed one thing. We will be posting new books once a week now, rather than every day. Data showed that daily posting was burning people out. And frankly it was burning us out too.
So, got check out the Kotter giveaway. On Monday, there will be something new.
The power of crowdsourcing.
Jeff Howe's Crowdsourcing is now out. I planned on starting this post with an F. A. Hayek quote on a community's ability to bring widely dispersed knowledge together; then I realized I had already posted it here. And so I'll go a different route.
Earlier this summer, I had a chance to talk about Crowdsourcing with Jeff. That is, using the power of crowds to do work. Wikipedia is a good example. Or Threadless, the t-shirt company that's raking in over $10 million every year.
What fascinates me about crowdsourcing is the level of passion. People (consumers) don't want to stand by on the sidelines and passively consume. People want to be involved. They/we want to share what we know.
Crowdsourcing creates what Jeff calls, the perfect meritocracy. If you go back to F. A. Hayek's idea, it's impossible for each one of us to amass unlimited amounts of knowledge. In crowdsourcing, it matters not whether you are a rocket scientist or a high school dropout. What matters is what you know and how that knowledge is applied.
That's the story shared in Jeff's book. It was just released last week. Here's a trailer for the book. If you're interested, check out our conversation.
August's International Best Sellers
It's that time to find out what people were reading from 800CEOREAD in August all around the world!
September 2, 2008
Welcome Back Kotter
Today marks the release of John Kotter's latest book, A Sense of Urgency, by Harvard Business School Press. Kotter has written about urgency before... Raising urgency is the first of his eight-steps for successful organizational change. The feedback he has received on the topic convinced him that this critically important step deserved a book of its own. He lays out exactly what led him to that decision and what he intends to accomplish with the book in the first chapter:
For the past thirty-five years I have been studying what people actually do to help their organizations perform well, no matter how difficult the circumstances. My work has led me to this topic and this book. In the pages that follow, you will find dozens of stories about urgency, complacency, and false urgency. I will describe a strategy and four sets of tactics I have seen people use to create a strong sense of urgency and an unexpectedly high level of performance--with benefits flowing to investors, employees, national economies, and their own careers.
To learn more, check out the video and read the conversation with the author below.
If you'd like to catch up on Kotter's previous books before diving into this one, you're in luck. We've gotten the band back together (as Todd eloquently put it) and relaunched InBubbleWrap for the day. Head on over and enter to win the John Kotter Library, including: Leading Change, The Heart of Change and John P. Kotter on What Leaders Really Do.
For many years, you have been teaching business people how to be change leaders. In A Sense of Urgency you identify the shifting nature of change. How does that affect the current business climate?
It used to be that companies experienced large scale changes--a large acquisition or a new corporate strategy--about once a year. I call that episodic change. Now this still exists, but it lives--as do we--in a world of continuous change. Companies are always shifting, evolving, and changing and small- and mid-size changes come at an almost ceaseless flow. In this current situation, being able to establish and sustain a true sense of urgency becomes an essential asset rather than a nice-to-have quality. Without it, taskforces underperform. Enterprises underperform. And people get hurt--sometimes badly.
How successful are organizations in creating and sustaining meaningful change?
Scarily, in doing my research, I found that 70 percent of large scale initiatives in companies failed or were not fully launched. Only 10 percent of the cases achieved what they set out to do--and in some cases overshot their expectations. In those ten, a similar formula was used in virtually all instances, and they all began with creating a sufficiently high sense of urgency among enough people to set the stage for making a challenging leap into some new direction.
What are some errors people make when they try to create change?
The single biggest error is that they do not create a high enough sense of urgency. When the urgency challenge is not handled well, even very capable people and resource-rich organizations can suffer greatly. You see this often in a company that has a history of being a market leader. There is a feeling that everything is just fine and nothing needs to change because they know what they are doing. But the world we live in keeps shifting and moving forward and a company can easily move from first to last just by believing they are successful. Complacency created by prosperity can blindside even the best managers.
What is false urgency and how can we stop it?
False urgency is even more insidious than complacency and just as common. In an organization suffering from false urgency, there is a great deal of energized action, but it's driven by fear, anger, and frustration and not a focused determination to win, and win as soon as is reasonably possible. With false urgency the action has a frantic feeling: running from meeting to meeting, producing volumes of paper, moving rapidly in circles, all with a dysfunctional orientation that often prevents people from exploiting key opportunities and addressing knowing problems. But, if you ask managers, they don't see the negative energy--they will always comment on how fast everyone is moving and how very busy everyone is. They will deny, and deny again, if you tell them it's not truly urgent.
How do you define true urgency?
When people have a true sense of urgency they think that action on critical issues is needed now, not eventually, not when it fits into a schedule. Now means making real progress every single day. This isn't about setting up more meetings and creating bigger teams. It's about really accomplishing something of value every single day. It means seeing the risks around you as opportunities rather than unobtainable challenges. You must spend your day moving forward--not just putting out fires left right and center. With complacency and false urgency, people spend their day looking inward. People infused with true urgency constantly scan the horizon around them--both inside and out--looking for information relevant to success and survival.
Wouldn't that high level of energy create burnout or undue stress?
Not at all. A true sense of urgency is a highly positive and focused force that doesn't create dangerous levels of stress. At least partly because it motivates people to relentlessly look for ways to rid themselves of chores that add little value to their organization but that clog their calendars and slow down needed action. People who are determined to move and win, now, simply do not waste time or add stress by engaging in irrelevant or business-as-usual activities.
This is the basic strategy that any person or organization can put into place to create a better, healthier, and more productive environment.
How do you create a heightened sense of urgency and then sustain it?
Well, you don't do it by appealing just to someone's sense of logic. You have to appeal to their hearts too, just as great leaders throughout the ages have won over the hearts and minds of people. Within that heart-head strategy there seem to be four sets of tactics that work best. First, use a variety of methods to help people better see the hazards and opportunities that are all around them--and incredibly people don't often see them. Second, become an urgency-beacon in the way you behave each and every day. The vast majority of people do not. Third, always look to see if there is an opportunity in a crisis to help increase urgency. And finally, confront the No--Nos--those people who hate change and are remarkably skilled at fostering both complacency and false urgency.
What about the future of urgency and change management?
Speed will only increase. A sense of urgency will only become more essential. It is not a luxury but a must have--a critical competitive advantage--and a humanitarian necessity for all workers. Sometimes in a work situation it is hard to clearly see this issue. But looking at some larger challenges helps us gain perspective. Think nationally and globally: climate change, terrorism, the monumental effects of China and India becoming developed nations, the ethical issues surrounding bioscience and the need for Social Security reform in the United States. Do we have a strong sense of urgency to deal with these issues? Remember, words are not the test. Action is the test. Furious activity and running and meetings and slick presentations are NOT the sign of true urgency. Alertness, movement, and leadership, now--and from many people, not a few--are the signs of true urgency. So where do we stand today? We can do better.
New excerpt up - from Leadership and the Sexes
There's a new excerpt up on our Excerpts blog. It's taken from Chapter 1 of Leadership and the Sexes: Using Gender Science To Create Success In Business by Michael Gurian and Barbara Annis.
From the publisher: "Men and women lead differently. Most businesspeople, from front line employees to CEOs, sense this at some level, but can't quite articulate the differences without falling into the trap of creating male and female stereotypes. In their new book, Leadership and the Sexes gender experts Michael Gurian and Barbara Annis show what the latest scientific studies reveal about male/female brain differences, and explain how these differences impact the ways that men and women negotiate, communicate, lead, and run meetings."
The excerpt we have posted is a good, lengthy, meaty one. It raises a lot of important points about biological differences between men and women, but it also prompts more questions and will have you curious to see how the authors address not only gender differences in leadership, but also societal issues surrounding socialization and gender stereotyping.
Here's a brief passage from the excerpt:
The human brain is hard-wired (genetically coded with) its gender. As gender is not one thing or type, but very diverse, you will find throughout this book that your brain's male/female coding fits somewhere on a wide gender/brain spectrum.
And here's a direct link to the chapter: 800ceoread.com/excerpts/archives/008408.html
at 9:05 AM
| Comments (0)
| TrackBack (0)
Categories: Communication, Leadership, Personal Development
August 29, 2008
Steven Levy's Top 10 Technology Titles
You may know Steven Levy for his many books--his most recent is The Perfect Thing: How the iPod Shuffles Commerce, Culture, and Coolness--or from his work covering technology for various magazines. He made the move to writing full time for Wired after 12 years at Newsweek just this year (I linked to his recent review of Anathem last week).
A true expert on the matter, he recently published his list of the top 10 general-interest technology books over at ieee spectrum online, writing:
Any great nonfiction book combines education with entertainment. In drafting my A-list of general-interest books about technology, I considered impact and significance but gave still more weight to the reading experience. This is a collection where lay readers can appreciate each entry--and engineers, programmers, and other tech professionals can't afford to miss a single one.
His choices are:
You can find the original article, with detailed reviews of every book on the list, here.
Have a great Labor Day everyone!
The Age of Speed
Vince Poscente understands the opportunities speed offers. At age 26, he took up speed skiing, and merely four years later, he would race to a Canadian national record of 135 miles per hour at the Winter Olympics in Albertville, France.
That was 1992. Three years later he hit the road as a motivational speaker, and would land in the Speaker Hall of Fame after only eight years on the circuit.
Last year, he released The Age of Speed: Learning to Thrive in a More-Faster-Now World with our good friend, business book publisher/sage Ray Bard of Bard Press. The title quickly became a national bestseller, making The New York Times, The USA TODAY, and Wall Street Journal lists.
Ballantine picked up the paperback rights to the book, and it was released on Tuesday, updated "with 20 brand-new tips to help you make the most of your time."
If you're looking for a great holiday-weekend read, I would certainly consider The Age of Speed. As Poscenti says, "Speed is the only way to get more time, more life." His book aims to help you harness the power of that speed, instead of drowning in its current. Take The Age of Speed with you for the weekend, and come back to work Tuesday morning and hit the ground running while everyone else is moping back into a shortened workweek.
August 28, 2008
Nick Hornby on Naked Economics
In Naked Economics, Charles Wheelan makes an analogy between music "piracy" and farming, writing "You spend all summer tending to your corn crop and then your neighbor drives by in his combine, waves cheerily, and proceeds to harvest the whole crop for himself."
Though an overall fan of the book, Nick Hornby disagrees with that specific sentiment. Writing about it on his blog on Tuesday, he grabbed hold of Wheelan's analogy and took it to a hilarious conclusion. After making a concise point about the very different nature of corn and music as products, he goes on to write:
(One reason why people--OK, evil people--feel it's OK to download, say, a Jay-Z album without paying for it is that there are few outward signs that Jay-Z is suffering as a result.) Or is the record company the farmer, in Wheelan's analogy? Well, if the farmer had spent decades overcharging grotesquely for corn, ... then perhaps the thieves would have been cheered all the way to the bootleg farmer's market.
This being a family blog, I cut out what exactly the record company execs spent their "grotesque" profits on, but Hornby continues from there, comparing some of the more innovative ways musicians have been releasing their music to traditional farming (and pointing you to online resources for free music along the way).
The Myth of Multitasking
It seems we all "multitask" these days... talking to a coworker while writing a blog post (Kate), answering the cellphone while crunching the monthly numbers, reading a new email while taking a phonecall. In fact, you're multitasking right now, aren't you? Dave Crenshaw would so no, you're actually not... he would say you're "switchtasking." You see, his Myth of Multitasking (watch out, it's a parable) not only exposes the inefficiencies of multitasking, it states that it doesn't even exist. Why? Well, in his words:
Because the truth is we really cannot do two things at the same time--we are only one person with only one brain. Neurologically speaking, it has been proven to be impossible. What we are really doing is switching back and forth between two tasks rapidly, typing here, paying attention there, checking our "crackberry" here, answering voicemail there, back and forth back and forth at a high rate. Keep this up over a long period of time, and you have deeply engrained habits that cause stress and anxiety and dropped responsibilities and a myriad of productivity & focus problems. It's little wonder so many people complain of increasingly short attention spans!
The quote above is taken from Dave's guest-post at The Cranky Widgets Blog.Since its release on the 18th, the book and author have been on a "blog tour," being reviewed and interviewed all over the blogosphere. If you're interested in learning more about Dave and his ideas, I've put links to many of those posts below.
Interviews:
Virtually Organized
Black Belt Productivity
Reviews:
awake@thewheel
Get Rich Slowly
Slacker Manager
Change Your Thoughts
August 27, 2008
New Excerpts from Brand Digital and What's Stopping You?
There are two new excerpts up on that blog devoted to them. The first is from What's Stopping You: Shatter the 9 Most Common Myths Keeping You from Starting Your Own Business by Duane Ireland and Bruce R. Barringer, and shares three insights into why starting a business is not as expensive as you think.
The other excerpt is from Allen Adamson's BrandDigital: Simple Ways Top Brand Succeed in the Digital World, and provides the "four criteria by which a good brand driver can be judged." You may recognize Allen as the author of the popular BrandSimple: How the Best Brands Keep It Simple and Succeed.
The direct links are below:
What's Stopping You
BrandDigital
Creative and Personal Mastery coming to Los Angeles
Srikumar Rao, author of Are You Ready to Succeed?, is offering his Creative and Personal Mastery course in Los Angeles for the first time this fall. The course has been wildly popular in its previous incarnations at Columbia Business School, the Haas School of Business at the University of California at Berkeley and London Business School.
What is it all about? Let me quote the syllabus:
The thesis of this program is simple. Life is short. And uncertain. It is like a drop of water skittering around on a lotus leaf. You never know when it will drop off the edge and disappear. So each day is far too precious to waste. And each day that you are not radiantly alive and brimming with cheer is a day wasted.Stop right now and evaluate your life. YOUR LIFE. As it is right now. Are you, by and large and daily variations aside, happier now than you have ever been? Do you have the inner conviction that you are on the path that is just right for you, the one that is transparently leading you to fulfillment in many dimensions--in your career, in relationships, in spiritual development?
If the answer is, NO, ask yourself WHY NOT? The first step to getting there is to refuse to accept anything less.
This program is designed to be that first step for you.
The deadline for application is next Friday, September 5th and there is a deliberately cumbersome application process, so if you're interested in attending, head over to areyoureadytosucceed.com right away and read the syllabus to see if the course is right for you.
If you do not live in Los Angeles or cannot take the course, you can take the audio version of The Personal Mastery Program, offered on six compact discs.
How the Wise Decide: Final Post
For the past few days, we've been joined by Bryn and Aaron, authors of How the Wise Decide. If you'd like to catch up on their blog posts, start here. This is their final post for our blog.
: : : : : :
At a time when business decisions are more challenging than ever before, we set out to answer a simple question: How do the really successful leaders make the tough calls?
Our method was straightforward: Go to the source. We would find people who had made great decisions consistently--people like former American Express CEO Harvey Golub, U.S. Supreme Court Justice Stephen Breyer and The Blackstone Group chairman and CEO Stephen Schwarzman--and ask them how they did it. We figured that if we could ask enough successful and experienced leaders about their toughest decisions, surely the essence of decision making would emerge. As it turned out, our first inclination--Go to the Source--became our first principle, confirmed time and again by many of the 21 leaders we interviewed.
When it was all over we had distilled six core decision-making principles that have guided wise leaders across functions and industries and brought them through various crises. The six principles--Go to the Source, Fill a Room with Barbarians, Conquer the Fear of Risk, Make Vision Your Daily Guide, Listen with Purpose and Be Transparent--are the guiding lights by which the CEOs in our book, How the Wise Decide, drove the value of their companies up an average of 15 times the S&P 500 during their tenures. They are the basis for how four of our leaders became self-made billionaires, and two won the National Medal of Technology.
The principles sound deceptively simple. But when you read the book you will see, in the stories of how these leaders made their decisions, that executing the principles is the hard part. Following through on any single imperative with the dedication and drive that our wise leaders apply to it requires focus, effort and time. Doing it with all six might seem impossible. Don't worry. It isn't.
The principles we outline in How the Wise Decide are universal and timeless. But everyone's situation is different and there are probably some lessons that will be more useful or easier to execute in your present situation than others. Start there. As you master one principle, begin working on another. But keep all six in mind, perhaps written on an index card you carry in your pocket or purse, because there will always be opportunities to apply them to specific decisions. Even the most cursory use of the six principles will lead to better decisions.
How the Wise Decide isn't a book about business theories. Rather, it is a practical guide written for managers by managers that provides the advice we all need to make great decisions consistently. Our goal from the start has been to help accelerate you along the path to wise decision making and successful leadership. We believe that in these demanding times, when choosing the right decision is critical, the principles at the heart of How the Wise Decide can help you do just that. Please visit our website, www.wisedecide.com, to learn more.
: : : : :
Many thanks Aaron and Bryn!
August 26, 2008
How the Wise Decide: Dermot Dunphy, Part III
This blog post comes from the authors of How the Wise Decide. To read part I, click here and part II. Here's part III:
: : : : : : : :
The real challenge confronting Dermot Dunphy as he pursued his vision for Sealed Ait was how to keep the technological edge that allowed Sealed Air to charge premium prices. Dunphy knew from his own experience that R&D was essentially a joke among most packaging companies. They knew what was important: cutting costs so they could cut prices, then doing it all over again. Conventional marketing wisdom would see Bubble Wrap as a built-in advantage to get Sealed Air in the door among new customers. Then it could grab a bigger share of each customer's wallet by offering an expanded portfolio of more conventional products.
And then, of course, Sealed Air would be back in the thick of cutting costs in order to cut prices.
Again, Dunphy chose a different direction. He didn't want to compete with anyone in the commodity business. Instead, he saw Bubble Wrap as only the first of a full line of package protecting products that would emerge from vigorous R&D. Sealed Air would hire researchers in chemistry and mechanical engineering to develop products that didn't yet exist for customers who knew little or nothing about Sealed Air at that point. And like his decision about the sales force, this solution would be costly and time consuming. But Dunphy knew technology was the only thing that separated Sealed Air from the price cutters.
The combination of a sales force that understood that it sold a benefit rather than a product and a research and engineering team that applied creativity to what was otherwise a moribund business launched Sealed Air on a course from which it hasn't deviated in more than three decades.
"Every other company in the industry sent people out with catalogs saying 'How many bags do you need? Here's our price.' We sent people out with engineering studies who said 'Let us look at your back room, let us into your factory. We'll show you the economic benefits of adopting our thought processes, our designs, and, of course, our products."[i]
If Dunphy had used his vision's objectives selectively he might have hired the best sales force but skimped on product R&D, thus wasting the sales team's talents. Conversely, without smart sales people Sealed Air's technologically sophisticated products might have languished on warehouse shelves or been sold at unsustainably low prices. By applying his vision every time he made a call, Dunphy ensured that Sealed Air's decisions were coordinated.
Yet even someone as dedicated to following his vision as Dunphy found himself occasionally tempted to take a short cut. When a company in Tulsa, Oklahoma, that produced stretch film to wrap and anchor boxes on pallets came on the market, Dunphy wanted to take a look. He chartered a small jet to ferry the top management team from its New Jersey headquarters to visit the Tulsa company. On the ride home Dunphy reflected on the day, pleased with what he had seen, and began talking about the next steps to move forward with the deal to acquire what he described as a "decent, high-margin business."
Then Sealed Air's senior vice president in charge of international activities, a key executive in the company, spoiled Dunphy's reverie. He told Dunphy that their trip to Tulsa had confirmed what he already suspected: there was no cutting edge technology involved in stretch wrap. To acquire the company Sealed Air would have to deviate from its long-standing vision embodied in Dunphy's Seven Principles.
"He was slightly shocked that I was considering breaking away from our high standards," Dunphy recalls. "He half seriously, half amusingly, but rather bitingly accused me of trying to build a bigger company so that I could boast about it to Harvard Business School friends at my forthcoming reunion. That got the message across pretty clearly!" Needless to say, Sealed Air didn't make the purchase.
There may have been some short-term cost from following Dunphy's vision so relentlessly, but the long-term benefits were tremendous. By the time Dunphy retired in 2000 his relentless focus on making every decision according to his vision had paid huge dividends. Sealed Air had more than 350 employees in R&D labs scattered around the world and had developed an array of innovative new products in such diverse areas as food and medical packaging. The unprofitable little turnaround that he joined in 1971 had more than $225 million in net income on more than $3 billion in sales and was generating gross margins of 35 to 38 percent in an industry that typically saw returns in the low 20s.[ii,iii] The original investors who hired him saw their holdings rise 8,300 percent over the CEO's three decades of leadership.[iv] As we point out in How the Wise Decide, packaging may not be a glamorous business, but returns of 8,300 percent certainly are.
: : : : : :
More tomorrow from the authors of How the Wise Decide.
[i] Dunphy interview with Harvard Business School, page 8
[ii] Sealed Air press release, January 25, 2001, http://ir.sealedair.com/releasedetail.cfm?releaseid=74113.
[iii] Dunphy interview with Harvard Business School, page 13.
[iv] Sealed Air press release, October 25, 1999, http://ir.sealedair.com/ReleaseDetail.cfm?ReleaseID=74279.
How the Wise Decide: Dermot Dunphy, Part II
This blog post comes from the authors of How the Wise Decide. To read part I, click here. Here's part II:
: : : : : : :
Formulating a vision is one thing, executing it quite another. The first thing Dermot Dunphy had to decide when he became CEO of Sealed Air was how to build a sales team that could best take advantage of the Bubble Wrap opportunity. He knew dozens of top-notch packaging salesmen, the kind who had Rolodexes bulging with the names of good customers. If he could lure them away from their perches at established companies to join an unknown, unprofitable company they would give Sealed Air an instant foot in the door of the purchasing departments at hundreds of potential customers. Yet he knew they also would bring with them ingrained ways of doing business: discounts, price cuts, deals.
No thanks. Dunphy's vision of what he wanted Sealed Air to become sent him down a different path. "We didn't hire anybody from other packaging companies," he explains. "We started off with the assumption that we wanted our people to be superior. Somebody from the packaging industry would just bring with him the same old mindset. Instead, we only hired people just out of school or people who worked at technical companies like Hewlett Packard or superior sales companies like Procter & Gamble. Then we taught them packaging."[i]
Finding and training a cadre of sales people to sell benefits, not products, was a costly and time consuming solution, but Dunphy believed it was the only way for Sealed Air to succeed. The sales team would bring a fresh approach, selling promises of protection in an industry in which price had prevailed. But was that all it would take?
: : : : :
Next up, the lesson.
How the Wise Decide: Dermot Dunphy, Part I
It's day two of Aaron and Bryn's, authors of How the Wise Decide, joining us to share the problems, lessons and solutions garnered from their interviews with 21 leaders. Today, they're talking aboutDermony Dunphy, the former CEO of Sealed Air.
: : : : : : :
Most companies today have vision statements, idealistic slogans intended to guide their management and employees. But it is easy for vision statements to degenerate into mere words on paper, lost in the short-term fog of day-to-day business decisions. A great vision can and should be stated simply, but implementing it won't be easy. We make the case in our book, How the Wise Decide, that you have to maintain the constant discipline to let that vision guide every decision you make, even seemingly innocuous day-to-day tactical choices. The benefit of that discipline is that choices become easier. All you need do is ask if an option furthers the vision. If the answer is no, even with short-term profits at stake, it isn't really an option. Let us show you how one of our wise leaders, Dermot Dunphy, created and implemented a vision that resulted in immense value.
In 1971 Dunphy had sold his packaging company and was thinking about what to do next. Investment bank DLJ asked him to take over a small packaging company that had just lost its CEO, the result of stumbling financial performance. Understand that in 1971 the packaging industry wasn't exactly a hotbed of innovation. Cardboard boxes and wadded paper about sums it up. But the company Dunphy took over was different. Sealed Air was the brainchild of two inventors who a decade earlier had created a textured wallpaper consisting of little air bubbles trapped between layers of plastic. The wallpaper went nowhere, but Sealed Air had changed course and targeted the packaging market with a product called Bubble Wrap.
Dunphy's previous company had been a commodity business that was constantly squeezed between giant raw materials suppliers on the bottom and demanding, powerful customers on the top. Sealed Air was nothing like that. "I decided, when I found Sealed Air, that I kind of woke up in heaven and that focusing on the technological edge, combined with a marketing edge, was the way to control my destiny and control the company's destiny," he says.
Dunphy quickly formulated his vision of what Sealed Air could become: a company selling not a product, but a benefit. "The strategic vision was that we were in the business of protecting our customer's products from damage caused by shock, vibration and abrasion. And the bubble was our core business."
August 25, 2008
How the Wise Decide: Bill George, Part III
Part III of the Bill George story, brought to you by the authors of How the Wise Decide.
: : : : : :
Bill George calls his traumatic experience in the Lenox Hill operating room a "power-of-one" observation. That single catheter failure crystallized in a way that no report ever could the problem confronting Medtronic. But George wasn't basing his decision to overhaul the catheter business on that one experience. Instead, he was considering it in the context of everything else he knew about the business. He was able to see not only the flaws in the catheter, but also the flaws in how Medtronic handled information.
Other power-of-one observations sparked more changes at Medtronic. One day George was watching a surgeon implanting an early version of Medtronic's defibrillator, a device that restores normal rhythm to a wildly beating heart. The device was large and the electrodes were delicate. The surgeon was having difficulty fitting the defibrillator into the patient's chest cavity. Finally he pushed hard and suddenly blood was everywhere. The surgeon had perforated an artery.
"Surgeons are good at cutting, but they're strong, both in personality and in physical strength. He was trying to force the device when what was needed was the refined touch of a cardiologist," George says. The patient survived, but Medtronic's technicians began focusing on making smaller defibrillators that cardiologists could easily implant without having to do deeply invasive surgery.
Bill George knew the tremendous value that derives from making power-of-one observations. In any given year he spent an astounding two thirds of his time in the field gathering first-hand information. Not many CEOs can find a way to do that, but George set up a senior management team that took care of other matters to allow him to get out of the office. As we recount in How the Wise Decide, George had many other similar experiences during his tenure as a result of visiting doctors in their offices and surgeons in their operating rooms all over the world. His observations showed him not only how to fix faulty products, but also a faulty organization and they gave him the insights that spurred the development of new products before competitors saw the potential. He spent so much time with primary sources because he knew he didn't have enough information from other sources to make intelligent decisions.
What George and other leaders who diligently practice the principle of Going to the Source understand is that firsthand information is the best information. It is unfiltered by others, it provides subtle details and nuances that are lost in Power Point presentations and, most important of all, it shows us reality in all its messy details and emotion. Without face-to-face encounters with the people who are driving the future of your business, you will miss out on the power of emotional input.
In case you're wondering about the financial impact of George's ambitious efforts to Go To the Source, during his 12 years of leadership from 1989 to 2001 Medtronic's market capitalization soared from $1.1 billion to $60 billion. That's an average annual growth rate of 35 percent!
: : : : :
Stay tuned for day two of the blog hosting by Aaron and Bryn, authors of How the Wise Decide. Tomorrow, they'll be talking about Dermot Dunphy, the former CEO of Sealed Air.
How the Wise Decide: Bill George, Part II
Part II of the Bill George story, brought to you by the authors of How the Wise Decide.
: : : : : :
After having a faulty Medtronic catheter thrown at him by an angry surgeon, Bill George began investigating why he hadn't known about quality problems plaguing the catheter business. What he found was a tortuous path that routed the sales reps' field reports about failing catheters through seven layers of bureaucracy before they reached the people who designed the products. When George questioned the engineers about the reports they denied any design flaws and blamed the surgeons for misusing the equipment. George quickly reached two conclusions. First, there clearly was a problem with the quality of the catheters. He had seen the problem with his own eyes, had been shocked by the incident and had even brought the ruined device back to headquarters in his baggage.
"It's an overstatement, but field reports are a dime a dozen," George told us. "There's no emotional association with them. But when you're in a medical environment like an operating room all your senses--sight, sound, smell, taste--are working. It's a totally different experience than reading a field report."
Second, and more importantly, there was something dangerously wrong with Medtronic's ability to handle critical information. "It was a systemic problem," he explains. "What was wrong was that the system wasn't getting quality information from the operating room to engineering, quality control and manufacturing, the people who could fix the problems. People don't want to pass on bad news and engineers can be in denial about a problem."
George immediately ordered up a solution. Within a few months the catheter sales force was split off from Medtronic's centralized sales operation and attached to the catheter division where sales people were in much closer contact with engineering, quality control and manufacturing. At the same time George ordered engineers to get out of their offices and spend at least one day a month in operating rooms observing how the equipment they designed was being used. A few engineers complained to him that they were too busy to waste time watching doctors. "I said 'if that's the case, you're working on the wrong things'."
: : : : :
Stay tuned for today's final blog entry on Bill George.