Change Agent - Issue 39

Last year, I needed some gears to use as props for a fancy presentation that I was going to give. Not just the kind of motorized toy gears that you can buy at a toy store, but real metal gears. Where do you go when you want to buy metal gears? I found a place by using a low-tech tool: the Yellow Pages. As it turns out, there is a gear shop (with a name like Acme Gears or Mr. Gears or whatever) just a couple of blocks from my house.

I got there at 7 AM and found a 100-square-foot shack with a little sign out front. I opened the heavy metal door and saw a little room with a floor that was covered with metal shavings, dust, and grime. A three-year-old calendar hung on the wall. And a huge gear-making machine filled the room. Operating the massive mechanism was an enormous guy with one hand and a big grin. There was no doubt that he had been making gears all of his life and that his shop was organized, optimized, and experienced at the art of making beautiful brass gears. I didn't want to ask if a gear-making accident had led to his injury, but I did get the gears of my dreams and a vivid memory of what the inside of a gear-making factory looks like.

I left the factory and drove to my office, where I was struck by what I saw as I walked in: row after row of cubicles. Every cubicle had a telephone, a chair, and a PC. That was it. Except for some folks who worked in the mail room, every person in the company used precisely the same tools to do their job. There was no way to tell what our company made -- or, for that matter, if we made anything.

Here was a business that looked as if it could be in just about any line of business. And my guess is that your business looks similar. You might be in the chemicals business, the glass business, or the media business, but odds are your office has a phone, a PC, and a window -- just like the office of Jack Welch or Steve Jobs or the struggling entrepreneur down the street.

So what business are you in? Years ago, this was every consultant's catchphrase. The best way for a consultant to start a conversation and to get a new client was to ask a CEO that question -- and then to watch her squirm. So you think that you're in the cork business? You think that you make money selling corks to vineyards for wine bottles? Nonsense! You're in the liquid-containment business! You need to establish new ways to leverage your liquid-containment expertise -- dikes, maybe, or semipermeable osmotic barriers for exotic-gas chromatography experiments.

Big companies, little companies, smart companies -- they all fell into the trap of coming up with ever-more-vague descriptions of what they did. "We enable health-care professionals to thrive." No, actually, you make gauze. But nice try.

Why bother with vague mission statements and product-line descriptions? Consultants aren't entirely evil, you know. They did this to help executives see beyond the factory floor and realize that the factory could be leveraged. There were new markets and new opportunities out there for U.S. Widgets, but you weren't going to find them if you kept obsessing about replicating your current clients.

That was factory-driven strategy: We have a factory, therefore we're in the business of making a lot of stuff in that factory. Mr. Gears didn't get any bigger because his factory couldn't get any bigger. He was a one-man shop and happy about it. But most leaders who focus on growth end up focusing on how to make more stuff in the factories that they've got -- and then on how to build more factories.

Only after satisfying that urge do executives consider whether they can actually sell enough of their stuff into a new market to keep the factory busy. One company that I worked with made very high-end aerospace parts using high-tolerance machinery and exotic materials, and it sold those parts to the military-industrial complex. We're talking rocket ships and missiles. The company's CEO then made the mystical decision that the ski industry really needed a ski binding built to the same specs. The company used the same factory to make the world's best (and its most expensive) ski bindings. Of course, the venture failed, but that CEO did a good job of following the factory-first mantra.

So what does all of this have to do with a gear shop?

Gear shops are no longer the engine of our economy. The rows and rows of PCs and cubicles in your office now make the world hum. Suddenly, factory-driven strategies make no sense at all. Just because you are currently in the business of providing real-time box-office data to the horse-racing industry does not mean that you need to stay in that business. Other than your brand and your relationships with customers, your only asset may be the smart people who work in your office. And those smart people are totally and completely able to adjust to a fundamentally different kind of business within a week.