You don’t have to be a tyrant to get Americans to work together. Hitler’s notion of what the American character is all about was gleaned from his reading of Western novels by Karl May, books that every German boy was brought up on, by a man who’d never set foot in the United States. But that didn’t stop Hitler from holding an unshakable opinion about the United States and how it worked. Looking at the barrage of competing ideas that spring from our tolerance of free expression, Hitler saw what he assumed must be total chaos. He envisioned a disorganized society and, as a result, one that was weak, vulnerable, and uncommitted to any sustained effort.
I remember that one of my most exciting experiences as a boy came during World War II when my dad arranged to take me along on an airplane filled with reporters to watch a big contest between Minneapolis and St. Paul. It was to see which could black out its city faster in an air raid alert practice. The plane flew along the border between the two cities, and I pressed my face as hard as I could against the window so I wouldn’t miss anything. When the air raid signal sounded, the lights went out as if an unseen hand had flicked off a single switch.
Hitler found out that Americans of every variety of opinion and background can pull together. You just have to give us a reason.
That’s what managers are supposed to be able to provide.
Motivation. Goals. Resources. Leadership. But not restrictions. Not being told what to do. Not rules. Oh, God, how Americans hate rules. One of the sharpest entrepreneurs ever was Gardner Symonds, a former chairman of Tenneco. Tenneco people describe Symonds as the person who had the vision to make Tenneco Automotive a highly focused, multibillion-dollar company specializing in automotive products and systems. I had dinner with him once when he spoke at a seminar at Stanford.
He said there are four things you need to do to build a successful business. One: Find the capital. Two: Find a favorable environment to employ it. Three: Hire the key people. And here’s where he took a long pause and said, “So far, I’m not telling you anything you didn’t already know, because number four is the important one. Then you’ve got to know when to get the hell out of the way. That’s the hardest part, but that’s the one that will make you rich.”
I have a friend, Pat Fallon, who runs an advertising agency. Within three years of the time he opened his shop, Advertising Age named Fallon Worldwide as Agency of the Year, the equivalent of sweeping the Academy Awards. It was an unheard-of honor for an agency that new, and one located in neither New York nor L.A. but in the “fly-over land” of the Midwest.
Fallon’s management style is ideal for the fragile creative egos he handles. They’re not exactly dress-code types. If he tried to enforce a white-shirt rule, the place would empty out in fifteen minutes. But he has the same problem everyone in the business has: getting out a superior product. He does it by maximizing personal freedom and thus personal responsibility to an almost unheard-of extent.
A PR fellow I know who worked for him at another agency said, “I was there two years before I even knew Fallon was my boss, and that was only because he left, and the guy who replaced him told me I’d be reporting to him instead of Fallon from then on.”
Fallon understands that in his business—and in yours, more than you realize—what people are looking for isn’t only money, it’s recognition, appreciation, and creative freedom. He gives them what they need. They give him what he needs: the best product in the industry.
Fallon doesn’t give orders; he facilitates the creative process by hard work and accessibility. In the ad game, your inventory is ideas, and they can come from anyone, anywhere. Art directors are as capable of great copy as copywriters are of graphic concepts. The key to keeping the ideas flowing is an atmosphere where everyone can feel free to contribute. That atmosphere requires a barrier-free environment. That’s why if you pick up the phone and call Fallon, you get Fallon…without anyone asking who you are or what you want. There aren’t many advertising agencies approaching $1 billion in billings around the world where you can get the boss on the phone without passing through a receptionist and three assistants. Though Fallon probably talks to more insurance agents and stockbrokers than he wants to, it’s a small price to pay for creating the best advertising agency in the country.
No matter what business you’re in, to be successful, managers must create the kind of environment that makes their people the most productive. It isn’t enough to make them conscious of details if you destroy their sense of freedom and spontaneity in the process. You must understand them well enough to give them not what you want, but also what they need to make a maximum contribution.
Look at the people who walk out your door and leave you to become successful at their own businesses. Chances are they’re not doing it just for the money. They need the room to express their own styles. Give them that room…and the recognition and appreciation…and nine out of ten times they won’t leave. Over recent years a lot of terms have been coined to describe setups that let entrepreneurs thrive in big organizations: from skunk works to “intrapreneurship.” These are new forms of capitalism. It’s fueling new forms of innovation with capital. It gives men and women the opportunity to realize their own idea without leaving the company. One step short of full partnership, it still lets the best become presidents of their own company within a corporate framework.
We have a sharp young person in our firm who could easily have been a great success on his own, and he had reached the point where he realized it. Just in time, we furnished him the capital and the infrastructure to manufacture his own specialty line as president of Minnesota Color Envelope Company, a Mackay Envelope subsidiary. Sure, it’s not as profitable for us as it would have been if he’d been content to stay on as an ordinary employee. But that wasn’t the alternative. The alternative was losing him and winding up having him as a competitor.
Lyndon Johnson provided the ultimate justification for that kind of “intrapreneurship,” albeit a negative one, in describing his relationship with J. Edgar Hoover: “I’d rather have him inside the tent pissing out than outside the tent pissing in.”
So remember, you can get your employees to pay attention to detail, and run your ship like an America’s Cup yacht, if you develop a leadership style that delivers your message in a positive way, and if you demonstrate your confidence in your people by giving them freedom to do the job you hired them to do.
Be like those great jockeys Jerry Bailey, Laffit Pincay, or Willie Shoemaker. They all know that being tops in the saddle often means being light on the reins. They say the horse never knows such a jockey is there—unless he’s needed.
When I bought—or rather, when I was dumb enough to get stuck with—an envelope company, it had twelve employees, sales of $200,000 annually, and a sackful of nuts and bolts that passed for envelope-making equipment. I thought I was being very businesslike when I asked to see the books. “Forget the books, sonny,” my charming predecessor said. “Take it or leave it.”
When I said I’d take it, the lawyer I had hired to advise me in this transaction quit. For the first five years I teetered between bankruptcy and insanity.
Nothing I learned during those years about the envelope business was as valuable as what I learned about lawyers and accountants. Lawyers and accountants make excellent lawyers and accountants. They’re great specialists in what they do, but you might as well rely on a podiatrist for specific business advice.
I also learned something about dealing with that great American institution, the labor movement.
At the end of year one, my employees, sensing that perhaps I was not going into the tank after all, began to answer the siren song of the labor movement. Before they could take a vote, I called my new lawyer and asked him what I could do.
“Harvey,” he said, “you can’t fire them for considering a union, and you can’t threaten them. That would be an unfair labor practice. But you can call them into the office, one at a time, and tell them of the great progress that they’ll make if only we can all strive for a common goal, without outside interference telling us how to run our business, and so on.”
And so that’s what I did.
One at a time, I called them into the office. One at a time, I took them to the top of the mountain and described the glorious landscape that lay at our feet if only we could continue to work together in the future as we had in the past. And one at a time, my twenty employees told me that as a result of my stirring speech, he or she would cast their vote against the union.
That is, all except one employee. He said, “Mr. Mackay, my grandfather was a union man, my dad was a union man, and I’m a union man, and I’m voting union.”
There it was. I was going to win, nineteen to one. With surprising ease, in my very first attempt, at the still-wet-behind-the-ears age of twenty-six, I had proved myself a born master of labor relations.
This was too easy. I was an entrepreneur! I couldn’t wait to call my lawyer. He seemed somewhat restrained in his praise, but I took that to be the result of a touch of jealousy at my having shown such natural aptitude for a skill it had taken him years to perfect. “Call me after the vote,” he said.
The next day they held the election. Sure enough, the vote was nineteen to one—in favor of the union! I’d lost, nineteen to one; they’d handed me my head. This was not the way I’d learned it in Labor Relations 101.
What I did learn was that I had to be ready to make very rapid midcourse corrections in small things to keep my major business objectives intact. Or, as my father taught me, “It doesn’t matter how many pails of milk you spill, just so you don’t lose the cow.” The end of the story is that I raised my prices so I could afford union wages.
In the years since I learned those lessons and took my first bumbling steps in business, Mackay Envelope has grown to over 550 employees, sales of approximately $100 million, and modern plants in Minnesota, Iowa, and Oregon.
Mackay Envelope did not prosper because there was a shift in the economy in favor of the envelope industry, nor did I uncover the perfect product at the perfect time or carve out a new market niche. Envelopes fall under the classic definition of a mature industry, à la steel and cement. Our products are constantly being assaulted by sexier, more convenient means of communications. Many marketing pundits saw the dawn of the Internet Age as the doom of the envelope industry. But a funny thing happened on the way to the junk heap of commercial history. The death of the direct-mail industry has been greatly exaggerated. In 2004, we found direct-mail marketing climbing at a rate of 5 to 8 percent a year! E-mail has caused a decline in business-to-business and first-class mail but not in commercial mailings to households.
To increase revenues, the successful envelope entrepreneur has but one logical strategy: take the market share from someone else. That means salesmanship and the ability to manage a business where margins can be wafer-thin and you can barely tell your own products from your competitor’s. Unlike farming, you can’t even get the politicians sufficiently interested to make speeches saying you’re the backbone of the American way of life. The envelope game seems to lack the glamour and visibility of higher callings like these, so what I’ve learned, I’ve learned by getting slam-dunked often enough until the message sunk in.
I have one ironclad rule for myself. I walk my plant every day just like it says in In Search of Excellence. I can learn something new and get the feel, touch, and pulse of the place without anyone having to say a single word to me. Without a single word? Absolutely. Do wives and husbands have to announce each other’s moods with a drum roll and trumpet fanfare?
A capable manager walks his plant and gets the good news before anyone else.
An outstanding manager gets the bad news first. Nobody wants to be the bearer of bad tidings, because that triggers the kill-the-messenger syndrome. If you’re in charge, you have to encourage the flow of bad news, because if you don’t, bad situations get worse—before you can stop the hemorrhaging.
If your only means of communicating upward is a formal, operations-manual kind of system, you’re making a mistake. Don’t rely on the formal chain of command to provide you with the bad news. If there’s a problem, the manager in that area will always try to solve it before you hear about it. He’ll justify his action as being within his scope of responsibility, but he’ll be motivated as much by a sense of wanting to cover it up before you hear about it.
You need a second line of communications. You have to encourage not only your own people, but your customers, too, to talk to you informally, to feel comfortable approaching you in the halls and getting concerns off their chests.
One of the largest and most successful retailers in the world is Target. There is no tougher business than retailing. Look at some of the retail giants that have gone under, American institutions like Woolworth, W. T. Grant, Zayre, Montgomery Ward, Bradlee’s and Caldor, or those that have gotten into trouble, like Kmart.
Target is the new name assigned to a corporation long known as Dayton Hudson. Several decades ago, the five Dayton brothers in Minneapolis propelled this firm into professional management and set the stage to make Target the second-largest general mass merchant after Wal-Mart. How did the Dayton brothers set the stage for retail success where so many others have failed? For many years, you could ask Don Dayton, but the place to find him was not in his office. It was out on the floor of his store. When he did go to his eleventh-floor office in the downtown Minneapolis Dayton’s department store, it was never by elevator. Don took the escalator. He could see more of what was going on that way. That’s how Target CEO Bob Ulrich and so many Target executives over the years learned the ropes. That isn’t just walking the store. That’s minding the store. The mark of a real pro, no matter what the business, is recognizing that the absolutely best business information you can get is never found in a report or other secondhand information. It’s a steady diet of nose-to-nose, constant, immediate, unfiltered feedback from your customers and employees.
I have a very simple way of making sure that a job I really don’t want to do gets done. I write out a brief description on a sheet of yellow legal paper and throw the paper on the floor next to my desk. To get to my desk, I have to go through the nuisance of stepping around, over, or on it. Whatever it is, it gets done in a hurry. Genius may not always be equated with messiness, but the following words are very much to the point:
Picture to yourself the darkest, most disorderly place imaginable…blotches of moisture covered the ceiling; an oldish grand piano, on which the dust disputed the place with various pieces of engraved and manuscript music; under the piano (I do not exaggerate) an unemptied chamber pot; beside it a small walnut table accustomed to the frequent overturning of the secretary placed on it; a quantity of pens encrusted with ink, compared with which the proverbial tavern pens would shine; then more music. The chairs, mostly cane-seated, were covered with plates bearing the remains of last night’s supper, and with wearing apparel, etc.
That passage is found in The Lives of the Great Composers, by Harold C. Schonberg. It is Baron de Tremont’s description of Beethoven’s “office.”
Despite the fancy fruit baskets at Christmastime and the expense account lunches, most of us think of suppliers like the old U.S. Navy Officer’s Manual description of enlisted men: “They are ignorant, but they are shrewd. They bear watching at all times.”
The Billy Graham organization takes a different approach, one that’s a lot closer to the Golden Rule than it is to the Navy Manual. For one thing, suppliers don’t always have to bid for their business; BG doesn’t necessarily base supply decisions on meeting specs. Here’s an example of how they do it.
A friend of mine, let’s call him Al, is in the public-relations business. He serves as an outside adviser on a church board public-relations committee. He’s a friend of the pastor and such an indefatigable PR type that he does it for the fun of it even though he doesn’t belong to the church and is hardly what I would call religious. Another member of the same advisory board is an officer of the Graham organization. Let’s call him Arthur.
It so happened that Al was loudly and publicly fired from his job. There was no way any other firm in town would hire him, so he opened up an office on his own. About three weeks after opening his doors, and mostly twiddling his thumbs, he received a call from Arthur at BG. Until then, Al had never seen Arthur outside the board meetings. Arthur asked whether he would have time to help develop a marketing plan and some PR materials for one of their campaigns. Al managed to find the time. When he had completed the project, Arthur asked Al to bring over his bill. Al thought that was kind of curious—most people expect you to mail it in—but he figured, well, they want to go over it with me. So Al nervously put together his statement very carefully, itemized everything, and went over.
Arthur barely glanced at it. He called his assistant in and said, “Will you see if we can cut Al’s check right now.” And, of course, they did. He was paid before he left the building.
Where do they tell you in business school to pay your suppliers when they hand you the bill? Aren’t we supposed to hang on to our cash as long as possible and work the interest for the maximum return? Did anyone you know ever chew out his controller because he paid a supplier too late?
There’s a little more to the story. It’s Christmastime three years later. Al’s business has taken off; he’s thriving. He did several more major jobs for BG, but as he got busier, he didn’t hear much from them anymore. The phone rings. It’s Arthur. Would Al like “a little extra holiday money”? They have a job that needs his immediate personal attention. By this time Al has ten employees. He’s trying to hire two more that week and they’re up to their ears in work. “I told him I was really as busy as I had ever been,” said Al, “but if they really wanted my help, of course, I’d be happy to do it. Or even give them the name of someone else who could help.” “No,” Arthur says, “I’ll take care of it. Thanks anyway. Glad you’re doing so well.”
“We talked for a little while more, just chit chat stuff, but when I hung up the phone, I started to shake, and then I started to cry. All those jobs I’d done before, all the business he had given me when I was sitting there by myself. The nagging suspicion I’d had from the beginning was confirmed. It wasn’t because I was such a great PR guy. There are many in town who could have done it better. They knew the territory a lot better than I did. But Arthur asked me because they knew I was hurting, and I needed the business. And then they called me again, just checking in, kind of, to see if I still needed help. Nobody I’ve ever done business with before has ever cared about me the way the Billy Graham organization did. And I’m Jewish.”
That afternoon, Al sent them a nice big contribution. He still sends them checks every year, and he hasn’t done business with them in years. BG had cared about him when it counted; he has never forgotten it. And he never will. How many companies can say they have made permanent customers out of their suppliers long after they ceased to furnish supplies? By helping him when he needed it, BG earned loyalty that no amount of money could buy. BG has recognized a business principle that is so elementary, so corny, that we seldom ever use it: If you expect the other guy to care about you, show that you care about him. Sounds pretty close to that Golden Rule business again, but does it ever work for BG. What kind of service do you think BG gets? What kind of reputation do they have in the community? What kind of prices and delivery do they get from their suppliers?
I can answer all of the above because I’m another supplier, and a Jewish one, too, that the Billy Graham organization helped get started in business. They get the best quality. They get the best delivery. They get the best prices…you can be certain that they know what they should be paying even though they don’t get bids for their outside needs. If you overcharge, you still get paid, once, and then you never hear from them again. And, of course, because they pay so promptly, you don’t have to build an annoyance or cost-of-money factor into your billing. Simply stated, they are regarded as the finest account in town, not just because of the way they pay—I’ve gotten paid many times before I shipped, absolutely unheard-of in the envelope business—but also because of the quality of the people at BG. In fact, we’re willing to take less just for the privilege of doing business with them.
The way you pay your bills says something about the kind of person you are to deal with. Whether it’s the man who painted your house or the firm that delivers your raw stock, you’ll always get a better shake if you pay the same day you get the bill.
The success of the Billy Graham initiative is a reflection of the relationship of two extraordinary partners who built the organization. Each had unique talents. Billy Graham himself was the quintessential Mr. Outside. He embodied the image of the organization both to the outside world and to the people who work at BG. His character, his leadership, his enormous public presence, and his following are at the heart of the tremendous morale that surrounds the place, even though it is so inconspicuous you can barely find the sign on the door. The late George Wilson—who passed away in 1999—was Mr. Inside. While Billy provided the inspiration, George kept the place humming. As Mr. Inside, George was low-profile, low-key, tireless, with an eye for talent and detail, with an easygoing, warm, one-on-one style and absolutely committed to Billy and running an efficient, modern operation.
Most organizations and especially manufacturing companies need both these talents: the salesperson who brings in the business and the manager who knows what to do with it. But you’d be surprised how many businesses there are where they either don’t understand that those two talents seldom run together in the same person or where destructive conflicts between the inside types and outside types end up tearing the place apart.
I remember reading in The New York Times Magazine about turmoil that once existed at Lehman Brothers, a Wall Street investment banking house. A rough-edged Mr. Inside, Lew Glucksman, succeeded in driving out their Mr. Outside, Pete Peterson, and within a year this proud, hundred-year-old firm was swallowed up by Shearson.
Glucksman thought he and other inside types could do it all. He found out otherwise.
I have a stockbroker friend who uses a formula for investing that’s based on the Mr. Inside/Mr. Outside rule. Whenever a company goes public for the first time, the underwriter usually holds an informational meeting. They take place in fairly elegant surroundings, so that as the niceties are observed, the stockbrokers can be subjected to the pitch from the company’s executives that will induce them to go out and peddle the stock to their customers.
“Usually the pitch for the stock is made by the company’s Mr. Outside,” says the stockbroker, “but if there’s no Mr. Inside up there at the speaker’s table, wearing a brown suit with sleeves two inches too short, I pass on the deal. The same if the shrimp on the buffet table are as big as your fist and the Scotch is the really good stuff, “cause that means there’s no product there. No manager that’s worth anything or has any clout would let the company buy Johnnie Walker Black for a bunch of stockbrokers.” He says it hasn’t failed him yet.
I’m not a Mr. Inside. I can’t do it all, but it took a long time for my ego to accept that. When I did, I went out and hired a key man to run my plant and made him the president of the company. He does a much better job of it than I ever could. But conversely, I’m a better salesman than he is.
There’s another side benefit to dividing the inside and outside roles.
Ike had Nixon; George W. Bush has Rumsfeld; every ball club has the manager of the moment. You have to get someone who can make the tough, mean, unpopular decisions—and can take the fall when they get too tough, mean, and unpopular. You are the peerless leader. You couldn’t really know what a meanie old Frogface is or you wouldn’t let him treat people that way. Of course you know. That’s why you hired him. If you’re out there on a shoeshine and a smile, serving on community boards, making new business presentations, being quoted in the paper on the future of the widget industry, you don’t want to be known around town as the guy who lays off employees at Christmas, dislikes labor unions, and shortens the coffee breaks. Your public performance won’t fly if you’re the one who has to crack the whip at home.
How do you run a business? You understand the strengths and weaknesses of the people you’re dealing with and exploit them—in the best sense of the word—to build strong personal loyalties and to make sure everyone plays his or her proper role. Even though that sounds like a bad B-school text, doesn’t it make a little more sense?
Be a damn good hatchet man.
Some managers were just made to play the heavy. Classic slave drivers like Harold Geneen, Lyndon Johnson, General George Patton, and Vince Lombardi (“He treated us all alike, like dogs”) are too larger-than-life to be prettied up by public relations.
No large organization—especially one with a strong desire to be a winner—survives without a little bit of Attila at the top. Often it’s the COO or the director of operations. Occasionally it’s the CEO himself. When that happens, the CEO inevitably pays a price—with the community and the press, with his employees—but, most of all, with his counterparts in other companies.
If you are determined to be a tough guy, wisdom says you better bring these strengths to the fore:
In other words, you must have the mind-set of a drill sergeant. Your troops aren’t going to love you, but they’ll respect you—as long as you can prove to them you’re tougher than they are and you’re willing to drive yourself even harder than you’re driving them. Establishing this kind of style is like playing corporate “King of the Mountain.” Everybody competes with everyone else in the place for turf or gets thrown off the pile.
The emotional investment for this kind of “persona” is enormous, and not much is left over for all the other things a CEO must be in the 2000s to win trust and initiate change. It’s not my first recommendation, but if it’s you—go to it.
Vince Lombardi said, “Victory doesn’t mean a lot. It means everything.” What victory consists of is everything. Doing everything right. The point is, a successful business is like a successful football team: You don’t have to be winners; just make fewer mistakes than your opponents.
If you run a business, there are 1,001 ways to screw up every day, and almost all of them can be avoided with a little more attention to detail or common courtesy. A customer calls and gets put on hold for too long or gets shuffled around to three or four different people. Good-bye, customer. The order got lost or is late or is the wrong color…or whatever. Hello, Chapter 11. I don’t have to tell you what can go wrong. Everything can go wrong. If you’re in charge, your job is to minimize the mistakes.
You can’t be everywhere at once.
You can’t get away with, “It’s on the truck” or “It’s in the mail” for very long.
You know better than to try to solve your problems by merely sending out another memo.
Yet you still have to try to impress all of your people with the importance of paying attention to details.
How do you accomplish this?
The strategy is leadership.
Nobody is going to believe it’s important unless you, the boss, make it seem important. The tactic you use is by example.
Here are a couple of ways in which I’ve seen it done.
Lou Holtz is a stickler for details. When he was the head football coach at Notre Dame, I was able to join him for a road game at Purdue. His student athletes were instructed to wear coats and ties to the stadium because they’d be closely observed as representatives of the University of Notre Dame. They were waiting to board the bus to go to the stadium for the game. And waiting. Coach Holtz showed up. Didn’t say a word. Just went down the line and looked them over. And over. Finally he went up to one of the players, smiled, reached up and straightened the player’s tie, and then nodded to the driver of the bus. Not until then was the door to the bus opened and the team permitted to load up.
He hadn’t said anything, but the message was as clear as if he had tattooed it across the center’s fanny: If you’re going to be a winner, guys, look like a winner. Little things mean everything.
Bud Grant, another great football coach and motivator, had another gimmick. The very first drill at the very first practice session of every Viking training camp was the same: Grant personally demonstrated and the players practiced how to line up properly for the playing of the national anthem. And they got the message: Let the other teams stand around like they’re in a bread line; you’re special, you’re winners, so you look and act like winners every second you’re part of this team.
You can preach about little things and discipline until your tongue hangs out, but it won’t work unless you yourself find a way to dramatize it and make it seem important enough so the message gets through.
What’s the difference between the CEO of Company X prowling the halls and looking for messy desks and Holtz straightening neckties or Grant showing grown men how to stand up straight? After all, they’re all tidying up with the same objective in mind: to demonstrate leadership and instill a sense of the importance of detail. What the coaches understand is that no matter what the lesson is, you can teach it only by instilling a sense of pride, not shame in the pupil. Poking into offices that are, presumably, not on public display, says, “You don’t know how to do your job.” Shaping up public appearances says, “Let the whole world see you look as good as you are.”
A master of driving home a large point by making an issue over a small one is Carl Pohlad, who owns the Minnesota Twins baseball team and is on the Forbes 400 list of the super rich. Pohlad made his fortune in banking and soft-drink bottling. In 2003, Forbes reported his sale of assets to Wells Fargo gained him $1 billion!
During a luncheon negotiation with Pohlad involving a major real-estate undertaking, the young tiger on the opposite side of the deal was asked by the waiter what he’d like to drink.
“I’ll have a Coke,” he said.
“No, you won’t,” said Pohlad. “You’ll have a Pepsi.”
Needless to say, Pohlad’s soft-drink plants bottled Pepsi-Cola. More important, his mild indignation, though seemingly lighthearted, gave him just the tiny edge he needed to score a few extra points in the negotiations.
Another multimillionaire in the beverage business, Jay Phillips, passed away at the age of ninety-four in 1992. He owned the Phillips liquor interests, and made his point about the proper brand to serve in a slightly different but equally direct fashion. Upon arriving as a guest in the home of a business associate, Phillips would eye the liquor cabinet to see what was being served. Smart hosts always saw to it that Phillips labels were displayed.
You may not be the nation’s largest Pepsi bottler or a Jay Phillips, but if you’ve filled out the Mackay 66 and know your target, you’ll not only avoid costly gaffes…you’ll also be able to use the little things to score big.
Vietnam is wars ago on the American landscape. Nobody associates it with winning. Yet it offered one of the best and most perceptive stories about winning I’ve ever heard. It seems General William Westmoreland was once reviewing a platoon of paratroopers in Vietnam. As he went down the line, he asked them a question: “How do you like jumping, son?” “Love it, sir!” was the first answer. “How do you like jumping?” he asked the next. “The greatest experience in my life, sir!” exclaimed the paratrooper. “How do you like jumping?” he asked the third. “I hate it, sir,” he replied. “Then why do you do it?” “Because I want to be around guys who love to jump.”
Dennis Connor, the man who put the blocks to Australia and won back the America’s Cup in four straight races, explained in a few words how he did it: “I surround myself with quality people that make me look good.” Winners also know how to bounce back after a hard hit. Connor’s crewman John Grant put it this way: “Dennis likes to know he has people who will make the right moves when things go wrong.” And that’s the right management instinct if you’re at the helm of a twelve-meter yacht or a billion-dollar business.
Winners surround themselves with other winners. A winner knows he’s a winner. He doesn’t need second-raters and yes-men around to feed his ego. He knows he’ll win more, and go farther, with associates who not only can keep up with him but who also are capable of teaching him something.
If you’re about to form a new business connection, whether it’s a job or a joint venture, don’t just look at your opposite number. Look at his subordinates. Does he trust them? Does he delegate to them? Do they complement his talents by being strong managers while he’s an entrepreneur? Or are they just his clones? If they’re weak, you have a problem. You’ll not only have your hands full getting anything done your way, you’ll also be completely dependent on your new associate’s personal capabilities and energy. There won’t be quality staff backup. Not a good situation in which to find yourself.
There’s a story making the rounds that a manager who couldn’t use his concert tickets for Schubert’s Unfinished Symphony gave them to his work study management executive—in non-jargon, the efficiency expert—and received the following report after the performance:
Efficiency achieved at the expense of creativity is counterproductive. Don’t equate activity with efficiency. You are paying your key people to see the big picture. Don’t let them get bogged down in a lot of meaningless meetings and paper shuffling. Announce a Friday afternoon off once in a while. Cancel a Monday morning meeting or two. Tell the cast of characters you’d like them to spend the same amount of time normally spent preparing for and attending the meeting at their desks, simply thinking about an original idea. And it has to be something they’ve never mentioned before. Don’t even require them to submit the results. Just see what happens.
If you discover one of your executives looking at the wall, like the oboe player, instead of filling out a report, go over and congratulate him or her.
They are probably doing the company a lot more good than anything else they could be doing. They’re thinking. It’s the hardest, most valuable task any person performs. It’s what helped get you where you are. THINK: that’s the one-word motto that Thomas J. Watson brought to IBM decades ago. THINK has never left IBM, even during tough times. After Lou Gerstner’s masterful turnaround of the business, it’s probably as important a mandate as when Thomas J. Watson introduced it. You’ll even find ThinkPad notepads in the IBM product assortment.
THINK! Don’t stifle it. Encourage it.
No, I’m not talking about sex again, though the same principle applies. Have you ever noticed a certain lack of enthusiasm for what passes for fun of the usual corporate variety?
You don’t have to wait until the calendar tells you it’s time for the Christmas party or the office picnic or some other form of compulsory fun.
When you sense that the pressure has really risen and stayed on too long, when you can feel the concentration level going down—that’s the time to have the party or to come up with tickets to the ball game or the concert. You’ll be pleasantly surprised at the results the next morning after that freebie from the boss. You noticed what was happening: You cared—and you did something about it.
I know that a lot of people are tired of hearing about “how they do it in Japan.” But I had an experience there just a couple of years ago that you deserve to hear about. It illustrates to me how employees can care. It also says that managers must take employees seriously when employees express their views and feelings.
I was invited to visit the Komatsu Corporation factory in Osaka. The company is one of the world’s largest and most efficient manufacturers of heavy equipment. Sales at the time of my visit were $9.5 billion annually.
Just before the plant tour was scheduled to start, I got a call in my hotel room. Some of the workers were on strike. Did I still want to see the plant? Sure. Why not? We take the tour. We pass a group of workers wearing black armbands, moving around doing their jobs. “Who died?” I asked. “No one,” they told me. “These are the people who are on strike. They strike by wearing black armbands, the traditional Western symbol of bereavement, while they continue working. They’re sad that things have come to such a sorry state of affairs that they are in disagreement with management, but such things do sometimes happen. So they are on strike—by wearing black armbands.”
But the plant keeps operating. No production is lost. The workers keep on earning wages. They keep talking with management about the problems. And they keep on working!
And, by the way, they keep on slamming us into the pavement with the quality, efficiency, and value of the products they are producing in direct competition with us.
The lesson here is about creativity, not just productivity. The Japanese have found a way for the plant to stay operational and for the workers both to keep drawing a paycheck and to keep their grievance alive and visible to their managers every minute of the workday.
The payoff was that the terms of settlement of the grievance probably weren’t much different from what they would have been had the workers shut down the place. All they missed was the chance to shout insults at each other across the bargaining table for a few months.
Lombardi again, but let me try to put a new wrinkle on it. You can practice all day long, but if you don’t really know what you’re doing, no matter how much talent you have, you’re only perfecting an error.
Look at the great athletes and musicians. There are no walk-ons at the Super Bowl or Carnegie Hall…or in corporate boardrooms, for that matter. The level of performance in those exalted places is only partially a reflection of talent. There are two other qualities that are indispensable in making it to the top: expert coaching and iron determination. Let’s start with coaching. Only we’ll call it teaching.
You’re reading this book for a reason: in the hope that buried somewhere in these pages are at least one or two ideas you’ll be able to use to make a buck. For the short time you, the reader, and I, the writer, have to spend together, I’m your coach. We both know that no book is going to change your life. Only you can actually change your life. I can’t do it for you. No teacher can.
A teacher is not there just to acquaint you with the tools of your trade; a teacher is a tool of your trade, no matter what that trade is. You never stop needing teachers. The great musicians never stop taking lessons, never stop trying to improve. Artur Rubinstein used to say that if he missed a day of practice, he noticed it in the quality of his performance. If he missed two days, the critics noticed. And if he missed three days, the audience noticed.
Whatever it is you do, you can be better at it if you just keep on learning. I certainly have not mastered the art of making envelopes, selling envelopes, or developing new envelopes.
The minute I persuade myself that I have, that I have learned all there is to learn about the subject and can relax, that’s the moment my competition will find a way to do any or all of the above better than I can and will hand me my head. The annals of business are filled with stories of companies that thought they had it made and could milk their enterprises as cash cows without having to bother about improving their products or service. It’s amazing how fast they found their markets disappearing.
Howard Johnson’s, today known as a hotel chain, is a classic example. I grew up in an era when Howard Johnson’s had the fast-food business pretty much to themselves. But instead of plowing enough of their profits back into research…developing new markets…anticipating trends in consumer attitudes…Howard Johnson’s stopped learning and laid back thinking they had it made. They found out that they didn’t.
You can apply that lesson to your own business. Hire people who are still learning, people who feel that learning is a lifelong process, either in the classroom, the office, or at home. Encourage your employees to learn by paying their tuition for them. Develop a business library and stock it with written materials and CDs and DVDs. Show them you want them to grow—and your business will grow, too.
There are two types of experts, and it’s very important to be able to distinguish between them: There is the expert who can make something happen, and there is the expert who can tell you what he or she thinks is going to happen. Get all the advice you can afford from the experts in category one, but be very, very cautious about the category-two types.
Let me give you an example: One of my best friends was the president of a very distinguished regional brokerage house, and as such had more than a rooting interest in the economic outlook. The firm paid a sizable retainer to a prominent economist who provided them each month with short- and long-range economic forecasts. It was beautifully written, filled with clever quotes and closely reasoned arguments…and always wrong. Nothing unusual there, as it has been said of economists that they are the only professionals who can make an excellent living without ever being right in their entire careers.
My friend knew all this, of course, but he was afraid to cancel the arrangement because of fear he might someday miss a major turn in the economy. He hedged his bets, though. When he had to make a really serious decision—a major underwriting, for example—he also used the economic forecast feature in Fortune magazine—which he bought at the newsstand every other week—and got better results.
Whether it’s economists, the most prestigious of the professional pundits, or stock-market forecasters, or political analysts, or just plain old sports handicappers and racetrack touts, my advice is the same: Be extremely leery. Rely on these people to tell you why something happened, but don’t rely on them to tell you why something is going to happen. They don’t know any more than you do—and neither do their computers. When it comes to forecasting events with a large number of highly volatile variables, any one of which could determine the outcome, experts are less than expert. Trust yourself and your gut, and you’re likely to do at least as well.
When I use this line in speeches, I get more “Amens” than a Billy Graham sermon.
You can’t put a little plaque with those words on your desk, but if you are a manager, you would be well advised to engrave them on your psyche.
There isn’t any. But you do have to do it, so you may have to master a technique that both suits your style and the occasion. The Ken Blanchard one-minute-in-hell method is hard for me. If I’m really on a tear, I’m not ready to stop after a minute. And I don’t.
Nothing works all the time, but there’s one method I’ve saved for the biggies. I sit in my big, comfortable office. I reach out for the culprit through my assistant, who gives him a “little tip…I’ve never seen Mr. Mackay so angry.” I make him stew in the anteroom for up to half an hour. Okay; so far, nothing you haven’t done a few times yourself. The purpose of the preliminaries is obviously to make him focus on his mistake and be painfully aware of the depth of my wrath.
He is summoned in. He stands in front of my desk. I speak. “Jack,” I say, rising up, scowling, and pointing to my chair, “please go over and sit in that chair.” He sits in my chair. I sit in what would normally be his chair. “All right, Jack, now what would you say if you were me?”
Oh, how they hate that chair. I once overheard a conversation where they were talking about me and one fellow said to another, “Did he give you the chair?” You’d think it was Sing Sing! It’s unfamiliar territory, so that generates discomfort automatically. Second, because of what is coming down, they know they don’t belong in the position of authority represented by the boss’s chair, and that makes for an added burden of guilt. Believe me, four out of five times they were harder on themselves than I ever would have been…though, of course, no one has ever fired himself. Because I don’t do the chewing out myself, no never-to-be-forgotten-always-to-be-resented phrases are lodged forever in their memories. They do all the dirty work.
But it’s not surefire. One fellow out of five I tried it on was very flip about it. So I had to wait until the next time…and I did not give up my chair when I fired him.
Every manager should insert a small addition to his prayers each night in which he invokes the aid of a Higher Power in ensuring that his predecessor is always an incompetent. In fact, there’s no better situation for a manager to inherit than following an incompetent. Obviously there’s nowhere to go but up. A more subtle variation on the theme occurs when a superstar is about to leave. Since he did such a spectacular job, it seems logical to ask him to share just one last bit of his superior wisdom: Mr. Superstar, who should be your successor? Whoever he recommends, smile sweetly, and cross that name off your list.
It’s just bubble gum psychoanalysis, but I believe that, consciously or unconsciously, no one really wants his or her successor to succeed. They recommend candidates likely to fail, thereby making their own achievements all the more remarkable.
Back in the 1970s, Bill Fitch, who went on to coach in the NBA, was a giant success in restoring University of Minnesota basketball to national prominence. After building up the program, he decided to go on to greener pastures. The assistant coach, with Fitch’s strong recommendation, got the job…and was gone in a year. The other leading candidate for the job—the fellow who got turned down—wound up at Indiana. There that coach won several NCAA titles. He also coached the U.S. team to an Olympic Gold Medal in 1984. Today, Bob Knight is coach of Texas Tech University. While the center of controversy for his sometimes volatile behavior, Knight’s success for posting wins on the hardwood court is indisputable.
The same thing happened a couple of years ago when Bud Grant, head coach of the Minnesota Vikings, retired the first time and persuaded the Vikings’ management to hire assistant coach Les Steckel. Steckel was totally wrong for the job and, after the Vikings suffered a 3–13 season, Grant was back again, hailed as the savior of the franchise.
The weak predecessor/strong leader/weak successor syndrome isn’t confined to sports. Andrew Jackson’s handpicked successor as president of the United States, Martin Van Buren, was a dud. One of the persistent myths of American history is that a dying Franklin D. Roosevelt passed over ex–Secretary of State, ex–U.S. Supreme Court Justice Jimmy Byrnes for vice president in 1944 because he saw the hidden quality of greatness in Harry S Truman. Roosevelt picked Truman precisely because he seemed to be such a perfect hack. Roosevelt would have been astonished, and no doubt dismayed, if he had known how well his successor performed.
Anyone who thinks he or she is indispensable should stick a finger into a bowl of water and notice the hole it leaves when it’s pulled out.
All successful sales organizations offer a constant round of morale-booster meetings, incentives, awards, and recognition. No matter how often salespeople are told “It isn’t personal” when they’re turned down, professional sales managers realize how psychologically draining those rejections are. It’s a never-ending struggle to keep their people up and motivated. What applies to salespeople also applies to the rest of the workforce. Everyone needs to feel appreciated.
Most businesses aren’t very glamorous. Envelopes may turn me on, but to most people in the endlessly exciting envelope game, it’s just a job. If you want to goose up the morale a little bit among your middle managers, give them some unexpected recognition. For most people, bragging rights are just as important as money.
Send a few key people to a convention or a seminar or two. Give it the full treatment. Call them in unexpectedly, tell them the company hasn’t had that great a year but you want to recognize their superior performance by sending them to such-and-such a school/seminar/convention. If you’re ready to give the person even more of a boost, throw in a ticket for the wife or husband. They’re to report back on what they’ve learned, of course, but make it clear you really selected them because they are just the sort of person you want representing the company, and you want to reward them for it. Then send out a memo announcing exactly what you just told them, or put it in the house organ.
You’ve accomplished several things: You’ve told your people you notice and appreciate good work, and you’ve created a performance incentive without locking yourself into a costly and ever-escalating program. That, of course, is all in addition to your existing recognition and awards program.
When people ask me that, I tell them we have 550. “Wow!” they answer. “How many employees do you have?” “Five hundred fifty,” I say.
As I mentioned before, we manufacture a common, ordinary kind of product that’s been around in similar form for hundreds of years. Nobody stops me on the street and says, “Gee, what a great envelope you guys make.” The truth is, in our industry everybody makes pretty much the same product line and the pricing is very competitive.
Our success depends on marketing. There’s no magic formula for making every employee aware of the importance of marketing to our company. It’s a daily grind. Our strategy is to create awareness among our people. We use devices like one we started years ago. The parking space closest to the door of our main office has a sign: “Reserved for [you fill in the name] Salesperson of the Month.” The key to that parking-slot gimmick isn’t just recognition for an individual. It’s also that the parking space is closer to the door than my parking space or anyone else’s. It’s a very specific way of saying that sales are the key to our business.
There are two very simple signs I want to tell you about. You won’t find them at the novelty shop or the cutesy sign store, because I made them up myself. One hangs on the door to my office. When the door is closed, you come eyeball-to-eyeball with it. It says, “If you know where you can get us some business, come in.” The second sign is on the little round table in the conference area of my office. It says, “Our meeting will not be interrupted…unless a customer calls.”
Professional managers can repeat the same task over and over, but most successful entrepreneurs can’t handle boredom. The difference in these two familiar types runs so deeply that, if you’re a manager, it’s unlikely you’ll succeed in the role of entrepreneur, just as entrepreneurs tend not to make very good managers. There’s a place in the world for each. The message here is to entrepreneurs.
McKinsey & Company did a study of the members of the American Business Conference, which grew 20 percent per year over the five-year period prior to the publication of the report. There is one common thread running through these operations: The people who run them tend to be entrepreneurs who just can’t stand corporate bureaucracy, organization charts, and manuals for operating procedures.
Entrepreneurs share a common trait with good salespeople: Both are able to communicate a sense of self-confidence and importance about their mission that is contagious to all around them.
Entrepreneurs scratch before they itch. They dare to fix things before they break because it is part of their makeup to seek out fresh challenges.
They determine the agenda; they set the pace; they dominate the field of play. Pit an entrepreneur against a manager, and the entrepreneur is constantly forcing the manager to abandon his own plans and react to the entrepreneur’s initiative.
If you’re an entrepreneur, you know it. And if you are, your competitors have reason to dread it when you feel the onset of restlessness. It means you’re ready to make another move. Don’t fight it—it’s the entrepreneur’s greatest strength. At the same time, recognize your greatest weakness: an eye for detail, which all too often translates into an inability to manage the financial end of the business.
If you’re an entrepreneur, be frank enough about your own limitations to get yourself a George Wilson to handle the day-to-day operations. Thirty-five years ago, when Wilson was stewing over whether to take on the commitment of moving the Billy Graham offices to a newer building, he called Graham and asked his advice. “I don’t call you and ask you what I should preach,” said Billy. “Don’t call me about what you should do with buildings.”
The ability to listen to others is not, typically, the entrepreneur’s greatest strength.
If you’re the oldest guy in the shop, if you’re the one others turn to when they want to hear about the “old days,” it’s time to find yourself an even older grizzly.
When I first bought Mackay Envelope, I was twenty-six. My lawyer, the one I hired after I fired the young hotshot who told me not to buy the envelope company, was sixty. My accountant was fifty-eight, and my banker would admit to being seventy, but I think he was closer to eighty. They didn’t know a thing about the envelope business, but they didn’t need to. They had seen enough business problems in their lifetimes to be able to deal with anything imaginable without knowing the ins and outs of my particular industry.
Though everything that happened to me in my first five years of business was new to me, nothing was new to them. And even when I didn’t take their advice—and often I didn’t—they were a calming and reassuring influence. And that’s something every businessperson, novice or experienced, has need of from time to time.
I’m a bit past twenty-six now and getting closer to old-timer status myself, but if I learned anything from those old-timers, it was that I didn’t have to shoulder the whole load alone. There are a lot of qualified advisers out there to help…if we only ask them. Try it sometime. Thinking of adding a new product line? Considering relocating your plant? Afraid to take a strike, but feel in your gut you should? Making an acquisition? You’re not the first person who’s had to wrestle with those problems. Ask an old grizzly. You may have to listen more than you talk, but that won’t hurt you either.
“I’m a great believer in luck,” said Stephen Leacock, the Canadian humorist, “and the harder I work, the luckier I get.”
The founder of Holiday Inns, Kemmons Wilson, never got his high-school diploma, but they asked him back anyway to give the commencement address to a graduating class at the school he attended. He said, “I really don’t know why I’m here. I never got a degree, and I’ve only worked half days my entire life. I guess my advice to you is to do the same. Work half days every day. And it doesn’t matter which half…the first twelve hours or the second twelve hours.”
The late Curt Carlson was founder of the multibillion-dollar Carlson Companies. That today includes the Radisson Hotels of Carlson Hospitality Worldwide and the restaurants of T.G.I. Friday’s, which operate in fifty-five countries. It also includes an empire of corporate and leisure travel as well as marketing services. Curt was a dear friend and cherished mentor of mine. He started selling premium stamps out of the trunk of his car and ended up with one of the nation’s great fortunes. The last estimate of Curt’s personal worth that Forbes magazine made before his death in 1999 was $1.6 billion. Curt had a very simple philosophy about work. He said the first five days of the week, Monday through Friday, are when you work to keep up with the competition. It’s on Saturdays and Sundays that you get ahead of them.
To a lot of people, Carlson was a workaholic. Of course, he didn’t think so; to him, work wasn’t work. Obviously, he didn’t work for money only. As you might imagine, Curt was a pretty bright guy and undoubtedly realized that anyone with $10 million can be just as happy as someone with $1.6 billion. For Curt, making, not having, the extra $1.590 billion was fun. Playing golf was work. (Guess what he was better at.)
But you and I don’t have to be workaholics to be wildly successful.
Ken Blanchard, the coauthor of The One Minute Manager, has it right. It’s the “peak performers” who do the best job of handling the load. They can turn on tremendous bursts of speed for a week, two weeks, three weeks, when it’s needed for some particularly important task, and then be unashamedly lazy in between when the nature of the work is routine.
Peak performers can distinguish between goal-oriented performance, really productive work, and mere wheel-spinning. They are astute in avoiding the latter. Classic entrepreneurial boredom sets in…and then they get the hell out of the way for a while.
So, yes, you have to be able to work very, very hard, but no, you don’t have to approach every assignment in typical “Type A” full-speed-ahead fashion. Knowing when to throttle down can contribute as much to your performance, and your life-span, as knowing when to throttle up.
Curt Carlson and Kemmons Wilson were a special breed; they never stopped working. But most of us would probably improve our own performance if we did take off more often.
I don’t take many real vacations, and I also get away from it all by being involved in activities around town that get me out of the office routine—or at least I tell myself I’m getting away from it all. But then, I’m the kind who could be just as happy with the $10 million as Curt was with his $1.6 billion.
I have a confession to make: If I had written this book twenty-five years ago, the heading here would have suggested the exact opposite, something like TAKE IN LAUNDRY BEFORE YOU TAKE IN PARTNERS.
If there’s any characteristic that distinguishes the entrepreneurial type, it is a half-mad fanaticism about going it alone, without anyone poking a nose into his business, asking questions, or telling him what to do. Nothing is tougher for an entrepreneur than letting go of total control.
Well, the world has changed. Every business, even as elementary a human pursuit as making envelopes, a product that is essentially no different from what it was 150 years ago, is becoming more complex because of the introduction of sophisticated machinery, marketing, and financing techniques.
The seat-of-the-pants entrepreneur, no matter how talented or intuitive, needs professional skills he can never hope to master himself. He will have to buy those skills in a marketplace where the sellers have also become much more sophisticated about the value of their abilities and how to charge for them.
Time for another cautionary tale.
An entrepreneur friend of mine holds controlling interest in a professional sports franchise. It has been very successful, in large part because the entrepreneur had the vision to see that television was upgrading his market from a small, local audience to a vast, nationwide one. And also because he was smart enough to hire the best nuts-and-bolts man in the business to run the franchise.
One day, the nuts-and-bolts man came upstairs and asked for a piece of the action. Not a particularly large piece. In fact, even 1 percent would have been adequate to satisfy his hunger for security and prestige, the need to feel he was an owner and not a mere hired hand.
But the entrepreneur, the man with Space Age marketing vision, also had Stone Age labor relations attitudes. He refused. The manager left.
Our entrepreneur didn’t realize that any business relationship in which one party has an obvious edge over the other won’t be to the advantage of either because it won’t last. Although the franchise hasn’t exactly fallen on hard times—it’s next to impossible to lose money in that game—the entrepreneur has clearly lost his touch.
The next manager he hired turned out to be even more demanding and a shrewder corporate politician. Now the entrepreneur is trying to keep from being thrown out of his own business entirely.
I wonder if he ever thinks back about that meeting of years ago, when, if he had only been willing to give up just 1 percent of his franchise, he never would have faced the prospect of losing it all.
These days, if you expect to keep your business, you’ll need professional skills to run it, and the people who have those skills are likely to be just as aware of their value as you are.
They expect a piece of the action. You’re going to have to give it to them or risk losing them, and possibly something much more important.
Scott Mitchell is both a visionary manager and a savvy risk-taker. When I saw how effectively Scott was running Mackay Envelope, I didn’t wait for him to cross the hall and ask. I offered him a stake in the business, and one that was considerably larger than 1 percent. Since then, several of my major competitors have taken a run at him, but he’s not leaving. He’s an owner now.
Should I have waited until I had to make the offer?
Not unless you think it’s smarter to buy when everyone else is bidding than when you see value long before it’s recognized in the marketplace.
The salesperson’s classic tactic of knowing as much as possible about the customer begins with learning names and progresses to using tools like the Mackay 66. Now let’s see how the entrepreneur can expand that concept. Again, I’ll illustrate with a story.
A politician is the ultimate entrepreneur. He is out there all by himself, with no corporate identity to hide behind. Politics, at least in the pre-Watergate era, was the last of the freebooting, swashbuckling, no-holds-barred, nineteenth-century businesses, where competitors slugged it out toe-to-toe, winner-take-all.
A professional politician is someone who has mastered both the tools of persuasion and the rough-and-tumble tricks of the marketplace. Anyone who makes it to the top in politics can usually make it anywhere.
I met Hubert Humphrey for the first time when I was fresh out of college. I’d hit the books pretty hard for four years, but I spent a lot of time hitting golf balls, too, and got to be a pretty fair collegiate player. I tried to persuade my father that destiny beckoned me to the pro circuit.
My father countered by setting up a series of meetings for me with various big shots he knew. I think the idea was that they were to talk me out of taking up golf and try to convince me to do something constructive. The reason he thought it would work was that I was always kind of a hero-worshiper, and these people were all well known, the kind that my dad wrote about every day in the papers.
Humphrey was first on the list. I went into his office, he bounded out of his chair Humphrey-style to greet me, and said, “I hear you’re a great golfer, Harvey. I envy you. I wish I had that talent. Just keep at it, and maybe someday”—he jerked his head over in the direction of the White House, where Ike the golfer was practicing putts on the rug in the Oval Office—“you’ll get to be president, too.” I was amazed. Instead of boring, well-meaning advice, which is what I eventually got from everyone else on the list, what I got from Humphrey was the hand of friendship no matter what I decided.
Humphrey knew I wasn’t going to listen to a word he said about what I should do with my life. I’d make up my own mind about that. Rather than viewing me as a chore to be disposed of as soon as possible, or an object of his oratory, Humphrey saw me for what I really was: a customer, a soon-to-be-voter. He used the few minutes we had together to achieve his objectives. He made me his friend, and, of course, I became a supporter and contributor to his campaigns.
As entrepreneurs, we like to think of ourselves as farsighted, but we’re seldom as farsighted as a Humphrey. Instead of thinking of our employees as customers to be won over to achieve our long-term objectives, we think of them as automatons, pieces of machinery who are summoned to carry out our short-term objectives. It doesn’t work that way. Take the trouble to do what Humphrey did. Do your homework. Find out enough about the people you’re working with so you can show some genuine personal concern about them. Express that concern and make them your friends. One at a time. Your long-term success depends on their performance. To a greater extent than you may realize, they’re performing for you, for your approval, not just for your paycheck. If you can make them believe that your approval means something, by taking a personal interest in them you will have taken a major step toward securing your own long-term success.
Successful politicians realize they get most of their votes retail, one at a time, from constituent service and personal contact, not wholesale, from their positions on the issues. In other words, a voter will often support someone he disagrees with, but never someone he dislikes. It works the same way in business.
A little-known journalist friend of mine once interviewed Jeno Paulucci, the entrepreneur who built up and then sold two major food businesses for a reported $100 million. The interview took place in the dead of winter in a fancy hotel suite with Paulucci surrounded by aides. When they finished, Paulucci got up, went over to the closet, got out the writer’s coat, and then everyone stood around while the five-foot, five-inch, $100 millionaire Paulucci struggled to get the impoverished writer into his Sears Roebuck overcoat. Just a tiny, little thing, but to that writer, Paulucci defined himself by that one courteous gesture.
“I’ve been eating Jeno’s Pizza Rolls for the past ten years,” he said, “even after Jeno sold the company. I sure wished I liked them better.”
In 1990, Jeno went on to found a company named Luigino’s in Duluth. This profitable private company has sales of a half-billion dollars. In July 2004, on his eighty-sixth birthday, Jeno announced that he was turning over the reins of this company to his management team. When the Duluth News Tribune asked him if this meant he was retiring, Jeno shot back, “Oh, hell, no…. As long as I live, I have to do something.” Ron Bubar was named chairman and CEO of the enterprise. How will Jeno take to life in the wings? He’ll be helpful—just like he was to that little-known journalist. Ron Bubar, Jeno was quoted as saying, “will manage with my full support, and I’ll be able to devote more time to supervise management of other Paulucci enterprises.”
Those of you who follow baseball will recall that owner George Steinbrenner fired Billy Martin five times as manager of the New York Yankees. After one of the stormier episodes, Steinbrenner hired Yogi Berra to replace Martin. One of the sport’s more inventive historians tells the story that Berra was rummaging around in the desk in the manager’s office when he found two envelopes that had been left behind by Martin. There was a “#1” on one and a “#2” on the other. Both were sealed and addressed “To my successor,” and below that, the words “Open only in case of emergency.” Berra put them back in the drawer.
Berra started out with a very good won-lost record. Suddenly the road got a little bumpy, the Yankees lost a few, Steinbrenner went on the warpath, and Berra rushed to the office and opened up envelope #1. Inside was a single sheet of paper. On it was written “Blame it all on me.”
Terrific! That’s exactly what Berra did. The team got back in the winning column and Steinbrenner got off his back. Four weeks later, another losing streak. Steinbrenner went berserk. Berra ran back to the office and opened up envelope #2. It said, “Prepare two envelopes.”
Next to losing a loved one, losing a job can be the most traumatic experience many of us face in a lifetime. But if you are one of those who have worked for someone who is impossible to please or are in one of the notoriously high-turnover businesses, you should be preparing two envelopes every day: the “I stay” envelope and the “I leave” envelope.
Survivors have their “I leave” envelope cleaned, oiled, and ready to fire when that road does get bumpy. They don’t panic if they’re terminated. They use the occasion of their firing to extract the maximum amount of concessions from their employers…employers always feel somewhat guilty about letting go even the most incompetent employee. Survivors network extensively within their industry and their community for a new position long before the ax falls.
Be honest with yourself. You can probably tell if you’re about to be let go. If you are, anticipate. Getting fired could be the best thing that ever happened to you. It won’t seem that way at the time. When Churchill was turned out as prime minister after leading Great Britain through the darkest hours of its history, his wife tried to comfort him by telling him it was a “blessing in disguise.” “If it is,” said Churchill, “then it is very effectively disguised.” But Mrs. Churchill had a point. After all, look what happened to Ronald Reagan after Warner Brothers released him. Or Lee Iacocca after he got fired by Henry Ford.
Alcoholics Anonymous has used that principle as a starting point to reclaim thousands and thousands of lives. Thousands more are never reclaimed because it’s so hard to change.
Sheer stubbornness has destroyed a lot more bottom lines than new technologies. There were just as many mean spirited jibes at Coca-Cola for abandoning its original formulas as there were at Ford when it unveiled the Edsel. The difference was that Ford decided it was going to prove the marketplace was wrong and stuck with its mistake far too long. Coca-Cola realized early that while humiliation was inescapable, horrendous losses need not be. It cut its losses, and its mistake cost it a lot less money than stubborn pride cost Ford.
Campbell’s spent years developing a new offering in what’s called the “functional food” category. Named Intelligent Quisine (IQ), marketing consultant Sangita Joshi describes it as “a frozen food line that would help older Americans” needing to modify their diets. It had “great endorsements from the medical fraternity; many trials…and yet it bombed due to poor taste.” Campbell’s acted quickly and regrouped.
Product withdrawals these days don’t have to be just timely. Sometimes they are real time. Bill Gates was demonstrating the introduction of an improved Windows 98 program in front of a slew of journalists and live TV cameras. As the demonstrator touted the program’s virtues, Windows crashed in front of God…and Gates! On the monitor appeared the infamous “blue screen of death” and its white-typed error message. The ever quick-witted Bill intervened in a nanosecond with: “That must be why we’re not shipping Windows 98 yet.”
One thing professional stock and commodity traders learn early is that they don’t give away medals for courage in the marketplace. There is only one reward the marketplace has to offer: money.
If you’re not making any, bail out. Quickly.
Facing the results of a huge mistake, many people will stop dead in their tracks, too emotionally drained to see that any problem that can be solved with a checkbook isn’t really a problem, it’s just an expense. Once the mistake is recognized, what’s lost is lost. Don’t freeze. Act. If you can buy your way back on the right track, do it. Quickly.
Then it’s no longer a problem, it’s just a negotiation over the cost of the solution. Here are a few examples.
The former governor of Kentucky’s wry observation should be tattooed on every manager’s forehead. Everybody’s a winner on paper. It’s in the flesh that the differences stand out. Who would have hired failed haberdasher Harry S Truman based on a résumé, or chosen 73-year-old Eureka College graduate Ronald Reagan over Walter Mondale, a polished lawyer, after comparing their paper credentials? Hiring the right people is the greatest talent a manager can have because good people produce good work and lousy people do lousy work. That’s why Alfred Sloan, the manager who made General Motors, spent so much time hiring people even for positions that seemed routine. It’s why at the prestigious firm of Latham & Watkins—as business consultant David Maister has written—“all candidates get twenty-five to thirty interviews, compared to a norm in the legal profession of approximately five to ten interviews.” And Latham & Watkins is regarded in knowledgeable circles as one of the best-run law firms in America. I try to take it a step further. I get involved in the hiring process not just to get good new people but also to remind the ones who are already with us about what’s important at Mackay Envelope.
Every few years we have to hire a new receptionist/switchboard operator. Now, ordinarily this is a job that would be handled routinely by a company’s personnel department, and not even by the head of the department. Not at my shop. I do this one myself. And I make it the biggest deal since the search for a replacement for Johnny Carson. (And Jay Leno landed that spot thirteen years ago.) Employees are asked to submit candidates and reminded that for ninety-nine out of a hundred people who come into contact with Mackay Envelope, the first significant impression of the company is from the receptionist/switchboard operator.
By the time we find the right person, everyone in the place is part of the program and totally aware that courtesy and attention to detail are critical concerns at Mackay Envelope and that you’re someone special if you’re asked to work here. We’re not filling slots; we’re looking for capable, caring, conscientious people.
As a result, when you call Mackay Envelope, your call is usually answered after no more than three rings; you hear a pleasant voice, a voice with a smile in it; and if you’ve called us more than once, chances are the receptionist recognizes your voice and calls you by name before you even have a chance to identify yourself.
Just recently we ran an ad for a salesperson and received 135 résumés. Thirty were screened through initial interviewing, and I interviewed the 8 finalists—and rejected all of them. We were back to square one again.
Searches for our firm may take thirty days to two years. “But how can that be? How can you tolerate unfilled vacancies for that long?” I’ve been asked. First, we plan our needs so we aren’t backed up to the wall when any one person leaves. Second, I’ve been in business for more than forty years and I’ve been “open for hiring” fifty-two weeks a year for years. When anyone really solid comes through the door, they have a job—even if we don’t have a place. That gives us bench strength. Third, our selection process is so rigorous that our long-term retention rate is well above 80 percent. Getting hired by Mackay Envelope is like a battlefield commission. It generates pride for the recruit and for the entire workforce—which sees real evidence that management is doing its job.
If you want to understand the fundamentals of hiring, go back to the basics of buying and selling. You, the employer, are buying and he or she, the candidate, is selling. The résumé, the interview, letters of recommendation, references—these are all selling tools. Put yourself in the candidate’s shoes: Do you expect the suit he’s wearing are his best duds or tomorrow’s Salvation Army contribution? Are Mary’s handpicked references going to tell you she is a genius or a dunderhead? What do you expect the reference letter to say: “I hope your company can do something with Jack because—God knows—we certainly couldn’t!”?
Now, should you be offended or distrustful because the candidate is selling hard? Not on your life! Selling skills may be exactly what you’re looking for. But there is a big difference between admiring a beautifully produced television ad and believing it. When you hire, it’s your job to be the product quality engineer who tests and stamps approval. You may remember that old chestnut of a TV ad for Hanes men’s underwear. A relentless quality controller yanks and stretches the elastic to the max—Inspector No. 12: “They can’t be Hanes until I say they’re Hanes.”
I’m not going to go into the techniques of interviewing a candidate. Much has been written on that by specialists elsewhere. At Mackay Envelope we have a ten-step hiring process that I do think is unique and useful. Sure, we don’t use all ten steps for every new hire, but we use more of them than you might think. If it sounds as slow and as painful as the Chinese water torture, imagine your pain at the other end if you have to fire someone you mistakenly hired. Then the investment doesn’t look so bad.
Those are the ten steps to successful hiring: Mackay’s Boot Camp for Natural Selection. By the way, I never call their references. In the middle of the interview, I always ask for the name of an influential teacher or mentor who knows their strengths and weaknesses intimately. It’s surprising how often that name differs from the ones on the résumé.
Happy hunting! And remember, don’t bag it unless you expect to be happy with it hanging in your office for some time to come.
Ask yourself, How would you feel having this same person working for your competition instead of for you?
When I started in business in 1960, I thought it would be a nice gesture if I gave my employees a little Christmas bonus. Money was out of the question, so I gave each one of them a Christmas turkey. The first year I gave away 12 turkeys; the second year, it was 35; then 50, then 75, and now it’s over 550…and there is no way I’ll ever be able to quit without having a revolution on my hands. There’s nothing the matter with being generous, but beware of spontaneous gestures unless you remember they have a way of becoming permanent “traditions.”
Spend more time on time management. You’re in as good a position to save time as your richest and most powerful competitors. Over a lifetime, it’s incredible how much time you can save, and the advantages you can achieve, while you’re sitting on your duff in your car. For example:
Add a few noncar time-savers to that list:
Like everyone else, I have accumulated my share of enemies in the course of a lifetime. It’s nothing to be ashamed of. Forgive thy enemies is very difficult advice for many of us to follow. After all, if someone has harmed us, we tend to want to get back at them. We can carry our grudges for many, many years.
And, of course, it is totally counterproductive. I once fired an employee who then went into competition with me and began using what I felt were unfair business tactics. The psychic energy and accumulated bitterness that went into my thoughts of revenge consumed me for the better part of five years.
It was more than a waste of time, because whenever I thought about it, I grew vindictive and sour, and those attitudes spilled over into everything I touched. As a result I lost more than did the object of my revenge.
If you can’t take the best advice and forgive your enemies, then take the second best and forget them. The only way you can achieve true revenge is not to let your enemies cause you to self-destruct.
Knowing your competition is just as important as knowing your customer.
Let me illustrate the point by calling forth a brief tale of high intrigue and the clash of arms from the chronicles of the envelope game.
A manufacturer I know has a major competitor, with a larger and more modern facility, located directly across the street from his own plant. They’re both fine companies, and for years my friend was rankled by the fact that his competitor was the sole supplier to one of the area’s Fortune 500/NYSE-listed companies. Though he was always willing to accept the proposition that no account was locked up forever, he couldn’t dislodge the competition and crack this prospect. He tried all the standard ploys. And he got nowhere.
Then he decided to try a different approach, and instead of concentrating on the customer he focused on his competition. Did they have a weakness that played to one of his strengths?
It turned out they did. The prospect had expanded operations in the South. When he analyzed the competition, he realized that their closest plant was in New York. He had a plant in Birmingham, Alabama. Did he use that information to gain a competitive edge? You can bet your last #10 envelope he did. It was obvious that his competitor couldn’t match him in price or service in that particular area.
The next time one of my friend’s reps walked into the prospect’s office, he was able to offer a package for the southern operation that gave him his first major inroads into the account and left his competitor in the dust.
He never would have won the account if he had kept his attention solely on his prospect. His unwillingness to believe his competitor was invincible led him to develop sufficient knowledge of his competitor’s operations to cause him to seize the initiative and close the sale.
Unless you have a unique product or service, or run a state-owned bakery in Fidel Castro’s Cuba, competition is a fact of life. You must deal with it. The best way is to gather what knowledge you can and then act.
Along with everything else that has changed, the old gladiatorial style of competing has passed. No longer do we just climb into the ring and have it out. When Flavius thrust his broadsword, Spartacus raised his shield. That was reactive competition, based entirely on waiting for the industry leader to move, and then countering. The outcome depended upon the strength, speed, weaponry, and reflexes of the combatants—and whether the Coliseum was muddy or not on the day in question.
Planning was minimal. In marketing, this old routine translated into minding the four P’s:
It worked or it didn’t. That day. If it didn’t work, you tried another prospect.
Today we compete differently. Warfare, in both the military and corporate modes, has become much more sophisticated, more analytical, more strategic rather than just tactical. We corporate types, with our management teams, the general staffs of our boardroom bunkers, press the noiseless buttons of our computerized war machines to create:
The oversimplifications of the gladiatorial era have been replaced with the overcomplications of the era of technology. Now, we literally study our competitors to death. It has become impossible to stay on top of all the data and still run a business.
Many managers, while calling for more information, are overwhelmed by the information they already have, and what they do have, they use piecemeal or improperly. Knowledge is not power unless it is used. It does not have to be perfect, but it does have to be accessible. And it requires managers who have the judgment to act on it properly.
At Mackay Envelope, we put this idea into practice two decades ago, and we continue to swear by it today. Conceptually it’s a spin-off of our customer profile, so we call it our competitive profile. It’s here in its entirety on the following pages. And we fill it out on every significant competitor we have.
Mackay Envelope Company
12 P’s Competitive Profile
Date __________________
Last updated ___________
By ____________________
1. Pedigree
Name of company _____________________________________
Headquarters location __________________________________
Subsidiary or independent? ______________________________
If subsidiary, of whom?__________________________________
_____________________________________________________
Publicly/privately held__________________________________
2. Physical Scale
Number of plants ______________________________________
Plant locations ________________________________________
Number of employees __________________________________
What geographic areas can they serve best?_________________
What geographic areas can they serve adequately? ___________
3. Performance as an Investment
Fiscal year ends on what date?____________________________
LY revenues___________________________________________
LY profits ____________________________________________
Performance trend past two to three years__________________
Any unusual financial issues (heavy inventories, etc.)? ______________________________________________________________
D&B rating___________________________________________
Overall financial condition (check one): Strong______________
Satisfactory ______________ Shaky ______________
4. Pricing
Their pricing attitude (check one): High and mighty _________
Down and dirty________________________________________
How do they respond to pricing competition?_______________
5. People
Unionized (if so, by whom)? _____________________________
Who are the two to three most important players in the firm and what are their positions? _____________________________________________________________________________________
What is their reputation as an employer?________________________________________________________________________
6. Positioning
What is their target market? _____________________________
What unique products (features) do they offer?______________
What is this firm’s short-term strategy? ____________________
What is this firm’s long-term strategy?_____________________
7. Plans
Do they want to hold position/grow aggressively? ________________________________________________________________
Are they targeting an acquisition/rumored as an acquisition/ merger candidate? _____________________________________
Are they rumored to be developing any products or services?
_____________________________________________________
8. Performance as a Supplier
Average delivery time___________________________________
Quality of service ______________________________________
Service strengths_______________________________________
Service weaknesses _____________________________________
Hard/easy to resolve customer problems ___________________
With what accounts do they have the best relationship? ____________________________________________________________
What accounts would it hurt them the most to lose?_______________________________________________________________
What is their practice regarding entertainment, gifts, etc.? _____________________________________________________
Who are their most important suppliers? ________________________________________________________________________
Their business practices reputation (check one):
Fully aboveboard ___________ Less than perfect ___________
9. Prestige in the Business Community
Characterize their reputation overall ___________________________________________________________________________
Has this firm (or its principals) had any legal or image problems? _____________________________________________________
Does the firm (or its parent) have any strong charitable, social, or civic involvements?_____________________________________
How about top management of the company?_______________
How is the company regarded within our industry? __________
By our trade associations? _______________________________
10. Probing for Data
Do we have any employees recently recruited from them who should be debriefed?____________________________________
What customers either used this competitor in the past or use them in conjunction with us who are reliable information sources about this firm?________________________________________
Who else do you know who can supply information about this company? ____________________________________________
Do we know how this company perceives us? (lazy, aggressive, technically superior, etc.) ________________________________
Is news about this competitor routinely served in the general, financial, and trade press on the Web? Who’s responsible for doing it? How are important developments shared? ____________________________________________________________________________________________________________________
11. Prize Fight…Them and Us
Which accounts do they have that we want? _____________________________________________________________________
Who is their salesperson(s) for these accounts? ___________________________________________________________________
What piece of the business (territory, market segment, etc.) do they operate in? How can we profitably grow our share? ___________________________________________________________
Have we (or anyone else) ever won business from these people before? If yes, how was it done?___________________________
12. Postmortem
We will beat this competitor if we do the following five things right:
Note what this is not. It is not a bound book, or a five-inch-thick computer printout. It is not fancy. But that’s the point. Fancy does not get read or used. This does.
Now let’s see how to compile this and how to use it.
When we launched this program, we set aside about half a day a week to fill these out. It took us two and a half months to complete all the questionnaires. Don’t let that intimidate you. A lot of the data can be gathered by staff and assistants. For the meatiest parts, three or four of us would sit down as a group: my marketing and sales head, the relevant sales manager, the salesperson, and me.
Now’s let go through the questions, step by step:
By this time you probably have figured out an astounding feature of this questionnaire. It is not just what it tells you about your competition that makes it so valuable, but what it tells you about your own strategy.
Once you have compiled a stack of these questionnaires, sorted them out, compared them, and categorized them, you’ll start to see a pattern emerge from step 12. The actions you need to take to make competitive inroads will repeat themselves. Your competitive profile has become a strategic plan. I don’t know of a better, simpler, more effective, or more usable method of developing one.
Von Clausewitz, the great military strategist, observed that it is the mark of inadequate commanders to fail to seize the initiative because they overestimate the strength of their opponents. For years, General Motors and IBM dominated their industries despite critical deficiencies. The companies that should have been willing to fight them for market share really weren’t competitors, just symbionts, looking for unfilled market niches where they could pick up a few crumbs that fell off the master’s table.
When the competition finally came, it came from people across a cultural chasm so wide they didn’t understand what it was that made these giant companies so wonderful, or from shoestring operators who had nothing to lose by ignoring the popular mythology.
It took the Japanese to show us how vulnerable GM was—and Microsoft to shake the living daylights out of IBM. GM and IBM were redefined competition. We all are, and it doesn’t matter if you’re Microsoft or Dell, Toyota or Honda. We all live or die by the competitive sword. And we always will.