Purpose

A Week of Cannes - Inside The Box

Fear is creative kryptonite. Its proximity alone enough to sap the life force of original intent. 

Put fear in a lead box and throw away the key. Or at least hide it for a few hours every day. The alternative being the status quo. Which as history has proven, is a fool's paradise.

For the last week, Cannes has provided its own lead box. One formed by a combination of conversation, exploration, exhortation, celebration and a good deal of rose. It is a box strong enough to withstand even sleep deprivation - the late night bogeymen being banished to the shadows by the simple practice of staying awake until the dawn. 

Fear’s absence has, for a few days at least, removed the fog, cleared the air and revealed a horizon of possibilities. 

Which makes Cannes the most important catalyst within the communications industry today. 

The truth is those possibilities are always there. Waiting, silently, for those with vision and courage to walk through them armed with simple truths.

That the way forward is not barred by economics or by others.

It is not restricted by rules. It is not determined by rulers.

That the way forward lies within our grasp.

We need only a destination that is important to us and a means of transportation.

Which makes it a pragmatic journey, and a practical one. A journey guided by Purpose, powered by a process and sustained by known practices.

This is not esoteric optimism. Or fanciful philosophizing. 

It is the foundation on which to build a business that sits, as Jeffrey Katzenberg said in his session with Sir Martin Sorrell on Friday, “at the intersection at which Art meets Commerce.”

It is an intersection that offers endless choices. 

And only one wrong one. 

To stay on the current road. 

No matter what discipline you practice, or skill you sell, doing more of what brought you to this point in the journey is the equivalent of putting two feet on the brakes while you drive down the side of a cliff. You might slow how long it takes to reach the bottom, but the final resting place is guaranteed.

We coach a growing number of business owners and business leaders. Our focus is to help them be clear about the future they want and to begin the practical steps to reach it.

In essence, we become their lead box. A place to explore possibilities without fear. And to take the journey best suited to them.

It takes courage to stop what you’re doing. And fear influences us all in ways overt and unseen. 

But as Cannes reminded us this week, what is yet to come is open to our influence. 

And diminished only through the choices we make.

Building Tomorrow’s Company, Today

Most businesses find themselves precariously balanced between reacting and planning. 

It’s a battle almost always won by the need to tend to the impact of decisions we made yesterday, the consequences of which we couldn’t or didn’t see at the time.

This creates a defensive, reductive view of a company and its possibilities, and usually results in neither the business nor its people fulfilling their potential.

Regular readers here will know that I am an impassioned practitioner of the power of envisioning the future we aspire to create - for ourselves and our business - and then designing and building a model capable of fulfilling that vision.

At the Wired/MDC conference on Tuesday, I listened to the founder of Netflix - Reed Hastings - describe the quite remarkable story of how he and his partners built their company. 

Netflix started its subscriber-based movie and TV show rental business twelve years ago. Today, it has 23.6 million subscribers, and has just passed Comcast Cable in audience size. 

Quite something for a business whose original business model was mail-order DVD rentals.

Except that its original model was not mail-order DVD rentals. 

Its original model was the one it is living today: real-time streaming of movies and TV shows over the internet. 

A model which follows a strategy borne of a simple realization. That the Purpose of a movie rental company is to offer its customers the widest choice of rentable movies whenever they want to watch them. Or as Reed Hastings wrote in 2005, "We rent movies. But the real service we provide customers is convenience."

Back in 1999, when Netflix signed its first subscriber, anyone on the web looking for content was going to AOL.com and listening to their modem sync up to the AOL servers at 56K. If you were lucky, you got mail. And if you waited long enough, a picture or two. You would have waited a long time for a movie. For some movies, you’d still be waiting.

In 1999, the best way to rent movies was to go to Blockbuster. And from Blockbuster’s perspective, they were fulfilling the movie renters' need. Some people got their first choice movie. The stores were pretty close to most people's homes. And as long as you got the movie back within a couple of days, the prices were competitive.

Except, if you looked closely, they were doing it on their terms. Not on their customers. And whenever you build a business based on what works for you, you leave a gap for someone else to build a business that works for the customer.

Enter Netflix.

“They built the railway line over the Alps before there was an engine capable of making the journey.”

One of the rock-like foundations on which the Technology Age has been built is Moore’s Law, which states that computer processing power will double every 24 months. Its accuracy has allowed for technological R&D to produce rapidly iterative design and capability.

Were all of life based on such certainty, our time here would be both richer and poorer. But when it comes to building a scalable business, speed of success is dramatically encouraged by predictability of resources.

Reed Hastings and his partners pulled out a spreadsheet and applied Moore’s Law to bandwidth expansion. Were the same growth-rate to hold true for both, when, they asked, would Netflix be able to satisfy the purest definition of its Purpose, and deliver streaming movies in real-time over the internet?

The answer, their spreadsheet projected, was 2008.

From that day, and every day for the next nine years, they worked to build a business capable of delivering the widest selection of movies as fast as possible to their customers based on current technology. It was a business whose end they had already designed.

The business was home delivery of DVDs, and they used it to create four long-term assets:

  1. A brand synonymous with being the best way to bring movies into our living rooms
  2. A reputation for a broad, deep and growing catalog
  3. A loyal and growing subscriber base
  4. A reputation for customer service

Everything else about Netflix 1999-2008, they planned to throw away.

As it turned out, the spreadsheet was right. And so was the strategy. 

In the meantime, Blockbuster - which already possessed all four of the foundations Netflix aspired to create - continued to look backwards.

Driven by its historic success, and an operational model based on number and location of storefronts, Blockbuster convinced itself its approach was right. And if its approach was right, the answer to falling revenues must be to address the fundamentals.

Extended rental periods; reduced late fees; earlier new releases; increased inventory. All of which added cost, cut into margins and did little to arrest declining interest.  Fundamentals in terms of Blockbuster’s business. But increasingly meaningless to its customers. 

Because in the pursuit of its long term strategy, Netflix had discovered that choice and convenience were more important to most renters than immediacy. And so, knowing they didn't yet have the means to satisfy the entire Purpose, they built a model that in the short-run would satisfy two thirds of it. And they started mailing out DVDs to its customers. No more disappointment at the store. No more store in fact. Just ease and choice.

And, even better, Netflix knew this was just a stepping stone. They knew that the third leg of the strategy was just a matter of time. Their spreadsheet said so. They just had to wait for the technology to catch up. 

When, in 2008, it did, Netflix satisfied their ten year old strategy to stream movies straight into the home. It took a couple of hours to download a movie, and the quality was only alright. But, innovation is about improvement, not perfection.

The results are astounding. Today, Netflix is valued at $12.5 billion and has recently committed $100 million to produce its own programming for the first time.

Blockbuster was sold a month ago for $400 million. $87 million of which was debt. From a high of 4,000 stores, its new owners are hopeful they will be able to keep 400 open. 

This week, Comcast announced a new residential internet service that will allow its subscribers to download an HD movie in 3 minutes. 

For Blockbuster, it probably means nothing.

For those waiting for new releases to be instantaneously available in 3D, it’s progress.

For Netflix, it’s just one more step on a journey that began when Reed Hastings pulled out his spreadsheet and designed the future of his company.

For the rest of us, it's perhaps a good reminder to make sure we're clear about what business we're building.

How The Airline Industry is Mis-Using Creativity

There are three types of change in running a company. Those that fix the problem. Those that make the problem worse. And those that look like the former but accelerate the latter.

If you apply the forces of creativity to them you greatly accelerate the results. A fact the U.S. airline industry is already experiencing.

This week the eight largest U.S. airlines announced their highest profit margins in a decade. Projections are that in 2011 the industry will earn $5 billion. If all goes well, next year that number will rise to $5.6 billion.

Which sounds healthy, until you realize that during the past nine years the airlines lost $60 billion. And 160,000 jobs.

Which means that even if they can sustain these new levels of performance for another ten years or so, by 2021 the US airline industry will have spent two decades producing a net return for its owners of exactly $0.

And that’s the best case scenario.

The worst case is that this turn-around will collapse like a suddenly depressurized cabin. 

If you believe in the power of creativity bet on the latter.

Because the airline industries have used a lot of it to create this turnaround. And most of it has been applied to finding new ways to take advantage of the customer. Bag fees. Change fees. And now potentially, use of the overhead storage compartment fees.

In fact the additional fees charged by the airlines in 2010 are higher than the industry’s actual profits. Which means that without those fees the airline industry is a loss making business.

But, when the gain to a business comes at the expense of its customers, with no improvement provided in return, the inevitable outcome is short-term increases in profitability followed by long term damage to the desire of the customer to be a customer.

Let’s apply positive creativity to this issue.

Peter Drucker once famously said that the Purpose of a business is to create a customer. The ability to provide something that people value and the ability to do so profitably.

But when a business focuses only on price, it makes irrelevant the thing that is actually most important to its customers.

The reason they paid the money in the first place. Whether that is whiter whites, lower taxes or satisfaction of a personal vanity .

And when judged by the results of a purchase, the airlines offer something of inestimable value.

Our lives.

The virtual guarantee that they will get us to our destination safely.

A value proposition on which to change the world. And one which supported by fair pricing, comfortable seats and an investment in the future would radically change their future.

It’s late in the game for the airlines to be re-establishing their core value. Perhaps too late. 

And when airline travel is finally replaced by something that makes sense, something that delivers us quickly, comfortably and safely without destroying the ozone layer and ending the existence of Polar Bears, something that has no need for pat-downs and retinal scans, something that greets its customers with enthusiasm and innovation, something that stimulates and satisfies its employees, and something that creates shareholder value, it is unlikely that whatever that something is will carry the names of any of today’s airlines. So small is the value of those brands in the eyes of their customers.

Unless, of course, the airlines unlock the power of positive creative thought, and apply it to creating long-term value.

For us.

And thus, for them.

Welcome to: Art, Meet Commerce

Since I began this blog I’ve written about issues that affect the leaders of businesses. Both practical and personal.


In my mind, I’ve been vague about the kind of business the blog was designed to help. After really thinking about it, I’ve decided I’m ready to be more focused.


So, I’m going to write about ideas that will help creative companies become more valuable businesses.


And I’m calling it Art, Meet Commerce.


Because after all, that’s the balancing act we all confront when we sell subjectivity.


What makes a business valuable depends on your perspective. It’s the most personal of definitions. And I hope to explore as many of them as I can. And any you suggest.


I’m also conscious that many of these ideas will apply to many kinds of businesses. After all, creativity is the fuel of innovation. And every business must innovate. Or die. There being no company that has survived by maintaining the status quo. 


But instead of trying to reach the broadest audience, I’m going to provide a narrower audience with deeper insight.


An audience that uses the power of creativity to change behavior. Who are motivated to be paid relevantly for that change. And who want to leave a legacy. 


In some cases I’ll write a series about a topic that requires more detail. In others I’ll pull examples from the news and talk about how they apply to creative companies.


You can expect to see a couple of posts a week from me. A realistic output that I can sustain. Probably Tuesdays and Thursdays. With the occasional spontaneous outburst thrown in.


What you’ll read will be unbiased and unvarnished. I’m trying to help. Not please. 


And I welcome dissenting opinions, alternative points of view, and honest, open debate.


Speaking of which, I’ve been watching a lot of Mad Men recently. 


In the infancy of Sterling Cooper Draper Pryce, following Don Draper’s laconic interview with Ad Age, and its ensuing disastrous results, Betram Cooper admonishes Don’s diffidence.


“Turning creative success into business is your work. You failed.”


Is this, in a nutshell, the Purpose of every creative business? And what is a creative business, anyway?


Answers to these, and many other questions will be forthcoming.


Stay tuned. 


And pass it on.


Thanks.

Sitting on The Edge of Revolution

These are turbulent times. Politically, economically, socially.


A story on the web this morning reports that a fire department in rural Tennessee allowed a family’s house to burn to the ground because they hadn’t paid an annual $75 fee for fire department service. 


In addition to losing all of their possessions, the family’s cat and three dogs were killed. 


When the fire department arrived at the scene because the neighbor’s house was being threatened - they had paid the $75 fee - the fire chief ordered that water be sprayed only up to the property line between the two homes, despite the home owner offering to pay ‘anything’ to have his home saved.


I have a pragmatic view about building a business. You define a Purpose, hire people that you think can help you create that vision, invest in them until doing so becomes destructive to the organization or unhelpful to them, and then make a change. It’s called accountability. The mid point between ruthlessness and enablement.


Accountability must have flex in it. Circumstances and people are not fixed points of reference. And absolute rules create only dictatorships. 


I believe the most effective management structure is a benevolent hierachy. One that listens and then decides. A model that allows you to judge the quality of the thinking of the leadership of an organization, and its prospects for achieving its Purpose.


I have never thought about the Purpose of a fire department. ‘Protect lives and property,’ seems like a good place to start. Sending a large bill after you’ve provided that service would be an acceptable quid pro quo for even the most radical opponent of socialized government.


The news website on which I saw this story is running an online poll. 22% of the respondents believe that the fire chief was right to let the home burn.


Clearly they’re not animal lovers.


Revolutions are not known for promoting rational thought. 


Fear in buckets, yes. 


Which tends only to promote the circumstances that created the need for revolution to begin with.


Running any business during a revolution is hard. The screaming and yelling drowning out most of the ability to think clearly. 


But if you’re clear about why your business exists - clear to the point of being able to write it down in a single line without the use of the word ‘and’ - you’ll put out your customers’ fires with increasing ease.


And get paid handsomely for doing so.

How To Rule The World

Around 5pm EST this coming Sunday, Germany will win the World Cup. 


It will happen because six years ago, having been unceremoniously dumped out of the European Championships - during which the team failed to win a single game - the German football authorities decided to rebuild.


The did not undertake this mission lightly. They didn’t embark on a conversation-heavy, action-light series of meetings and investigations. 


They hired a man and asked him for a plan.


Fortunately for them, and for the rest of us waiting for our respective countries to demonstrate there is a reason beyond passport issuance to believe that next time will be our time, they hired a man capable of giving them a plan.


They hired a man called Jurgen Klinsmann. 


Klinsmann had won the World Cup with Germany. He had played at the highest domestic levels of German, Italian, French and English football. He had moved to California, thereby removing himself from the day-to-day petty politics of European football and ensuring he retained objectivity.


Klinsmann did three things that are a model for anyone re-building a business.


One. He solicited opinions. From players and managers alike. Everyone who would have some influence over how his German players would play. Then he empowered them to make a contribution.


Two. He defined the characteristics of how his Germany would play. Characteristics that were based on well-established German traits. Being dynamic. Aggressive. And decisive. Traits that Klinsmann readily admits were the cause of two World Wars. But which he believed could be better Purposed on the football pitch.


Three. He built an organization capable of surviving his departure, in the knowledge that the emotional effort required to build the foundations would quickly create friction between him and the German Board.


It was not an easy transition. Early results were poor. And he almost lost his job after 18 months. Only a decisive win over the U.S. in 2006 keeping him in place for the World Cup that year.


His team came third. And was celebrated throughout Germany. Then Kilinsmann resigned and handed over the model to his young assistant, Joachim Loew.


Two years later, Germany were runners up in the European Championship.


This afternoon, they play in their second consecutive World Cup semi final. 


It is a case study in organizational re-structuring.


Vision. Execution. Evolution.


And built, not around an irreplaceable individual or a single skill. 


But around a Purpose and a set of timeless characteristics.


Klinsmann’s work has changed the face of world football. Created a template that others will follow. And will bring hundreds of millions of Euros worth of value to the German economy.


As an Englishman, praising German anything is hard.


But between now and Sunday evening I'll be doing something for the first time in my life.


Hoping for a German victory. 


Change indeed.


Perspective

I didn’t intend to take so long a break from writing. A couple of days turned into a week which turned into a month and then suddenly, here we are. Fifty days later.

Which is also how businesses lose their way. Not dramatically. Or explosively. But moment by moment. Drop by drop. Without the benefit of audible warning. A self-imposed short-coming. There being few organizations that offer incentives to the dissenting voice.

I had excuses. A very large client and a demanding brief. One that challenged and stimulated in equal measure. The very best kind of work.

As a business we emerged from the last couple of months with a clearer sense of our own Purpose. To unlock the potential of creative businesses of any size. From multi-national enterprises - our most recent client - to single-owner entrepreneurs.

And over the last couple of months we have been reminded of a simple truth when it comes to building successful businesses.

Size matters.

For big companies, the trick is to use it without being slowed by it. A balance most have not yet achieved.

For small companies, the trick is inverted. Which is to think big. While taking advantage of one of the great advantages of being an entrepreneur. The freedom to act.

An advantage that many throw away.

I will be talking a lot more about building organizations that unlock the value of creativity over the next few months. I hope you’ll pass the word to those you think will be interested. And I hope to see you here 2-3 times a week, regardless of what else I’m up to.

For those of you that have written to me over the last couple of weeks asking me to get back to writing regularly, thank you for your interest.

And your push.

On a very personal note, a very dear friend of ours, Heather Guillen and her husband Tom, suffered the tragedy of losing their prematurely born son Tommy, last Saturday.

Heather writes a blog called Poor Lucky Me. She has continued to write it during the trauma she and Tom are now living through. It is one of the most human and raw accounts of life I have ever encountered. And it has changed my perspective about a lot of things in the days since I heard their terrible news.

I have no wisdom to account for a loss so complete that every breath must now be a deliberated choice.

But I know that Tommy has changed my life.

And for that I will always be grateful to him.


Can. Do.

I walked past a homeless man last night. Chris and I were on our way to shop for dinner.  A brief interlude of being husband and wife at a time of intense professional focus and opportunity.

He was sitting on the still damp sidewalk leaning against the wall that separates Starbucks and the dry cleaners - an example of retail location management that I hope is an indicator of somebody’s ability to turn strategy into real estate reality.   

As we passed he reached out towards us and mumbled something. “Can you help me out?”

There are some people that ask for money that appear to me to be using it as a way to pass the time. They are both diffident and menacing. A difficult combination to express in the few seconds it takes for the exchange to take place. Dressed too well. Disinterested too quickly. They leave you with a feeling of relief as they fade into the immediate past.

This man was not one of those. This man sat on cold, wet concrete and looked up with anxiety in his face. This man was dressed in newspapers.

These were not newspapers he had wrapped around him at random. These were newspapers he had made carefully and artfully into clothing. These were newspapers whose purpose had reached new heights through this man’s endeavor. These were newspapers that told you more about the man than any study of his history could have revealed in an hour of conversation.

I was startled. Not by his situation, which is all too common on the streets of New York these days. But by his solution. And I wanted to help.

I reached into my pocket and felt a few coins. Insufficient either to help him significantly or reward him appropriately, his need and his artistry both vying for attention in my conscience.

“Do you have any cash on you,” I asked Chris.

She shook her head. “You were buying my dinner, remember?”

I did. And my wallet was safely tucked away underneath two layers of coat and jacket. And it was cold.

“I’ll give him something on the way back. We’ll only be ten minutes.” I smiled at him as I withdrew my hand from my pocket. “We’ll be back,” I said.

The line at the take-out counter was a little longer than I expected, and we stopped into another shop along the way that we had walked past for two years without venturing inside. The image of the newspaper man strayed into my mind, and I felt for the bills that I had stuffed in my pocket at the register.

It had started to rain, softly and without menace, but I was glad for the weather-proof shell and rubber soled boots I was wearing. And as I stood on the street corner, waiting for the light to change, I wondered what it would be like to wear newspapers for clothes. Wondered whether he had learned the skill from someone else. Wondered how often he  had to replace them. Wondered which papers worked best. Wondered what he will do if we really do start to get all our news electronically. I’m a fan of the iPad, but as a way to keep warm, it leaves a lot to be desired.

As the light changed and the mass of people on either side of 23rd street began their journeys towards the middle the crowd parted just enough for me to see the wall where he had been sitting.

It was empty. He was gone.

Suddenly the money rolled up in my hand felt like newspaper. And utterly useless. Its purpose taken away. I stopped for a moment as we reached Starbucks and looked inside, hoping to see him sitting in a chair. With or without a laptop. I wouldn’t have minded either way.

Chis went into the dry cleaners and asked about their drop off hours for this morning. The warmth of the dryers and the smell of the chemicals rolled into the night like excited children on Halloween.

I looked across 6th Avenue, and then back the way we came. There were people everywhere. Clothed. And invisible.

As we walked the final two blocks home I wondered why I hadn’t taken the time to follow my instinct when I first saw him.

Why I had thought that to put off an action now would give me an equal opportunity to carry it out later. Why I had assumed that circumstances wouldn’t change. That my plan would fit everyone else’s plan.

There is a difference between intent and action.

It is called opportunity.

And we miss them every single day.

Consultancy in Action

A potential client asked me yesterday what I mean by Plan The Last Day First. Rather than give her our well honed explanation I pointed her at yesterday's post on Jerry Solomon’s blog.

We don’t disclose our work with our clients unless they choose to do so. So everything here is information that Jerry or his partner Mindy Goldberg have already openly discussed on Jerry’s blog  or on our website.

When we first met Mindy, Jerry and Jeff Preiss they were engaged in a process of redefining their partnership. A process that challenges the most self-effacing and self-aware by demanding that you compare your value with that of other human beings.

Conversations about better or worse anything quickly become emotional. Add to that the financial stakes of sharing the ownership of a business and you get, as Jerry described it, a recipe for impasse.

They hired us to help. We were able to do so. And the impasse was resolved.

Which is part one of the story.

Part two manifested itself in Jerry’s blog yesterday.

We believe that the best companies are built from passion, and towards a purpose.

Most business owners depend heavily on the passion part of the equation. And spend little time defining where they want to end up.


Which seems to miss the opportunity to apply one of the few constants in the life of an entrepreneur. The absolute inevitability that there will be an end.

Some entrepreneurs love what they do so much that they want to die doing it. Others want to capitalize on their success by selling their business one day. In either case, leaving behind a legacy of all the effort, thought and personal investment becomes increasingly important to owners over time.


Many business owners treat the end as an issue to be avoided until their own enthusiasm starts to wane. By which time their ability to affect their own outcome lies somewhere between limited and non-existent. We see this particularly in creative companies, whose founders have a difficult time separating their own value from that of the business.


However, it is the ability of an owner to ultimately make themselves irrelevant to the success of the company that creates the most dynamic future for any business. By empowering the employees left behind. Increasing dramatically the value the business has to potential buyers, or a new generation of owners. And ensuring the DNA of its founders lives on in the soul of a business long after they have ceased to be its daily heartbeat.

In Jerry’s blog yesterday he describes the decision to hire Lisa Margulis as his replacement as, “a conscious choice on whether to remain a life style business or build a company that lasts beyond the partners.”

This is the essence of Plan The Last Day First.


And the key word is conscious.


Every business owner makes a choice about the future of their company every day. Many times they don't recognize it as such. But in all aspects of life, the absence of a conscious decision to do something is an unconscious decision not to.


Deciding to take control of your future requires that you be willing to give up some control of the present. By involving others and helping them to grow. A win-win on a thousand levels.

I don’t know Lisa personally. But I suspect that she will enjoy working at Epoch a great deal.

Both because it is a company filled with extraordinarily talented, inquisitive, genuine people.

And because its owners are building a business that is committed as much to her future as it is theirs.

iWant

Most business owners spend a lot of time figuring out how to give their customers more of what they want.

At various points in the business cycle they add better and cheaper to the analysis. An approach that creates productivity and efficiency. But little originality.

It is a strategy that also systematically undermines the value of those businesses. By turning the unique into the common and individuality into commodity.

My brother-in-law showed me a quote last week that described Steve Jobs’ approach to building his business.

“First he creates black holes. Then he fills them with stars.”

If we seek to only do better that which has been done before, we will eventually optimize ourself out of business.

But if we focus instead on what makes us magical to our customers, we will be irreplaceable.

How To Find Your Purpose

It’s been a week of milestones. None more important than the one we celebrate today. Chris’s birthday.

It’s rude to discuss a woman’s age. And potentially dangerous if it’s your wife’s. Suffice to say, mine has the energy of a thirty-year old, looks like she’s forty and has reached this milestone with no regrets and an open heart.

There are many, many things she does better than anyone I know. She is also, it is fair to say, still discovering what she wants her legacy to be.

There are many, many people who would say she has already done so. That their lives have been made better for knowing her. That her support, her inisght, her kindness and her honesty have enriched their lives and helped them unlock their potential. That she has made a difference.

That she loves to help people is a fact. That our business increasingly lets her do so on a wider basis than ever before is true. That doing so makes her happy is obvious. But she would say there is more to be done. New challenges to meet. New opportunities to explore.

And through that journey she is unwrapping her Purpose.

Purpose, as anyone that comes here regularly knows, is a passion of mine. I believe it creates focus and reward far beyond financial returns - though it impacts those enormously too - and allows us to make decisions in the moment that are more reliably positive.

For a business or a person, Purpose is hard to define. An under-statement of some significance in many cases.

Over the last couple of years I have come to learn there are two ways to do so.

Through disciplined analysis supported by insight, experience and sensitivity. A process we use with our clients with great success.

And through exploration. Of trying and failing. And trying again. And discovering patterns that lead you to a simple truth.

I wrote in Boards magazine this week that Steve Jobs has created a culture at Apple that is prepared to fail in order to succeed. Which has allowed both the company and the man the opportunity to explore. What they are. And what else they can be.

I don’t presume to know whether Steve Jobs has discovered his Purpose. Though faced with his own mortality last year, I suspect it has been on his mind.


Before he introduced the iPad - an invention that I personally believe changes everything - he discussed Apple’s recent performance.

The numbers are astounding. In 34 years they have become a $50 billion company that has already changed the world three times.

A success story capable of distracting anyone from understanding their Purpose.

Instead, I believe it has allowed Apple to define theirs.

Today Apple sells three product lines. Macs. iPods. And IPhones. With the exception of a few desktop computers, the overwhelming majority of the products they sell are mobile.

Today, they are the largest seller of mobile devices in the world. Bigger than Sony. Bigger than Samsung. Bigger than Nokia.

Apple was a computer company. It is definitively not any more.

Instead, its Purpose now is to allow us to enrich our lives wherever we are.

A discovery made not through analysis but through exploration.

It is a Purpose that I believe they share.

With my wife.

Happy Birthday Chris. Thank you for sharing your journey. Can’t wait to see what happens next.

Millbrook

Chris and I were invited to speak to the Millbrook Business Association last night.

We moved to Millbrook sixteen months ago. After living in a city all my life it’s still breathtaking to walk outside our house and realize I’m a long par five from the next closest house and a couple of golf courses away in the other direction.

We have big skies in Millbrook, a view I never tire of, and more room than our dogs know what to do with.

Except for six weeks in the spring when allergy season kicks in, it’s easy to see why people stay for generations.

The village of Millbrook lies about ninety miles north of Manhattan with a full-time population of about 5,000. On weekends in the summer, it’s more than that. Though not much. A New York Times article in 2003 described it as a haven. A perfect choice.

A lot of people come here to ride. Apparently if you love sailing you go to the Hamptons. If you love riding you come here. Whatever the reason, some of the estates have to be seen to be believed.

Like a lot of towns and villages around America, Franklin Street - Millbrook’s Main Street - has been hit by the recession. A reality that impacts the surrounding service businesses as well. In three and a half hours last night we met a head master, two architects, an insurance broker, a real estate agent, two landscape designers, a publisher, a designer, a hardware store owner, a general contractor, a bookshop owner, and a maker of the most delicious french-style tarts you’re ever likely to come across.

Millbrook has an incredible base on which to build. A compelling location. A diverse and invested business community. Some of the most talented artisans I’ve ever encountered. A growing Farmer’s Market. A nascent architectural reclamation project. A proud history. Nationally recognized schools and a lot of smart, sophisticated people interested in the welfare of the village and the surrounding area.

Like a lot of small communities it’s trying to decide its future. A challenge brought current by the collapse of the economy and the malling of America.

Small towns are organizations. Looser and more divergent, perhaps. But still able to combine the diverse skills of individuals to create a whole that is greater than the sum of its parts.

Historically, they were created for a variety of reasons. Some geographic. Some politic. Most of which have disappeared over time as transportation has evolved, communications have accelerated and sprawl has taken cities further into rural America.

Today, many exist out of tradition or habit. Values diminished by time and widespread economic frailty. And a poor foundation from which to build a vibrant future.

In this week’s local paper - a blessing in and of itself- I read a letter to the editor. It suggested that small-towns across America need to define themselves differently if they are first to survive. And then to thrive.

They need to become experiences, the writer concluded. To give people a reason to come.

A good starting point I think. But one that does not go quite far enough.

Before any organization can define how it should present itself, it must first establish its Purpose.

A focal point that defines the essential values of a community, and coalesces interests and innovation in ways both indigenous and organic.

This establishes a process that allows a community to define the inevitability of change on its own terms.

The alternative is to resist change in the name of small-town America. Which ensures two things.

That change, when it comes, will not be pleasant.

And the great American Main Street of yesterday will be most easily found at Disneyworld.

In Paris.


Why We Don't Get Hired

There is one group of people that never hire us.


Those looking for the silver bullet.


I meet one or two every month. People who hear about us from clients, or come across our website. They call and ask how soon we can have a conversation. When can we meet. How does it work. When can we start.


It normally takes thirty minutes to discover that what they're looking for is an instant remedy to problems that have been built in to their business since they began. A vision that was too narrow. A perspective that was too short-term. A strategy that was too reactive. A failure to understand what they were really selling. A passion for being essential to their business.


These situations have three things in common.



  1. All companies face some of them. And some companies face all of them.

  2. There are answers to each of them. Most of which take less than a month to define.

  3. The solutions come through exploration and understanding. Not from the business equivalent of a pill.


 

Do You Want Your Company To be The Best In The World? Go Ahead.

One of the most influential voices in the fashion industry today lives in the suburbs of Chicago. Her name is Tavi Gevinson.

She is 13.

She’s passionate. Has a point of view. Uses the web to express herself. And didn’t know all this shouldn’t be possible in the cynical, political world of The Devil Wears Prada.

One of the first things we do when we work with a new company is to discern their underlying greatness. Then we look to see if there’s an area they can own. As in ‘best in the world’ own.

It often takes a little while for us to convince them that they have the capacity to be truly great.

And sometimes a little longer to convince them they have the right to be.

But once they accept that they do, the energy that releases is extraordinary.

In today’s world, you can lead an industry from anywhere.

What does your company do better than anyone, and what are you going to do about it?

The Purpose of a Company

Defining the purpose of a company is the hardest and most necessary step to building a Better Business.

Peter Drucker, probably the most acclaimed management consultant in history, believed the core purpose of any company is, ‘to create a customer.’

I mis-understood this the first time I read it and replaced ‘create’ with ‘get’.

Which is a bit like replacing ‘sell’ with ‘buy’ in your view of the world. A mistake which many companies are making at the moment.

Getting a customer is child’s play. And usually a one-way transaction. They win. You lose.

Creating a customer means selling something of value.


To them. And to you.

Chrysler. A Case Study In Unconscious Capitalism.

Why does the world need Chrysler? Or General Motors?

As business models they are subsidized blackmail. In which the American taxpayers provide the subsidy and the guilt.

Were Chrysler or GM to fail, the loss of jobs and the reverberation through the American economy was deemed to be so devastating that we are told it is worth the price we pay to keep them both around.

In which case, wouldn’t it be better to use all this political, emotional and financial capital to build companies worthy of the investment.

Great companies, big and small, are run consciously.

They know why they are in business. The know what they are trying to achieve. And they work to create value for four groups of stakeholders.



  • Customers

  • Employees

  • Suppliers

  • Owners


There is no order of priority to that list. Great companies work equally hard for all four groups. And, unsurprisingly, the businesses who succeed in every area, produce the best financial results.

Both Chrysler and GM are off to a lousy start. As my friend Jerry Solomon wrote today, General Motor's self-serving approach to one group of suppliers is extraordinarily destructive. To any supplier short-sighted enough to accept their terms. And to themselves.

The Obama administrations have revealed their shock at the state of both companies.  And came close to letting them fail. The inside story is here. It's worth reading. Chrysler were ultimately saved by the deal with Fiat. Which came with a heavy price.


Chrysler's new marketing chief, Olivier Francois, is also responsible for: marketing all of Fiat’s brands; leading all of Chrysler Group’s advertising; brand development and strategy development, and is also CEO of Chrysler. He will “execute his duties via a trans-Atlantic routine.”

His reputation as a marketer is that his work should first of all be noticed. And he is stronger on style than strategy.

Hardly a platform for a turn-around.


Perhaps we should collectively ask him to step into our office. Since, in large part he works for us.

Or perhaps we should simply decide that Chrysler and GM are both past saving and build companies that create things the world wants.

Starting with respect.

5 Things The Airline Industry Has Taught Us About Better Business

The airline business is pointless.

If there was any kind of alternative to traveling further than 250 miles, we’d all take it. And celebrate.

Instead, we game the system to get the lowest fare possible, hope our upgrade clears, and try to make sure there’s internet access on board to help us forget that as an indicator of man’s achievements, air travel is our only major innovation that’s going backwards. Having experienced Concorde, that’s a realization that hits me every time I fly.

Fifty years after the Boeing 707 was heralded as the first jet airliner, we still fly at exactly the same speed that modern miracle achieved on its maiden voyage. 591 MPH. Imagine where things would be if technological achievement had remained frozen in 1959. Today, New York to London is still 6 hours, give or take, depending on the jet stream.

Maybe that’s the real strategy behind global warming. Heat the planet, create violent weather conditions, jump on board the jet stream. It would make more sense than anything else those that run the airline industry have offered as business rationale.

Let’s look at just this decade. Since 9/11 the industry has:



  • Gone through five Chapter 11 reorganizations

  • Supported two mergers

  • Eliminated about 250,000 jobs

  • Been responsible for a mountain of debt and pension defaults.


If over that same period you ignore the tens of billions of dollars written off to goodwill write-downs, and the hundreds of millions of dollars of reorganization costs, then the airline industry only lost around $40 billion.

$40 billion. In an industry trying to make money.

With no competition.

That every one of us will have to use multiple times this year.

And yet. The most recently published quarterly reports have been met by airline executives with rejoicing over the increases they have generated in ancillary revenues. Things like baggage fees and on-board meals. United earns about $14 a passenger in those fees. They also lost $137 million in the 3rd quarter.

What they don’t know is the cause and effect of either number on the other.

In other words, they don’t know if charging for bags increases revenue or drives people to other airlines.

Seems like a fairly rudimentary piece of analysis. If we do this, will be better or worse off?

United don’t know. (No news there for the airline that came up with the profound brand positioning, Rising.  As opposed to the alternative, one presumes.)

Neither do any of its competitors. One of the many reasons why the airline industry has lost more money than it has ever made.

But the airline industry does have value. As a business model. Of what not to do.



  1. Don’t sell your services for less than it costs you to provide them. Unless you know you can raise them tomorrow. Not think. Know.

  2. Don’t build a business that is entirely dependent on any single resource, especially when controlled by a limited number of suppliers who are ambivalent whether you succeed or fail.

  3. Don’t build a business around a small group of people with highly specific, and hard to replace skills. And if you must, align their interests with yours. So that the success of the business is their business - as well as yours.

  4. Don't restrict innovation. If your business can't offer a significantly more valuable experience every three years, your customers will find someone who can. Unless you can corner the entire industry. In which case, you don't need anyone's help.

  5. Don’t focus on narrow metrics that support what a great job you’re doing while the business is falling down around you.


The truth is out there.


Just don’t expect to find it by looking up.

Courageous Conversations

At the heart of the problems faced by many companies, is that the owner has so far avoided a Courageous Conversation.

Instead of identifying and exposing what's really going on, owners resort to analyzing the company's strategy, a debate that is often substituted as an alternative to confronting two primary questions.

Am I still in love with this business? What am I trying to achieve?

Entrepreneurs build extraordinary businesses when their talents meet their passion. When their passion fades, the business suffers.

Unless it has been built to thrive without them.

Most are not.


And when owners bury the real issues - consciously or sub-consciously - the interests of the company, its staff and ultimately the owners themselves are seriously damaged. Often permanently.

The situation is complicated a hundred-fold when a partnership is involved. Then, the absence of an exit strategy and an ownership transition plan becomes a noose from which many companies never escape.

A Courageous Conversation is needed when you see these conditions appear in combination:



  • A business without a clearly defined Purpose.

  • A partnership that used to work effortlessly but is now increasingly disjointed.

  • Employees taking sides.


Employees smell lack of ownership interest instinctively. And even if you’re kidding yourself, you won’t kid your employees for very long. In the absence of a company Purpose, great employees will stick around in this economy only long enough for the unemployment numbers to start falling.

Sometimes, a Courageous Conversation results in a genuine re-commitment by the owners to the business. Madonna Badger of Badger and Partners and Jerry Solomon of Epoch Media talk about this on our website.



Other times, it highlights the divide, and requires the negotiation of a fair, equitable and practical separation. No small feat. And often hardest for close partners who tie themselves in knots trying to be reasonable at the expense of reality.

The good news is that Courageous Conversations are the fuel of empowerment. And liberation.

Two traits on which both companies and lives can prosper.

-------------------------------------------------------------------------
Note: The concept of the Courageous Conversation was brought to us by our newest
associate, Jamie Gutfreund.

Jamie was introduced to us by Dana Astrow, our first.

Their background and expertise speaks for itself. Their insight is extraordinary. Their enthusiasm infectious. We’re a much better business for having them be part of it. 

Gourmet Magazine: Right Ingredients. Wrong Recipe.

The announcement today that Condé Nast has decided to shut down Gourmet Magazine after 68 years was a stark and startling reminder that even great brands go stale.

In the moment its demise was announced, Gourmet was revered by the professional and privately passionate alike. Jean-Georges Vongerichten, regarded as one of the most celebrated chefs on the planet is a fan. And a subscriber. As are 978,000 others. A number that has stayed relatively unchanged for a decade. Indeed, Jean-Georges attributes his success to Gourmet’s prestige. “It helped make me what I am today.”

How then does a 68 year old institution with the power to make or break the world’s greatest restauranteurs, become a memory?

There are two reasons. One we talk about a great deal. One we do not.

The first is that Gourmet failed to understand the essence of its value to consumers. Not as a magazine. But as an authenticator of taste. Sensory and subjective alike. Regardless of the medium. Or the calendar.

Absent that understanding, Gourmet did not bring us YelpFoursquare. Or even an iPhone Gourmet app. They gave us information. Great information. But on their terms. Not ours. As Jean-Georges explained, “Even I look up information on restaurants on the Internet when I travel, to see what's good or bad."

The second, is that McKinsey, the consultants brought in to analyze the state of Conde Nast concluded that Gourmet was better dead than alive. A decision that suggests a failure to see the possibility of repurposing the value of a 68 year old iconic brand. Or an unwillingness to re-invest in it by its owner.

A waste. By consultant and corporation alike.

And unnecessary if you take time to understand why you’re really in business in the first place.
 

Thinking on The Run

The return of the NFL to a couch near you shines a spotlight on an attribute that separates great athletes from also rans.

Thinking clearly under pressure.

Building a better business asks the same of you. The ability to isolate the important from the irrelevant no matter how loudly the latter is yelling.

Doing so demands you get and keep perspective. Which requires answering two questions.

1. What does your business do that your customers can’t do without?

2. Will what I’m doing today help us do it better?

If you’re not certain you know the answer to 1, the answer to 2 is just a guess.

A strategy that will quickly make the answer to either question irrelevant.