Gone So Soon

Recently I gave an interview about one of my favorite career projects, Carmen Sandiego. It was being researched by an archivist! I hadn’t been asked in years about the mysterious thief in the red trench coat and fedora. As big as she was in my life and on the national stage, save for a new motion picture in development, few people remember dear Carmen as much more than nostalgia. For that matter, who remembers the massive multimedia magic of CD-ROM computer games with all of 700mb of storage?

There she is. There she isn’t. Nothing lasts forever. Very little lasts long at all. That is the stuff of our culture. That is the stuff of our careers. Hold on too tightly to anything and you find yourself grasping ancient pixel dust.

Creative destruction is increasingly real and accelerating faster than ever. A new company comes, an old company goes. Brands emerge and evaporate before our eyes. In the start-up world, the notion of permanence is almost impossible to envision. Look forward with alacrity or don’t bother looking up from abandonment.

Contemporary taste is fickle. Technology trends are more fickle. Customer loyalty is most fickle.

Earlier this year I watched the National Geographic Channel limited series Valley of the Boom. I couldn’t tell if it was a dark walk down memory lane or an idealist’s time capsule of lost promise. Netscape—the big bang of the internet age—went from conception to extinction in all of about four years. The Globe—the biggest IPO of its time—was practically eviscerated at birth. Pixelon—a scam extraordinaire foiled by its own iBash—today doesn’t even make a decent trivia question on a game show.

Those were just three emblematic stories, real-world cautionary tales of boom and bust. You might remember the history of other exploded rockets, from Pets.com to Webvan. Maybe you don’t want to remember. Of the big consumer-facing internet companies that emerged from dotcom v1.0, it seems Amazon, Priceline, and eBay are the only lauded brands continuing to operate at large scale.

Google emerged in the second wave of the internet, capitalizing on all the failed portals’ inability to understand the essential nature of search, most notably the excruciating death spiral of Yahoo. Can you think of another important round-one bubble survivor? Which will be the next to vaporize? Jeff Bezos has already said Amazon won’t last forever. He knows inescapably it will be replaced by something fast moving and better.

Today there are reportedly 300 or so companies affectionately refered to as “unicorns.” These are start-ups largely in the technology sector with a valuation of more than one billion dollars regardless of revenue or earnings to justify the bragging rights. You are undoubtedly familiar with many of their quirky names: Uber, Lyft, WeWork, Airbnb, DoorDash, Slack, Pinterest, Instacart… these are widely regarded as some of the good ones.

How many of these brands will today’s schoolchildren recognize when they become adult consumers? You know they won’t all still be around. History assures us of that—unless of course this time is different (and when someone tells you this time is different, keep your hands on your wallet).

Early last year I wrote an article titled Is Facebook the Next AOL? At the time I wasn’t sure. Later in the year I wrote about it again. By then Mark Zuckerberg had testified before Congress and I had become sure. Facebook is going to fall hard. The level of cynicism over there is no different from the hubris of America Online. Today cash is pouring in and it has no serious competitors, so hey, it must be invincible, a forever brand!

Facebook only has one major problem corroding its innards: customers don’t trust the people running it. No product or service can last long that way. It’s hard to be a forever brand when your promise is held in contempt. You can pay lip service to addressing the failings in your business model, but if the core concept is fundamentally conflicted, you can’t beat the reaper.

Even General Electric has fallen from grace. GE, the one original Dow Jones industrial average company dating back a century, is no longer in the Dow 30 index. How can that be? Yes, it is still an enormous enterprise, too big to fail, one might say. Does that mean the brand matters a fraction as much as it did a decade or two ago?

Nothing lasts. Creative destruction is consistent that way.

Google will last a long time because it has built a mighty moat, but it won’t last forever.

Apple? Depends on how it deploys its seismic war chest of cash.

Netflix? Hard to imagine, but it seems like a transitional platform. It could be bumped off.

Microsoft is evolving again, truly embracing the cloud, so maybe it will be the new GE. It has lots of runway to continue reinventing itself, but like GE, no runway is infinite.

What’s the point? Think about your own Carmen Sandiego, that gig you love that will be gone someday, and plan your career accordingly. Are you ready to lose the inevitable and discover what comes next? The ship you are on may appear to be built out of steel, but steel eventually rusts. Are you looking beyond the bow?

Creative destruction wins every single time, but don’t despair. Where old jobs become obsolete with antiquated value propositions, new jobs emerge requiring fresh ways of looking at the world. I doubt that will change. While so many companies have come and gone in the last quarter century, the planet has lifted two billion people out of abject poverty. There are new pockets of middle-class workers emerging all over the world in an increasingly shared global economy. That seems like a decent enough tradeoff for a few trampled unicorns.

Maybe someone will even capture Carmen Sandiego. You never know what can happen when you let go of everything you don’t need anymore.

What’s Eating Brother Elon?

Let’s start with what needs to be said before all else: I am an enormous fan of Elon Musk. I think he is quite likely the most important and visionary entrepreneur today leading the way in technology, business, and innovation. He walks in the American continuum of Edison, Disney, Gates, and Jobs.  I wrote as much in a post dating back to 2014.

So when a guy as brilliant as Musk goes sideways, I start to ask myself some questions. Like, what’s up with all the weirdness?

Clearly I have no ability to understand what’s going on in this amazing individual’s life, other than to observe the monumental toll that stress can take on even the mightiest of titans. To guess at what might be at the root of Musk’s recent unpleasant run in the headlines would seem a fool’s errand.

While I am unable to fashion an informed evaluation of why Musk appears in many ways to be undermining his own success of late, I am thinking about the learning that might be had from observing his stress. I am reasonably certain he will have no interest in my reflections of what his behavior could be telling us, but perhaps this will provide a mirror for others on what some of this means and how it possibly could be addressed.

Here are five thoughts on that.

Focus Is No Small Trick

Can one person really be an effective CEO at more than one company? It’s hard enough to be a decent CEO period. Now add longevity to the CEO run and enormous competitive forces, and you start to wonder if running both Tesla (after integrating SolarCity) and SpaceX is remotely possible. Let’s also not forget that Musk is additionally CEO of Neuralink and The Boring Company. If you have ever been CEO of a high-growth company or even know one, you are aware that the job requires super-human energy, and even then the clock is always ticking against the corner office. Musk is beyond super-human, not only as a leader but as a founder who tackles some of the most difficult problems of our day. Will he succeed at all of his goals? I am sure a lot of investors and customers are counting on that, but wouldn’t the odds be more in his favor if he narrowed the scope of his personal agenda and delegated authority with a much broader brush?

A Competitive Advantage Is Not Forever

Tesla has created leading-edge, clean-exhaust automobiles. These electric vehicles are as beautiful and luxurious as anyone could have imagined. Most Tesla owners are evangelists for the company and fiercely loyal to the brand. There is no question that Tesla has been an inspired market leader, but all it takes is one visit to the showrooms of other luxury car companies and you start to see that high-end electric cars are on a fast path to becoming commodities under many brands. BMW and Jaguar already are introducing competitive product lines. Others are on the way. Staying ahead of the pack is its own form of madness and a lot less fun than introducing first-of-a-kind category killers. Can playing king of the hill without a summit in sight have a troubling impact on the psyche? How can it not?

Production Efficiency Is as Difficult as Innovation

Why hasn’t a new auto manufacturer in the U.S. survived at scale beyond the Big Three? The bulk of car buyers want cheap—most consumers don’t have an option to spend more, so the entrenched behemoths take small margins to achieve broad sales and then make money in other ways like service and financing. When you are playing with other people’s money, the demands of Wall Street can be insanely demanding. It’s hard to make big bucks selling very few cars. While Model S and Model X are both category-defining luxury cars, they remain low-volume production units with difficult margin economics given their scale. Model 3, the low-cost mass-market entry, is supposed to change the scale of Tesla, but realizing the dream of high-volume, low-cost, low-margin automobile economics seems precisely what is eating away at our hero. Is the problem perhaps not solvable with the reality of capital constraints all businesses face? Is there another business model beyond manufacturing that Tesla might want to explore with respect to the investment burden they carry?

Health Matters

A lot of people at the upper echelons of business take pride in working themselves to death, or at least appearing to do so. I will admit I am personally not beyond this criticism, and have winced more than once when listening to colleagues celebrate the notion of work-life balance even in the most competitive environments. Many leaders demonstrate manic obsession in their devotion to their enterprises, and it is hard to argue a company can be at the top of its game with a standard forty-hour work week. That said, no matter how much we wish to argue the contrary, we are human, our bodies have limits, and when we cross our own lines of practicality, we can become counterproductive. Sleep matters. Nutrition matters. Some relief from stress is necessary to be consistent in exercising good judgment and productive reasoning. When our vitality breaks down, it is only a matter of time before we collapse or the responsibilities we own become compromised.

Authenticity Does Not Require Unrestrained Drama

The modern workforce is not put off when a boss exhibits some vulnerability. Relationships defined by org charts actually can be strengthened when a manager exhibits humility toward his or her own limitations. Leaders who acknowledge that emotions and potential exhaustion set them on a level playing field with peers and subordinates can foster a dynamic environment of trust and support. That doesn’t mean employees and other stakeholders want executives to ramble, wander, or become media fodder. Remember that old saying, “When you’re in a hole, stop digging.” Random proclamations to shareholders and needlessly quirky public appearances can leave deep craters on the social graph. All organizations want some form of predictability in the leaders they choose to follow. When they lose confidence in top management because of repeated, silly, and unnecessary antics that can demoralize their aspirations, they can make another choice. They vote with their feet.

I am rooting for Elon Musk to win, for SpaceX even more than Tesla, because he has proven that not only government bureaucracies can build dependable rockets. That is forcing innovation around reusability in space exploration and keeping admirable government spending on otherworldly travel in check. While I probably can’t put a dent in Musk’s corrective arc (which I want to believe is on the horizon), perhaps I can open the eyes of a few mere mortals to the underlying tension of his story. Perhaps your story of stress and self-expectation has similar subplots of immovable market forces. What could you be doing to course-correct that might give Musk reason to pay attention?

You Can’t Fix Morale

Here’s a phone call I sometimes receive, usually from someone senior in executive management or the investment team behind a once promising company:

Inquirer: Hey, we need your help with something. We have a situation and we’re not sure what to do about it.

Me: Sounds intriguing. What is the situation?

Inquirer: Well, we’re having… I’m not sure what you would call it exactly, I guess a problem with morale.

Me: What would you like me to do?

Inquirer: We would like you to help us fix morale.

Me: Oh, that. I’m sorry, I can’t help you.

Inquirer: We haven’t spoken two minutes and you already know that?

Me: Yes, I’m quite sure. I certainly would like to take your money because I’m sure you are willing to pay a lot to do something about this, but I only take on projects where I can actually help someone.

Inquirer: How can you be so sure?

Me: You can’t fix morale.

Inquirer: What do you mean? Morale gets fixed all the time.

Me: Yes, exactly. Morale gets fixed because whatever is causing it to deteriorate gets fixed, but that is where you need to look, at the disease, not a symptom.

Inquirer: Are you saying we need to fix something else in our company so that maybe it can have an impact on morale?

Me: Yes, that is what I am saying. In fact, you probably need to fix your company.

Inquirer: So a contract to fix morale is not big enough for you? You want a bigger contract to fix our company? But our company is not broken.

Me: Then you probably don’t have a morale problem and don’t need any help.

Inquirer: You’re not doing yourself any favors turning this down. It’s a big project. We have a sizeable budget for it.

Me: It’s tempting, but why don’t you have another look at the situation and maybe we can talk again.

The call usually ends there and we don’t talk again. Every once in a while we do talk again and then I tend to get involved in long stretches of dialogue with team members up and down the line. We talk about a lot of things: leadership talent, product quality, business model. We talk about creativity and innovation, passion for excellence, dedication to the customer experience. One of the things we never talk about is trying to fix morale.

Let me say it again: You can’t fix morale.

Bad morale is a byproduct, most often of poor direction, sometimes of impossible goals so ridiculous no one ever feels appreciated, other times of uneven credit and compensation in times of success. There are successful companies with good and bad morale, and struggling companies with good and bad morale. Good morale is also a byproduct — you achieve it by focusing on the right things.

I view morale as a result of process and outcomes. Process involves day-to-day workplace routines that reinforce or strip away employee engagement. Outcomes involve the continuity or deadend at the culmination of a milestone, the reward or repudiation for the commitment of time, expertise, or passion. If your process is bad, morale will be bad. If your outcomes are bad, morale will be bad.

Suppose your company wildly missed earnings targets three quarters in a row. You’ve seen your second round of layoffs in less than two years. More than half of your VPs were fired and hired in the past ten months. The CEO, also rumored to be teetering, has said repeatedly everyone needs to “work smarter, not harder,” but no one is sure which product in the pipeline is going to carry the day. Employee morale as you would expect is rotten all around you. Your colleagues are irritable and nasty. Every week someone you like leaves the company for another gig.

Let’s look at some options for addressing this:

  1. The company hires a consultant to run a survey on employee satisfaction and weeks after you fill out your survey they find out what everyone knew before the survey: Morale stinks like a decaying carcass. The CEO announces Fridays will be half days, the company will be publishing a weekly newsletter celebrating its best employees, and all VPs and above will be taking classes in how to write better reviews and talk nicely to their teams. Everyone is told he or she is appreciated and reminded to work smarter, not harder.
  2. The company holds an executive offsite where all the VPs get to articulate everything that is wrong with the company. The VPs report back to their teams that the CEO agrees, there are not enough resources in the company to go around, the timelines for deliverable are insane, and the competition has an edge on the industry that is daunting. Starting today you will have realistic goals, more resources, flexible timelines, and as long as everyone is doing their best, then management will back off and be satisfied.
  3. The CEO pulls together a half-dozen of the best minds in the company to conduct an honest post-mortem of why the company’s strategy is failing. That team then strips away all the derivative efforts that are draining resources from the company’s true mission and recommits to a narrowed product strategy that capitalizes on the company’s identified competitive advantage. The CEO then directs the executive team to align the best talent in the company with key roles on the narrowed agenda and hire new talent where mediocrity is being tolerated, then communicates the new plan to the full company in verbal and written detail, not just in an inspiring kickoff speech but in regular progress updates that are candid and coherent.

You might think the answer is obvious, but sadly it is not — especially to less experienced management teams where too many influential individuals have achieved authority through battlefield promotions. Here we are talking the bedrock of directing process and refocusing outcomes. Good process takes a lifetime to learn. Steering through outcomes whether planned or unplanned requires a deft touch. There are no shortcuts. If you don’t have the energy or commitment to take apart process and outcomes one building block at a time, you have little shot at repairing morale.

I often ask people to share with me whether they have had a single good manager in their careers. You would be surprised how many say no. In fact these days it is the rare exception of people who actually rave about a boss from the past and talk about how they are putting that learning to work. The ones who are tend to have fewer morale problems on their hands. Too many leaders’ lives are filled with morale problems because they haven’t learned how to steer past them.

Now think about all those unicorns out there — you know, the 150 or so privately funded startup companies currently valued at $1B or more. Those should be some of the happiest places in the world for people to work, big idea places filled with promise and hope for future riches. Go take a random walk through those gardens on Glassdoor. You might be surprised at what you find. They have a lot of problems. When the majority of them are unable to achieve liquidity for their option holders, they will have even more. With that will come a wave of demoralization sweeping through employee workstations. How would you go about fixing that?

You can fix a product. You can’t fix a byproduct. Fix what’s wrong in your company, not the normal human emotional reaction to what’s wrong in your company.

You certainly can fix engagement. You fix engagement through authentic vision, brilliant product design, and a rallying cry around consistent execution. Fix engagement and morale fixes itself.

Align the finest talent you can identify with challenging projects that allow them to do the best work of their careers. Keep an eye on process. Celebrate outcomes and share the wealth. Be generous with people who are meaningfully contributing to company success. Morale will be swell and you’ll have bragging rights to let everyone around you know what a great environment you’ve created for the next wave of outcomes.

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Image: Dilbert.com ©Scott Adams

Leading Teams Toward Success Using People, Products and Profits

I’ve written the words People, Products, Profits (In That Order!) so many times over the years it would be easy to think of them as simply a slogan I use, a catchphrase meant to pique your interest. I assure you this is no more the case than Apple using the words Think Different as a clever tagline. Like the words Think Different, People-Products-Profits is part management philosophy, part rallying cry, and in an aspirational context, part religion. When I invoke these words to set the table for embarking on the outrageous, it is with the full knowledge that I could sound silly, fail miserably, fall on my face, or possibly convince you that relentless pursuit of the extraordinary is within your grasp. That’s a lot to bite off in a very few words. It’s meant to be.

In my new book, Endless Encores, a veteran CEO named Daphne spends an evening talking with an up-and-coming executive named Paul, helping him come to terms with the potential first failure he could be facing following a huge initial success. They are stuck in an airport, passing the hours. She is a leader and he is leader, only at the moment he is too obsessed with his own personal exposure to realize that he is failing to be a leader by trying to duck out of the way of his own mishap. By worrying more about what he has done than what he has learned, he has shifted the weight of his problem from marginal to endemic. In truth, the failure he might be facing is not so much a setback as it is an opportunity. By the end of the story, he has embraced that and reset his sights on the long game.

Save for the guidance from Daphne, Paul might have missed the boat. And the plane. And all that might have been ahead of him in the form of material reward, passionate accomplishment, intellectual richness, and emotional fulfillment. It’s a close call, but he makes it over the coals. You can, too, if either you have a Daphne in your corner and you’re willing to listen, or if you otherwise come to acknowledge your role as a leader is more about the long-term example you set than the specific offering you at the moment champion. One is permanent and tangible, the other fleeting and beyond your control. Where would you prefer to focus?

Leading through People, Products, and Profits means committing to the idea that talent is a priori to all success. This has much less to do with your own talent than the talent you assemble, empower, and inspire. World class products and services don’t create themselves. They are created by human beings, most often high performance teams, and the time you devote to building and bolstering those teams is a direct reflection of your values.

When your team identifies a product concept that is worth pursuing, leadership becomes the championing of execution over the touting of an idea. We can all dream up big ideas, but few of us can bring them to market. Those who can almost invariably need some form of stewardship to hold the team together through unending punch lists of details. If that’s not challenge enough, you can have the best team in the world and the best product in the world, but if your business model is not sensible and doesn’t sustain the enterprise, it really doesn’t matter what you set out to accomplish. A business has to create value, usually measured in the form of profit, and if you can’t lead a team to do that more often than not, you’re not likely to get many chances to stand in the center ring.

The point of the rallying cry is to set a tone of priority, balance, and perspective. Everyone likely wants a business that is profitable, but leaping straight to the outcome ignores the most valuable element in the mix: your customers. An exceptional team that has been well-directed puts the customer in first position, in essence their supreme boss, with the primary hope that if a customer’s expectations are exceeded, that customer can become a customer for life. When we talk about the notion of lifetime value, we are talking about just that: Have we surprised and delighted a customer in such a way that they ascribe emotion to the brand we represent? Will they come back for more with cost-effective prompting, and will they tell their influence circles about the breadth and depth of their fine experience? That’s why a business leader is accountable first to customers, because they hold all the cards, and that’s why when they pursue a business opportunity, they place investment in talent first, product innovation second, and business model third. You need all three, but put them in the wrong order and you are left extracting value from a customer rather than bonding a customer who becomes a partner in creating value.

Yes, you have to juggle three balls at once in sequence if you want to repeat success, and you have to do it over and over. It’s not easy and it’s not supposed to be easy, because if it were, you wouldn’t be worthy of praise or wealth because anyone could do it. Likewise, leadership is a choice. It’s not for everyone. The rewards are far often more intrinsic than measurable, and falling on your face in a public forum is never going to be fun. You will fail. We all fail. If you learn when you fail you will also win. You have to decide if leadership is really something you’re ready to shoulder. If you are, choose your words and the order of those words carefully. The talent around you will only become cynical if you’re insincere and don’t stand for something more than winning right now.

Repeating success is about the journey. Leading is about tone and substance. Projects are always short. Careers can be short or long. The choice is always yours. Your values always matter. If you’re deliberate in determining how you build a culture of shared values, the best around you will always be listening. Stay authentic and their results will surprise you. Those are likely to be extremely pleasant surprises.

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This article originally appeared on Leadership Now.

Photo courtesy of Free Range Stock

Endless Encores: A Brief Excerpt on Profits

EE CoverWith the September 22, 2015 publication of my second book, Endless Encores, I wanted to share a few excerpts to catch your interest. Published by The Story Plant, this is a business parable about People, Products, Profits—in that order. This excerpt is from the chapter about Profits.

♫ ♫ ♫

There was a modest rumble in the room. A flight had been called. It was not Daphne and Paul’s flight to Los Angeles, but both were heartened by the rustling of computer bags and rollaboards around them as fellow passengers-in-waiting began ambling to the door. It had been a long night, but now it appeared the delay would not go on forever, nor the conversation.

“We have hope,” proclaimed Paul. “We’re going to get out of here.”

“Hope is the strength that keeps us going,” said Daphne, watching people around her happily begin to leave the airport lounge. Since their flight wasn’t leaving, she had no reason to follow them, but she knew her remaining time with Paul would be limited.

“When you set out to determine strategy, how do you think about building the business so it keeps growing?” continued Paul. “No sane executive wants to lead a company into the Dead Brand Graveyard, yet so many end up there. Suppose they have the best people and the best products. How do they get their head around a business model that is going to both work now and expand into the future?”

“That’s the greatest enigma of all,” answered Daphne. “You have to think about recurring revenue alongside new revenue. Some transactions have to be there without your prodding, so you can add new transactions on top of them. If you’re going to spend money to acquire new customers, you have to balance that with what you’re spending to retain the ones you have. If all you do is spend to acquire new business, your margins will be perpetually squeezed. No fun, I assure you.”

“My boss says that all the time,” agreed Paul. “If every year you start the P&L from zero, it’s virtually impossible to grow. You have to know there is some business already on its way from your catalogue of products, and on top of that you add new product introductions.”

“Smart guy, your boss,” said Daphne. “He gets the mix a lot of us miss. Maybe he was at the same Paul McCartney concert I attended.”

“The same boss who isn’t going to can me for this lackluster sequel?”

“Yes, that clever fellow. Let me ask you something about that catalogue of products, the base of recurring revenue. Do you cannibalize your own markets before the competition does it for you?”

“Well, we don’t put out the same videogames, so it’s not exactly possible,” said Paul. “But if you’re asking do we sometimes leave one out there longer than we should to extract the last bit of profit from it, yeah, we do that sometimes.”

“How does it make you feel?”

“Queasy”

“Me, too,” winced Daphne. “I think we all do it to some extent, but the key to all of this is balance. Yes, you need a base of recurring revenue, but if you don’t give your customers something new and exciting before your competitors do, they will sweep your customers into their camp. You have to study and manage the ratios of evergreen and introductory endeavors at work in all your sales channels. Remember, constraints on distribution are low, choices are high.”

“It’s staggeringly hard to find the stamina to pull a product from the shelf when it’s still selling,” said Paul. “R&D costs are ridiculously high. We need all the sales we can muster for contribution margin to make sense.”

“One of the hardest choices in business is to pull a product while it’s still moving. Again, what we are talking about is strategy. Of course you don’t want to leave more money on the table than you should, but you’ll often find you need to leave some. If you don’t do it, your competitors will happily obviate your offerings. That can be the end of one brand and the birth of a new one that is no longer yours.”

♫ ♫ ♫

Endless Encores: Repeating Success Through People, Products, and Profits by Ken Goldstein is available in hardcover and as an e-book from Amazon, Barnes and Noble, iBooks, Kobo, IndieBound, Indigo, and at independent bookstores near you.

“Focus relentlessly on the extraordinary.” Pub Day