The Chicago Cubs are my idea of a quasi-family business - a businesses founded by multiple people who weren’t related by blood or marriage, yet whose children grew up calling each of the other partners "uncle."
Just before my mother’s 90th birthday, I went to the drugstore to find a card for her. Alas, there was no “Happy 90th Birthday” card. How could that be, I wondered, at a time when centenarians have become so common in the US that the NBC TV's Today Show no longer features Willard Scott’s celebration of 100th birthdays (Scott himself retired from the show in December 2015)? What I did find in the card section, however, was a broad selection of cards for celebrating one’s “special birthday.” Now I understood: The use of “special birthday” designations made good business sense, as it eliminated the need to maintain inventory of cards for every possible adult age. In fact, “special” birthdays, as I’d come to understand them even before that drugstore visit, are often used to describe birthdays ending with a five or a zero. This custom began as a politically correct way to avoid specifying the exact birthday of people who might be sensitive about their age.
More recently, it has become customary to wish someone a “happy special birthday,” regardless of their age shyness. But doing so can have multiple negative consequences in certain situations. In general, after one reaches a certain age, say 60 or 65, every year becomes more precious, making the five and zero “special birthday” designations less meaningful—and less appropriate.
More specifically, my observation is that this innocent custom can have an adverse effect on leadership successions within family businesses. An impending “special birthday,” for instance, often prompts related thoughts among the birthday-holder and the wisher. The phrase may connote: “I know a secret about you—your exact age,” or “I’m not getting any younger,” or even “You’re a ‘has-been’ and it’s time to step down.” In this context, a family business leader may feel that it is too late for him or her to initiate new programs within the firm and thus might assume a posture as a steward or placeholder seeking preservation of status quo until a successor assumes the leadership position.
Here’s an example. I consulted with a family firm whose founder had built a spectacularly successful business that seemed capable of running forever on auto-pilot. His eldest son had worked in the business for over two decades and was the natural choice as successor CEO. When he ascended to the role, his four siblings were not actively involved in the business, as two were practicing attorneys, one was an investment banker, and the fourth was a high school English teacher. The second-generation CEO grew the business even more than his father had. Then, in his 60s, he suddenly became highly conservative about business strategy and finances. The shift was likely prompted by a combination of his age and respect for his siblings, who owned 80% of the company’s stock and had three children working there as executives. The CEO himself had no children. Late in his tenure, he simply stopped being a leader and positioned himself as a placeholder, waiting for one of the third-generation family executives to take the helm.
When family business leaders take that stance, no one wins. One effect is that the business becomes less able to make innovative changes under the current leader. Then, when a successor is selected and ultimately given power, it may take them years to create an environment that once again fosters innovation. Their struggles could have been eliminated and their prospects enhanced had their predecessor continued positioning the company for meaningful reinvention, including through:
- Spending more on R&D to identify the best new opportunities and the challenges to avoid;
- Enhancing governance, such that the board is better able to set and influence long-term strategy, regardless of who is CEO; and
- Improving communications among shareholders such that family voice is as unified as possible and amplified, to be better heard by all stakeholders.
It would be ideal if wishes of “happy special birthday”could create a clarion call signaling it’s time for the family business leader to prepare for succession. There is so much planning and effort that goes into effecting a successful transition to next generation leadership, so an early wakeup call could be extremely helpful. Such wishes needn’t be a threat.
Of course, ultimately it takes more than a simple birthday wish to create a positive or negative leadership situation in a family business. But little things can reflect and influence familial, business, and cultural dynamics like those discussed here.
So the next time you are tempted to wish a family business leader a “happy special birthday,” think carefully about all the possible implications.
Tom Stemberg, the founder of Staples, the first big box office products stores, passed away on Friday, after a long, brave battle with stomach cancer. Tom was not only a successful entrepreneur and venture capitalist, he was truly a good guy, who remembered those who had helped him and not only gave back to them directly but to other unrelated people, because he was thankful for what he had received from others.
Tom willingly gave back to the community, including those who he hoped would contribute to our country, to our business community and to the overall economy. He believed entrepreneurs would be the basis for better lives for all Americans.
Among those fortunate recipients were hundreds of students in my class “Successful Entrepreneurship,” which I created and taught at the Kellogg School. He eagerly appeared in my class each year and willingly accepted subsequent contacts by students who sought more of his invaluable advice.
Two years ago he sat for a lengthy interview, which contributed valuable input and wonderful stories for my book, Invent Reinvent Thrive, published late last year. Those stories are amongst many I tell from such interviews. Tom’s stories have a most poignant message relating to doing good homework, not just diligence, not even just due diligence but what I call “dual due diligence.”
That interview was shortly before he learned and told me that he was ill. I assumed he would thus be unavailable for my next class. I was wrong. He called me and asked when the class would take place. He delivered his usual high quality presentation, and though he was clearly drained from the process, told me that he was fine, just a bit more tired than in the past.
In his capacity as a venture capitalist, he was always ready to meet a new entrepreneur. Even when he knew quickly that the venture wasn’t suitable for him, at which point many venture capitalists look at their watches and suddenly remember a meeting they must attend, Tom would patiently sit through the meeting, giving his valuable insight and advice.
Tom was one of the good guys. His loss will be felt by many. Entrepreneurs have lost an important supporter, though he’ll be a role model for years to come. And I have lost a good friend. He will truly be missed.
When consumers step into any retail store these days, they’re looking for more than the products on the shelf or even the quality of the service they receive. Increasingly, they expect an engaging, entertaining experience, and will reward the same with their spending dollars. Multiple stories in my book INVENT REINVENT THRIVE (McGraw-Hill, 2014) illustrate how retail entrepreneurs have succeeded by building businesses that deliver an entertaining experience to their target customers. Here, we consider three massive retail successes (Build-a-Bear Workshop, Costco, and Starbucks) and the entrepreneurs behind them (Maxine Clark, Jim Sinegal, and Howard Schultz), as profiled in my book, along with Abt Electronics, a Chicago-based retailer, which, though not detailed in my book, is the subject of a Kellogg School case study I authored. All are great examples of the retail-is-entertainment concept across sectors.
Build-a-Bear Workshop: When Maxine Clark came up with the idea of a retail store where customers could create their own teddy bears, she knew she was selling much more than teddy bears, even more than a stuff-your-own-animals experience. She aimed to provide an entertainment venue where all family members—children, parents, grandparents, and others—could be part of a process that tied them to the product, the process, the experience, and the company. That meant creating a bright, whimsical, colorful space with different stations, the ability to customize and personalize the products in multiple ways (such as a recorded message built into the stuffed animal), and windows through which customers could view the entire process. By the time people received their personalized products fresh off the “assembly line,” they had bonded closely with the brand through the engaging, entertaining experience.
Costco: Jim Sinegal’s approach to keeping his company Costco engaging evolved over time. Beyond offering a smaller number of SKUs (stock-keeping units, or different product types) and larger unit sizes than traditional discount retailers, he changed the product lineup and added multiple departments over the decades to keep customers interested. That meant the addition of bakery items, seafood, gasoline, pharmacy, and many other products. The company also introduced customizable products such as liquor bottles onto which customers could engrave gift messages. Costco’s famous cornucopia of free samples in almost every aisle and outsized café items (a hot dog and a soda is still $1.50, the same price as when Costco first opened in 1983!) only add to the festive atmosphere. Again, the business’s ability to engage customers has contributed greatly to its success.
Starbucks: Howard Schultz’s vision for Starbucks included providing a warm, inviting atmosphere for people to enjoy on their way to or from work. The combination of premium coffee products, comfortable furniture, and relaxing music—including jazz and other compilations made specifically for the company—has made it a place where many people come to work and socialize, a “third place” between work and home. So much so that many communities provide sufficient demand for multiple Starbucks stores in close proximity. While Starbucks may not offer entertainment per se, the business provides a master class in how to engage customers and keep them coming back again and again, daily in many cases.
Abt Electronics: Another business that embodies the retail-as-entertainment concept is Abt Electronics, a family-owned retailer in the Chicago area. Bob Abt, who passed away recently, built the company over several decades from a small store his mother started into an extraordinarily successful retail phenomenon. The warehouse-sized store sells appliances, TVs, sound systems, vacuum cleaners, fitness equipment, watches, phones, furniture and much more, all out of a large, single location. There are interactive displays for family members of every age, and even free chocolate chip cookies available daily. Bob Abt was inspired to offer such a large-scale, engaging, entertaining experience by Las Vegas casino mogul Steve Wynn, of whom Abt was a big fan. Not surprisingly, many customers report feeling like they are in an upscale Vegas casino while shopping at the store.
INVENT REINVENT THRIVE offers many more details of the first three retail superstars above, along with examples of other entrepreneurs who understand that retail is entertainment. The message is clear: to thrive as a retailer, you need to engage your customers by creating an environment and experience that engages them fully, connecting them on multiple levels with your products and company. That translates into long-term customer value, and market-beating profits.
Entrepreneurs tend to be so busy doing things that are visible in the external world—conceiving and developing products, lining up suppliers, acquiring customers—that they may overlook some of the more invisible, interior work that is part of success. I’m talking specifically about introspection, or the observation and examination of one’s own mental and emotional state and its implications. “I don’t have time for that kind of thing,” many an entrepreneur or family business leader has told me when I raise this issue. I always counter that it’s important to make time for meaningful introspection—and then to apply what you learn—as it can have a huge impact on your business, family, and well-being.
The story of the Bronfman business family is a clear example of the power of introspection and its application—or lack thereof. As detailed at length in my book Invent Reinvent Thrive (McGraw-Hill, 2014), the three Bronfman generations faced multiple challenges that would have been mitigated by careful introspection and consequent action.
Sam Bronfman built Seagram into a highly successful business including spirits and other consumer products; based in Canada, it was once the world’s largest distillery. But the father cast a long and dominant shadow on his son Edgar, who had also joined the business. Had Sam been able to introspect and understand the danger of his approach to Edgar, he may have helped his son develop a more sound and effective internal state himself.
This became especially important when Edgar had to assess the judgment of his son (Sam’s grandson), Edgar Jr., who succeeded his father as CEO. Though Edgar Sr. probably recognized that his son was making questionable business decisions, especially with regard to considering sale of Seagram’s core business, he was overly careful about dominating the next generation. He wished to avoid doing to Edgar Jr. what his father had done to him. Had Edgar Sr. used introspection to understand more fully the source of his reluctance to act, he may have been able to separate the personal from the professional and stepped in to intervene on the deal Edgar Jr. ultimately made with Vivendi—a transaction that ultimately cost the family billions, halving their wealth.
Introspection and its application also figured into the role of Edgar Sr.’s younger brother Charles in this situation. Charles clearly observed what was going wrong with the Vivendi deal and had serious doubts about ending the Bronfman Family’s control of Seagram. However, his “younger brother syndrome” prevented him from saying what needed to be said to Edgar Sr. He understood the business problem but, like his brother, failed to understand fully the role of his internal state in preventing his intervention. Deeper introspection would have helped. Thus Sam, Edgar Sr., and Charles all would have benefited from more thoughtful introspection, which would in turn have helped the business and the family assets that depended on it.
In fact, Charles proved he was fully capable of engaging in the necessary introspection and then applying it effectively when he did so with Michael Steinhart with respect to the charitable foundation they formed, Operation Birthright. The organization aimed to enable any young Jewish person to visit Israel at no cost. Though Charles and Michael agreed on the big picture, they clashed over details (e.g., whether it had to be the person’s first trip to Israel). Charles’s wife gave him simple but profound advice about having a frank discussion with Michael: “You have everything to gain and nothing to lose” was the essence of what she said. Charles followed her advice, and the better understanding he achieved with Michael helped make Operation Birthright immensely successful.
Had Charles followed the same advice in dealing with Edgar Sr., his brother, the family’s wealth might still be fully intact. Here, however, deep emotional issues made it seem there was indeed much to lose. With introspection, that could have been gauged more realistically. Eventually, after serious and difficult introspection, Charles did have a conversation with Edgar. Though it was too late to save the fortune, it was a well-timed interaction, happening shortly before Edgar Sr.’s death.
Introspection and application are obviously easier in a non-family situation such as the one related to Operation Birthright—although even that one was facilitated by Charles's wife’s advice. Overall, anyone in business—entrepreneurship, family business, or otherwise—can benefit deeply from introspection. Open your mind for exploration, assess your motives and their potential sources, then develop a thoughtful plan to put what you’ve learned into action. You won’t regret it.
Most students complain about homework. When my MBA students at the Kellogg School of Management grumble about assignments, I tell them that what they’ve called “homework” from elementary school through graduate school isn’t actually homework. It was merely practice to develop tools for them to learn to do real homework. Real homework is the work you do when no one gives you the assignment, tells you how much work is enough, or establishes a deadline. Ultimately real homework is what you have to do yourself to succeed. Real homework really counts.
Successful businesspeople—entrepreneurs, family business founders and managers, and corporate managers—all do high-quality, appropriate amounts of homework. When they stop short on the homework, they almost always come up short on results. If you’re not sure how to do real homework, take a look at my recent book, Invent Reinvent Thrive (McGraw-Hill 2014), which has many excellent examples of the kind of homework that breeds success. In this three-part blog, I present multiple stories of real homework from the book, grouped by the principle they exemplify best.
Learn From Your Customers Starbucks founder Howard Schultz never even worked in a coffeehouse. He was inspired to start Starbucks by the European coffeehouses he observed when working as a coffeemaker salesman. He studied the stores and their practices carefully and saw how much consumers enjoyed premium coffee in a “third place” between home and work. Everything he learned convinced Shultz to persist in finding investors for Starbucks, even when no one, including coffee experts, seemed interested. Later, when highly successful Starbucks faltered amidst the 2008 recession, Schultz again did his homework, this time visiting stores and observing everything they were doing from the customers’ points of view (and ignoring Wall Street’s and analysts’ gloomy opinions). What he saw convinced him the company had lost touch with its original values—its “soul,” according to an internal memo Schultz wrote that was leaked to the press—and he took steps to recapture that spirit, including closing their thousands of stores for a day to replace equipment and to retrain all store employees. All the homework paid off as Starbucks regained strong growth and stock value.
Learn From Your Competitors Charles Schwab reinvented the stock brokerage industry by doing away with unnecessary product/service bundling and sky-high commissions. By studying the competition from the point of view of customers, Schwab was able to introduce highly valuable features through his namesake firm, including simplified transactions and more affordable pricing. The homework Schwab did with his customers, especially those in Silicon Valley, wound up changing the industry and making Chuck Schwab a billionaire. Early in the new millennium, when the company suffered from mounting competition, Chuck returned as CEO and observed the competitors, copycats who decreased commissions and service offerings at the same time that Schwab & Co. was raising commissions to cover increased numbers of managers. Schwab understood that his company had become the type of firm he’d once outmaneuvered: one that offered overpriced services to justify its bloated structure and workforce. He agreed when I likened this situation to Pogo’s lament: “We have met the enemy and he is us.” Schwab used what he learned to cut costs dramatically, improving the pricing he could offer customers and turning the company around.
These are just two of the homework-related principles I’ve observed in my many interactions with successful entrepreneurs, including the ones featured in Invent Reinvent Thrive. In the second and third parts of the post I will present additional lessons, including how homework helps you learn from mentors, previous associates, naysayers, and your team, as well as the importance of applying your homework-based learning across domains.
© Lloyd Shefsky
Success is often interpreted as an indication of intelligence. It brings to mind the lyrics of “If I were a Rich Man” from Fiddler on the Roof: “When you’re rich, they think you really know.” Highly successful entrepreneurs tend to be quite smart. Some have a good sense of self-approval; others less so. It turns out that the quality of self-approval is likely an important factor for success. Being able to gauge your capabilities, including raw intellectual horsepower, and understanding that while you may not be the smartest person in the room, there are things you can do about that, namely, get smarter and/or change rooms. Rather than bemoaning deficits, the most successful entrepreneurs learn to focus on areas in which they do show more aptitude and interest, and to take steps to shore up their capabilities in other areas, whether by building new skills or the right team.
Below I present several lessons related to understanding your intelligence and how to use it. I illustrate the lessons with stories of entrepreneurs from my recent book Invent Reinvent Thrive (McGraw-Hill, 2014).
Find the right “classroom”—and the right brains to pick. Mike Krasny did both. “I wasn’t one of the smartest kids on the block,” he told me during our interview for the book. “I was not a good student, I was a C student, probably in the lower quartile.” Had Mike continued to use academic grades as the only measure of his talent, he may not have discovered and indulged his deep interest in computers, at a time when most of his peers knew nothing about the field. He took his first computer class in 1971 at the University of Illinois and—though it took him some time to get over the lack of confidence bred largely by his early academic experience—eventually launched computer distributor CDW. As an entrepreneur he learned as much as he could from businesses he admired and the people behind them—including HP, IBM, Microsoft, Intel, Fel-Pro, and Walmart. As head of CDW, he found the right people for his management team, further building the firm’s capabilities. By stepping into the right “classroom” in which to excel and identifying the right brains to pick, the former C-student earned an A+ in creating shareholder value.
Don’t put them on a pedestal. Everyone establishes their own standards for “smart,” generally pointing to someone else whom they consider very smart. It’s fine to have business mentors or others you admire for their intelligence. But some entrepreneurs make the mistake of putting their sources of inspiration on sky-high pedestals, which may diminish their sense of their own capabilities. This was the case with Jim Sinegal, founder of Costco. Prior to starting Costco, Jim worked for Price Club for over two decades, He always revered that company’s founder, Sol Price. “He taught me everything I know,” Sinegal said of Sol. Jim truly believed that Sol was the smartest man he'd ever met, and as a result Jim never presumed to be able to do what Sol had done, even as Costco grew steadily. Of course, at the time Jim launched Costco, Sol’s experience was infinitely greater than Jim’s, who started at Price Club “schlepping mattresses out to the customers’ cars’ rooftops.” Twenty five years later, as Price Club’s second in command, Jim felt Sol remained far smarter and more capable than Jim. It wasn't until years later, after Costco had been operating for a while, when Jim found that Price Club was having problems, that he began to believe in his own capabilities more deeply, and made strategic moves including expanding Costco’s product lines significantly. Ultimately, Jim motivated Costco’s purchase of Price Club. Sol and Jim remained friends until Sol’s death. And while Jim still reveres Sol, the former mentee’s story illustrates that sometimes actual results displace pedestals. Removing his longtime mentor from the pedestal helped Jim make Costco into the $100 billion business it is today.
Recognize your blind-spots, Although he is not an entrepreneur but a leader of a prominent family business, Tom Pritzker’s situation is worth noting. Unlike CDW’s Mike Krasny, Tom was an excellent student, and he rose to become a third-generation leader of the highly successful Pritzker family, which held assets including the Hyatt hotel chain. Tom learned a great deal both within the classroom and outside it, especially from his father, Jay, whom I consider one of the smartest people I’ve known, and Jay’s father, A.N. Observing them helped Tom understand how to find, select, motivate and defer to strong professional managers for the family’s many businesses. But Tom also inherited a large blind-spot: While the previous generations had excellent business acumen and skills, they had failed to prepare for the “cousins stage” of the business; the many protective measures they had implemented—including granting decision-making rights and knowledge about the family business to very few family members—backfired when the business passed into the third generation’s hands. Tom was a smart businessman, but he tried to play the hand he was dealt instead of replacing a few cards. He continued with all that his ancestors had invented, instead of reinventing it to fit the family/business situation. The ensuing legal battles made the highly private Pritzkers front-page news for years. Being the smartest businesspeople in the room had made the family blind to the governance/ownership measures they needed to take. Eventually, Tom recognized the shortcoming and took steps to remedy the problems, but only after significant, undesirable public exposure of family discord.
Be honest with yourself. Honesty and self-awareness don’t always accompany intelligence, as the Pritzker story illustrates. Tom Stemberg, founder of office-supply giant Staples, provides a nice counter-example. Upon arriving at Harvard, Stemberg found himself somewhat unprepared, in part because he had completed high school in Austria after his mother moved him there following his father’s death. Speaking of Harvard, Stemberg told me, “You had to accept the fact that you’re not only not the smartest person in the room, you may not be in the top ten. You have to get comfortable with that and move forward.”That attitude helped him move forward in a big way, as he sharpened his idea of a large-scale office-supply chain, learning by observing local stationery stores and companies such as United Stationers and Quill, always admitting when he lacked knowledge, but also feeling comfortable when he thought he was right. Stemberg’s healthy self-awareness helped him build Staples into a multibillion-dollar retail chain with over 2000 stores in 26 countries.
Intelligence is only one factor in success, and certainly not the most important one in many cases. The “smartest” entrepreneurs may not be the smartest people in the room, but they have found the right space in which to compete (like Krasny), worked hard to be honest with themselves about what they don’t know (like Stemberg), avoided being intimidated by successful peers and mentors (like Sinegal did eventually), and assessed their blind-spots carefully (like the Pritzkers eventually did). I hope you can do the same.
Jerusalem Mayor Barkat, featured in the book Invent Reinvent Thrive, shows leadership in taking down a terrorist the other day.
“A tolerance for ambiguity” or even the ability to thrive amidst ambiguity is on everyone’s list of key traits for entrepreneurs. So how do successful entrepreneurs develop that trait? One might develop a tolerance for pain by continually enduring pain; but there must be a better way. Successful entrepreneurs don’t just strengthen their tolerance—they reduce the ambiguity. In many instances, founders gain insights and learn best practices by observing people and practices carefully across sectors, applying what they learn to great effect. The entrepreneurs below, all profiled extensively in my book Invent Reinvent Thrive (McGraw-Hill, 2014), are excellent examples of the power of watching and listening. Maxine Clark expanded her vision of a store where people could customize teddy bears into the 400 Build-a-Bear Workshops in existence today. Part of Maxine’s early success was her ability to negotiate leases in malls on behalf of her start-up in an unproven business. To succeed, she used what she’d learned previously as president of mall staple Payless Shoes. “Even though I’d never negotiated a lease before . . . I had listened to our legal department talking about them,” she told me in our interview for the book. “I didn’t have to know everything about them, but I did need to know enough not to be dangerous.” The insights Maxine gained from observing lease negotiations helped Build-a-Bear thrive.
Howard Schultz, founder of Starbucks, used what he’d observed in Europe while working as a coffeemaker salesman to help generate the vision of a coffeehouse with a different kind of atmosphere, one that could become an appealing “third place” between home and work. Even though everyone—including the original owners of the Starbucks Coffee company, who employed Howard in sales—thought his idea for an upscale US coffeehouse was terrible, he persisted, eventually convincing others to invest. Starbucks wouldn’t be the business giant it is today if Howard hadn’t kept believing in his vision, fueled by what he’d observed across the Atlantic.
Mike Krasny, founder of computer distribution giant CDW, also encountered many naysayers. But while he was a self-admitted poor student with no business training, Mike had a skill many other would-be entrepreneurs lacked: learning by observation. Initially, that meant using what he’d learned working in his father’s auto dealership to place his first ad for computer sales. After he launched CDW, he continued to learn by observing, including watching the practices of and listening to advice from leaders of businesses he admired, from computer industry peers (Microsoft, Intel, IBM) to those in other sectors (Fel-Pro, Walmart, Quill). As CDW matured, Mike delegated key functional matters to professional managers, and learned from them and multiple mentors. Listening to his “teachers” helped transform a former C-student into an extraordinary business success.
Jim Sinegal grew discount retail warehouse Costco into over 670 stores representing over $100 billion in annual revenue today. Before launching Costco, Jim worked for Price Club for 23 years, learning a great deal from founder Sol Price. “He taught me everything that I know,” Jim told me during our interview, pointing out how much Price emphasized the need for strong leadership and careful planning. Jim also learned a great deal by observing the brokers who sold products to Price Club, identifying their strengths and weaknesses. That knowledge enabled Jim to work as a highly successful broker himself. After he left Price Club, his plan to open Costco went on hold due to a recession. While waiting for economic conditions to improve sufficiently to launch his own business, he worked as a broker. His listening paid off, enabling him to be ready to open Costco when economic conditions improved.
David Axelrod, former campaign manager and senior advisor for President Barack Obama and current director of the University of Chicago’s Institute of Politics, exemplifies the theme of learning by observation. David learned a great deal as a young journalist, first with a small Greenwich Village newspaper (The Villager) during college then as a Chicago Tribune reporter. He paid especially close attention to the political campaigns he covered, particularly the strategies of the media consultants for three Chicago mayoral candidates. A dinner with Bill Zimmerman, media consultant for one of those candidates (Harold Washington), gave David further insights into campaign-management skills/strategies, and soon he was able to make the leap from journalism to campaign director, eventually making history by helping the US’s first African American president get elected.
While it’s easy to think of entrepreneurs as all about action, the best ones are both observers and doers, learning from watching and listening to others, then putting their new-found knowledge into action. That means sometimes the best course at any stage of a business—from pre-launch to maturity—is stepping back to see what you can learn from people, practices, and other companies, then formulating new ideas and strategies for success. As it says on one of my favorite T-shirts:
“Silent” and “Listen” have the same letters. Coincidence?
So listen up and learn what you need to reinvent and get ahead.
That's what Alyson points out so well in the article, The Case For Embracing Lateral Career Moves, published by FastCompany. If you assume, as so many do, that exponential or total change of your skill set is required, then the prospect of reinvention is daunting. During the worst of the recent great recession, many who lost their jobs appeared to be like a deer in headlights, because they didn't understand those possibilities. If, however, you understand that reinvention can be incremental, by changing perhaps a few skills, with the result that a new skill set is created, then the prospect seems more readily achievable. There are numerous people who have done just that.
In my book Invent Reinvent Thrive (McGraw Hill, 2014), I relate some of their stories and explain why such reinvention is critical and how incremental reinvention is readily achievable. The stories include (i) a soldier, who became a businessman, then a venture capitalist and a philanthropist and ultimately the Mayor of Jerusalem; (ii) a grocer who understood retail but not the office products industry but who sharpened a few skills to fit that industry and founded Staples; (iii) a solo practicing physician who ultimately became the president of the largest group of physicians in Illinois; (iv) a man who considers himself a failure in school, who first toyed with using computers in his father's car dealership, who then tried his hand at selling computers and related products that he obtained at reasonable cost from others who didn't know what to do with such inventory, finally founding CDW which he sold for billions.
As Alyson points out in her article, it doesn't matter whether you adjust your skills through multiple jobs at different employers or by lateral shifts within the same company. Either way, refining your skill set by refining or changing just a few skills generally is sufficient to achieve a meaningful reinvention.
Someone recently said to me, “the concept of reinvention of you or your business is fine in certain occupations, industries and businesses, but it could not be applied across the board.” I strongly disagreed and for a somewhat ironic example, took the title of John le Carre’s famous book, Tinker, Tailor, Soldier, Spy, and applied reinvention to each of those businesses. Tinker In my recent book, In my book Invent Reinvent Thrive (McGraw Hill, 2014), I tell the story of Sam Popiel and his famous invention, the Pocket Fisherman. Sam was on one of his excursions to a practice fishing farm, where he would tinker with his invention until he solved the pending problem. That day he also tinkered with the price that he would charge for the Pocket Fisherman. As a result, he brought millions of additional dollars to the bottom line. The methodology for reinventing his business through this tinkering process is a fascinating, fun-filled story.
Tailor Tom Stemberg, the founder of staples and subsequently a venture capitalist who has invested in companies such as Lululemon and a chain of cleaning stores. While those businesses were more like tailors, the best stories of Tom’s career relate to Staples and especially his use of good homework to overcome naysayers.
Soldier One of the people I interviewed for my book was Nir Barkat, currently the mayor of Jerusalem but previously an entrepreneur and venture capitalist. Prior to all of that Nir was a soldier in the Israel Defense Forces. The story -- how he was wounded as his commanding officer, standing next to Nir, was killed during military activities -- is an exciting read. More important is how Nir took the lessons from the military training and activities and applied them to every phase of his continually reinvented life. He is proof that a soldiers reinvention of himself and later in his businesses can be a remarkably successful and profitable journey.
I was fascinated to read, earlier this year, of a soldier reinventing himself as an entrepreneur as a result of reading my earlier book, Entrepreneurs Are Made Not Born. Civilian Warriors, is a book written by Erik Prince, the founder of Blackwater, a private company that conducted military operations in Iraq. In it, Erik said that Entrepreneurs Are Made Not Born inspired his own entrepreneurship.
Spy Recent news events show that the spy agencies, from the CIA to the NSA, are constantly being reinvented. I do not have any personal knowledge about the spy business. Besides, even if I did and told you, I would have to kill you. :)
Brigid Sweeney, in her insightful article, "Please Don't Call Them Stores: Modern Retailers Aim to be Hangouts,” appearing in Crain’s Chicago Business, provides local examples of how retailers are focusing on providing "a place in-between" and customer entertainment, such as including experiential happenings. Nowhere is the importance of a place in-between laid out more clearly than in the story of Starbucks, both at its inception and later, during its reinvention in 2008. Even when I first met Howard Schultz and interviewed him for my first book, Entrepreneurs Are Made Not Born, I referred to Starbucks as a club, much like the bar on "Cheers," where the opening song proclaimed "a place where everybody knows your name," reminiscent of the way Starbucks taught baristas to know frequent customers’ names and even their favorite beverages. In my latest book Invent Reinvent Thrive (McGraw Hill, 2014) I explain how Howard's clear understanding of that essence of the business (what he refers to as "the company’s soul”) enabled him to avoid the near catastrophe in 2008.
Similarly, in Invent Reinvent Thrive, I tell the stories of Jim Sinegal, founder Costco, and Maxine Clark, founder of Build-a-Bear, both of whom believed in customer entertainment and experiential events in their retail businesses, much as those mentioned in Brigid Sweeney 's article.
As I said in Invent Reinvent Thrive, “Jim Sinegal decided he’d better reinvent Costco, at least partially from time to time, lest his stores…become uninteresting. He decided to add new items periodically. He constantly reminded himself and his colleagues, ‘There’s no annuity [here]. You’ve got to continually add stuff that’s new and exciting. Otherwise you become boring.’” Likewise, I quote Maxine Clark in Invent Reinvent Thrive: “At the May Company, she was fortunate enough to make a presentation to Stanley Goodman, May’s chairman. He told her that ‘retailing is entertainment and the store is a stage. When the customers have fun, they spend more money.’ His words made an indelible impression on Maxine.”
Brigid is right on!
Years ago, I wrote Entrepreneurs Are Made Not Born, a best-selling book now in eight languages. There I found that nurture was a far greater factor than nature. My new book, Invent Reinvent Thrive (McGraw-Hill, 2014), deals with both entrepreneurs and family businesses. Most people would say successful family businesses, those that make it successfully into the third generation, beating 9:1 odds, should thank their gene pool. After all, they'd say, they wouldn't have inherited the business if they hadn't had the right genes. I agree that inheritance is inherently different than starting your own business. So clearly, succession to family businesses are due to nature, but successors to leadership of successful family businesses may owe as much to nurture as to nature. Most entrepreneurs must search the world for role models, that search in itself being an entrepreneurial quest. Family business successors are dealt their business role models at birth, but how the family deck is shuffled and re-dealt has an extraordinary effect. For most, the deck they inherit is tempered or leveraged by lifetime, or even daily influences by parents, grandparents, etc. Here I'd like to explore how and where ancestors transfer their most important legacy, the values and principles that make up the infrastructure of their family's enterprise. The common allegories tell us that such principles are obtained: by visiting the office or factory on vacations or weekends; at the dinner table (every day or on holidays); and attending business dinners or events. What really happens in each of those places and experiences? Is it formal lessons, observing the ancestors, or experiencing under the ancestor's wing? How important are stories, and does it matter when (e.g. when the next generation is young and impressionable) or where (office, dinner table, etc.) the stories are passed along? The point of this blog post is that when it comes to ancestral family business stories, what matters most is how they are communicated. Many different times and places can work, but the nature of the transmission often is what has the greatest impactpositive or negative. Moreover, how stories are communicated depends heavily on the nature of the family, its business, and specific circumstances. That's what's suggested by the examples below, taken from by book Invent Reinvent Thrive.
Col. Henry Crown founded the vastly successful Material Service Corp. with his brothers after World War I. His son, Lester, used to bring his two sons, Steve and James, with him to the office on Saturday mornings. Usually he sent them down the hall to the colonel's office to spend time with their grandpa. Henry was a great storyteller, with extraordinary stories to share, including how he came to secure the Empire State building for his portfolio and why he failed to acquire the land where the U.N. now sits. The principles inherent in those stories, including those relating to strategy, philanthropy, and Judaism-based values, are still part of the company's compass. James, the firm's current leader, remembers the stories well, as does his brother, Steve, and they continue to share them with the next generation.
Tom Pritzker - of the Chicago family that owns Hyatt hotels and many other assets - heard stories from his father, Jay, and his grandfather, A.N. The most impactful may well have been those told after Tom had come to work at the company. He and others in his generation learned about business, investment, and structure at home but Tom's most important lessons were those experienced at the office. He watched how Jay and A.N. treated non-family founders and CEOs of the businesses the Pritzkers invested in and controlled, with an emphasis on A.N.'s legacy of integrity, reputation, and fairness. Such observations were reinforced by explanations and concrete lessons from Dad and Grandpa. This on-the-job learning became an important way to transmit the Pritzker family values and culture.
Unfortunately, fellow third-generation member and successful venture capitalist, J.B. Pritzker lost his father, Don, before the elder Pritzker could communicate many stories. Grandfather A.N. and uncles Jay and Bob tried to help, but they were in Chicago, over 2000 miles from J.B.'s California home. So when J.B was old enough, he talked with his parents' friends and pieced together what he could, suggesting that it's usually not too late to learn from family lore and that family lore can be transmitted by non-family.
From an early age, Linda Johnson Rice sat at the dinner table with her parents John Johnson and his wife Eunice, who in the 1940s founded Ebony and Jet, the first magazines targeted at African Americans. The magazines and subsequent Johnson holdings, including cosmetics and travel products, were highly successful, and among the Johnsons' dinner guests were high-profile people from the business, political, social, and entertainment worlds. That meant Linda learned, at the table, how to deal with people of fame and power, as well as the importance of diversity and collaboration. She also worked, first part-time and later full-time, and observed how her father handled complicated and sensitive business matters. He was also a communicative father/manager. She gained insight into why he wanted things done, and he was able to watch her and gain comfort that she understood and could accede to her father's wishes. He also knew that she had the wisdom and judgment to do things differently than he would, in ways more consistent with and necessary in the "new world." He made clear to her, in his own way, that she was authorized to do so, and he paved the way with key employees to better enable Linda to lead the company. His style was nurturing to the nth degree.
Marilyn Carlson Nelson, like Linda Johnson Rice, learned from both the dinner table and her time at her family's business, which often intersected, such as the lessons she learned from father (founder Curt) at Sunday dinner at Carlson's hotel restaurants. He regaled family with stories of his autocratic style, but seemingly contradicted those with his urging his family to vote on particular family expenditures. He clearly communicated to Marilyn that his goal of creating a business that would last 100 years would and should take precedence over his style choices. What Marilyn learned was especially important when she took over leadership of the family's business's including Radisson hotels, TGI Friday's restaurants, and Carlson Wagonlit Travel in 1998, one year before Curt's death.
The second-generation Bronfmans, Charles and Edgar, became co-chairmen of Seagrams producer of spirits and other consumer productsafter their father Samuel's death because those were Sam's orders. But the non-communicative relationships among Samuel, Edgar, and Charles, left little space for the transmission of stories and values, and the second generation was particularly resistant to their father's style, as they had seen it lead to multiple outbursts and estrangement from others. This history contributed to a particular absence of lesson-teaching on Edgar's side, with disastrous results. His son Edgar Jr. incurred a multibillion-dollar loss for the family when he sold Seagram to Vivendi, an act that is directly related to Sam's failure to communicate properly with his sons, as I explain in Invent Reinvent Thrive.
As the examples here suggest, ancestral family business stories are important vehicles for communicating principles, values, and practices across generations. But where and when they are transmittedwhether at the dinner table or in the conference room, whether during childhood or much lateris much less important than how it is done: with a priority on communicating them in the first place and, ideally, doing so in a supportive, constructive manner. Lastly, the use of stories- - from earlier days or even as lessons from concurrent events- - can be powerful.
In my last blog I discussed “Describers,” or entrepreneurs who are able to sell their visions to investors and others by describing what they see in great detail, using words and graphics. That is, they convince people to invest by describing the picture on the puzzle-box cover, without assembling any of the puzzle. Some entrepreneurs choose not even to try articulating the vision and opt instead to demonstrate it—whether that’s their natural preference or tendency, or because a description isn’t sufficient to paint the vision clearly.
I call this type of entrepreneur a “Demonstrator” (but not the kind holding a protest sign!). Here I present two examples of consummate Demonstrators, using examples from my book, Invent, Reinvent, Thrive (McGraw-Hill, 2014).
Maxine Clark, founder of Build-a-Bear Workshop, is an excellent Demonstrator. Executive stints at May Company and Payless Shoes (where she was president) helped fuel her vision of a store offering a “stuff-your-own-bear experiences.” But the manufacturers she approached initially about the idea didn’t get it; they couldn’t see the fully assembled jigsaw puzzle—an experiential entertainment venue, not a mere toy store—as she did so it wouldn’t make sense asking them to invest. (This was symptomatic of my old saying, “If you’re not up on it, then you must be down on it.”) In fact, the only people who consistently understood Maxine’s idea were children, who could invest only with their hearts, not their piggy banks. Rather than trying to force suppliers, investors, and others to believe her, Clark decided to assemble the puzzle herself. She funded her first Build-a-Bear store in St. Louis out of her savings. (She could afford to do that; many can’t.) Despite friends’ warnings to “start small,” she built the store the way she envisioned it, with ample space for customers to explore and interact. An angel investor came to see the first store immediately after it opened and on the spot offered to back the business’s expansion. Today there are over 400 Build-a-Bear stores worldwide.
James Freeman had a passion for coffee; it motivated him to found Blue Bottle Coffee. Much like Maxine Clark, James’s vision involved process, the experiential element. He had a special way of preparing the coffee--one cup at a time. In his case, the completed puzzle was the coffee quality resulting from the unique brewing process, rather than the atmosphere that Starbucks offered. He had to overcome doubt that customers would be willing to wait an extra few minutes for an individually brewed coffee. Rather than just talking about it or asking focus groups what they thought, Freeman demonstrated his idea would work by offering the fresh-roast coffee at farmers’ markets. It was a big hit there, but customers strolling through farmers markets aren't as time-sensitive as commuters. With his own meager funds, James opened a small coffee kiosk in a smelly San Francisco alley; the outlet grew quickly in popularity, including with commuters, proving what he couldn’t with words alone. Having proven the concept, Freeman later opened more stores in San Francisco and New York, where they continue to succeed today.
Of course, many entrepreneurs, including those profiled here, are good at both describing and demonstrating. As I explain in Invent Reinvent Thrive, some business ideas lend themselves better to one approach or the other. But the bigger point is to understand the value of each way of sharing a vision, and to harness describing and demonstrating in service of your own ideas, however big or small they may be.
Ernst & Young Family Business Center publishes a 3-part blog series inspired by the book's author, Lloyd Shefsky. The first installment of the 3-part series, A Grave Matter for Family Businesses, initially appeared on Aug. 18, 2014.
In the article, “Don’t Blame Age for Declining U.S. Entrepreneurship,” Ben Casselman makes important observations: Overall U.S. entrepreneurship is declining and the average age of existing companies is getting older. He seems to believe that with the millennials turning 40 fairly soon, the recent trend will reverse itself. I beg to differ. I think the rate of entrepreneurship may continue to decline for a variety of reasons, including governments’ direct (e.g., red tape) and indirect (e.g., restrictions on lending) intrusion into "free" enterprise. However, one of the biggest factors will be the overhang of debt. Today, 70% of college graduates leave school with debt from tuition loans. In addition, the relationship between debt and first job income has become intolerable. I borrowed my entire tuition for law school. When I graduated, my total debt was about 30% of my compensation during the first year after graduation. Today, a graduating student’s debt, assuming all tuition was borrowed, would exceed his or her first year’s pay. Those students who opt not to be entrepreneurs right away have a variety of excuses, but debt is their number one and growing excuse. Talk about stifling entrepreneurship!
In Invent Reinvent Thrive, I talk about several different family businesses, and how they faced and overcame certain challenges as the business passed from generation to generation. In this week's Becker Spine Review, writer Laura Dyrda took her inspiration from the book to cover three family medical practices facing change at a time of business turnover. Laura provides lessons learned and how they can apply to evolving spine surgeon practices, including obtaining outside experience:
Steven Crown, a third-generation family member in Henry Crown & Co., struggled to work alongside non-family members who knew eventually he'd become their boss. His mistakes were corrected before he could learn from them. As a result, Steven left the company for outside experience before returning to the family business...
Even though I didn't cover medical practices as part the family business aspects of Invent Reinvent Thrive, this piece shows that the principles I'm trying to impart are universally applicable. Thank you to Laura and Becker's Spine for promoting the message of reinvention.