What's New, What's Not

Unit of One

It is one of the mantras of the new economy: Change is everything, and everything is changing. But is it true? We asked 12 business leaders, from various industries and from different generations, to pause and consider: What's really new -- and what's not -- in the new world of work? Has technology redefined competition? Are people-based companies forging a new notion of leadership? Is there a new way to do strategy -- or is strategy even necessary today? Their answers yield some new rules, some old truths -- and a chance for you to reflect on what has changed and what remains the same.

Andrall E.Pearson

Chairman and CEO
Tricon Global Restaurants Inc.
Louisville, Kentucky

There are two reasons why people leave their jobs: Either they don't feel appreciated, or they don't like their boss. But two factors have created a new competitive landscape: Today almost everyone can get another job; and more and more people can gain access to low-cost capital. In our business, it used to be clear who had the financial muscle to be on top. Now we're facing a wide range of well-financed competitors. So it's more important than ever for us to draw upon our entire organization.

That calls for a new form of leadership, one that moves from exhortation to execution. It's no longer enough to be an idea-driven leader -- you need to be a hands-on leader. I've certainly been guilty of the old style of leadership. I used to give uplifting speeches, but I would never get down to saying, "Here is what this means to you." These days, I spend a lot less time exhorting people to behave differently and a lot more time showing them how.

The benefits of this approach are so obvious, they make you cry. But you have to invest an enormous amount of time over an extended period. I spend at least half of my time out in the field, talking about leadership. But I'm not just talking. At Tricon, we're creating all kinds of mechanisms to help our people get involved in improving performance -- from a three-day leadership course that focused on problem solving to what we call "meetings in a bucket" at KFC.

As a leader, I'm asking questions and picking up ideas all the time. For example, at KFC, we were testing a new sandwich that's made with a Pepperidge Farm bun. I spent some time in KFC outlets, and everyone I talked to who had tried the sandwich loved the bun, but we weren't mentioning that new feature in our commercials. I simply made that connection and suggested that we add this information to our message. That's a kind of detail I would never have been involved in a couple of years ago. But that involvement makes a huge difference.

Andy Pearson has had no fewer than four careers. He has served as a senior partner at McKinsey & Co., as president and COO of PepsiCo, as a professor at Harvard Business school, AND as a partner in a management buy-out firm. As chief executive of Tricon -- which consists of Pizza Hut, Taco Bell, and Kentucky Fried Chicken -- Pearson runs the largest restaurant chain in the world.

B. Joseph White

Dean
University of Michigan Business School
Ann Arbor, Michigan

There are two genuinely new conditions in the world today: Information technology and biotechnology have the potential to change society as deeply as the automobile did a century ago; and a movement toward self-reliance has emerged, with implications for everything from how we make a living to how we raise our children.

With changes of this magnitude, you can't just think about them; you can't just talk about them; you can't teach them in a classroom. That's why we're pushing students beyond the four walls of our school and into companies and nonprofit organizations around the world.

Take South Africa, for example. The most moving experience that I've had in recent years was a meeting with Desmond Tutu in Cape Town. I asked him, "What are your greatest concerns about the future of South Africa?" He said, "We have 30 million people living on hope. If the economy and the society don't deliver measurable improvements over the next five years, I don't know what's going to happen here." Now, if you're a 25-year-old student and you're looking for a challenge, then look no further: Archbishop Tutu just delivered it to you.

That opportunity reflects a fundamental difference between the current generation of businesspeople and the previous generation. There's a growing realization in our schools that business is the most powerful, most progressive social force in the world. If the dream 25 years ago was to join a big company and to pursue a career involving steady advancement, the dream now is to cultivate an economic entity that creates tremendous value, that provides opportunity for others, and that may even change the world.

Joe White was appointed dean of the University of Michigan Business School in 1991. He serves on the boards of several organizations, including Kelly Services, Cummins Engine Foundation, and the board of overseers for the Malcolm Baldrige National Quality Award.

Carol Bartz

CEO and Chairman
Autodesk Inc.
San Rafael, California

I'm at the stage of my career when people often approach me to ask, "Will you be my mentor?" I don't know what the heck that means. Does it mean that they want me to be their mom? Does it mean that I'll be personally responsible for their success? Am I supposed to share my life secrets and private thoughts with them? To me, the prevalence of that question is a sign that a lot of people don't understand what is probably the most important shift in the new world of work: the demise of lifelong employment and of the corporation's promise of long-term stability. Today you are largely in control of your own destiny at work.

That's pretty damn liberating. It's also pretty damn scary. People are asking, "Who can I look up to?" That's understandable, but it's the wrong question. Work is more challenging than ever before. There's also an opportunity to get more out of it than ever before. The assumption behind mentoring -- "I'll tether myself to one person who will take care of me" -- is bankrupt. A better way is to build what I call a "personal mosaic" of influences, experts, and guides. Personal-mosaic building is about breaking mentoring down: What specific skill do I need? What's my next challenge? For each issue, you seek out an individual -- someone who can deal with crises in a certain way, someone who has an excellent time-management system, someone who seems good at handling office politics -- for advice, information, and models.

Carol Bartz took the helm at Autodesk, the nation's number-one PC design-automation software firm, in 1992. Since then, the company's annual revenues have grown from $285 million to $618 million.

Mike Volpi

Vice President, Business Development
Cisco Systems Inc.
San Jose, California

Historically, acquisitions have been viewed as one-time events that involve tremendous pain: You rope in dozens of people to work bruising hours on a deal. You rearrange lives, you fire people, and you perform all kinds of unnatural acts. Then 6 to 12 months later, you go back to your ordinary job.

At Cisco, we've transformed acquisitions into a standard business process, and we've made that process an important tool in the manager's portfolio. We have as many as 60 people, from various functional areas, dedicated to the task of acquiring and integrating companies. By going through the acquisitions process repeatedly, we improve it every time. That has allowed us to move very, very quickly -- we can now manage 10 to 12 acquisitions a year -- and it has allowed us to stay on top of the waves of technology that are rolling in with ever-increasing speed.

If anything in the technology business is in shorter supply than time, it's talent. Acquisitions are a fantastic way to bring new technical talent, new marketing savvy, and new know-how into an organization. After we complete an acquisition, we focus on easing the transition for new employees: We make it clear to people who come in from the outside that they're not outcasts at Cisco. The company is full of executives who have come in through acquisitions and who now run significant portions of the company.

As Cisco's top deal maker, Mike Volpi has supervised 29 acquisitions and more than 40 equity investments. Born in Milan and raised in Tokyo, he earned both bachelor's and master's degrees in mechanical engineering, along with an MBA, from Stanford University.

Jay Chiat

Cofounder
TBWA Chiat/Day
New York, New York

Now more than ever, everybody is interested in the next new thing. But the real challenge isn't about introducing the new; it's about reinventing the old. That's a tough assignment. Kids -- that is, 12- to 24-year- olds -- determine whether a brand has any energy. And kids today are fickle: A brand holds their interest for only a moment. That's because kids grow up not only with television but also with computers and interactive entertainment.

Enduring brands share one quality: Call it "comfort." Brands like Kellogg's and M&M's have an inherent value for us -- because we grew up with them. When I was a kid, brands had a place at the table. These days, with 600 cereals in the supermarket, it's hard to develop "comfort" with any brand.

It's a truism that everything recycles eventually. Marketing is returning to older, more basic issues. It's not about how new a product is -- it's about how well that product resonates with people. How do you take something with a past and reenergize it? How do you get it back onto the table? Steve Jobs understands this: His energy, his intuition for marketing are amazing. He invented a revolutionary brand called Apple, and recently he has brought it back and revitalized it. Look at the iMac. It has all the qualities that made Apple lovable in the first place. It's easy to use; it's as much a friendly, beautiful object as it is a technology tool. And look at who's buying it: first-time computer users. That's amazing! The personal computer has been around since 1981. Almost two decades later, people who had never thought to invest in a computer are investing in this one. What's more, people are talking about it. That's one thing that will never change: Word of mouth is the ultimate form of advertising.

Jay Chiat has worked for more than 30 years in the advertising business. In 1968, he founded Chiat/Day, a revolutionary ad firm that was responsible for such breakthrough classics as the Apple 1984 series campaign and Nike's 1984 Olympics campaign. In 1994, Chiat sparked another revolution -- in how work gets done -- by transforming his agency into one of the first (and most talked about) virtual offices in the world.

Chunka Mui

Partner
Diamond Technology Partners
Chicago, Illinois

Ask yourself a couple of questions: How would your bottom line be affected if every one of your customers got the best price on every transaction? How would you respond if your customers, by forming cartels, could easily share information with one another about their interactions with you? These are hypothetical questions, to be sure, but they suggest what is new about the new economy, and they point to the far-reaching impact of the Internet on how business gets done.

While the answers are changing, the basic questions remain: What do customers expect? What will the new industrial structure look like? How do you organize for a new environment? And how do you adjust the capabilities of your organization?

Chunka Mui (cmui@diamtech.com) is coauthor, with Larry Downes, of the best-selling book "Unleashing the Killer App: Digital Strategies for Market Dominance" (Harvard Business School Press, 1998). He is a partner in the digital-strategy practice of Diamond Technology Partners and executive editor of Context, a magazine published by his firm.

DeeDee Gordon

Director, Market Research
Lambesis Inc.
Del Mar, California

In traditional marketing, a bunch of people in a company say, "Okay, we hear this is cool, and we're going to target this group." That's where things like "Generation X" come from. Well, Generation X is a book. It's fiction! And it's offensive to kids. They don't like to be pegged to one bland category. Kids want to look at an ad or a product and say, "This company understands me. This company isn't talking down to me -- it's talking with me."

When you look through the eyes of what I call "trendsetters" and "early adopters," what you see is that kids are living in a radically different world from the one that most people who run companies understand. Kids can see anything on the Net. You hear that a lot, but think about it: They can see violence and destruction. They can learn about sleazy political officials. They can view autopsy pictures. As a result, they're much more pessimistic than adults.

All of this is leading to a huge shift in perception: Future generations are going to be expert editors. They're dealing with so much stuff that one of their basic life skills will involve scanning, sorting, and editing lots of information -- so that they can decide what to wear, what sports to play, how to decorate their rooms. You can already see this trend in musicians like Beck and the Beastie Boys, in stores like Urban Outfitters, and in movies like Pulp Fiction, all of which mix and package many different influences, eras, and styles. What's new in marketing? Think cultural sushi.

DeeDee Gordon, a pioneer in the art of "coolhunting," continues to scout trends in the world's edgiest cities. She consults for top retailers, movie studios, car companies, and apparel and cosmetics manufacturers. Gordon got her start as a coolhunter at age 22, when she worked for Converse -- but her favorite sneaker today is the Nike Air Rift.

Samir Arora

Cofounder and CEO
NetObjects Inc.
Redwood City, California

There's no getting around it: Internet time is shorter than ordinary time. Most companies today are grappling to keep up with the pace of change. To win big in this new environment, you need to understand that everything that you once considered to be fundamental has changed forever.

The economics of the Net allow a startup to come in and change the rules of an industry -- any industry. Consider eBay: This company, which holds public auctions on the Web, has enabled people to make transactions on a scale that was simply not possible before.

In that context, I've found leadership to be more important than ever. By leadership, I mean not simply the articulation of vision and values, but also a continuous dedication to being brutally honest -- with yourself, with your employees, and with your customers -- about the realities of this new business environment.

Before cofounding NetObjects, Samir Arora cofounded RAE Technology, a software-applications company. Previously, he held various management positions at Apple Computer. In 1997, he was named Entrepreneur of the Year by the Information Industry Association's Emerging Business Council.

Michael Lynton

Chairman and CEO
The Penguin Group
New York, New York

People in the Internet business tend to be particularly evangelical about what they call the "frictionless economy." But my job is to provide friction. In this case, "friction" means an editorial point of view. In the age of total access, standing for something is going to become more important than ever.

At the same time, the emergence of various online technologies is making possible an entirely new relationship with customers. Traditionally, we've known very little about book consumers. Now we can communicate with them -- directly and on a one-to-one basis.

That changes the dynamic of the business radically. One person, thinking differently, can turn conventional wisdom on its head. Here's an example: For years, the industry has considered the travel-guide business to be completely flat. Then along came a company called Rough Guides (in which Penguin now has a majority ownership stake). The Rough Guides grew out of a simple idea for a series aimed at 30- to 40-year-olds who were interested in roughing it a bit. The company quickly established an incredible brand, and it's growing at the rate of nearly 20% a year. The big established companies, including Penguin, were simply unable to look a little to the left or to the right to identify that market.

Michael Lynton began his media career at the helm of Disney's publishing business. it didn't take long for Michael Eisner to call on him to rescue then-failing Hollywood Pictures. In three years, Lynton put the studio back on the map with a string of hits, including "The Rock," "Crimson Tide," and "Mr. Holland's Opus." In 1996, he moved from Malibu to New York to run Penguin's global book business.

Orit Gadiesh

Chairman
Bain & Co.
Boston, Massachusetts

Everybody talks about the speed at which things are changing. We hear a lot about the emergence of new technologies that render entire markets obsolete overnight; about the increased speed of communication, which allows shock to travel instantaneously across the planet; and about the shifting of boundaries between industries and the emergence of new competitors. As real as those changes are, my response is "Well, the pace of change has been accelerating since the beginning of the 20th century." From the point of view of business leadership, what matters is understanding how people react in such times of uncertainty, when they have less ability to manage their external environment.

Uncertainty has always been a fundamental reason for developing a strategy. Yet, with the level of uncertainty that we see today, more and more people are asking, How can you develop a strategy in a world that keeps changing so fast? They're afraid that articulating a set of rigid principles will hinder their ability to react quickly. I would argue that it is precisely at such times that you need a strategy. Think about what strategy is: It's the process of making trade-offs and choices about how to allocate scarce resources. A company that has infinite resources doesn't need a strategy. Do you know of any company that has infinite resources?

In the current environment, companies can't afford not to have a set of guiding principles -- a system of core values that communicates "true north" to the entire organization. These days, many of the operational decisions that enact the strategy are being made in the field, near the customers, rather than at the top. But with a clear set of strategic principles in place, it's actually easier for people in the field to make quick, confident decisions that are consistent with overall strategy. And, in the end, that arrangement allows for greater freedom, flexibility, and experimentation.

Orit Gadiesh has advised business leaders on strategy since 1977. Before joining Bain & Co., she served in the office of the Deputy Chief of Staff of the Israeli Army. As chairman of Bain -- one of the world's top global-strategy consulting firms, with 2,000 employees in 25 offices in 18 countries -- Gadiesh works with CEOs and senior executives at many of the world's top global companies.

David Duffield

President, Chairman, and CEO
PeopleSoft Inc.
Pleasanton, California

I don't think people realize just how "new" the Internet is. We have yet to scratch the surface of what the Net makes possible for business. Until recently, the Net has involved an almost mindless convergence of information: You do a search using one of the popular search engines, and you still have to sift through 10,000 or 20,000 pieces of information. That kind of search is frustrating and time-consuming, and it just doesn't make sense as a business tool.

The critical next step for the Net involves increasing its relevance. That means giving people the information they need, when they need it, and eliminating the clutter that prevents people from making good decisions. That also means bringing together information from inside and outside of organizations -- from partners, service providers, and merchants -- to provide a console from which people can do their work. For business, that's the real promise of the Web.

The more the technology of the Web changes how we do business, the more we need to focus on people. Financial performance, growth, and wealth are all wonderful things, but it's people -- your employees, your customers, your business partners -- who make those things happen. When we founded PeopleSoft, we had three core principles: Make customers happy. Have fun. Be profitable. Having fun at PeopleSoft is mandatory. People who are having fun are more productive, they are nicer to the other people in the organization, they become evangelists for the company, and they deliver fantastic customer service.

The most important part of my job involves working with our employees and our customers. That's another thing that's new about the new economy: The job of leadership has changed. Leadership is not about having all the answers or about issuing directives. Leadership is about getting people to do things for you without your having to ask them to. That's a real challenge, and that's where those core principles take over.

Dave Duffield (dad@peoplesoft.com) is PeopleSoft's foremost "people person." A software-industry veteran, he started out at IBM and went on to launch two mainframe-application software companies: Integral Systems Inc. and Information Associates. His current company, PeopleSoft, is an enterprise resource-planning software firm with annual revenues of $5 billion. Duffield is serious about encouraging fun at work: He funded -- and has been known to play guitar with -- the PeopleSoft house band, the Raving Daves.

William F. Powers

Vice President
Research Ford Motor Co.
Dearborn, Michigan

I'm a scientist. I believe there are certain laws that hold anywhere in the world, at any time in history. They might get updated every 100 years or so -- as Einstein modified Newton's law of gravity -- but certainly they don't change every decade. I keep looking for the business equivalent of Newtonian laws, but I haven't found many. There's the law of supply and demand, there's the age-old battle of the unpredictable, low-cost competitor versus the dominant industry player, and that's about it. The point is, if you let yourself think that you've found natural laws in business, you'll end up kicking yourself in the head.

One thing that has held steady throughout my career -- from my days of working on the Apollo program to my days of developing cars at Ford -- is that in any successful innovation, there is one magic ingredient: a strong, motivating goal that everyone on a team can easily understand and embrace. With Apollo, we wanted to get to the moon by the end of the 1960s. At Ford, we wanted to develop a car for the 1980s -- a time when the company was down and out. That car, the Taurus, was the first high-volume, aerodynamically styled car that featured fuel economy. And it represented a big risk. But the goal behind it was special enough to overcome that hurdle: As we saw it, the Taurus program was not only going to help save the company -- it was going to establish a new path in automotive engineering.

In the early 1960s, Bill Powers helped to develop the Saturn Booster guidance system, and to conduct Apollo mission analyses, at NASA's Marshall Space Flight Center. He spent the next decade consulting for the space-shuttle program at the Johnson Space Center. He joined Ford Motor Co. in 1979.

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