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Steve Bennett, president and CEO, Intuit Corp.
Even during the Internet Golden Age, Silicon Valley’s siren song was just background noise for Steve Bennett. It wasn’t that he didn’t get job offers. As executive vice president of GE Capital, his phone number, like those of most of Jack Welch’s top lieutenants, was on speed dial at the big search firms. But Bennett loved GE: He had spent his entire 23-year career there. Welch had rewarded him with a variety of promotions, underscoring one particularly upbeat review with a 40% raise.
Then, on November 29, 1999, Bennett got a call that changed everything. Intuit, the software outfit famous for Quicken, TurboTax, and QuickBooks, was looking for a CEO. The requirements: the ability to run a multibusiness company, a track record for growth, a talent for innovation, and the skills to lead an organization that is obsessively devoted to its people. Bennett was intrigued. “I thought that I would learn more in this job than I would ever have the chance to learn if I stayed at GE,” he says. “Plus, I wanted to prove that I was more than a one-trick pony.”
Running Intuit would take a whole stable of tricks. Scott Cook had founded the company in 1983 and guided it through its first decade. In 1994, he hired Bill Campbell to take the reins and steer Intuit through its growth years. But once the company’s revenue neared $1 billion and the product line became more diverse, Cook knew that he needed someone with significantly different skills to lead the company into the $10 billion club. Intuit was good — its products had extraordinary share, and its customers were loyal — but it had hit the wall at the $900 million mark.
Besides lacking operational rigor, Intuit was missing opportunities for growth. It had focused so relentlessly on its core customers — businesses with fewer than 20 people — that it had failed to keep pace with customers who had outgrown its software or who had specialized needs that the current product line didn’t satisfy. “When a company does something that it’s good at and gets good results, it tends to get stuck in a rut,” says Cook. “The world had moved ahead, yet we had not changed our mind-set. I was having a frustrating time trying to make that change happen.”
On Friday, January 21, Bennett accepted the job, sold his GE stock, and walked out the door. By Saturday, he was on a plane to California. He spent Sunday in press training, debuted as the new CEO on Monday, and bought a house in the Valley — on the spot, in the dark — that night.
Bennett proved equally resolute in his first weeks and months at Intuit. While he had never led a company outside of GE, he had run a variety of business units over the course of two decades and had refined a plan for taking on new challenges. By the time he arrived at Intuit’s campus in Mountain View, he had, for example, already amassed a vast amount of information about the company and how it worked. “The interview process is where you start,” he says. “That’s where you ask all of the questions about what it takes to be successful: How do you set objectives? What’s the business management – review process? How do you do budgets? Who makes decisions? Which functions are strong?”
No sooner was Bennett in the door than he hit the road, touring Intuit’s major sites and testing against reality the hypotheses that he had formed during interviews. In 30 days, he visited a dozen locations and talked to hundreds of people, gathering feedback and insight on what was right — and wrong — with the firm’s operations.
What he found was an organization with a democratic, employee-centric culture — a place where managers could choose whatever PC suited them, no matter what other business units were using; where meetings happened simply because nobody had the nerve to say, “This is a waste of time”; and where one group owned a product’s development, and another owned its sales support. “We were focused too much on making sure that everybody felt good and not enough on high performance,” says Bennett.
Intuit managers, he felt, had bought into an almost folkloric belief in false paradoxes — you could be either innovative and entrepreneurial or rigorous and strategic, fast or cost conscious, customer driven or disciplined — and it had infected how they ran their own organization. “I wanted them to know that a company can be focused on high performance and still be a good place to work,” he says.
Bennett had expected to spend two months gathering data, but after five weeks, he was confident enough to act. He was also scheduled to give his first overview of the company at an analysts’ meeting on March 16. He knew that employees would also be looking for signals. Facing that group, Bennett did something that, at the time, was unthinkable: With the company’s founders sitting in the audience, he stood up and said that Intuit was underperforming compared with the opportunity it faced. “In Silicon Valley in early 2000, you hyped first and then hoped you could deliver the results,” he says. “We spun that upside down.”
That meeting was as much a message to Intuit’s employees as it was to the financial markets. Soon after, Bennett followed up with a document titled “Steve’s Dream for Intuit” that mapped his plan for turning the company into a high-performance machine. It turned many of the company’s long-standing beliefs and practices on their head and stunned the firm’s executives. “Most people thought that I was smoking dope,” he says. “Out of 35 top managers in the company, there were probably 3 who thought that what I talked about was doable.”
Among his goals: Put leaders of business units totally in charge of the end-to-end customer experience, institute zero-based budgeting, standardize equipment as a way of managing costs, and exit businesses such as insurance where Intuit couldn’t control the critical success factors. “The response was, ‘We’re in Silicon Valley. We can’t manage costs. We’re all about growth!’ My response was, ‘What’s going to pay for growth? You run a tight ship, you give some to the shareholders, and you invest the rest in things that customers care about.’ “
Bennett began his change program by restructuring the org chart so that he had 18 direct reports instead of 8. “I took out some layers so that I could connect directly with more people in order to drive change faster,” he says. “If you have that many direct reports, you don’t have time to meddle in their business. My job is to conduct the orchestra, not to play all the instruments.” He was even willing to question the treasured Intuit operational values that were posted on the company’s wall. Value number six, for example, was, “Speak, listen, and respond.” That was widely understood to mean that everybody had a voice and that top management should take the time to listen. It’s a lovely sentiment. Trouble is, there are only 24 hours in a day — even for indefatigable CEOs. “As soon as I was appointed, 200 people wanted to come and see me,” says Bennett. “I told my assistant, ‘Tell them no.’ If I spent all of my time talking to all of them, then who would do my job?”
Intuit managers soon learned that Bennett had his own corporate credo: Mind your minutes. Indeed, talk to any Intuit staffer for more than a couple of minutes, and you’re likely to hear about “the critical few versus the trivial many.” That’s Bennett code for successful time management. Spend too much time on the “trivial many,” and you’re screwed, he says. Focus on the “critical few,” and success will surely follow.
Raymond Stern, Intuit’s senior VP of corporate development and strategy, says that the discipline has been liberating. “One of the things that Steve is amazingly good at is getting a crisp understanding of priorities. All of the top-level leaders in this company have a one-page list of priorities. They learned that from him.”
That focus on priorities has been particularly successful in setting the company’s strategic direction. Three years ago, Intuit was largely geared toward its consumer and tax businesses while its small-business division lacked focus. Today, the company is galvanized by its new “Right for My Business” strategy, which develops customized business-management solutions for various industries. Intuit now develops products specifically for accountants, retailers, building contractors, and nonprofit businesses that go far beyond traditional accounting functionality. It has also introduced products aimed at businesses that are larger and more complex than those targeted by its original QuickBooks software. The market for small-business management solutions, estimated to be worth $18 billion, presents an enormous opportunity for the company, and Bennett expects that it will generate two-thirds of Intuit’s revenue during the next few years.
And despite all of the new big-league initiatives — the focus on operational rigor, time management, the Six Sigma quality-improvement process, zero-based budgeting, and hard-assed decision making — Intuit has not lost its small-company feel or its dedication to being a great place to work. Bennett himself now has more time for value number six, and he’s often seen hanging out in the company cafeteria or wandering around the office, talking to employees. He sends handwritten notes to staffers who have done something praiseworthy, and he’s scrupulous about making time for golf.
Stern, who was once a consultant, has seen a lot of companies and is now a true believer in Bennett’s work-hard – play-hard philosophy. “There are a lot of great jobs in the world, but few great companies to do those jobs in,” he says. “I love what I’m doing. I think the company is going places. And I’m having more fun in my career than I’ve ever had before. I think that feeling is pretty universal.”
Melvin Wearing, chief of police, New Haven, Connecticut
Melvin Wearing’s first day as New Haven’s top cop was, at best, bittersweet. Sure, he had finally gotten the position he’d been dreaming of for 28 years. But his moment of glory was largely overshadowed by the flagrant misdeeds of his predecessor, Nick Pastore. Flamboyant and controversial, Pastore had just resigned after fathering an illegitimate child with a convicted prostitute. The scandal was so salacious that Wearing’s ascension became a ho-hum postscript to the big story.
“I remember seeing the ceremony for Chief Wearing on the local news, and everybody focused on the fact that Nick Pastore had gone out under this cloud,” says Lieutenant Bryan Norwood, New Haven’s chief of detectives. “Nobody mentioned that Chief Wearing had been a cop here for almost 30 years.”
When Pastore stepped down, Wearing stepped into a huge challenge. The department’s credibility had been trashed. Morale was terrible. And communication between the chief’s office and the cops on the beat was often conducted through union grievances.
Pastore, a tough, hard-charging former police officer, had earned a national reputation for bringing community policing to New Haven, a city of about 120,000 whose criminals were so brazen that drug dealers once staged a gun battle on the courthouse steps. During Pastore’s seven-year tenure, the crime rate dropped by 34%, and the department was featured on 60 Minutes. Pastore was popular in the community and prided himself on being “the people’s cop.”
But the chief was widely disliked by the department’s rank and file. When the story of his resignation hit the papers, says one officer, “people cheered. It was like, ‘Ding, dong, the witch is dead.’ ” Indeed, many suspected that a disgruntled cop had tipped the media to Pastore’s paternity problems.
Wearing had been Pastore’s assistant chief, and while the two men shared a belief in community policing, stylistically, they were complete opposites. Even Pastore’s supporters use terms such as “contentious,” “eccentric,” and “anticop” to describe him. Wearing they call “compassionate,” “humanistic,” and “a source of inspiration and pride.” On February 24, 1997, his first day on the job, Wearing moved quickly to telegraph the changing of the guard.
First up: a visit to each of the day’s four lineups (the roll call of officers that begins each shift) — a practice that Pastore had shunned. Although he’s partial to sharp suits, Wearing donned his dress blues for the occasion. “It was important for him to send a message that he’s proud of police work and that he supports the work of the rank and file,” says Carolyn Bove, assistant police planner of the NHPD’s Planning & Research Unit. “He knew that people felt that the prior chief had demeaned police work.”
Lest anybody think that this was an occasion to get rambunctious, however, Wearing had another message, delivered in his typical low-key fashion: Don’t even think about messing around. For Wearing, it wasn’t just a matter of restoring the force’s credibility. As the department’s first black chief, he knew that he too would be under special scrutiny. “As the first African-American in this position, I knew that everybody wanted to see whether or not I could cut it,” he says. “I knew that I could do the job. I wasn’t going to let anyone cause me to fail.”
For four years under Pastore, Wearing had been a dutiful number two, faithfully executing his superior’s plans and keeping his mouth shut about what he didn’t like. So when he was handed the reins, he didn’t have a secret agenda that he was itching to implement. “It happened so quickly — in the run of a week,” he says. “I didn’t have time to think about what I would do.”
Still, he had seen enough to know where the force needed help, and he quickly moved to fill the gaps created by the full-tilt drive toward community policing. Wearing upgraded the department’s vintage technology, installing air-conditioning and laptops in cruisers, rolling out crime-mapping GIS across the department, and upgrading office equipment. He raised the standards in the training academy to exceed those mandated by the state of Connecticut, so that people couldn’t accuse him of lowering standards to get minorities in the department.
Because Wearing had come up through the ranks, his appointment didn’t trigger widespread internal panic. But after a few months of watching his staff perform, he began to make his moves, firing one captain who got caught with his hand in the cookie jar and removing another whose skills fell short of Wearing’s higher standards. And he began a rigorous effort to increase the department’s diversity. By 2002, women and minorities made up 51% of New Haven’s sworn personnel, up from 24% in 1990.
Perhaps Wearing’s most far-reaching legacy will be his focus on quality-of-life crimes — the so-called broken-windows approach to policing. Just as Rudy Giuliani cracked down on New York’s squeegee men, Wearing declared war on New Haven’s vagrants and hookers, street-corner dealers and boom-box blasters. By nipping misdemeanors in the bud, Wearing argues, police may deter more-serious crimes.
His approach seems to be working. In 1997, New Haven logged 13,950 major crimes; in 2001, the city had a total of 9,322. In the past four years, the department has earned four national and international awards for community policing. But along with the diminished crime rate comes a host of raised expectations. “Ten years ago, if you got the drug dealer off the corner, people were fine with that,” says chief of detectives Norwood. “Now they want the drug deal off the corner, the lights on, the streets cleaned, and the traffic flowing. That’s a lot, but when we tackle all of those issues instead of just the drug deal, it makes the whole neighborhood safe.”
Chief Wearing understands that he has to keep making an impact: “The real challenge for me is to sustain this over a long period of time.”
The Whiz Kid
Jim Berra, VP of loyalty marketing, Starwood Hotels & Resorts
On a standard-issue filing cabinet outside Jim Berra’s office, 12 sparkling Freddies sprout like stalagmites in a fabulous crystal cave. On the windowsill inside his office sit 9 more. Freddies, obelisk-shaped totems made of Tiffany glass, are the hospitality industry’s version of the Oscars, awarded to the best hotel and airline frequent-traveler programs. That would make Starwood Hotels & Resorts the Lord of the Rings of its business and Berra, the company’s 30-year-old vice president of loyalty marketing, best director.
Winning a dozen awards in any year would be impressive. But winning 12 out of 16 this year — the annus horribilis, of the hotel business — was right out of a Hollywood script. Berra, a genial law-school dropout with a passion for golf, faced a tougher-than-usual transition when he was promoted to head of the Starwood Preferred Guest program in July 2001. He had just lost 20 of his 24 staff members when his unit moved from Boston to headquarters in White Plains, New York. But that loss paled in comparison to the disaster of September 11.
“September was pretty crazy,” Berra says. “I had been trying to make a transition from Boston to New York, but then everything became much more confused. We had crises to deal with, worrying about how we would care for our members and how we should change our marketing strategy.”
Starwood’s immediate response was to protect its best customers, assuring its Platinum members (those who log at least 20 visits and spend $15,000 at company hotels annually) that their elite status would be preserved, even if they couldn’t meet the program’s requirements.
The medium-term challenge was to figure out what the company, which operates the St. Regis, Sheraton, W, and Westin brands, could do to stimulate business, which, among frequent guests, had fallen by 20% in the aftermath of the attacks. There were two main considerations, says Berra: weighing what would work tactically, given the level of uncertainty affecting travel in those first months after the attacks, and what would be appropriate given the country’s mood. Berra’s response was the “1K per Day” promotion from October to January, which rewarded members with 1,000 frequent-traveler points per night at any of the company’s U.S. hotels.
Meanwhile, back at headquarters, Berra was grappling with his own problems as he tried to figure out how to reorganize his depleted team. While he was desperate for help, he couldn’t afford to hire outsiders who would need training before they could be useful. So he put the word out that he was looking for rising stars from within the company. “Utilizing that internal talent helped us ramp up quicker,” Berra says, “even though I had to warn them that they were signing up for some short-term chaos.”
As a member of the group that launched Starwood’s Preferred Guest program back in 1998, Berra had a pretty clear idea of what he wanted to do. “I understood the lay of the land,” he says, “and had a good sense of where we needed to take the program strategically.” And, like any newcomer to a job, Berra was keen to have a few big wins to energize his new team. “I didn’t want to solve world hunger in the first three months, but I was looking for a couple of things that would pay immediate dividends,” he says.
So he focused on three priorities: First, he had to build better awareness of the company’s Preferred Guest program, which lagged behind Hilton and Marriott in visibility despite its unprecedented policies of having no blackout dates and no limit on free rooms. Second, he had to find a way to measure the program’s performance. And finally, he had to research customer segmentation for future promotions.
Then he set his group to work, testing various offers against the program’s 13 million – member database. Some offers were designed to lure back customers whose use of the hotels had dropped off. Others tested various demographic and psychographic factors: Is this person a business traveler? Would she respond best to bonus points, a room upgrade, or a free night?
Some offers worked; some tanked. But for Berra, even the flops were illuminating. “This company doesn’t view failure as a problem,” he says. “The goal is to ask, Can you measure it? Can you understand why it did or didn’t work? And if you failed, great. Use that to help you determine how to move forward. You can learn a lot from a dud.”
With the efficiency and low cost of email targeting, Berra can now design campaigns for as few as 2,000 people, offering, for example, weekends in Chicago in January to people from Wisconsin and Indiana. (Don’t laugh. That particular experiment generated a six-to-one return on investment.) “The nice thing about moving everything to electronic marketing is that you can queue up version A, version B, and version C and then watch how events unfold. Then you can push the button accordingly,” Berra says. “What’s important is the level of personalization and relevancy of content that you can deliver to your customers.”
A year after his tumultuous job debut, Berra has stabilized his department enough to think about launching a few more initiatives. He’s planning a frisky promotion that features boxer shorts for aficionados of the W line of hotels, a cobranded Zagat guide for Platinum members, and a companion ticket on major U.S. airlines for every two-night stay in a Sheraton through September. And as the U.S. market for frequent-traveler programs becomes saturated, he keeps Japan in his crosshairs.
Berra is an ambitious guy, so it’s no surprise that his goal is to snag the ultimate Preferred Guest: “The president and first lady recently stayed in the St. Regis in Beijing,” he says. “I’d like to make them VIP members.”
The New Owners
Lydia Shire and Paul Licari, Locke-Ober
In Boston, there are certain things that you just don’t do: Root for the Yankees at Fenway Park. Admit that you vote Republican. Wear jeans and sneakers to dinner at Locke-Ober.
One block from the Boston Common and a five-minute walk from the state house on Beacon Hill, Locke-Ober has been a bastion of privilege and Brahmin decorum since 1875. Tucked away at the end of an alley, the perennial watering hole for politicos was a favorite of John F. Kennedy, who huddled in the private rooms upstairs, mapping his campaign for president with Arthur Schlesinger and John Kenneth Galbraith. Both Teddy and Franklin Roosevelt dined there, and Enrico Caruso (a notoriously stingy tipper) was a fan of the sweetbreads Eugénie.
But by 1999, the restaurant had fallen on hard times. Lydia Shire, proprietor of two trendsetting restaurants (both of which are now closed), was one of the first of the city’s many interested chefs to make an offer when the business was put up for sale. Knowing that the owner, David Ray, was concerned about preserving the restaurant’s heritage, she played to his New England chauvinism: “I told him, ‘You can sell it to anybody, but don’t sell it to a carpetbagger. And why not sell it to me? Who better than an Irish broad from Boston?’ “
It took Ray two years to sort through various offers, but in late July 2001, he agreed to a 20-year lease in a deal constructed by Shire and her business partner, Paul Licari. Licari, who has a long history in the restaurant trade, knew what they were in for. “The place had become a breeding ground for bad things,” he says. “It was beaten, tired, hurt. As bad as anything I’ve witnessed.”
Historically, summers at Locke-Ober are slow. But the fall is always busy, and the holidays are downright frenzied. Shire and Licari were determined to capture that business, even if it gave them only two and a half months to prepare for opening. Says Shire: “We got the permit and flew.”
Shire hired a new kitchen staff, and she worked to update the recipes on the menu. Licari supervised the waitstaff and the remodeling, overhauling the kitchen and renovating the lounge by regilding the walls, laying a new floor, and rewiring light fixtures. While they were eager to infuse new life into Locke-Ober, they knew that to change it too much would be to destroy it. “We came into an environment that dictated many things to us creatively: the name, the dress code, the price point, the menu, the physical assets, even some of the employees,” Licari says.
What’s more, the entire city was watching, and everybody had an opinion. On November 16, the restaurant reopened amid much fanfare and scrutiny. With an unfamiliar staff, a reformulated menu, and no time for a “soft opening,” Shire and Licari had feared that the launch would be tough. And the first 10 days were a disaster. Service was slow, food was cold, and the ordering system malfunctioned. “People were walking out. It was horrible,” Licari says. “You could have put me in front of a firing squad, and it would have felt better.”
But Shire, Licari, and their staff persevered. “It was round-the-clock work,” Licari says. “Everybody was here in the morning and here all night. We’d have a few hours to sleep, and then we’d be back.”
The grueling hours were largely dictated by startup pressures. But Licari says that they also signaled the new professionalism he was trying to instill. “We kept the menu, but we changed the attitude,” he says. “You have to have discipline, a leader, a work ethic. The old Locke-Ober had lost that.”
Some staff members simply couldn’t adjust to the new demands. One kitchen employee of 20 years took off his apron in the middle of his shift and walked out the back door. “We never heard from him again,” Licari remembers. But every day, he says, the gap closed a little more. “By the end of the tenth day, it wasn’t smooth, it wasn’t good, but it wasn’t ugly.”
Gradually, the furor settled down. The kitchen hit its stride, the waitstaff learned the drill, and the bar began attracting a younger clientele. By early December, things were going fairly well. But Licari insisted on keeping a tight hold on the reservation book, limiting the number of diners until he felt that the staff could handle them.
Holiday business was tremendous, and in February, the New York Times gave the restaurant a glowing review. By June, the private rooms were packed with graduation business, and the dining room was booked solid — even on Monday nights.
The partners have since embarked on an ambitious plan for renovating Locke-Ober’s nine banquet rooms. They are targeting members of the city’s young financial crowd, some of whom Licari had courted as investors. He sees corporate and private functions as the restaurant’s most significant future business. On one recent night, a party of 14 young financiers spent $11,000 on wine alone, Licari recalls, grinning.
Meanwhile, longtime patrons still recognize the restaurant they have loved for decades. Just after it opened, Shire remembers, one regular stopped her in the lounge. “Very nice,” he said. “I see you didn’t do anything here.” Shire says that her heart sank. Then she realized that it was a compliment.
“I learned long ago never to say that you ‘own’ Locke-Ober,” Shire remarks. “This restaurant has been here for more than 100 years, and it will be here for many more. We’re merely a part of the caretaking staff.”
Linda Tischler (ltischler@fastcompany. com) is a Fast Company senior writer.