Like this year's Agenda issue, the April:May 1998 issue of Fast Company featured a report on the people, teams, and companies that are creating the future of business. Last year's role models were as follows:
Steve Miller of Royal Dutch/Shell, whose approach to grassroots leadership offers a powerful model for others to follow — by showing that commitment and creativity come from all parts and from all levels of an organization.
David Duffield of PeopleSoft Inc., who (along with Steve Zarate) shows how humane technology can generate huge productivity gains — and let loose the unbridled human spirit.
Al West of SEI Investments, a pioneer in total teamwork who heads an organization that has much to teach about becoming a take-no-prisoners competitor through one-for-all, all-for-one collaboration.
Ray Anderson of Interface Inc., whose commitment to sustainable growth demonstrates the zero-waste practices that every company can use to merge economic growth with social responsibility. Here's an update on the progress of these four Agenda setters.
Shell Learns to Lead
Is Steve Miller, group managing director of the Royal Dutch/Shell Group of Companies, worried that recent mega-mergers in the oil industry (BP joins forces with Amoco; Exxon and Mobil create a new global giant) will challenge his company's leadership position?
Hardly. "If anything," Miller says, "all of this merger activity has made grassroots leadership an even greater imperative. We want to create hundreds of small, entrepreneurial businesses that come together to make one big business. Grassroots leadership lets you break down a massive company into a series of bite-size, manageable, highly effective pieces."
Miller's basic argument: Enduring growth doesn't come from cutting deals in the executive suite; it comes from the ground up. His secret weapon: a series of "retailing boot camps" in which frontline employees work together to develop products, to share ideas, and to foster continued innovation. A recent study of these boot camps estimated that they have added more than $300 million to the company's bottom line since 1996. But the real value of these camps, Miller says, lies in the way that people at Royal Dutch/Shell are now able to create learning opportunities on their own.
"We're scrambling to keep up with the phenomenal rate of learning around here," he says. "It's as if, in the first year, people weren't sure how to add and subtract — and now, a year later, they've already licked calculus. So we're trying to figure out how to create a grassroots-leadership graduate school. In other words, how do you get your doctorate in this stuff?"
Power to the PeopleBorg
Every high-flying software company hits turbulence at some point. Today PeopleSoft Inc. finds itself traveling through stormy weather. Its stock, which was trading at more than $50 per share last April, has recently been trading as low as $22 per share. Also within the past year, the company announced its first layoff (430 employees, or 6% of the workforce). The causes of all this turbulence: stiff competition, slow revenue growth, and fears that the Y2K problem may lead customers to postpone their automation plans.
What is PeopleSoft relying on to power its comeback strategy? On the power of the PeopleBorg. That's the nickname that CIO Steve Zarate has given to the digital infrastructure that links the company's 4,000 people. The term, which Zarate borrowed from "Star Trek," refers to a global network of laptops, shared applications, email exchanges, and intranet conversations.
The way to ramp up growth, argues Zarate, is to ramp up the power of the PeopleBorg. "Sure, it's been a tough year," says Zarate. "But you can't grow by 100% per year forever. We have to embrace innovative tools that lower costs, increase productivity, and help us grow." And, he adds, it is precisely during tough times like these that the company's commitment to "infomocracy" becomes most valuable: "Everyone should know everything — both good news and bad news." Here's hoping that 1999 brings PeopleSoft more of the former and less of the latter.
At SEI, Teamwork Pays
Success in the marketplace poses challenges even to companies that don't experience setbacks. There's no denying that 1998 was a banner year for SEI Investments Co., a teamwork-obsessed firm that provides bank-trust automation for 85 of the top 200 U.S. banks and back-office services for leading mutual-fund providers. SEI's stock has traded as high as $120 per share (up from a high of $37 in 1997), giving the outfit a market value that approaches $2 billion. But doesn't runaway growth put extra pressure on a company that's organized around 140 teams and that has neither a centralized support staff nor an HR department?
"Teams are difficult to manage," admits CEO Al West. "If you're the head of a team, you have to become more of a coach than a leader. Your success is based on how well you work with peers. We couldn't have achieved our current level of growth and success within a hierarchy. The problem with hierarchies is that they require you to engineer everything. And there's just no way that we could have engineered everything that has gone right for us."
SEI's biggest challenge, says West, is to reinforce a shared sense of purpose within a fast-paced, decentralized environment. "We all need to be singing from the same hymnal," he says.
Another big challenge involves taking time to enjoy the sweet smell of success — and to recognize the performance of successful teams. Toward that end, SEI sponsored a 1998 holiday bash that resembled an Academy Awards ceremony more than it did a run-of-the-mill office party. The 1,600 people who attended the event were treated to short videos made by teams that had registered better-than-expected performance.
"We gave these teams video equipment and an editor," West says, "and they each communicated something about the job that they did. One of our teams from asset-management services — a team that grew faster than any other team in the company last year — created a hilarious video about conquering the world. It was a real hit and very informative." West plans to archive the videos and to make them available on the company-wide intranet. And he expects to see even better videos next year: "Teams are no longer happy with just having the best job performance. Now they want to make the best videos too!"
Interface: Waste Not, Want Not
The most tangible environmental innovation at Interface Inc. in 1998 was its product catalog — a 2-pound, 10-ounce book that could prove to be a revolutionary force within the interior-design world. Interface is one of the world's leading producers of commercial carpet, and its products are everywhere — from the floors of the U.S. Capitol to the offices of MTV. The company has launched an effort to become completely sustainable — to reinvent its products and production methods so that new carpet is made out of old carpet. In the words of Ray Anderson, founder and CEO, Interface aspires to be the "first fully sustainable industrial enterprise, anywhere."
One of the most wasteful aspects of Interface's operations is the manner in which the company markets its line of products. Like other companies that sell floor coverings, Interface presents its range of carpets and colors (more than 1,000 combinations in all) to designers, architects, and customers in bulky architectural folders that contain small squares of carpeting. A complete set of Interface samples weighs 400 pounds, costs $1,500 to produce, and takes up as much shelf space as an entire design library.
Last June, Interface introduced a catalog that dramatically reduces carpet-sample waste. The catalog, a perfect-bound book titled "Square Feet," displays every design and color of carpet that Interface offers. It has the stylish presentation and photographic quality of a coffee-table book, and it costs just $30 a copy to produce. By using it, Interface expects to save tens of thousands of pounds a year in carpet and cardboard.
There were several other innovations. In January, Interface introduced a carpet tile in which both the pile and the rubbery backing are composed of 100% recycled material. In February, it turned on a solar array at one of its factories in the Los Angeles area. The half-acre array is the largest commercially operating solar grid in the contiguous United States.
All of which has made Anderson a source that people turn to when they need advice on bringing sustainability to business. During one recent month, he spoke to audiences in China, Japan, and Maine. He has also written a book, Mid-Course Correction: Toward a Sustainable Enterprise (Chelsea Green, 1999), that describes how he is re-creating Interface. Says Anderson: "I want to pioneer the company of the next industrial revolution." — Charles Fishman