Successful Leadership By Example

Via Flickr https://www.flickr.com/photos/chathamhouse/4462290204
Mayor Barkat, – Photo Credit: Flickr/chathamhouse

How do you become a successful leader?

To answer that question, consultants worldwide charge princely sums, educators offer boatloads of courses, military organizations teach, train, and mentor relentlessly, and countless books offer their take. Some of these sources help. Some don’t.

My recent book, Invent Reinvent Thrive: The Keys to Success for Any Start-up, Entrepreneur, or Family Business (McGraw-Hill, 2014), discusses how leaders drive personal and professional success through reinvention.

One of the stories in the book is of the current Mayor of Jerusalem, who has reinvented himself several times, including as the principal early backer of Checkpoint, a highly successful computer firewall security company.

This week, Mayor Barkat made worldwide news by providing a different kind of security: He tackled and detained a terrorist who had just stabbed a man on the streets of Jerusalem. The incident made news—and even led to people posting pictures of Barkat dressed as Batman and other superheroes on social media—because such behavior is unexpected of political officeholders, who are generally the objects, rather than providers, of protection.

But if you’d read my book and the story I tell there about Barkat, you wouldn’t have been surprised by his actions this week. Indeed, you’d have more insight into how he and other successful people in business, politics, and other domains reinvent themselves incrementally and continually to achieve ever-greater success—and how you can do the same.

Watch, Listen, Learn: How Entrepreneurs Gain Skills through Observation

“A tolerance for ambiguity” or even the ability to thrive amidst ambiguity is on everyone’s list of key traits for entrepreneurs. So how do successful entrepreneurs develop that trait? One might develop a tolerance for pain by continually enduring pain; but there must be a better way. Successful entrepreneurs don’t just strengthen their tolerance—they reduce the ambiguity. In many instances, founders gain insights and learn best practices by observing people and practices carefully across sectors, applying what they learn to great effect. The entrepreneurs below, all profiled extensively in my book Invent Reinvent Thrive (McGraw-Hill, 2014), are excellent examples of the power of watching and listening.

Maxine Clark expanded her vision of a store where people could customize teddy bears into the 400 Build-a-Bear Workshops in existence today. Part of Maxine’s early success was her ability to negotiate leases in malls on behalf of her start-up in an unproven business. To succeed, she used what she’d learned previously as president of mall staple Payless Shoes. “Even though I’d never negotiated a lease before . . . I had listened to our legal department talking about them,” she told me in our interview for the book. “I didn’t have to know everything about them, but I did need to know enough not to be dangerous.” The insights Maxine gained from observing lease negotiations helped Build-a-Bear thrive. Continue reading

Money is Fungible; Capital Sources Are Not

Entrepreneurs, especially those in early stages of building a business, focus sharply on finding investors. They do so with good reason: without initial and ongoing capital, many businesses would die on the vine. But I’ve observed that some investors fail to take into account prospective investors’ compatibility with and suitability for their businesses and their own styles, practices, and preferences. In other words, they consider funding from any source—self-funding, angel, VC, other institutional investors—as having the same value. Money is fungible, right? Continue reading

Adding new skills to your quiver enables painless reinvention.

That’s what Alyson points out so well in the article, The Case For Embracing Lateral Career Moves, published by FastCompany.

If you assume, as so many do, that exponential or total change of your skill set is required, then the prospect of reinvention is daunting. During the worst of the recent great recession, many who lost their jobs appeared to be like a deer in headlights, because they didn’t understand those possibilities. If, however, you understand that reinvention can be incremental, by changing perhaps a few skills, with the result that a new skill set is created, then the prospect seems more readily achievable. There are numerous people who have done just that.

In my book Invent Reinvent Thrive (McGraw Hill, 2014), I relate some of their stories and explain why such reinvention is critical and how incremental reinvention is readily achievable. The stories include (i) a soldier, who became a businessman, then a venture capitalist and a philanthropist and ultimately the Mayor of Jerusalem; (ii) a grocer who understood retail but not the office products industry but who sharpened a few skills to fit that industry and founded Staples; (iii) a solo practicing physician who ultimately became the president of the largest group of physicians in Illinois; (iv) a man who considers himself a failure in school, who first toyed with using computers in his father’s car dealership, who then tried his hand at selling computers and related products that he obtained at reasonable cost from others who didn’t know what to do with such inventory, finally founding CDW which he sold for billions.

As Alyson points out in her article, it doesn’t matter whether you adjust your skills through multiple jobs at different employers or by lateral shifts within the same company. Either way, refining your skill set by refining or changing just a few skills generally is sufficient to achieve a meaningful reinvention.

Reinventing Tinker Tailor Soldier Spy

Someone recently said to me, “the concept of reinvention of you or your business is fine in certain occupations, industries and businesses, but it could not be applied across the board.” I strongly disagreed and for a somewhat ironic example, took the title of John le Carre’s famous book, Tinker, Tailor, Soldier, Spy, and applied reinvention to each of those businesses.

Tinker
In my recent book, In my book Invent Reinvent Thrive (McGraw Hill, 2014), I tell the story of Sam Popiel and his famous invention, the Pocket Fisherman. Sam was on one of his excursions to a practice fishing farm, where he would tinker with his invention until he solved the pending problem. That day he also tinkered with the price that he would charge for the Pocket Fisherman. As a result, he brought millions of additional dollars to the bottom line. The methodology for reinventing his business through this tinkering process is a fascinating, fun-filled story.

Tailor
Tom Stemberg, the founder of staples and subsequently a venture capitalist who has invested in companies such as Lululemon and a chain of cleaning stores. While those businesses were more like tailors, the best stories of Tom’s career relate to Staples and especially his use of good homework to overcome naysayers.

Soldier
One of the people I interviewed for my book was Nir Barkat, currently the mayor of Jerusalem but previously an entrepreneur and venture capitalist. Prior to all of that Nir was a soldier in the Israel Defense Forces. The story — how he was wounded as his commanding officer, standing next to Nir, was killed during military activities — is an exciting read. More important is how Nir took the lessons from the military training and activities and applied them to every phase of his continually reinvented life. He is proof that a soldiers reinvention of himself and later in his businesses can be a remarkably successful and profitable journey.

I was fascinated to read, earlier this year, of a soldier reinventing himself as an entrepreneur as a result of reading my earlier book, Entrepreneurs Are Made Not Born. Civilian Warriors, is a book written by Erik Prince, the founder of Blackwater, a private company that conducted military operations in Iraq. In it, Erik said that Entrepreneurs Are Made Not Born inspired his own entrepreneurship.

Spy
Recent news events show that the spy agencies, from the CIA to the NSA, are constantly being reinvented. I do not have any personal knowledge about the spy business. Besides, even if I did and told you, I would have to kill you. 🙂

 

A Place In-between, Commentary by Lloyd Shefsky

Brigid Sweeney, in her insightful article, “Please Don’t Call Them Stores: Modern Retailers Aim to be Hangouts,” appearing in Crain’s Chicago Business, provides local examples of how retailers are focusing on providing “a place in-between” and customer entertainment, such as including experiential happenings.

Nowhere is the importance of a place in-between laid out more clearly than in the story of Starbucks, both at its inception and later, during its reinvention in 2008. Even when I first met Howard Schultz and interviewed him for my first book, Entrepreneurs Are Made Not Born, I referred to Starbucks as a club, much like the bar on “Cheers,” where the opening song proclaimed “a place where everybody knows your name,” reminiscent of the way Starbucks taught baristas to know frequent customers’ names and even their favorite beverages. In my latest book Invent Reinvent Thrive (McGraw Hill, 2014) I explain how Howard’s clear understanding of that essence of the business (what he refers to as “the company’s soul”) enabled him to avoid the near catastrophe in 2008.

Similarly, in Invent Reinvent Thrive, I tell the stories of Jim Sinegal, founder Costco, and Maxine Clark, founder of Build-a-Bear, both of whom believed in customer entertainment and experiential events in their retail businesses, much as those mentioned in Brigid Sweeney ‘s article.

As I said in Invent Reinvent Thrive, “Jim Sinegal decided he’d better reinvent Costco, at least partially from time to time, lest his stores…become uninteresting. He decided to add new items periodically. He constantly reminded himself and his colleagues, ‘There’s no annuity [here]. You’ve got to continually add stuff that’s new and exciting. Otherwise you become boring.’” Likewise, I quote Maxine Clark in Invent Reinvent Thrive: “At the May Company, she was fortunate enough to make a presentation to Stanley Goodman, May’s chairman. He told her that ‘retailing is entertainment and the store is a stage. When the customers have fun, they spend more money.’ His words made an indelible impression on Maxine.”

Brigid is right on!

Family Business Success: What’s the Real Inheritance

Years ago, I wrote Entrepreneurs Are Made Not Born, a best-selling book now in eight languages. There I found that nurture was a far greater factor than nature. My new book, Invent Reinvent Thrive (McGraw-Hill, 2014), deals with both entrepreneurs and family businesses. Most people would say successful family businesses, those that make it successfully into the third generation, beating 9:1 odds, should thank their gene pool. After all, they’d say, they wouldn’t have inherited the business if they hadn’t had the right genes. I agree that inheritance is inherently different than starting your own business. So clearly, succession to family businesses are due to nature, but successors to leadership of successful family businesses may owe as much to nurture as to nature. Most entrepreneurs must search the world for role models, that search in itself being an entrepreneurial quest. Family business successors are dealt their business role models at birth, but how the family deck is shuffled and re-dealt has an extraordinary effect. For most, the deck they inherit is tempered or leveraged by lifetime, or even daily influences by parents, grandparents, etc. Here I’d like to explore how and where ancestors transfer their most important legacy, the values and principles that make up the infrastructure of their family’s enterprise. The common allegories tell us that such principles are obtained: by visiting the office or factory on vacations or weekends; at the dinner table (every day or on holidays); and attending business dinners or events. What really happens in each of those places and experiences? Is it formal lessons, observing the ancestors, or experiencing under the ancestor’s wing? How important are stories, and does it matter when (e.g. when the next generation is young and impressionable) or where (office, dinner table, etc.) the stories are passed along?

The point of this blog post is that when it comes to ancestral family business stories, what matters most is how they are communicated. Many different times and places can work, but the nature of the transmission often is what has the greatest impact—positive or negative. Moreover, how stories are communicated depends heavily on the nature of the family, its business, and specific circumstances. That’s what’s suggested by the examples below, taken from by book Invent Reinvent Thrive.

Col. Henry Crown founded the vastly successful Material Service Corp. with his brothers after World War I. His son, Lester, used to bring his two sons, Steve and James, with him to the office on Saturday mornings. Usually he sent them down the hall to the colonel’s office to spend time with their grandpa. Henry was a great storyteller, with extraordinary stories to share, including how he came to secure the Empire State building for his portfolio and why he failed to acquire the land where the U.N. now sits. The principles inherent in those stories, including those relating to strategy, philanthropy, and Judaism-based values, are still part of the company’s compass. James, the firm’s current leader, remembers the stories well, as does his brother, Steve, and they continue to share them with the next generation.

Tom Pritzker – of the Chicago family that owns Hyatt hotels and many other assets – heard stories from his father, Jay, and his grandfather, A.N. The most impactful may well have been those told after Tom had come to work at the company. He and others in his generation learned about business, investment, and structure at home but Tom’s most important lessons were those experienced at the office. He watched how Jay and A.N. treated non-family founders and CEOs of the businesses the Pritzkers invested in and controlled, with an emphasis on A.N.’s legacy of integrity, reputation, and fairness. Such observations were reinforced by explanations and concrete lessons from Dad and Grandpa. This on-the-job learning became an important way to transmit the Pritzker family values and culture.

Unfortunately, fellow third-generation member and successful venture capitalist, J.B. Pritzker lost his father, Don, before the elder Pritzker could communicate many stories. Grandfather A.N. and uncles Jay and Bob tried to help, but they were in Chicago, over 2000 miles from J.B.’s California home. So when J.B was old enough, he talked with his parents’ friends and pieced together what he could, suggesting that it’s usually not too late to learn from family lore and that family lore can be transmitted by non-family.

From an early age, Linda Johnson Rice sat at the dinner table with her parents —John Johnson and his wife Eunice, who in the 1940s founded Ebony and Jet, the first magazines targeted at African Americans. The magazines and subsequent Johnson holdings, including cosmetics and travel products, were highly successful, and among the Johnsons’ dinner guests were high-profile people from the business, political, social, and entertainment worlds. That meant Linda learned, at the table, how to deal with people of fame and power, as well as the importance of diversity and collaboration. She also worked, first part-time and later full-time, and observed how her father handled complicated and sensitive business matters. He was also a communicative father/manager. She gained insight into why he wanted things done, and he was able to watch her and gain comfort that she understood and could accede to her father’s wishes. He also knew that she had the wisdom and judgment to do things differently than he would, in ways more consistent with and necessary in the “new world.” He made clear to her, in his own way, that she was authorized to do so, and he paved the way with key employees to better enable Linda to lead the company. His style was nurturing to the nth degree.

Marilyn Carlson Nelson, like Linda Johnson Rice, learned from both the dinner table and her time at her family’s business, which often intersected, such as the lessons she learned from father (founder Curt) at Sunday dinner at Carlson’s hotel restaurants. He regaled family with stories of his autocratic style, but seemingly contradicted those with his urging his family to vote on particular family expenditures. He clearly communicated to Marilyn that his goal of creating a business that would last 100 years would and should take precedence over his style choices. What Marilyn learned was especially important when she took over leadership of the family’s business’s —including Radisson hotels, TGI Friday’s restaurants, and Carlson Wagonlit Travel —in 1998, one year before Curt’s death.

The second-generation Bronfmans, Charles and Edgar, became co-chairmen of Seagrams— producer of spirits and other consumer products—after their father Samuel’s death because those were Sam’s orders. But the non-communicative relationships among Samuel, Edgar, and Charles, left little space for the transmission of stories and values, and the second generation was particularly resistant to their father’s style, as they had seen it lead to multiple outbursts and estrangement from others. This history contributed to a particular absence of lesson-teaching on Edgar’s side, with disastrous results. His son Edgar Jr. incurred a multibillion-dollar loss for the family when he sold Seagram to Vivendi, an act that is directly related to Sam’s failure to communicate properly with his sons, as I explain in Invent Reinvent Thrive.

As the examples here suggest, ancestral family business stories are important vehicles for communicating principles, values, and practices across generations. But where and when they are transmitted—whether at the dinner table or in the conference room, whether during childhood or much later—is much less important than how it is done: with a priority on communicating them in the first place and, ideally, doing so in a supportive, constructive manner. Lastly, the use of stories- – from earlier days or even as lessons from concurrent events- – can be powerful.

Reinvention in Family Enterprises to Stay Relevant Into the Future

The interview with Ford Motor Company Chairman, William Clay Ford, Jr, in the October 2014 McKinsey Quarterly, describes the sort of reinvention family enterprises need to stay relevant into the future. Bill Ford gets it. While his great grandfather, Henry Ford, may have invented their family business with its then unique method of mass assembly of cars, the company has been reinvented numerous times under the guidance of successive family leaders, which is why it continues as one of our great, successful and enduring family (controlled) businesses. Numerous more recent reinventions are directly attributable to the influence and leadership of Bill Ford. Now, he suggests that Ford redefine its mindset to be a “mobility” company, which is broader than only cars and trucks. Bill’s prediction of driverless Fords within a decade may be accurate, but the Ford company’s continuous reinvention will require a driver, with leadership like Bill’s, for the company to continue as a successful family business.

Here is the interview from the October 2014 McKinsey Quarterly:

William Clay Ford Jr. is known for taking the long view. The great-grandson of Henry Ford and the executive chairman of Ford Motor Company, Bill Ford was an early advocate for sustainability at the company, which earned the number-one spot on Interbrand’s list of Best Global Green Brands in 2014 and also has been improving its competitive position. But to navigate through the coming years, Ford must travel in uncharted territory. Today’s automakers confront developments that will affect the industry for decades: swelling megacities, self-driving vehicles, new technology challengers, and digitally connected cars—among others.

In September 2014, Ford sat down with Hans-Werner Kaas, a director in McKinsey’s Detroit office and a leader of the firm’s Automotive & Assembly Practice, and shared his views on disruptive trends throughout the automotive industry, his perspectives on leadership, and the opportunities he sees for the city of Detroit. The interview took place in Ford’s office at the company’s headquarters, in Dearborn, Michigan.

The Quarterly: There are a lot of forces converging in the auto industry right now, including urbanization in emerging markets, powertrain electrification, emissions concerns, and trends toward active safety systems, semiautonomous driving, and vehicle connectivity. Is it an understatement to call this an interesting time?

Bill Ford: The pace of change is accelerating and I love it. I think it’s the most interesting time in my 35 years at Ford. It used to be that the auto industry, and the car itself, were part of a self-contained ecosystem. If there were breakthroughs, they were developed within the industry. It was a much more controlled environment and not nearly as dynamic as today’s. In fact, I think we ended up being rather insular as an industry, and on balance it was not a good thing.

That’s all been turned on its head; we now have disruption coming from every angle, from the potential ways we fuel our vehicles to the ownership model. We have a whole generation that just wants access to vehicles as opposed to ownership—for example, through services such as Uber, Zipcar, and RelayRides. Even the dealership model is changing, with Tesla selling directly to consumers.

In terms of connectivity, so much of the technology is being developed outside the auto industry. Whether it’s vehicle-to-vehicle and vehicle-to-infrastructure communication, semiautonomous and fully autonomous driving, or connecting to the cloud—these are all major trends coming at us fast and furiously.

The Quarterly: How do the changes, and especially their disruptive nature and simultaneous appearance, affect automakers?

Bill Ford: The reality is that we will not own, or develop, most of these technologies. So we have to be a thoughtful integrator of other peoples’ technologies and understand where we add value. Because if we’re not careful, we could become like some mobile-handset makers, where all the value is added by someone else.

One way to distinguish ourselves will be in how we present these technologies to customers, so that they find them appealing and not intimidating. There will be a lot of new technologies that help enhance the driving and safety experience, but some people won’t be comfortable with them—they don’t want their data uploaded in the cloud, for example. So we’ll need to have levels of opt-in/opt-out in our offerings.

Ultimately, we can make the driving experience safer, more intuitive, and more fun. Actually, “fun” isn’t something that people talk about when they talk about all this technology. But fun is something that should always be a part of the driving equation.

The Quarterly: Speaking of fun, semiautonomous cars are an increasingly important development today, heading toward self-driving cars in the future. Will that affect our love affair with the car?

Bill Ford: Well, I think we are already seeing a different type of love affair. When I was a child, people could work on their own cars easily. They would wax them in their driveways. It was a very personal, hands-on relationship. That’s evolved over the last 15 years or so as more technology has come into vehicles and cars have gotten more sophisticated. But the fun of driving is still there. And as we look forward to autonomous driving, it certainly—if done correctly—can have profound safety implications. The elderly wouldn’t have to give up their driver’s licenses as early as they do today. Drunk driving could be a thing of the past. There are a lot of really positive things that come with it, and I’m excited by it. Still, I am also a little bit nostalgic, because I love to drive. I even like a manual transmission, though I may be a throwback.

The Quarterly: When should we expect those transformations to happen?

Bill Ford: There are a lot of bold, singular predictions. I take a more relaxed and holistic view. I think a lot of the required elements will go into vehicles over the next two, three, or perhaps five years. Yet by the time we actually get to full autonomy, it will almost feel like an anticlimax because we’ll have been 95 percent of the way there already. That last 5 percent, though, will be interesting, and no one really can predict when it will happen. We’ll need a lot more certainty than we have today before cars can be fully autonomous, and we’ll need redundancies in these systems.

There are elements already in place. I recently drove up to northern Michigan on Interstate Highway 75. I put on the adaptive cruise control, comfortable knowing that if the car in front of me decelerated quickly, my car would act immediately to keep the gap I’d set. I found that a really useful tool. We’ll keep adding more of these features, so that the final steps to full autonomy will feel almost uneventful. I think the technology will be ready before society and lawmakers are.

The Quarterly: How will connectivity affect the equation? Will there be a battle between our mobile devices and what is embedded in the vehicle?

Bill Ford: It’s true that people want to bring their lives—in the form of their phones and their iPads and whatever else they carry—into vehicles in a seamless way. And that’s happening to some extent now. But we can’t distract the driver with too much going on. Those are the kinds of things we’re thinking through and must think through as an industry. It’s the same with vehicle-to-vehicle communication: it doesn’t do any good if Ford vehicles can talk only to other Fords. Even though we have a lot of competitive issues, we have to have a standard, and that’s something we are working on as an industry.

I think all vehicles have to be part of an integrated network, and every form of transportation has to be talking to the others, so that we can optimize our way of moving around. For example, very soon our cars will be able—through sensors and technology—to be notified when a parking space opens up and then to pre-reserve it for us and have us billed directly, through an app. Things like this will start to redefine what urban mobility means.

The Quarterly: What’s the right balance between individual mobility and more holistic transportation systems, especially in light of accelerating urbanization and the development of megacities?

Bill Ford: I talked about this a few years ago at a TED conference,1 where I used the phrase “global gridlock,” which is exactly where we’re headed. It’s a fallacy to look at the GDP growth in emerging markets and say, “Wow, isn’t this great?” and then to extrapolate some absurd number of vehicle sales ten years out, with no thought of “Really? Where are these cars going to go?” The roads already are impassable in some emerging markets, and they don’t have the proper infrastructure. You’re not going to put two cars in every garage in Mumbai, for example, even if residents there can afford it. Given how disproportionately quickly the world is urbanizing, we are going to hit the limits of our ability to provide mobility unless we adopt a very different profile going forward.

It’s already happening. In most cities, if people have a car, they love their car and hate everybody else’s. And they are paying a fortune to just keep the car. In many cases, they have to pay a fee to get into a city center or can only go in on odd or even days, depending on the license plate. Lots of cities are trying to deal with this in different fashions, but those aren’t long-term solutions. Those are Band-Aids. Today, 30 percent of all fuel burned in cities comes from cars looking for a parking spot. And that’s not only fuel. That’s time, that’s aggravation.

When I gave my TED talk, people were shocked. They said, “Wait a minute. What I just heard you say is you’re going to be, potentially, selling fewer cars in the future.” And I told them that’s exactly what’s going to happen unless we start doing something differently and redefine ourselves as a mobility company and not just as a car and truck manufacturer.

The Quarterly: What does it mean to be a mobility company?

Bill Ford: The role of a traditional automaker changes dramatically. We become a piece of the mobility ecosystem. In this new world, we need to figure out what we have to own and what we don’t and to be a great integrator of technologies and services. We need to figure out who are friends, who are foes, and how do we turn our foes into friends.

I was speaking at a conference, several years ago, where I met Scott Griffith, then-CEO of Zipcar, which was relatively new at the time. I told Scott that I’d love to talk to him, and he said to me, “Didn’t you hear my talk about taking cars off the road?” And I said, “Yes, but it’s going to happen with or without us, and I’d like to have it happen with us.” So we’ve now gone together to over 250 college campuses—Ford and Zipcar—and it’s been a great partnership because students are influenced by what they drive in Zipcar, so when they leave school, we become a car of choice. It’s a win–win.

The Quarterly: Do you regard new or nontraditional players—such as Tesla, Google, or Apple —as welcome disruptors, partners, or foes?

Bill Ford: We have to make them all our friends at some point, and they may not all start out that way. But we need to be exceptionally curious as a company. We have to know how to interact with those companies because they speak a different language; they’re on a different cadence. They often have a different customer experience. Another big challenge is just keeping abreast of who these players are. The disruptors are being disrupted themselves on a regular basis. We need to be accessible, so that all these companies feel comfortable approaching us. It’s not a muscle that we’ve developed over the years, but we are doing that now and we need to continue to do it.

The Quarterly: How do you foster curiosity and accessibility while also focusing on your core business?

Bill Ford: There’s an interesting balance that has to take place, because we need to be open to and excited by the disruption happening everywhere. But we can’t be distracted by it, because we have a daily business to run. We have to deliver a quality product, which requires attention to detail; we have to meet all the regulatory requirements. And so what Mark Fields2 and I are talking about is the appropriate level of distraction. I think companies and their leadership need to understand the intensity of the disruption that’s taking place in our industry. We need to have an initial point of view on these disruptions. We need at least enough knowledge internally to be able to interact with these companies externally. I’m sure these very questions that we’re grappling with are being grappled with throughout our industry. But I think our family ownership and the way we’re organized allow us to take a longer view.

The Quarterly: You have been both an executive chairman and a CEO. What are the benefits of separating the roles?

Bill Ford: I’ve actually had three jobs. I’ve been nonexecutive chairman, I’ve been CEO, and then I’ve been executive chairman, so I’ve really lived the spectrum. And I love this construct because it allows me to use my knowledge of this company to think about where it can and should go in the future in a way that I could never do as CEO.

Just by definition, Mark’s share of mind has to be more focused on the immediate pressures of being a CEO and running the day-to-day business. A problem arises this morning; it’s got to be solved immediately. Still, this separation has to be a partnership. I can’t be off in an ivory tower with a stack of books thinking about the future, and Mark can’t be completely disengaged from what I’m doing. We spend a lot of time just talking and making sure we’re on the same page and moving forward in lockstep, although at times concentrating on different issues.

The Quarterly: How do you view a leader’s role with respect to engaging the company on broader societal issues?

Bill Ford: I think you’ve got several roles. You have to be an advocate for positive societal change within your company. I’ve pushed the environmental movement for 35 years within Ford. I met with tremendous resistance, both within the industry and my company; even the environmental community initially thought I was a wolf in sheep’s clothing. But I continued pushing.

Leaders also have an important role in their communities. People are very busy, and we can all find reasons not to get involved, but our communities need us. As leaders, we have, hopefully, some brain power, we have connections, we have resources. And we should bring those to bear to make our communities better places—whether that’s schools or hospitals or helping with social issues like homelessness and hunger. Find the thing that resonates most—but whatever it is, do it and set the example. And, usually, what comes back to you in terms of goodwill is ten times what you put into it.

The Quarterly: What is your outlook for the community of Detroit?

Bill Ford: I remember the 1967 riots in Detroit. I was ten years old, and I remember the city in flames. We had many years of decline: population decline, economic decline. And now—it seems strange to say as we sit here today with the city in bankruptcy—I’ve never been more optimistic. The economic equation taking place in this city is unlike anything I’ve seen, whether it’s start-ups coming into the city, established companies moving back to the city, or young people wanting to live in the city. I believe that when we do exit bankruptcy, there’s something to build on now. Lots and lots of work to do still, but I’m the most hopeful I’ve been in my adult lifetime.

About the authors: This interview was conducted by Hans-Werner Kaas, a director in McKinsey’s Detroit office, and Thomas Fleming, a former member of McKinsey Publishing

Describers and Demonstrators: How Great Business Leaders Communicate Their Visions (Part 2 of 2)

In my last blog I discussed “Describers,” or entrepreneurs who are able to sell their visions to investors and others by describing what they see in great detail, using words and graphics. That is, they convince people to invest by describing the picture on the puzzle-box cover, without assembling any of the puzzle. Some entrepreneurs choose not even to try articulating the vision and opt instead to demonstrate it—whether that’s their natural preference or tendency, or because a description isn’t sufficient to paint the vision clearly.

Image: Leonardo da Vinci; Musée du Louvre; Clementoni Products

I call this type of entrepreneur a “Demonstrator” (but not the kind holding a protest sign!). Here I present two examples of consummate Demonstrators, using examples from my book, Invent, Reinvent, Thrive (McGraw-Hill, 2014).

Maxine Clark

Maxine Clark, founder of Build-a-Bear Workshop, is an excellent Demonstrator. Executive stints at May Company and Payless Shoes (where she was president) helped fuel her vision of a store offering a “stuff-your-own-bear experiences.” But the manufacturers she approached initially about the idea didn’t get it; they couldn’t see the fully assembled jigsaw puzzle—an experiential entertainment venue, not a mere toy store—as she did so it wouldn’t make sense asking them to invest. (This was symptomatic of my old saying, “If you’re not up on it, then you must be down on it.”) In fact, the only people who consistently understood Maxine’s idea were children, who could invest only with their hearts, not their piggy banks. Rather than trying to force suppliers, investors, and others to believe her, Clark decided to assemble the puzzle herself. She funded her first Build-a-Bear store in St. Louis out of her savings. (She could afford to do that; many can’t.) Despite friends’ warnings to “start small,” she built the store the way she envisioned it, with ample space for customers to explore and interact. An angel investor came to see the first store immediately after it opened and on the spot offered to back the business’s expansion. Today there are over 400 Build-a-Bear stores worldwide.

James Freeman

James Freeman had a passion for coffee; it motivated him to found Blue Bottle Coffee. Much like Maxine Clark, James’s vision involved process, the experiential element. He had a special way of preparing the coffee–one cup at a time. In his case, the completed puzzle was the coffee quality resulting from the unique brewing process, rather than the atmosphere that Starbucks offered. He had to overcome doubt that customers would be willing to wait an extra few minutes for an individually brewed coffee. Rather than just talking about it or asking focus groups what they thought, Freeman demonstrated his idea would work by offering the fresh-roast coffee at farmers’ markets. It was a big hit there, but customers strolling through farmers markets aren’t as time-sensitive as commuters. With his own meager funds, James opened a small coffee kiosk in a smelly San Francisco alley; the outlet grew quickly in popularity, including with commuters, proving what he couldn’t with words alone. Having proven the concept, Freeman later opened more stores in San Francisco and New York, where they continue to succeed today.

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Of course, many entrepreneurs, including those profiled here, are good at both describing and demonstrating. As I explain in Invent Reinvent Thrive, some business ideas lend themselves better to one approach or the other. But the bigger point is to understand the value of each way of sharing a vision, and to harness describing and demonstrating in service of your own ideas, however big or small they may be.

Describers and Demonstrators: How Great Business Leaders Communicate Their Visions (Part 1 of 2)

Image Credit: Olga Berrios

Great business leaders have a knack for sharing their visions—whether related to a new venture, strategy, or product—in a way that gets investors, employees, and potential customers excited. In start-ups, especially those creating something new and unique, that skill is even more critical. I have observed that entrepreneurs fall mainly into two camps when it comes to how they share their vision: (1) Describers, or those who articulate the vision they see so clearly, using words and graphics to paint a full, rich picture for others to see and understand; and (2) Demonstrators, or those who demonstrate the value of their ideas by building models or prototypes to provide others a more tangible sense of their vision.

In this blog I’ll talk about the first group—Describers—using examples from my book, Invent, Reinvent, Thrive (McGraw-Hill, 2014).

Howard Schultz

            Howard Schultz, founder of Starbucks as we know it today, is a master describer. Among the people skills that make him a remarkable salesman and leader is an exceptional ability to communicate. But early on, when he communicated his vision for a new kind of coffeehouse, he was rejected by hundreds of potential investors. Part of the problem was that Howard’s original pitch was focused mainly on the coffee. In fact, that was just a part of his vision, and arguably not even the most important part. It was as though he gave potential investors 1000 piece jigsaw-puzzle, but never showed them the box cover with the picture of the completed puzzle!

The picture on the box would have revealed his full vision: what I have referred to for decades as a “club” like the bar of the TV-show “Cheers,” a place “where everybody knows your name.” Howard rejected my word, “club,” probably because it bore elitist connotations. He now refers to it as a place to stop between work and home—a “third place” that happened to serve premium coffee. Describing the picture of the vision isn’t easy. But eventually, Howard raised the funds, partly because he got better at painting the full picture in words for investors—he was able, orally, to “show” them the puzzle-box cover—and partly because people had deep confidence in him.

In the long run, it worked of course, and by 2013, Starbucks had over 21,000 stores and revenue of $15 billion. Howard’s description had become a reality. Of course, those who didn’t see the full vision may be drinking something stronger than coffee whenever they think about how an investment of $10,000 in the Starbucks IPO would be worth 1$64 million today!

Tom Stemberg

Tom Stemberg is another successful entrepreneur I interviewed for Invent Reinvent Thrive. Tom’s vision wasn’t about coffee, but ballpoint pens—and paper, and typewriter ribbon, and other office supplies. In the 1980s, he saw the need for a more accessible store that carried large quantities of the most-needed office supplies—or the staples—at more affordable prices. Tom eventually transformed that vision into Staples, the original big-box office-supply store. But first Tom had to convince others of the vision’s merit.

That wasn’t easy. The stationery industry was already seen as mature at the time, and many new entrants had failed. “Don’t do it,” people warned Tom. The CEO of United Stationers called the idea “horrible.” But Tom persisted, telling potential investors about the benefits of a large office supply store, drawing parallels to wholesale clubs like Costco and Sam’s Club, based on his extensive homework (including relentless questions about how much potential customers like law firms spent annually on office supplies and insights about how little they understood about their own expenditures and needs). Without building a single store, Tom was able to obtain financing from Bain Capital by convincing its head, Mitt Romney—later, the 2012 US presidential candidate—of his vision’s value.

The bet paid off, and Staples grew to 2000 stores and 50,000 employees worldwide, with almost $25B revenues in 2013, representing about 40% of the office-supply market, despite the presence of many competitors.

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Howard Schultz and Tom Stemberg were able to get others to believe in their visions through description. (Their stories are told more completely in Invent Reinvent Thrive). Sometimes, that may not be enough. In the next blog, I’ll discuss how some entrepreneurs have succeeded by demonstrating the value of their vision to investors, customers, and others.

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