Get Back in the Box: How Being Great at What You Do Is Great for Business

preface

I’m supposed to start with something scary. You know, how the world is about to change very drastically and if you don’t recognize this shift and reconfigure your business accordingly, doom awaits you. And after I paint that awful picture, I’m supposed to earn your trust so that you follow me out of the box and into a whole new way of looking at your predicament.

It’s a great formula for selling books, but it serves you no good purpose. For the world is not about to change so drastically. It already has. The change has come—you’re soaking in it. You don’t need a trend forecaster to understand what’s going on; you just need some eyes and ears.

After I’ve frightened you, I’m to tell you that there’s a single path to salvation, and that I have it. Then I list a whole bunch of companies I’ve consulted with that have done exactly what I’ve said, to their great success (leaving out those that have failed using the same advice) and throw in a few case studies of other companies just to add some heft.

But—thanks, in part, to the change that has already happened—you no longer need to model behaviors that worked for others, or even to analyze the processes through which they achieved success in order to repeat them. That’s a losing game, devised to disconnect you further from your own competence and make you even more dependent on the expertise of others. You shouldn’t have to step outside your own intuition and experience to learn what worked for someone else in some other pursuit. That’s their story. You get to write your own. So, unlike most books aimed at businesspeople, this is not a series of lessons from the companies and organizations that got it right. For the landscape is littered with those who tried to follow the strategies that worked for someone else, what seemed like just yesterday. You—not someone else—are the expert in what you do.

To most businesses, this painfully obvious fact itself is a frightening prospect.

Just last year, I got a phone call from the CEO of a home electronics chain, asking if I could devise a new communications strategy for him. He had read one of my books on Internet culture and was wondering if I could help him make use of some of this below the line advertising he’d been hearing so much about lately. He wanted his marketing to be less Saatchi and Saatchi and more craigslist. By this he meant he wanted to rely less on the expensive, high-concept traditional television advertising created by agencies like Saatchi&Saatchi, and somehow do his communications through bottom-up online communities, like the one that had developed around the craigslist online bulletin board.

As I reviewed the company’s dossier, product line, and customer experience reviews, I realized this CEO had a much bigger problem than his ads. The chain had lost its way. It had alienated its core customer base by abandoning the electronics business and becoming more of an appliance store. It had pushed design and manufacturing offshore, leaving headquarters without talent who really understood electronics. As a result, the quality of store-brand products had deteriorated, leading customers to buy other brands at thinner margins. Finally, it had alienated its store managers through infantilizing incentives schemes, and their employees with oppressive loss prevention (antitheft) policies. Yet this CEO really thought a shift in marketing would change his whole business.

That’s when it hit me: What this fellow needed was not simply to hire companies like craigslist but to be more like craigslist.

American companies are obsessed with window dressing because they’re reluctant, no, afraid, to look at whatever it is they really do and evaluate it from the inside out. When things are down, CEOs look to consultants and marketers to rethink, rebrand, or repackage whatever it is they are selling, when they should be getting back on the factory floor, into the stores, or out to the research labs where their product is actually made, sold, or conceived. Instead of making their communications less Saatchi and more Craig, they should be reconnecting with their core enterprise.

I’m hard-pressed to think of two companies that embody the difference between these two approaches better than the Saatchis and Craig. Consider the rise and fall of Saatchi&Saatchi for a moment. It’s typical of the kind of company that chokes as soon as it has broken from the pack, losing its way and forgetting its core value proposition. Without competitors at their side, many companies don’t even know what they’re about.

Sons of a prosperous Baghdad textile merchant, art patron Charles Saatchi and his brother Maurice, a Conservative party stalwart, founded Saatchi&Saatchi in 1970. The Saatchis took the conservative U.K. advertising world by storm with their provocative campaigns, a Rolodex full of high-society contacts, and a flair for self-promotion.

As the Financial Times put it, The Saatchi brothers’ expertise is in image-making. Their greatest triumph was in projecting the image of themselves and their company as the most dynamic force in worldwide advertising … they were great magnets for young talent—and made sure their company took full credit.¹

Just a couple of clever ad campaigns led them to global prominence in the late 1970s. Their Labour Isn’t Working spots for Margaret Thatcher became a new benchmark for political advertising. Their ad promoting the use of contraceptives featured a picture of a pregnant man. This edgy creative work, combined with the brothers’ talent for schmoozing clients and the powerful, gave them the ingredients to build an empire.²

But this was their tragic flaw: their quest for empire overshadowed their desire to make good advertising. In the process, they transformed themselves from an advertising agency into a holding company, and subsequently allowed their core competency to wither.

Making use of a loophole in U.K. investment law, the Saatchis raised hundreds of millions of pounds by going public, which they then used to acquire as many other agencies as they could gobble up. For a brief moment, they were the world’s largest advertising firm. But this didn’t mean a lot. The Saatchis’ wanton acquisitions had stirred up a feeding frenzy and merger mania in the advertising business, from which the industry has yet to recover.

The new way to acquire clients was to snap up the agencies that already had bookings with them. Instead of focusing on making great ads and pitches, agencies either became obsessed with purchasing their peers or establishing high stock valuations to prevent hostile takeovers. Those agencies that are farsighted enough to grasp this will do well, Maurice Saatchi proudly told the Wall Street Journal.³

The cash-rich Saatchis set the standard for mismanaged capital and overindulgence. They had almost no interest in conventional management, making only halfhearted efforts at due diligence and, by all accounts, vastly overpaying for their acquisitions.⁴ The Saatchis thoroughly convinced themselves they could go beyond advertising and provide pretty much any service to their clients. Maurice Saatchi had a vision for the firm to become a one-stop shop selling advertising, management consulting and even financial services to corporate clients.⁵ This led to their disastrous attempt to acquire Midland Bank, a failing British clearing bank, in 1987. Saatchi&Saatchi stock price was £50 a share at the time, but the bidding price for Midland was up to £3 billion.

The brothers were rebutted by a skeptical banking community and chastised by their shareholders for their cavalier behavior. Their bidding campaign almost led the firm to bankruptcy.

Saatchi&Saatchi’s rampant expansion and indifference to costs eventually alienated clients and shareholders alike, driving the stock price down and leading to the brothers’ dismissal from their own agency. The remaining, restructured, firm was renamed Cordiant after merging with the U.S. company Bates Worldwide; then Saatchi&Saatchi was separated out again for its original name value alone, and purchased by the French conglomerate Publicis Group.

As alienated from its core competency as ever, today’s Saatchi&Saatchi seems more dedicated to selling itself than its clients. Charismatic CEO Kevin Roberts is spending most of the company’s energy on a pet project of his called Lovemarks. In addition to being the title of his highly art-directed book, Lovemarks is an effort to rekindle the past glory of the advertising industry by conducting forensic examinations of brands people love—from Hello Kitty to Nelson Mandela. Of course, guiding people on a tour of winning brands is a process entirely different from building just one of them from the ground up. While platitudes such as loyalty beyond reason whet advertisers’ appetites for effective campaigns, simply telling us what has worked for someone else is a far cry from delivering on that proposition. Saatchi’s billings indicate as much.

If Saatchi&Saatchi epitomizes losing track of one’s core competency, craigslist represents the opposite extreme: sticking to what one knows best. The enterprise began in 1994 as a simple email listing of local events, sent out by San Franciscan Craig Newmark to about 20 of his friends, all in the cc field of the message. His main motivation was to demonstrate how the Internet could empower people to help each other out. As the list expanded to more than 200 people, Craig got a friend to show him how to set up a real mailing list and Web page. He considered changing the name to SFEvents, but his friends all agreed he should call it what it already was: craigslist.

These friends realized something Craig didn’t: it was people’s trust in Craig, and his pure passion for serving others through technology, that gave the list its authority. By 1997, there were more than 3,800 subscribers to the list. Every day, another 800 people checked the online version—still just a long page of classified listings on Craig’s personal Web site. Craig himself monitored the listings for abuse.

Internet giant Microsoft Sidewalk (now defunct) approached Craig to run ads on his site. He refused, citing an early cyberculture ethos: While making money on the net was good, not everything had to be about money. Remember, now, this was the dot-com era, when people like Craig were becoming paper millionaires. But, unlike those businesses that had been created for little else than their own acquisition, craigslist refused outside investment, fearing it would destroy the spirit that we have.⁶ There was something more profoundly important about building his business than money.

For both philosophical and practical reasons, Craig kept the interface on his Web list simple. No bells and whistles, no animation, no graphics—just text. The value proposition to users was not a style or brand, but trust: this was a community sharing information through its trusted host, Craig.

By 1999, craigslist was turning a profit by charging Bay Area businesses a modest $45 to run job listings on the site. Craig hired four people to help him comb the lists for integrity and manage the 180 new paid posts each day. Through the dot-com boom and bust, Craig maintained slow, steady growth, until by 2000, having grown solely by word of mouth (and, presumably, email) he was getting 8 million hits a month. Forrester, an Internet research firm, concluded that craigslist already outranked commercial job sites Monster.com and Career-builder.com,⁷ which were charging 10 times or more what Craig charged per listing.

Soon, other cities wanted their own versions of craigslist. Even though his company grew slowly and organically, Craig realized that the realities of building the business were sidetracking him from his core expertise of serving his community. He hired a CEO to handle those aspects of the business, and continued to spend 50 hours a week on what had made him famous in the first place: customer service, answering emails personally, and patrolling the list for fake no-fee brokers and other spam.

Amazingly, it was the dot-com crash that pushed craigslist into the stratosphere. Thousands of former hi-tech employees were now looking for work, and solace. In Craig’s words, We provide a means for people to give each other a break, to help each other out. We’re trying to, in our own small way, restore the human voice to the Net. ⁸

By 2004, this formula had spread craigslist to over 40 U.S. cities, logging a combined 1 billion page views from 5 million individual visitors each month.⁹ Since only prospective employers pay for the service, Craig has begun to count on his user base to help him patrol the tremendous databases for spam and abuses. In fact, he automated a process through which community members flag abusive posts; if enough users label a listing as spam, it is automatically removed. In a sense, his customers have become his extended workforce.

Oh yes, money. With a gargantuan staff of 15, craigslist achieved revenues that most analysts believe approached $10 million in 2004, simply by charging for job listings. By summer 2005, his 18 employees were serving more than 120 cities. For Craig, keeping operations lean is less a question of maintaining the bottom line than of maintaining focus. As he told CNN, The biggest challenge is to stay small while growing much bigger, which is to say that, as organizations grow large, sometimes they forget important stuff.¹⁰

Indeed. Sometimes, as in the case of Saatchi&Saatchi—as well as that electronics chain I was supposed to advise—growth even takes precedence over the core business proposition. CEOs turn to marketers to supersize them, and when their businesses inevitably suffer, they turn to a new team of marketers to repair the damage. Exploring their own businesses, returning to what should be their core competencies, feels like opening a Pandora’s box—when it should feel like coming home again. Businesses appear ready to do anything but what they actually do.

Over the past ten years, I’ve spoken with a lot of people about this conundrum, its historical context, and the ease with which so many businesses could transcend their reluctance to draw on their own expertise. Invariably, the Fortune 500 CEOs, billionaire entrepreneurs, and intellectual leaders with whom I engaged implored me to share these insights with the audience who needed them most: businesspeople. Their only advice was to write a book that tells the truth directly, unthreateningly, and with as few boring case studies and statistics as possible. That’s why I’m making such a simple proposition: stop solving your problems from the outside in. Get back in the box and do the thing you actually do best. This disciplined commitment to your own core passion—and not a consultant, ad campaign, or business plan—is the source of true innovation.

The longevity and prosperity of any enterprise depends most on its participants’ ability to maintain the wellspring of innovation. And the way to do this is to remember that you are always the source of your own best ideas. The most successful businesses for the next century will turn out to have been based not on infinitely repeatable Harvard Business School lesson plans, but on a combination of competence and passion. Dissecting an enterprise after the fact to see what made it work is akin to conducting an autopsy on a person to see what made him live. It’s another version of Saatchi&Saatchi’s Lovemarks. The very pursuit is symptomatic of the highly fragmented approach to business we’re leaving behind.

So let’s be clear: this is not a business book. Or at least it’s not just a business book. For your career is not your job and your company is not its balance sheet. Your most personal choices are, in fact, your business choices. And your business choices may as well be your civic choices. Whether you realize it or not, your product purchases and brand loyalties express your politics, and your relationship to money says a lot about your understanding of time, of power, and of belief. It’s all one dynamic picture.

That’s why I’m going to ask you to look at commerce, communications, civics, and community as if they are all part of the same system—an ecology, really, of interdependent activities and needs. There is just one thing going on here. Pretending that each aspect of your existence or your enterprise can be compartmentalized is, itself, a product of the Industrial Age thinking I’ll be asking you to abandon, and the surest path toward forgetting what it is you might have once, originally, hoped to accomplish.

For the same reasons, I’m hoping you’ll suspend—at least for the plane ride it takes to read this book—the conviction that competition is the primary driver of innovation. It may have once been able to serve this purpose, but it is also a necessarily divisive force—turning potential collaborations into adversaries, and what could be meaningful play into grueling work. We find ourselves comparing and contrasting our progress with others, focusing on what we lack rather than what we have, and alienating ourselves from our potential allies in the process.

Indeed, as my lectures bring me from industry to industry, I find myself amazed by just how little fun most people are having. Whether separated from one another by policy, competition, or cubicle, the last thing that seems to occur to people is to have fun together—when it should be the first priority. Instead, managers feel obligated to reign over employees; executives think they must hoodwink their shareholders; sales believe they must strong-arm their clients; and marketers assume they must manipulate the consumer. All for the life-or-death stakes of the next quarterly report.

Yet if you’ve got this book in your hands and are capable of reading these words, then the chances of your ever going to bed hungry, ever lacking a roof over your head, even just lacking the ability to get your kids a proper education or medical attention are virtually nil. The same goes for me.

Except for a random catastrophe completely out of our control, we pretty much know for certain that we are both going to be just fine. So why do we motivate ourselves and everyone else in our lives by acting as if our very survival were in question? The language and logic of business are organized around the survival instinct, even when survival is not in question. This is inefficient, unprofitable, and, perhaps worst of all, depressing.

Instead of relentlessly pursuing survival even after our survival needs are met, we must learn how to do things because they fulfill us—because they are, in a word, fun. Fun is not a distraction from work or a drain on our revenue; it is the very source of both our inspiration and our value. A genuine sense of play ignites our creativity, eases communication, promotes goodwill and engenders loyalty, yet we tend to shun it as detrimental to the seriousness with which we think we need to approach our businesses and careers.

If we can switch our orientation to fun, and see it not as an anarchic threat that needs to be quelled but rather as the core motivator and source of meaning for all human thought and behavior beyond basic survival, we will enable ourselves to reach levels of success that were previously unimaginable. Our very definition of success transcends survivalist notions such as cash reserves, time remaining, or personal safety, into the realms of self-worth, meaning, connection to others, and greater purpose. Plus, it’s better business.

In order to do this, however, we must radically reorient ourselves to the current social and business landscapes. We must learn to experience what is happening to us not as the collapse of our values and competencies—or, even worse, as an excuse to abandon them—but rather as their rebirth in an entirely new context. We must come to understand our age for what it is: a renaissance. Once we do, the rest will be easy. We’ll have no choice but to discard old models, fears, and extrinsic motivators, and instead start to innovate from the inside out.

In short, what I’ll be urging you to do in the following pages is to replace segmentation, repeatability, abstractions, competition, and effort, with integration, originality, foundations, collaboration, and fun. And to do this, all you need to do is rediscover your core passion and competency, and then pursue it relentlessly. It’s that simple.

But I’m not supposed to tell you that.

introduction

RENAISSANCE NOW

There is no Next Big Thing. In fact, the more things seem to change, the better opportunity you have to stay the same.

Unfortunately, most of us tend to see change as something that must be kept up with. The never-ending river of culture takes a new twist and all of a sudden we’re hiring researchers to conduct focus groups, and anthropologists to decipher the results. A new technology arrives and before we even know what it does, we’ve hired specialists to integrate it into our workflow.

How many of you remember the urgency with which businesses installed the brand-new Windows 2000 operating platform, only to go back to the more stable Windows 98 as quickly as possible? Newer didn’t mean better. I bet you’d be surprised to learn that the International Space Station uses mostly pre-Pentium chips in its onboard computers, and a circa-1993 Windows 3.1 operating system.

And how many businesses invested in online storefronts as soon as the World Wide Web was launched, only to find themselves competing on price, cutting into their own margins, and burning through cash? Upstarts like Pets.com proved better at making ads than selling dog food, and once-profitable retail category killers like Toys ‘R’ Us ended up killing themselves by venturing into an online space they didn’t understand. By focusing on conquering the Internet, these specialty stores also allowed their industry-specific expertise to languish, and offered potential customers of brick-and-mortar locations little if anything that Wal-Mart couldn’t provide.

Other businesses respond to change with reactionary fear, which can be just as debilitating. The recording industry has incurred nothing but ill will and poorer sales by digging in their heels and fighting the rise of Napster and other peer-to-peer file exchange systems rather than focusing on the core value of their business: making and distributing music. The emergence of alternative distribution systems could have motivated innovation as easily as it induced paralysis; the industry could have used it as an opportunity to develop better, higherresolution recordings that can’t easily be shared, or to build more accessible downloading interfaces, as Apple did with its groundbreaking iTunes/iPod online music store combination.

Institutions tend to react to the destabilizing force of cultural change with panic and an impulsive need to make sudden, rash moves to one extreme or the other. Whether by being reinvented by an outside consultant or by putting up so many defensive barricades that all attention shifts to the periphery, these organizations end up losing sight of their core purpose and vision. In response to unfamiliar demographic patterns, a venerable institution like Judaism hires market researchers/pollsters to figure out how to make itself more appealing to the MTV generation. Instead of figuring out what Judaism might actually have to offer kids living in a world dominated by MTV, the experts advise aping the styles, language, and ethos of the music station. Meanwhile, faced with pressure from competing clothing firms, the Gap imports a Disney executive with no experience in clothing to be its new CEO. On a shifting landscape, companies become mesmerized by the intangible priorities of branding or image, and begin to act as if all business processes were ultimately interchangeable. They are not.

Take the mismatched rivalry between America’s two would-be satellite radio providers, Sirius and XM. While Sirius inappropriately applies the generic, out-of-the-box strategies of other businesses to the specific case of a new technology and market, XM got back in the box to reinvent both radio and the business model surrounding it from the inside out.

Although Sirius was first in space, first to IPO, and first to market, it quickly lagged behind its upstart rival, XM. The reasons are clear. While an impatient Sirius made the mistake of farming out its chip design to Lucent spin-off Agere Systems, XM assembled an in-house team of former Motorola engineers, and steamed ahead.¹ Without direct access to, or even knowledge of, their own research and development, Sirius suffered incapacitating production delays. XM, on the other hand, made its technologists central to the business and ended up innovating over and over again. And despite Wall Street’s predictions that XM would forever lag Sirius, it actually made it onto the air almost a full year earlier.

XM didn’t stop there. It pioneered the SKYfi boombox, MYFi personal receivers, and a variety of new distribution channels for satellite, including commercial jets and Internet streaming. XM’s in-house technologists also gave it the ability to make its single best business move to date: a partnership to install XM-capable radios in General Motors and Honda vehicles. Marrying innovative technology development with innovative business strategy, XM CEO Hugh Panero invited the automakers to be part owners of the company, making them stakeholders in creating the success of XM. Panero’s willingness to reconfigure XM’s billing and accounting departments to mesh seamlessly with GM’s (And why not? They’re just spreadsheets!) was what ultimately won over the auto giant. Using similar strategies, XM has made deals to pipe its music into Starbucks, and has even convinced Microsoft to embed XM into its new Mediaplayer. Of course, knowing how your technology works makes you much more capable of imagining what your technology can do.

It’s no wonder that Panero is at home strategizing for a satellite radio company. It’s connected to his core passion and competency. Back in the mid-1990s, the battle-tested veteran of the cable-TV wars² was one of the few believers in subscription-based radio.³

Contrast this with Sirius, whose succession of CEOs have approached the underlying proposition of satellite radio with everything from indifference to contempt. After witnessing his first series of stumbles, the Sirius board replaced its company founder with Joseph Clayton, the former president of the infamous Global Crossing. Used to making waves by earning headlines, Clayton put image first, spending big on everything from a 15-year lease on a suite of offices at Rockefeller Center⁴ to a half-billion-dollar deal for Howard Stern (by contrast, fiscally conservative Panero bought and gutted a warehouse in a gritty neighborhood in Washington, DC). Bringing back memories of the profligate dot-com days, the timing and publicity surrounding the deal also led to charges of insider trading and an investigation by securities regulators.⁵

Then, as if for no other reason than he had become available, the board hired Stern’s old boss at Viacom, marquee CEO Mel Karmazin. Among satellite radio’s foremost skeptics when he was at Viacom, a $1.25 million annual salary from Sirius and $30 million more in stock options⁶ turned him seemingly overnight into a true believer.⁷ Reinventing himself as the coolest satellite executive on the block, Karmazin gave reporters some stridently bullish predictions: He boasted that his advertising revenue would grow from $1 million in 2004 to $100 million by 2007, and that satellite radio would grow into a bigger industry than cable and satellite television, combined. Fueled by hype, Karmazin’s conversion earned almost as much ink as Stern’s. We’re making news, explained Sirius’s PR department. XM is buying ads.⁸

While Sirius used its deals to make headlines, XM used them to help satellite radio realize its potential as a renaissance technology for audio broadcasting; this meant reinventing the best and forgotten things about radio in a new context. Panero talked to and hired people who worked in broadcast radio before it was corporatized and homogenized by Clear Channel and other conglomerates. Following their advice, and catering to their passion and core competency, he gave his DJs and programmers total control over their choice of music and other content. Karmazin, meanwhile, programmed his stations by category, from the top, explaining to the Wall Street Journal that broadcasting’s creative side amounted to little more than arts and crafts.⁹ Panero put his faith and fate in the hands of a head of programming who pioneered the artsy FM album format, to begin with, and who promised XM’s DJs, We’re not going to tell you what to play. You’re going to tell us.¹⁰

With only a fraction of the subscribers required for the satellite radio industry to succeed, it’s too early to be placing golden wreaths. But XM has already tripled the subscriber base of Sirius, earning greater revenue with fewer costs. And it did so by celebrating the technology, industry, and people it was working with. It was native to the space, populated by believers from the beginning, and not sidetracked by out-of-the-box concerns.

Generic management just doesn’t work anymore. Honestly, if our chief executive could as easily be from a movie studio as a sneaker manufacturer, how can we take pride in, or even recognize, what’s unique or meaningful about the enterprise to which we’re supposed to be dedicating a majority of our waking hours? We can’t—which is why for most people these days, work isn’t an awful lot of fun. Our daily tasks and the long-range strategies we’re working toward have become completely untethered from our core values and competencies. It’s a symptom of our era, felt across the full spectrum of our highly mediated and highly marketed culture. Whether at work or play, producing or consuming, there’s something missing.

Indeed, as all those depressing French cultural theorists predicted, twenty-first-century society has fragmented beyond our ability to comprehend it, much less manage it. While our Industrial Age processes were invented to simplify the once-daunting challenges of mass production and mass communication, they did so at the price of an immediate connection with our products and customers. The assembly line brought the many thousands of steps required for building an automobile into one, simple process. But it also meant that no one really knew in his bones how the whole process worked. The major television networks made delivering messages to an entire nation, on schedule, a snap. But it was really just a way of compensating for the new distance