Decision Quality Blog

I am spending the next couple of days as a participant/observer/agent provocateur at the BAI Mavericks in Banking Conference.

Tom Brown led off the proceedings with a conversation with Bill Taylor, business guru, Fast Company editor, and author of Mavericks at Work. This is a reasonably accurate/clean transcript of the conversation.

Tom:

When you look at the mavericks that you’ve gotten to know, what are the similarities?

Bill:

The first is a very clear understanding of what they see in their markplace that the rest of the industry doesn’t see . . . how you think and do you think differently. In an age of hyper-competition and non-stop innovation, do you have a set of ideas that will fundamentally differentiate you? The idea that there is one playbook to success . . . that’s like being on the George Jetson treadmill. It just doesn’t work that way.

One of the talks that stuck with me from one of Tom’s CEO round tables was by Jim McCormick at First Manhattan. He does all sorts of field research.  At every branch visit they do, he has his peole ask a very simple question, “Why should I do business with your bank vs. another.” Two thids of the time, they have no answer. I was amazed that people in the room weren’t surprised at that. I was sutnned. If your people can’t explain why you’re different, how will your customers know?

So the first sign is, what do you see that the competition doesn’t see? Every maverick I know has a vivid, rich answer to that question.

A second is that all demonstrate a real intellectual humilitiy. They know what they believe . . . the old model is that I do the thinking and the others do the doing. I’m the smartest person in the room. So many of the mavericks I’ve gotten to know have broken with that. It’s like “How can I be a leader in a world where nobody in the room is smarter than the other?”  It’s not so much that I have the greatest idea and how do I push that down. It’s I need a great idea, and how do I tap into the group mind to find and develop it?

Most of the Mavericks I know share those ideas.

Tom:

You think the group as  whole is smarter than the individuals. In this industry, we suffer from group think. How do you get past that?

Bill:

What I see more and more is that the most powerful ideas come from the most unexpected places. So the more people you can invite in from someplace else . . .  

I’m less and less a fan of benchmarking. Why is it interesting to benchmark yourself against best practices in your field when they’re not that good to begin with? The best people I know look way outside their field.

Find things that are proven. See if you can import them and improve them.

I’ve been spending a lot of time with Lexus. They’ve gone in 20 years from nothing to the nuber one luxury brand in North America. They’re not successful primarily because the car is that much better than the competition. Lexus as a company has dramatically rethought the luxury car experience.

When you think about luxury, what do you think of? Four Seasons. So they took a bunch of people and spent four days with Four Seasons learning what they did and how they did it. For example, at the Four Seasons, they get together before every shift change and talk about who’s going to be in the hotel that day.

So at Lexus, they do what they call “Standing around in a circle.” They talk about who’s in that day, what’s going on in the press, etc. When you pick up your car at the Lexus dealer I go to, you get two bottles of water and a godiva chocolate. They think about it as their “turn down service.”

Who’s the best retailer right now? Apple. One of the best things they have is the Genius Bar. So now Lexus does that too. People buy a Lexus. It has all this technology and nobody knows how to use it. So now they have something called the Answer Bar. So a week after you buy the car, or whenever, you can come back and get help. No charge. No appointment.

It’s easy to mistake people who are bright and articulate for people who are smart. I’ve seen people try all sorts of ways to allow people to support and evangelize ideas in ways that are natural to them . . . instead of saying the only way to win is in a board room with a power point.

In a world that is so competitive, with so many ideas to be solved, we need some new apporaches to creativity and finding ways to solve problems.

Tom:

Tom Watson would say that if he presented an idea and everyone agreed, he would table it. If a complicated idea has that much agreement, it can’t be right.

How do you get groups of people . . . .

Bill

There’s a company called Rite Solutions in Newport RI. They make software for the Navy.  The two guys that started it are 60- yers old now and they’ve started several software companies and made a lot of money. They know what they know and what they don’t know. All these kids comding out of MIT are so much closer to the technology and the market . . . “how do we create a system that surfaces great ideas?”

They’ve created an internal stock market for new ideas inside the company. So you don’t raise your hand in a meeting to put an idea forward. Instead, you fill out a stock prospectus and float it on the internal market. They all get a ticker symbol. Each idea gets a $10 initial price. Every employee gets $10,000 in opinion money. People bid up ideas. They can also volunteer to help out.

For example, they make casino software. An employee saw this and figured out that it could be adapted into a game that could be licensed to a company like Hasbro. She put the idea on the exchange and the price went through the roof. Now they’re licensing it.

They thought they could take the simulation software they do for the Navy and thought they could improve it by making it more X-Box like. This product line is now 30% of the total business of the company.

The basic decision making is through a system that allows you to be at your best. This is a company with a lots of smart people. This approach takes out the sting of failure. You want to surface a lot of good ideas. By definition, most of them will be crappy ideas. How do you let people down without demoralizing them?  The exchange gives people a way to tell themselves a story about why their idea did or didn’t make it.

Tom:

Is there a corollary about surfacing bad news in a company? Somewhere between two years ago and now, something happened. It took too long for the industry to recognize that something changed. There had to be people in the organizations the knew that things were going wrong.

Bill:

The easy answer is more transparency inside companies. The technology is easy, it’s more about he culture.

I have seen so many companies employing younger people. They’re used to this style of interaction. The notion is that there is no longer one VOICE for the company, but a company with a collection of voices, some of which will be directed at the outside world, some towards the inside world.

Another example is a company called BzzAgent. They do viral marketing. As an organization, it’s the most transparent I’ve ever seen. Everyone has a blog. The stuff that gets surfaced on the blogs would make your hair hurt. It has also prevented them from having all sorts of problems. They recently opened a Lodon Office. The person they picked was a bad fit. The reason I know about it is that it was told on the the CEO’s blog. Very embarrassing. By virtue of writing about that, it made it clear to the people they were interviewing next what they were going to sign up for. It was much more successful the second time.

Like a lot of companies, they have a board of advistors. They wondered if anyone read what they sent them. So in one of the reports they sent out, they put in huge type on one of the interior pages, WE CAN NO LONGER PROVIDE INSURANCE TO OUR ADVISORS AND DIRECTORS.  Only one person got back to the company. So they put all this on the blog.

It seems to me that transparaency is easier in a new organization. I think that’s the world we’re going into.

One of the challenges for big organization is how do we get form here to the future.  Another company is MGM Grand, one of the biggest hotels int the world.

Gamal Aziz took over the hotel in 2002. It was the Ford Taurus of hotels. It wasn’t remotely like what he thought it could be.  He used something called “working backwards.” Let’s look at every element of the hotel and ask ourselves what each space should generate in an ideal world? Forget what’s there. Then compare what’s there to our ideal.

They had a Brown Derby restaurant. It was doing $5 million and 1 million in profit.  So then they asked themselves what if they went and got some all star chef and did twice that and 4 x the profit? So now you’re not making 1 milion, you’re losing 3 million. Relative to what they could be doing, theyu’re losing. It’s now the first billion dollar hotel. The process has been pretty trauma free.

They go offering by offering and ask, what is the highest and best use of that space. We’ll change something new every 90 days.  Don’t start with the present and work to the future. Start with what you could be doing and work backward.

Tom:

Who has a good example of making bad news flow up?

Randy:

Bankers are risk managers. It’s hard to step out of the crowd. It’s hard to get out of the CEOs risk model.

Margaret:

Two things. In brainstorming exercises we don’t allow voting. Any version of voting overemphasizes the ideas we talked about the most or people’s own ideas.

The biggest thing I try to do to avoid group think is to try and step back from the “yeah buts,” and figure out the point of resistance and figure out an easy way to get past that. You can’t be glib about risk if you’re a bank.

Todd

Thinking about the diversity of people we put in a room around any given thing, you want to put people together who think  different. When people are quit, figure out how to bring them out.

Brad:

We’ve adopted many of the approaches Kevin Hoffberg at DQI teaches.  We examine the full range of possibilities that could be used to solve the problem. You encourage the extremes. If you were going to grow market share without regard to shareholder value, what would you do? If we were going to “Starbucks” the bank, what would that look like? This rewards creative thinking.

Tom:

As CapOne pushed the credit card model some years ago, they specifically designed tests to fail in order to figure out the limits of what could be done.  Testing the extremes.

Debby:

Talk about the importance of talent and talent management.

Bill:

It’s one of the things that struck me about the companies we got to know. They really look at the human factor of the business as every bit as urgent as the other parts of the business. In most companies, HR remains a backwater. That is not the way it works inside Maverick companies. They use words like “War for Talent.” An urgent strategic priority. Why would great people want to be part of your company? It can’t be about pay or stock options. What is it about your ideas in the marketplace?

Another big question is, “How do we know a great person when we see them?” They’re getting over credentials and where you worked last and more towards who you are as a person and what makes you tick.

The company that does this better than anyone is Southwest Airlines. For those feeling badly about being in banking, airlines suck. SWA has never had a down quarter. They have more market cap than all the others combined.

Part of it was inventing a better way of doing business. Part of it was a completely different psychology about people. Figure out who their superstars are and what makes them tick. Then go find more people like them.

Last year they hired 3000 people out of 250,000 applications. They take it very seriously.

Kevin:

Banks think they need to be everything to everyone, yet all the innovation seems to come from companies that set very clear expectations for their customers . . . they’re not everything.

Bill:

What people are hungry for is simplicity and clarity in the companies they do business with. For example ING Direct.  They are the ipod of financial services. Just a couple of products and services.  Brutally simple. It makes all the sense in the world. For the people it fits. They also rules out lots of others.

The question to ask is, “Are you the most of anything?” So many companies are pretty good at everything. A great forumula for going out of business slower than the other guys. In the 1950s it was the formula for success. So ask yourself, are you most flexible? The most affordable? The most something. You can only be the most of one thing.

Maverick companies all are the most of something. Therefore they are imposing constraints on themselves.  That means you can’t do other things. In this era of complexity, customers are desperate for clarity, simplicity . . . figure out how to be the most of something.

I’m a runner. We call it the spandex rule of strategy. Just because you can wear spandex, doesn’t mean you should. Same with strategy. Just because you can, doesn’t mean you should. Leaders don’t have the confidence and courage. . .  we all want to think outside the box. Find a couple of boxes you can do really well, and stay there?

Question:

Where do consultants fit in the world?

Bill:

An important source of learning about what’s going in your field and others.  I do think that so many leaders treat business ideas and shop for business ideas like they shop for food. Oooh, a pound of six sigma. They see that it worked somewhere else and then wonder why it didn’t work for them. The best ideas are authentic and homegrown.

I’ve been looking at big companies doing just okay and then realize there is another level. The way to build a disruptive future is to go back to their own past. They all started with a distinctive idea and a maverick future. And they lost that.

I’ve spent a lot of time with the Girl Scouts. This organization was on the verge of being completely irrelevant. An out of date brand. Incredibly irrelevant. There has been such a huge turn around since their new CEO, Kathy Cloninger. One of the most liberating thing they did was look back at when they were founded in 1912 and reread and writings of Juliette Gordon Low. This woman was a compelte radical of the first order. If she were alive today, she wouldn’t recognize the organization. WWJD. What would Juliet do? An effort to give themselves permission to be like their founder. Cultural permission to be like we were founded.

Tags: BAI, Mavericks in Banking, Tom Brown, Bill Taylor, Mavericks at Work, First Manhattan, innovation, disruption, Lexus, Apple, Genius Bar, Answer Bar, RIte Solutions, BzzAgent, Gamal Aziz, ING Direct, Girl Scouts, Kathy Cloninger, Juliette Gordon Low