"Being different is ultimately all about values — your values, your brand's values, and your company's values. Your values are what set you apart." -Scott Bedbury (Below, With Laurie Coots)
The Place: Sundance, Utah
The Event: The Fast Company Advance, a celebration of Fast Company's third anniversary
The Gathering: A round table of 45 of the best brains in the new world of work — a two-day conversation among change agents from some of the world's biggest and best-known companies; leaders from young, fast-growing companies; business thinkers and educators from the United States and South America; activists from the world of politics and public policy; economists and anthropologists, strategists and physicians
The Rules: No canned speeches. No overhead slides. And check your ego at the door.
The Topics: Four themes that cut across the world of work: What does it mean to be a brand today? How do you create a successful startup — or restart an old company? What do companies owe to their countries? And what are some of the abiding human issues that underlie the new world of work?
The Record: We taped the entire two-day conversation. Here we present an edited selection of comments made by 14 of the participants — provocative insights and useful practices drawn from the table talk at Sundance.
It's a New Brand World!
Scott Bedbury: It's fashionable to talk about differentiating your brand. Consequently, a lot of people are trying to be different just for the sake of being different. But that's dangerous — and often very shallow. To me, the question is not how can you be different, but how can you be different in a way that resonates deeply with people? How can you, your people, your products — and therefore, your brand — create a human connection? Or, to put it differently, now that everyone's bragging about their brand, how can a product develop humility?
I'm a firm believer that the bedrock of any great brand is a great product. But that's not enough. At Nike, we chastised anybody who tried to promote the brand solely on the basis of our technology — even though we knew that our technology was the best out there. Nike Air was great. It was protected by a thousand patents — but, when it came to connecting with our customers, it was insane to push the high-tech aspect.
When Nike broke the "Just Do It" campaign, the company was standing up for the human spirit. When Apple broke its "Think Different" campaign, it was making a human connection. And this is critical, because today, in almost every industry, we're seeing product parity — or at least the perception of product parity — on the part of customers.
God help any company that thinks its product is better, whiter, brighter, or faster than anybody else's and then stops there — because plenty of customers just see parity where you might see better performance.
That means that the real branding challenge is to peel back the layers of the customer — to get to his heart, his soul, to a place where he does not even think consciously. And to get there, you have to make decisions that you can't begin to justify financially — or even quantify — beforehand. You have to make these decisions from the gut, not based on focus groups or data. These are the wild-card decisions — random thoughts or out-of-left-field observations. And they come from people who are having fun in their work, people whose sense of humor and personal excitement comes through in the brand.
Another question is, How can you differentiate your brand? To me, the answer is that being different is ultimately about values — your values, your brand's values, and your company's values. Your values are what set you apart. Starbucks is built on Howard Schultz's values. Howard promised himself that he would create a company that would never leave its employees behind. And when he took over Starbucks in 1987, he set out to provide stock ownership and health and medical benefits for all of his half-time employees. Starbucks was also one of the first companies to recognize same-sex marriages.
Today, when you look at the quick-serve restaurant industry, Starbucks is different from almost all the others — and it's not just because a place like Burger King fills bellies, whereas a good coffee house fills the soul. It's also because companies like Taco Bell have 250% to 300% turnover among their hourly employees and 100% to 150% turnover among their managers. The turnover rates at Starbucks are a fraction of that.
Nick Shore: In the old days, first you'd create a product, then you'd build a brand around it. In the new paradigm, it's the other way around: The product is driven by the brand. The nature of the product — what it's about, how it's configured, how it's improved — is all driven by the brand. First you build a brand idea — you tap into the values that people are interested in, you understand what people are up to these days, you tune into what's happening in pop culture. Then you create a territory, a mind space — and only then do you build your product.
Tim DeMello: One of the toughest problems with brands today is that success breeds failure. Ingrained in every consumer is a sensibility that roots for the underdog. Take Nike, for example. That company has gone from making an emotional connection with its customers — because it was the outsider — to being the biggest, baddest brand around.
Which is why I don't buy Nikes anymore. Products get to a point where, all of a sudden, they're no longer cool. So here's the basic problem: You do everything right. You hit a home run in your market. You create a smash success in your category. And then, because customers root for underdog brands, all of a sudden, they leave you. What do you do?
Scott Bedbury: The most successful brands need to adopt a credo: As you make your brand ubiquitous, make every new source of ubiquity a means of refreshment — not a means of punishment. At Starbucks, we differentiate our stores: Some are plows, and some are probes. Plow stores are our acknowledgment that, as a publicly traded company, we have to hit our numbers. Probe stores are for experimentation. They come out of our skunk works, where we challenge people to come up with a thousand different ideas. We don't want a one-store look and feel. We want a palette from which to paint, with the freedom to draw on dozens of different design and performance factors.
Howard Schultz was once asked by USA Today how he created Starbucks as a huge brand. His response was that he didn't set out to create a brand — he set out to create a really good company, and the brand developed. There are three legs to the stool: The first is product superiority and product integrity. The second is the integrity of the company — how it treats its people, how it treats the environment. And the third is how the company connects with its customers — the words it chooses, the spokespeople it uses in its ads.
Laurie Coots: Brands do not exist anywhere other than in the minds and hearts of the people who believe in them. I've had the opportunity to work with some great brands: Nike, Reebok, and Apple. To me, branding is the new buzzword because companies have figured out that consumers are not willing to buy products just for the sake of the products. A good product is not enough; consumers today are also looking for soul — and soul is one thing you cannot invent. It has to be authentic. It has to be in the company. Unfortunately, there are a lot of folks out there who really don't have soul, but who are doing this branding thing as a way to stay alive. All that does is to dilute what is authentic about branding. But the good news is that consumers can smell a fraud. That's the reason Nike got into trouble: It started celebrating athletes who didn't want to play the game! That's the reason Apple got into trouble: It tried to be all things to all people. To me, soul is where it starts.
Mary Furlong: One way to think about the power of a brand is to look at the company through the eyes of a new employee. When a new recruit walks into the company and is able to meet the person who started it — the living, walking visionary, the person who put it all on the line to start the company — that communicates more than any company "vision" statement can. For me, that's the intangible value of having a company born out of a vision — and of having the leaders who created that vision available for everyone to see, to hear, and to relate to.
At the same time, there's a risk: Companies need to be able to outlive their leaders. One of the great examples of this is the HP Way: People who come to work at Hewlett-Packard know what the HP Way is. They may not be able to name the current CEO — I don't think I can! But HP has made the transition from being the inspiration of its founders to creating an enduring brand that has its own values and its own vision.
Start Me Up!
Tim DeMello: Think along with me about what it's like to build a startup company. Here I am, the budding entrepreneur. I have next to nothing. No money, no credibility. I also have a big challenge: I have to get people to understand who I am, what my company does, what we have to offer. I not only have to sell my product or my service, I also have to sell my company to the people I want to work for me — people who will have to give up really good careers for this unknown startup. I also have to sell my company to people who will invest capital in it. I have to sell my company to vendors, to get them to extend me credit.
The point is that in the early stages of my startup, I have absolutely no credibility. So my challenge becomes, How do I use somebody else's credibility?
That was one of the ideas that I used to start Streamline. I looked at large corporations and saw what they had that we could use: not just money, but also credibility — name and presence. Here's why: It makes a huge difference if I introduce myself as Tim DeMello, an entrepreneur who wants to deliver your groceries, or if I introduce myself as Tim DeMello, an entrepreneur whose company has received a total of $10 million in investment capital from organizations like GE Capital and Intel. Does that change your opinion of Streamline? The message is this: Large corporations represent a wealth of resources for the entrepreneur to tap.
The other major insight that we built into Streamline was a philosophy of the customer. Our model wasn't to push the consumer. It wasn't about taking a product and figuring out how to get it into the home. We started with the consumer — the time-starved consumer who's looking to outsource pieces of his or her day-to-day needs. We decided to create value around the consumer relationship, to ignore the old supply chain, and to build a new one — based on pull from the consumer.
That's where merchandisers are going wrong with the Internet today. They're using it as a mass-marketing tool. What consumers really want from the Net are the same things they want from retail stores: simplicity, service, and an experience that is built around them, not around the product.
Mary Furlong: Like Tim, I'm the founder of a company, ThirdAge Media. And before that, I started SeniorNet, 15 years ago. When I think about what it takes to make a successful startup, I ask three questions: What am I doing to build value? Do I have the right team in place? And — in terms of using my own time and energy — am I the right person for my particular team? Of these, the second is the hardest to answer — because it requires you to be brutally honest about people who often are truly committed to getting your startup off the ground.
I read in a Fast Company interview with venture-capitalist John Doerr, of Kleiner Perkins, that the dirty little secret of startups is that people get popped out of them all the time — even the founders. This is not something that they tell you when you start your own company: Your company may survive, but you may not. But it happens all the time.
All companies go through growing pains. The team you start with isn't going to be the team you end with. In the past three years, we've gone from 1,000 members to being bigger than the city of Atlanta — and we're on our way to being bigger than the city of New York. As you go through changes like that, an individual team member's skills may no longer match the company's growth and direction. One job of the leader is to make changes that help the company to maintain its momentum and that treat people in a fair and considerate way.
But change is part of any company's story. We all have to ask, "What value do we bring to the table? How is that changing?" Right now, I'm looking for a new team member, an executive who can build the company and direct it to the next level as CEO. My role will change to become the company's chair. It's all a matter of having the right person at the right spot at the right time.
Nick Shore: What I see a lot of these days are giant companies trying to operate like startups — slow companies trying to be fast. I'm working with one company in which the top leaders created a team that would work with startups. The team came right back at the leaders and said, "We're going to take you at your word — we're going to operate like a startup too. And that means we're going to claim autonomy for ourselves." If the team hadn't done that, it would have just become embedded in the quagmire of the old organization's structure. Companies have brilliantly crafted jewels that are stuck in ugly, awful boxes.
In this case, the startup team took the money it had been allocated and went to work with an investment banker. In essence, it took $10 million and told the investment banker, "Manage this as if you were making any entrepreneurial investment." This approach simply ripped the project right out of the guts of the organization, and the result was a project that works and feels like a $10 million startup. The larger, older company is actually seeing and experiencing what it's like to do a startup — learning more than it could any other way.
Chris Newell: The challenge facing every company and every organization today — whether or not it's a startup — is, How do you get people to think in a new way? I had an experience with Lotus and Lotus Notes several years ago that illustrates how easy it is for people to become captives of their own mental models. Lotus has always been a technology-driven company. But about four years ago, a group of us began to see Notes as more than just technology — it was an enabling technology. It could actually create customer intimacy, capture intellectual capital, facilitate knowledge management, and, in the process, create new value. But concepts like these — global teaming, distance learning, knowledge management — are hard to implement. If you're used to thinking in terms of technology, rather than in terms of solving problems around people working together more effectively, these terms sound vague. They make you very uncomfortable.
What it takes is learning to think in a way that sets you apart, that defines a whole different playing field. We've created a new mission for Lotus: to inspire innovative solutions that transform communication and knowledge into value. And our value is both in connecting communities in a way that shrinks the world and in providing access to ideas that will expand the world.
We came up with that idea through a process that involved 450 people inside the company. When we presented it to the operating committee, I asked, "Does anybody have a clue what this actually means?" One senior manager said, "It means we'd all better get ready, because a whole lot of sacred cows are at risk." That's what it takes to stay entrepreneurial — whether you're a startup or you're trying to reinvent yourself.
Maggie Hughes: There's less and less difference today between a startup and an established company — in fact, that may be an outmoded distinction. The success or failure of any company boils down to one question: Are you operating from passion? If you are, you're going to succeed. If you believe in what you're doing, you're going to make sure that everyone around you believes in it too.
Our company has grown from zero dollars to $5.6 billion in assets because of passion. I have told the same story to Wall Street analysts for years: This isn't the soft stuff; this is the stuff that matters. To me, the lesson is simple: If you're a startup, stick to your guns. Because there are some smart, big companies out there, and they will want to partner with you. They won't want to destroy you, they'll want to work with you. And eventually the tables will turn, and you'll become their biggest source of new income.
Here's the phrase that sums it all up: If you're doing the right thing, it will work. The right thing is hard to define, but you know it when you hit it. Eleven years ago, our company was a pay phone and a card table. Today two of the world's largest financial giants consider us their partner. We have around 450 employee-owners. Last year, we generated almost $400 million in revenues — that's nearly $1 million of revenue per person — and we wrote more life insurance than any other company in the United States. So we know that we're getting scale without becoming gigantic — which tells us that we're doing the right thing.
John Patrick: Big and small companies, old and new companies, established companies and startups, are all facing the same challenge. But it's not really about how you organize your company; there are a lot of organizational models that can work. And it's not about whether you're centralized or decentralized; I think the world is moving in both directions at the same time. What's really important is recognizing that, because of the Net, individuals are in charge now.
The companies that understand this, and act on it, will win. Take the news business, for example. Editors and publishers no longer decide for us what we're interested in, when we're interested in it, and the depth or degree to which we're interested. We decide. We choose what we want to explore, and when and how we want to explore it.
That shift is happening everywhere. Companies that still think that they're open only Monday through Friday, from 9 a.m. to 5 p.m., are operating on a totally obsolete notion. You can see the shift happening industry by industry: The Net turns everyone into a startup. It's a radical shift — it really does mean power to the people. And you have to evolve if you're going to survive.
What's Your Country's Strategy?
Oscar Motomura: There is a fundamental question that often gets overlooked: What does a company owe to its country? In Brazil, I'm in the management-education business. In our programs, we stress the important link between business and the environment in which it operates — the bond between the company and the country. I see business forgetting that one of its most important roles is to help create the environment and the society in which it functions. Companies not only need to craft their own strategies; they also need to help craft a national strategy. It's not enough for the company to move in a positive direction; the country must also move in the right direction.
The question for Brazil is, What kind of future will we create for our country? For businesspeople, the question is, What kind of strategy can we help to develop to realize that future? Right now, there are two competing visions. One side believes that Brazil needs to become more industrialized, which I believe is completely wrong. The side I agree with believes that Brazil should capitalize on its ecological assets and position itself for the future by investing in its irreplaceable ecosystem.
Most recently, I've sought to mobilize the business community to have a serious conversation about the country's future. There is a network of almost 5,000 senior executives from the 27 states of Brazil who have taken our Advanced Management Program. I've asked them to organize dialogues with academics, businesspeople, politicians, environmentalists, and scientists in their communities to discuss alternative futures for Brazil. What we're looking for are radically innovative strategies. After each group sends us a short paper summarizing the results of its dialogue, we'll cull the best ideas and convene a seminar in Sao Paulo, in April, with representatives of all 27 states.
David Dreyer: I want to continue the thread that Oscar has introduced — the link between companies and countries — and relate it to an issue that I'm involved in here in the United States. Not long ago, I was visited by Julian Bond, the chairman of the NAACP. He told me about a heroic effort that he's making to transform that organization — to modernize it, to build it into a vital operation. But the picture he painted suggests that we have a long way to go in this country to combine economic growth and social well-being.
He told me that the NAACP has 2,220 volunteer branches in the United States. Some branches have no telephones. Some have telephones but don't publish their numbers because they're afraid of harassing phone calls — which makes it impossible for people who need help to call them. Many of the branches don't have fax machines, and most of them are not on the Internet. His question was, How do I bring this organization into the 20th century? The answer was, You need to bring the organization into the 21st century.
Here's what I took away from Julian Bond's visit. First, when it comes to the new economy, we need everybody to participate in it. It is fundamentally damaging to the country's future to have an organization like the NAACP isolated from the technology that is helping to create the new economy. Second, a division between the information "haves" and the information "have-nots" creates a national political problem. It is very hard for elected officials to proceed with the work of global trade, international economic development, and global investment when people in cities and towns across the country are excluded from those policies' benefits. And third, it is not healthy for this country to have so many people who are excluded from all of the opportunities — all of the startups and other changes — that the new economy presents.
Steve Pontell: We face a huge challenge: The organizational infrastructure that was created to meet social needs in the past is simply not relevant to today's leaders. In the past, there were plenty of organizations that people joined to help meet community needs: Rotary, Kiwanis, Masons, chambers of commerce, and more. But the leaders of the new economy just aren't joining those organizations. As a result, when it comes to business helping to solve social problems, there's a lack of leadership, a lack of vision, and a lack of organization. All you see are tactics: businesspeople getting involved on a case-by-case basis, coming up with on-the-spot initiatives. Previously you'd see an organization like Rotary launching an international effort to eradicate polio. That's a big vision — one that has involved decades of effort and millions of dollars, and today it's approaching its goal.
I see three things missing from today's leaders. First is a vision — an understanding of what really needs to be done. Second is the exercise of true leadership. People are afraid to step out and champion a cause because they are afraid to be held accountable — they're afraid that they will be blasted in the media if anything goes wrong. And third, there is no strategy for dealing with the truly complex issues of our time.
Those problems are made worse by companies that are becoming less and less connected to their communities. Even a place like Minneapolis — with its legendarily civic-minded corporate culture — is starting to have difficulty getting business leaders to plug into social and community causes. Las Vegas is now growing by something like 6,000 people per month — which is forcing the city to open a new school every month just to keep up with the growth. But as Wall Street investors have taken over ownership of the casinos, investment in the needs of the local community has started to lag. In Los Angeles, the problem is different, but the result is the same: Corporate management turns over so often — every two years, there's a major change at the top of most organizations — that there's no way that executives have time to get an understanding of the community, much less to connect with it.
Part of the problem is simply time — it takes more time to make a connection. And part of the problem is definitional: What do people want out of their lives?
The Really Big Picture
Karen Stephenson: As an anthropologist, I hang out not only in corporate jungles, but also in real jungles. About 20 years ago, I found myself in a situation that taught me a lot about the laws of human interaction. I was in Guatemala, cutting my way into the rain forest with four other people. We were in a jeep on back roads, living off the land, when we got held up by a gang of renegade soldiers. There were seven of them and they told us to get out of the jeep and line up. I got a machine gun shoved in my ribs. I instantly knew that we were in the kind of situation that you read about: People disappear and are never heard from again, then years later, someone stumbles over some bones.
As the soldiers started taking our stuff out of the jeep, one of the people in our group, a man named Fred, began talking to the leader in a casual way. And when the soldiers had finished removing our things, Fred actually began putting them all back. He was very subtle about it: He kept talking to the leader, telling jokes, asking for directions — until he'd put everything back. And then there was a moment that I'll never forget. It was the moment of life or death, and everybody knew it: Either the leader was going to let us go, or he was going to kill us. At that moment, he kind of gave a shrug, took a few small items from us and a couple of our machetes, and then sent us on our way.
I understood then that, while I spoke the language of that country, I didn't speak the culture. Fred spoke the culture. He knew how to use the culture to turn the situation around. Years later, when I thought back to that moment in Guatemala, it occurred to me that there are underlying patterns of interaction between humans. I have degrees in chemistry and in physics; and in those sciences we know that there are underlying patterns in how atoms and molecules behave. As I've studied organizations, I've come to conclude that when you see people networking, schmoozing, or fighting, you're seeing underlying patterns that are just as deeply embedded in human principles as is anything in physics or in chemistry. Yet these patterns don't show up in the organizational charts that people draw at work — they're encoded in the relationships of trust that allow us to work together.
For most companies, the problem is that these relationships are invisible — and the knowledge embedded in them is also invisible. As such, it can't be tapped. In most big companies, innovation is accidentally discovered, and just as often, innovation is accidentally lost. There are no mechanisms to reveal the relationships of trust. To compete today, you have to be innovating continuously, which means that you have to be able to see the relationships of trust inside the organization.
Once you can visualize tacit knowledge, you can do something with it. You find repeating patterns of interaction — hot spots — that define networks of trust and reciprocity. Once you find those hot spots, you know where to find people who are innovating. The next question is, How do you scale trust? Here's the big challenge: Technology without people won't work. People without technology won't scale. Particularly in virtual networks, where you are working with people you've never met, you have to find a way to create trust and to scale it across the network.
Another question is, How do we create networks of trust that allow for diversity? As an anthropologist, I've learned that, primordially, trust is formed around the campfire. Trust is all about homogeneity: You look like me, you dress like me, you talk like me — I can trust you. But today, if I'm going to learn something new, I've got to trust people who are different from me — and that means diversity. Not diversity for reasons of political correctness, but for reasons of innovation. The challenge today is to build networks of diversity that fuel innovation, even when our primordial instincts tell us otherwise.
Ron Cappello: Here's my story about trust. I wanted to do some work with an Argentine company, so I sent some material down there to present our qualifications. When I called to see if our materials had arrived, I was told that we weren't being considered for the job — because of a man in New York who was screening the candidates. I called this man, and he told me that he'd rejected us because, four years before, he'd been fired from one of our parent group's companies. Period.
I told him that I understood how he felt, but that our company hadn't even been part of the group four years ago. I asked him if we could at least have lunch, since we were both in New York. There was a long pause, and then he agreed to meet me — the next day.
At lunch, he told me that he was still angry at how he'd been treated. I told him that I didn't blame him. I also told him why he should consider us for the job. The next day, he called to say that he'd agreed to have lunch because he'd hoped that I'd turn out to be a jerk. Since I wasn't a jerk, he would now consider us for the project.
That made me wonder, How can I get this man to trust me? I could tell that he was a sensitive person, and while he was willing to give me a chance, he really didn't know me. So I called him back and made a simple proposal: I'm going to guarantee that you and your client will be satisfied with our work. If you're not satisfied, we'll continue to work with you until you are satisfied — at no additional cost to you. He started to ask why I would make such a guarantee, and then he answered his own question: "You're making this offer because you want me to feel safe with the client and to have insurance if I recommend you." I told him that he was right-on. Four days later, he called and said, "The job is yours." To me, that's an example of how you build trust.
Karen Stephenson: It may seem simplistic, but I sort people into three categories: the strong, the meek, and the weak. The weak will mimic the strong, because they're good at managing upward. When you're managing an organization, that mimicry can make it hard to distinguish between the strong and the weak. But the way to tell the difference is to look at whom each serves. The strong serve the meek. The meek serve the institution — they're the people who willingly do the work. And the weak serve only themselves. The meek fear the weak, because the weak are bullies. The strong have compassion for the weak and either try to get them on board or, if that fails, get them out of the organization. And the strong know that they need to serve the meek, because the meek truly run organizations — and serving them communicates trust.
Clive Meanwell: There are four themes that come up in conversations that I have about what matters in the new economy. The first is, Whatever you do in your work life is actually pretty small. We all come from a generation that likes to believe that it's going to change the world. Well, guess what? If any of us were going to change the world, odds are that we would have done it by now. The point is, that's okay. Because we're all going to change something. We're all doing small, important things—and that's actually great. Because the people you really care about, whom you want to be proud of you, are small but important people—wives and husbands, children and family.
The second message is, Get on the long wave. Try this little experiment: Make a time line. Start with the Magna Carta, move on to the invention of the steam engine, then the French Revolution, then the atom bomb, and end with the cracking of the DNA code. Now take a look at these events. The long wave is all about individual freedom, individual responsibility, individual opportunity. The long wave is the story of the individual liberation. Of course, humanity has also had its wrong turns—which is why I threw in the atom bomb, an invention that could lead to a very short wave if we're not careful. But humankind saw that problem and uttered a collective "Whoops!"—and headed in a wiser direction. What this means in business is that if you want to be a change agent, be part of the long wave: Align yourself with the forces that, over time, are going to win.
The third message is, To make real change in an organization, you have to align your intellectual power with the civil authority. The civil authority in a company is its power source. It's nice to say that knowledge is power, but of course that's a bunch of hooey! Power is power. And as a change agent, the power you've got is the power of new ideas—which is much more abstract and a lot less actionable than the power of the civil authority.
So how do you claim the power it takes to move your ideas into the company? You have to get inside the psyche of the individuals who hold the civil authority. You have to accept their authority and then understand how to move them beyond where they are. I don't deny that's a very difficult task, because, once again, it brings us back to trust: You have to trust people; you have to put your life in the hands of someone else.
And that leads to the last message: The flip side of trust is fear—which is something we've all got to learn to live with. I look at all the things that we talk about in terms of the new economy, and it's just plain scary. It's scary every day. You're on a tightrope. And there are people at either end, holding the damn thing for you. They're your investors, your coworkers, your suppliers.
And the problem is, you don't know any of them well enough not to be afraid. And you know what? You have not choice other than to live with it. You have to embrace the fear. Every CEO I know is afraid every day, but still they push on. That's simply part of the big picture: It's okay to be afraid, even if it doesn't always feel that great.