Today we have four stories that sit at the intersection of innovation and culture.
The first is the story of Nick Sarillo, founder of Nick’s Pizza & Pub in Chicago. Sarillo set out to build a culture that ignored common knowledge’ about what to expect from hourly workers. Did he succeed? You tell me.
In an industry in which annual employee turnover of 200 percent is considered normal, Sarillo’s restaurants lose and replace just 20 percent of their staff members every year. Net operating profit in the industry averages 6.6 percent; Sarillo’s runs about 14 percent and has gone as high as 18 percent. Meanwhile, the 14-year-old company does more volume on a per-unit basis (an average of $3.5 million over the past three years) than nearly all independent pizza restaurants. And customers, it seems, adore the service: On three occasions, waitresses have received tips of $1,000.
Next is commentary from Daniel Isenberg, professor of management practice at Babson College, who offers cogent reasoning to save passion for the bedroom.
Passion is up there with innovation in what people think entrepreneurs need in order to succeed. I doubt it. My experience as entrepreneur, entrepreneur educator, and venture capitalist tells me that the more scarce and valuable commodity is cold-shower-self-honesty.
Third on our list is a cautionary tale about what happens when a leader looks for external confirmation that am innovative idea is great and passes on it when none is forthcoming.
Innovation is killed with the two deadliest words in business: Prove it.
When faced with a new idea, the boardroom impulse is to ask for proof in one of two flavors: deductive and inductive.
This attitude gives insight on the difference between Apple and Microsoft—only Microsoft’s blockage is internal according to Dick Brass, a vice president at Microsoft from 1997 to 2004.
Microsoft has become a clumsy, uncompetitive innovator. …
Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence.
The striking difference between the culture at Nick’s and the one at Microsoft is a real eye-opener.
Innovation and entrepreneurs, subjects that offer some of them most fascinating stories around. And although they often merge to form new business, there is plenty of innovation inside existing companies, too.
I have four such stories for you today, all on wheels.
On the high end we have two airlines, Air New Zealand and AirAsia.
Coach innovations helped Air New Zealand win the Air Transport World Global Airline Awards, AKA the airline Oscars. Innovations include Premium Plus Economy with more inches of legroom, special dinning options, in-flight concierges; completely re-designed coach seats, including eleven rows of three seats on each side of the cabin dubbed “Skycouches”, Snacks on Demand, three course meals, onboard events, such as wine tasting, a destination seminar or kids story time using the 23″ mounted galley monitor.
Once upon a little boy told his father, “One day I will own an airline.” The boy grew up to be Tony Fernandes, CEO of the Malaysia based budget airline, with 80 aircraft that fly to 122 destinations. AirAsia is growing, primarily because, as Fernandes says, “Each growth spurt has always come at a time of calamity for the airline business. I think the best time to build a brand is in times of recession.”
The next wheels are far smaller. They belong to Vickie Nolting, a hair salon manager who, in 1999, found work/life balance by creating a successful business called Hair On Wheels, providing on-site haircuts to such companies as DigitalGlobe, Intrado, Seagate and the U.S. Department of Commerce in Boulder, Colorado. These days Nolting has a staff of 15 part-time stylists, four vans and a PT Cruiser.
Our final look at innovation is also focused on cars, but they are parked. Parking lots take enormous space, but that’s not necessary. Using technology, their size can be cut 80% and still create a far more safe and friendly user experience. Just watch.
ROWE stands for “results only work environment” and it means just that. No set hours, no clock watching, get the job done and be evaluated based on the results and resulted in a 35% jump in productivity
These days Ressler and Thompson run CulutreRx, teaching ROWE to a variety of companies, such as GAP.
ROWE is a business strategy that’s been proven to profoundly improve workforce productivity (as much as 41%) and reduce voluntary turnover rates (as much as 90%). And, ROWE is a magnet for the talent you want to attract.
Best Buy’s culture is one that encourages creativity and good ideas at all levels, so it’s no surprise that another stand out came along a year later.
Julie Gilbert conceived and started the WOLF initiative in 2004 (she was given full ownership rights including the intellectual property and the right to take it outside anytime in exchange for building it first at Best Buy).
WOLF’s focus is to promote and enhance the role of women both inside the company and outside in their role as customers based on three precepts:
Commitment – to the business, customers and other members of the pack
Networking - amongst at all levels internally and externally to nurture and support one another
Giveback – giving back to women and girls in local communities.
Sound all warm and fuzzy to you? Are you fighting back a snicker and thinking that there is no way your company would ever mess with that?
If so, try shrugging off Best Buy’s results.
Revenue
$4.4 billion increase in revenue from female customers (11% increase in total company revenue)
Market Share
Highest ever female market share in company history
Females became the majority of the most “valuable “customers
Brand Reputation
Largest increase in brand perception in company history
Network
Passionate, global, viral customer networks growing market share and innovating new business offerings
Over 40,000 members in 40 plus countries
Performance Outcomes
5% reduction in female turnover resulting in a minimum of $25 million in savings
18% increase in the number of female employees.
100% increase in females in the most profitable business unit
40% increase in female General Managers & General Managers In Training
60% increase in female Operations Managers
30% increase in female Customer Experience Managers
ROWE and WOLF both came from the same company while Brad Anderson was CEO.
His response to the question “Where do you find new business ideas?” says it all.
I believe that some of our best ideas have come from the people who are furthest removed from the CEO’s office – those line-level employees who interact with our customers each and every day.
Without a culture that encouraged and supported innovation from all levels ROWE and WOLF couldn’t have happened.
The MAP that enables that culture can function at any level no matter the company’s overall culture. Yes, it’s more difficult, but you can create an environment in which your people’s creativity blooms.
I have 5 stories for you today about CEOs, two who don’t and four that do.
Pundits (consultants, academics, bloggers) are fond of lauding CEOs for their vision and skill at imparting it to their followers—Richard Fuld, Bob Nardelli, Jeff Skilling, Bernard Ebbers, Dennis Kowalski, the list is long—but after their meltdown you hear only from the Monday morning quarterback crowd.
But if you want to sort the true stars from the others, you need to take a long-term look—not Wall Street’s typical quarter or even a decade—at more than the stock price.
Moreover, you need to look at the down times; the times when the economy sucks, yet the CEO still finds ways to foster a great culture and stoke innovation—not just cut staff and threaten execs with termination if they don’t make their numbers.
For better or worse, it’s not in the vision or the leading, it’s the doing.
Our first story is should be a familiar name to all of you. Remember Sandy Weill? The man who drove the repeal of Glass-Steagall in 1999 and whose deal making built CITI, the colossus that never really jelled. He was named “C.E.O. of the Year” in 2002 by Chief Executive Magazine, but that was then and this is now.
In today’s cutthroat business world how many CEOs would lift a finger to save their competition? Ted Baseler, CEO of Chateau Ste. Michelle did exactly that when freezing temperatures wiped out the grape harvest in 2004. He didn’t just save his competition; he’s credited with saving the entire Washington state wine industry. Baseler is the quintessential big picture guy.
“We want Washington known. All of it. We’re not about to fight over whose bottle of wine gets sold. We’re competing with Napa, with France. We’re not competing with Washington wineries.”
My last offering is an interview with Pete Peterson, co-founder of Blackstone Group, looks back on s storied career and offers his insights as to what’s needed to “rebuild the American dream.” There’s a video (that refuses to embed) and a PDF of the interview (requires free registration). I think you’ll find it interesting.
Palindromes are far less frequent than the blue moon that occurred this New Year’s eve.
How infrequent?
“We have 12 palindrome dates this century; the rest of the world has 29,” he said. “Our 12 all will occur on the second day of the month. Theirs all occur in February.”
The U of Portland prof doesn’t limit this sort of thing to numbers. Take his name…
Print AZIZ in all capital letters; turn each Z on its side, and then swap the vowels. The result? His last name, INAN.
Now I have a suggestion for you. Share the articles with your kids in an age appropriate way, not just numbers, but words. Then play together with family birth dates, names, etc.—not as a lesson, but as fun.
As Inan says, it’s a great way to get kids interested in math and words.
Do you have the courage to hire people with quirks? Those who are unconventional or have unconventional experience for the position? Will you hire someone who is flawed in some way?
Would you hire a ‘cracked pot’ for your team?
An elderly Chinese woman had two large pots, each hung on the ends of a pole which she carried across her neck.
One of the pots had a crack in it while the other pot was perfect and always delivered a full portion of water.
At the end of the long walks from the stream to the house, the cracked pot arrived only half full.
For a full two years this went on daily, with the woman bringing home only one and a half pots of water.
Of course, the perfect pot was proud of its accomplishments.
But the poor cracked pot was ashamed of its own imperfection, and miserable that it could only do half of what it had been made to do.
After two years of what it perceived to be bitter failure, it spoke to the woman one day by the stream.
“I am ashamed of myself, because this crack in my side causes water to leak out all the way back to your house”‘
The old woman smiled, “Did you notice that there are flowers on your side of the path, but not on the other pot’s side?”
“That’s because I have always known about your flaw, so I planted flower seeds on your side of the path, and every day while we walk back, you water them.
For two years I have been able to pick these beautiful flowers to decorate the table.
Without you being just the way you are, there would not be this beauty to grace the house.”
Managed correctly, appreciated instead of tolerated or, worse, homogenized, the idiosyncrasies of your team, the unusual backgrounds, your cracked pots, are what push productivity, juice creativity and drive innovation across the board.
And often it’s another’s management failure that gives you the opportunity to increase the strength of your team.
So cherish the pots you already have and never hesitate to hire another.
Christopher Hill, then 20, told the police he was so distracted by a cellphone call that he ran a red light at 45 miles an hour, hitting Ms. Doyle’s car as it crossed in front of him.
Doyle died and Jennifer Smith, her daughter, is suing Samsung and Sprint.
Ms. Smith argues that the industry’s success in marketing to drivers is the reason people like Mr. Hill do not change their behavior or pay attention to what she characterizes as faint warnings by the industry.
A previous suit in 2003 was thrown out of court.
Now anyone who follows the tobacco lawsuits knows how difficult it is to prove that companies knew their product had risks even when testimony and exhibits are overwhelming.
So it seems a no-brainer to assume that there is no smoking gun for plaintiffs to find.
Bob Lucky, an executive director at Bell Labs from 1982-92, said he knew that drivers talking on cellphones were not focused fully on the road. But he did not think much about it or discuss it and supposed others did not, either, given the industry’s booming fortunes.
“If you’re an engineer, you don’t want to outlaw the great technology you’ve been working on,” said Mr. Lucky, now 73. “If you’re a marketing person, you don’t want to outlaw the thing you’ve been trying to sell. If you’re a C.E.O., you don’t want to outlaw the thing that’s been making a lot of money.”
Not everybody felt that way.
In 1990, David Strayer, a junior researcher at GTE, which later became part of Verizon, noticed more drivers who seemed to be distracted by their phones, and it scared him. He asked a supervisor if the company should research the risks.
“Why would we want to know that?” Mr. Strayer recalled being told.
Bell Labs is gone and many of those involved are retired and, like Lucky, have no real incentive to lie about what went on (if they were even inclined that way)—in other words, no actively vested interest.
Where does corporate responsibility lie in situations such as this?
It’s a lengthy article, but one well worth reading.
And you might ask yourself how many of your calls from behind the wheel are really so critical they couldn’t wait; and those that really achieve critical status. And of those that truly meet the critical test, how many would take so long that you couldn’t pull off the road?
As to texting, I can only hope that when you’re busy looking at the screen and hitting the keys that you run into an inanimate object as opposed to one with humans involved.
Either way, the next time you start getting involved in anything while driving ask yourself this: how well would you sleep for the rest of your life if you were Christopher Hill.
Image credit: Mike “Dakinewavamon” Kline on flickr
When possible I prevail on someone I know to attend the major AlwaysOn conferences, usually it’s KG Charles-Harris, but more recently it’s been Chris Blackman.
Last week Chris attended this year’s AlwaysOn Venture Capital Summit at Sand Hill Road in the heart of VCland and got a glimpse into the future investment strategies of that storied world.
From Chris Blackman
A culture of innovation? Customer driven? Family oriented? Work hard play hard? Top down or bottom up?
Do companies still embrace and boast about these corporate attitudes anymore?
Judging from what I heard at the AlwaysOn Venture Capital Summit they have taken a back seat to burnishing a reputation of being a green in many companies—but not all.
Amiel Kornel, senior managing director of the Emerging Technology Group at venture firm Spencer Trask still cares about those values and behaviors.
In particular, he looks for “companies that will define new market categories of business while emphasizing a top down approach to a balanced lifestyle.”
Innocentive is Kornel’s poster child for such values.
It also created the business category known as crowd sourcing.
For example, last week, the US government announced an online challenge with the aim of discovering a process for how the Internet can help with rapid problem solving. How was it won? A group of MIT students used incentive-based collaboration techniques to encourage individuals to share the winning information.
Innocentive is fast becoming the nexus of such competitions. They have the ability to bring together thousands of minds to solve intellectual challenges quickly.
Mr. Kornel reminds us why company culture is important: “Key individuals must be fun to spend time with because at the end of the day, this relationship is like a marriage.”
And to be productive it needs to be a good marriage.
Cali Ressler and Jody Thompson started changing the work world in 2003.
I love 
Do you have the courage to hire people with quirks? Those who are unconventional or have unconventional experience for the position? Will you hire someone who is flawed in some way?
Are you one of the millions who talk on your cell phone when driving?
When possible I prevail on someone I know to attend the major AlwaysOn conferences, usually it’s KG Charles-Harris, but more recently it’s been Chris Blackman.
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