To Bring Change Build Emotional Connection
Justin Menkes told me this story about Andrea Jung in one of her early business development efforts at Avon.
Avon is originally the California Perfume Company established in 1886. Fast-forward to the 1990s where Avon was often considered an aging product and a tired brand. Andrea Jung had just entered the company and had diagnosed the problem – the product was considered cheap and associated with low quality and outdated styles. Andrea knew it was time to take the product up-market. But knowing the course of action, and getting everyone on the bus is another matter. Even with the strongest strategy and idea, if people aren’t emotionally connected, it’s not going get off the ground. Andrea knew she had to capture the hearts and minds of everyone in the company, so she called a big town hall meeting to introduce the new branding and product enhancements.
As her product team was introducing the new flashy colors, packaging, products and branding, Andrea looked out upon a sea of confused and angry Avon women. They didn’t understand the reason for all this seismic change. All they could think about was their reliable customers’ disappointment and the loss of their Christmas bonuses. In the minds of the Avon women, Andrea was proposing to take away their livelihood.
Andrea stopped the presentation and asked a simple question to the audience, “How many of you use Avon products? Raise your hand.” As the Avon ladies looked around the room and saw how few among them actually used their own products, they understood how much trouble the company was in. In one singular moment Andrea empathetically understood their point of view and was able to pose a question to allow them to realize the urgency of their situation and the need for change. The rest was easy because now Avon had thousands of ambassadors for the new brand and product.
The message is this: don’t think the strength of a strategy or change idea will carry the day. Ultimately you have to win the hearts and minds of the people.
Read MoreThe Purpose Driven Leader – Rick Warren on Peter Drucker
“Every social and global problem is a business opportunity in disguise.” – Peter Drucker
Last week we attended the Peter Drucker Centennial conference in Vienna, Austria and had the incredible opportunity to interview and film world thinkers and leaders who were there celebrating and discussing Peter Drucker’s legacy and the future of management and business in the world. Peter Drucker called himself a ‘social ecologist’ – which is to say he focused on understanding and improving human interaction, our constructs in business, government and communities, and that impact on our lives and environment. Another favored definition is: ‘the study and practice of personal, social and environmental sustainability and change based on the critical application and integration of ecological, humanistic, community and spiritual values’
The key words there are ‘integration’ and ‘application.’ Rick Warren, author of A Purpose Driven Life, attended and gave the opening address at the conference and spoke of the three primary characteristics that defined Drucker’s life and work: Integrity, Humility, and Generosity.
These three traits are the antidotes to the three traps of today’s leaders. The first trap is to segment and partition our lives into work life, home life, sporting life, community-service life, etc., and instead our greatest strength comes from integrating all the disparate interactions, ideas and energies into a unified and integrated whole. The etymology of integrity is from the Latin integer, meaning wholeness, or the unit of one. Rick pointed out that the second trap is to focus and try to remediate what we think are our faults. Often humility is misunderstood to mean acceptance of weakness or inadequacy, when instead humility is freedom from arrogance and pride. And that intellectual freedom gives way to the ability to recognize the marvelous and to embrace wonder and curiosity. And then, importantly, to be inquisitive and open to learning. Rick had a powerful story about how each time he went to visit Peter Drucker and learn from him, he wound up trying to answer and wrestle with Drucker’s own persistent questions.
And finally Rick echoed Drucker’s advice that management and leadership was a liberal art yet a practical calling, and we all need to focus on what we can give and contribute in generosity. The third trap is to hoard. It’s no accident that to be miserly with time, energy, resources, talent, etc., is to be miserable. From Peter Drucker to Rick Warren to you, pause to keep Integrity, Humility, and Generosity ever present.
You can see Rick Warren’s address here. Doris Drucker’s address starts at about minute 35 and Rick Warren’s presentation at about minute 52. Enjoy!
Read MoreBuilding an international business? Go Native
I first heard the phrase Go Native (with respect to business anyway) from Stuart Hart, author of Capitalism at the Crossroads. Stuart intended this phrase as advice to companies looking to construct and gestate new products and services in partnership with indigenous markets. Last week we had an interview with Bruce Churchill, President of DirecTV Latin America. He understands the implications and expansive power of working closely with local operators and distributors, and not trying to manage businesses in foreign cultures from a head office located deep overseas.
Going native in emerging market ventures means leveraging the benefits of:
Culture: who knows better than a local operator in Venezuela that La Vinotinto is the football (soccer people!) team to watch and not La Furia Roja. A programming operator in Miami or NYC can’t possibly replicate the value of the local knowledge of cultural interests.
Credibility: again when creating the promotional and assembling programming packages (in the case of DirecTV) who knows better than the local operator in Lima, Peru what the population will respond to. Famously, think of Chevy’s efforts to market a car in Latin America called NOVA – uh, that’s means “No Go” in Spanish. Ow.
Financial excellence: operating on the local Mexican Peso or Venezuelan Bolivar means that the operating business isn’t managing currency fluctuations, but the local operator is working on local currency. In the end, reconciling P/L is more actual.
Ultimately, DirecTV disbanded offices trying to manage the business ventures in Latin America remotely from Miami or New York, and gave the creative and operational power to the local operators. The result? 62% Q3 growth reported November 5, 2009. Seriously.
Read MoreMedicine is for the people, only after will profits follow
“We try never to forget that medicine is for the people. It is not for profits. The profits follow, and if we have remembered that, they never fail to appear.” – George Merck II
In 1995 CEO Ray Gilmartin described the principle driver for Merck as growth. Not profitability, not cutting edge scientific breakthroughs, nor medicinal innovation or R&D… no, but growth. That intent continued into 2000 when the chairman’s letter to shareholders stated, “As a company, Merck is totally focused on growth.” At the time Merck had good reason to believe it could, in fact, accomplish this goal. They were on the cusp of releasing the FDA-approved and PTO-patented drug Vioxx. By 2002 Vioxx sales worldwide approached 2.5 billion, which weighed against a 25 billion company represented significant growth indeed. But in the same time period studies were finding an alarming relationship between Vioxx and an increase in ‘cardiovascular thrombotic events’ – heart attacks and strokes.
In 2008 the New York Times published an article revealing that research papers on Vioxx were often ghostwritten by Merck writers and then published under the byline of prestigious doctors and scientists. All in efforts to substantiate the value and public perception of Merck and Vioxx. By early 2005 the FDA had officially attributed up to 139,000 deaths to Vioxx and unofficial estimates ranged upwards of 250,000 globally, although statistics are difficult to gather in developing nations.
And while Gilmartin laudably ordered Marck to voluntarily remove Vioxx from the market in the fall of 2004, sending Merck’s stock from $45 to $33, one must wonder if Merck’s goal in the product Vioxx served the vision of George Merck II. Jim Collins reminds in How the Mighty Fall that the pursuit of profit over value, of growth over service can destroy even the mightiest of companies. Motorola, HP, IBM, even NASA have all suffered from hubris, conceit, denial of risk, and yet returned from the brink of disaster. Merck’s lesson is: remember the core vision and values, money will follow.
Read MoreYour Carbon Strategy is a Market Opportunity
We recently had the opportunity to film Andy Hoffman, at the University of Michigan Ross School of Management, regarding market opportunities in a carbon-constrained world. He frames the discussion in a purely apolitical manner – regulation is emerging at the state, federal and international levels that will dictate corporate carbon emissions; the question for you is: do you want to merely react to this shift in the market environment, or do you want to proactively build the next-generation corporate and product innovations that will put you on the leading edge? Put another way: do you want to be exploiting the opportunities in this pending market shift, or scrambling to catch up?
Historically many people have had a tree-hugger notion of save-the-planet fringe activists asking us to recycle, reduce, reuse and encouraging costly regulation. Andy asks us to instead, “Think of climate change as a market shift, one that will create both winners and losers. Changes in regulation coupled with shifts in consumer, investor, and energy will change the competitive landscape. How will you innovate to respond to this shifting landscape? ” He frames the discussion in strictly business terms.
Consider Tom Friedman’s argument that regulation can be an incredible competitive advantage. If you are a U.S. based multi-national corporation employing the best and brightest engineers, programmers, architects and technical professionals, you want the bar raised. You want your product innovation to be setting the standard in your market, and you want the barriers to entry to be increasingly higher to provide your company with a competitive advantage. In fact, that bar is already being raised around the world and US business needs the right incentives to keep up. Make no mistake, we want market innovation wherever it comes from but if you are a market-leader, you want to be defining the baseline to entry in the market
Read MoreAnne Mulcahy gets the cow out of the ditch
In 2001, the board of Xerox picked Anne Mulcahy to lead the Stamford company out of a ditch. At the time the sales force was in disarray, the SEC was investigating their business and reporting practices, and they were $14 billion (or $17 billion depending on what source you read) in debt. Her staff and business cuts were ruthless, but that plus a series of strong public relations efforts and senior management changes, yielded a $4 billion dollar gain on their debt. They aren’t out of the woods yet – Cannon and Hewlett-Packard provide tough competition in the market. In this new CEO QuickTalk, Anne Mulcahy describes the parable of the cow in the ditch. It’s a message that has stayed with her as she works to grow and lead Xerox to success.
Mulcahy describes herself as more of a communicator, than anything else. During her first few months, she spent untold hours and days traveling the globe listening carefully to employees, customers, and senior executives in the company. Her back-to-basics approach has been a boon to the company and investors. Only three years into her tenure, Anne Mulcahy gave this presentation at Stanford Graduate School of Business. Enjoy!
Read More