Chapter 7
Dare to Dare
I really do feel—about business and life—that everybody has to make mistakes. And everybody should be encouraged to feel that if they make mistakes, it’s okay.
Michael Eisner
Premier players can be found in all corners of the business world, and one thing they have in common is a willingness to take bold risks. They clearly understand that grasping at a dream requires one to reach beyond the sure thing. Even more, they seem to relish the opportunity. Walt Disney was just such a player.
In fact, if there literally were a cornerstone upon which The Walt Disney Company rested, it would have to be inscribed with one short word: Dare. Throughout the 43 years that Walt ran the company, he dared to meet challenges; he dared to take risks; and, ultimately, he dared to excel.
From the time that he decided to produce his first cartoon, Disney pushed the limits of ordinary achievement. He pioneered the use of sound in animated cartoons with Steamboat Willie. He signed his contract with Technicolor before the revolutionary process had even been accepted by the industry as a whole and astutely insisted on a two-year exclusive for his cartoons. He originated feature-length cartoons with Snow White and defied the odds at a time when no one thought anyone would ever sit through a 90-minute cartoon.
Even Walt’s decision to build Disneyland represented a new and risky concept in entertainment. Up to that time, amusement parks had something of an unsavory connotation, an association with the tawdriness of pre-1950s carnivals. It took the vision of Walt Disney to imagine a place that would incorporate historical reconstructions, displays, and rides, and it took the daring of Walt Disney to build it into a world-famous tourist attraction.
The Disney experience illustrates how a company willing to take calculated risks can advance the level of development of a product or service and, in the process, reap huge rewards. But not all corporate executives and managers fall into this enviable category. Too many opt for the safest route because they fear failure or loss. They allow themselves to get bogged down in corporate bureaucracy, which can keep the management process from flowing as it should.
However, such behavior is not written in stone. Companies can change the buttoned-down, risk-avoidance atmosphere that dictates status quo first, innovation later—if at all. We have helped numerous leaders learn to prioritize their objectives and to take a holistic view of their companies, thereby putting risk taking into the proper perspective. In this chapter, we will look at how leaders who dare can take calculated risks and lift their organizations to previously unimagined levels of achievement.
Solid Fundamentals Support Risk Taking
Psychologists might describe Disney as a born risk taker, someone whose fear of failure was outweighed by the need to tackle new challenges. His more cautious brother, Roy, often referred to him as “crazy” or “wacky.” But then Roy was in charge of the family cash box, which in the early days his brother depleted with alarming frequency, leaving it to Roy to persuade bankers to agree to new loans or extend old ones.
The key point is that Walt, although politically and personally conservative by nature, accepted no conventional boundaries when it came to his work. He was sure of his values and beliefs, sure of his own talent and that of his cast members, sure of his instincts, and sure that if given the proper chance, this outstanding combination would eventually prevail.
That is not to say that he jumped at every idea that came his way, but he certainly didn’t hesitate to take a chance if a concept met his artistic and financial criteria. First and foremost, of course, any potential project had to pass Walt’s trademark “entertainment” test. But if he felt that a project fit with his vision, he would leap, often ahead of the pack.
Another business giant who is not afraid to take a chance to realize his dreams is Lee Iacocca. His name is so inextricably linked to the Chrysler Corporation that asking whether a particular car is a Chrysler or an Iacocca is not really all that far-fetched—particularly if the car in question happens to be a Dodge or Plymouth minivan purchased in the 1980s. Iacocca hatched the idea for the minivan while he was president of the Ford Motor Company. In fact, as early as 1974, Iacocca drove a minivan prototype put together by one of Ford’s product engineers, Harold Sperlich, and two Ford designers.
Iacocca loved the car’s roominess, but to work properly, it needed a front-wheel-drive power train, the components for which would have to be designed from scratch, an expensive undertaking. Henry Ford II, Ford’s ultraconservative chairman and CEO, balked at taking on the risk and the expense. Henry was still haunted by the memory of Ford’s Edsel fiasco some 20 years earlier.
When Iacocca left Ford in 1978, he got permission from William Clay Ford, Henry’s younger brother, to take with him the consumer research he had gathered on the minivan. “I didn’t know I was going to Chrysler then,” Iacocca told Fortune magazine in a 1994 interview, “but I had a hankering to do this car because the research was so overpowering.”43
Harold Sperlich had departed for Chrysler a few years before, so when Iacocca also ended up there, the stage was set for the birth of one of the most profitable consumer products ever built. But first, Iacocca had to find the money to proceed with the minivan project, a daunting prospect at a company that in most quarters had been written off as dead in the water by the time Iacocca took over. The new CEO diverted the money from another project and the rest, as they say, is history.
Like Disney before him, Lee Iacocca dared to follow his instincts while staring potential disaster in the face. Later, with minivan sales surging and a debate raging over whether to commit several hundred million dollars to expand production capacity, Iacocca stood his ground against the opposition of all of his top executives who feared that the minivan might prove to be just a fad. He was sure he had tapped into a huge unanswered market. “Everyone fought me,” Iacocca told Fortune, “but that’s what makes horse races.”
Well, not quite. Iacocca had the backing of the solid market research he had done early on, not to mention the strength of his convictions. He wasn’t gambling on the unknown; he was taking a calculated risk based on sound numbers and sound instincts.
Both Ford and General Motors had built prototypes of a minivan too, but neither company had the courage to risk investing enough money to bring the vehicle to market. Because of this hesitancy, they lost out to Chrysler.
Successful cities, like successful companies, are often the result of daring yet trustworthy leaders. Once known as “India-no-place,” Indianapolis has become a thriving business hub and tourist destination. This transformation did not happen overnight. It began in 1967 with the dream of newly elected mayor, Richard Lugar, now Indiana’s senior U.S. Senator. Yet three years earlier, the notion of becoming a politician was far from his mind; he was merely a concerned parent on the Indianapolis School Board trying to preserve the school lunch program. After stirring things up in this position, the Indianapolis News suggested that the city needed a mayor who was not afraid of change, and that Lugar would be the ideal choice. In the election that followed, the Republican Party enthusiastically agreed and drafted Lugar as their candidate.
During his campaign, Lugar began talking about the limitless possibilities for Indianapolis, and his fervor spread with 50-foot billboards of the so-called “walking man”: Lugar striking a Kennedy-esque pose with his coat slung over his shoulder. With 25-foot lettering that read “LUGAR” in orange underscored with speed lines, talk on the street was that he “was going to remake the city.”
Lugar dared to act out the dream of his predecessor’s Indianapolis Progress Committee. During Lugar’s two terms as mayor (1968–1975), one of the most notable events in Indianapolis government history occurred, the adoption of Uni-Gov, a merger of the city and Marion County governments. Many units of city and county government were consolidated into one civil government, including the City Council and the County Council that joined to become the City–County Council. The structure of Uni-Gov was divided into three branches similar to the federal government: the executive branch, the legislative branch, and the judicial branch.
With Uni-Gov, the population and tax base of Indianapolis nearly doubled, and more than 2,000 agencies were consolidated into 6. More importantly, the merger had near perfect timing and may have saved Indianapolis from becoming another crumbling urban center surrounded by prosperous suburbs.
This story reaches far beyond Lugar’s clinching an election; it is one of powerful diplomacy, teamwork that transcended party lines, and a fight to destroy the racial inequalities that prevailed in the 1960s.
Long known as the “Crossroads of America,” Indianapolis has shed its tired image and emerged as an exciting community where people are proud to live and work. In the words of CBS sports commentator, Jim Nantz, “You can’t say enough about the vision by the civic leaders, the business community and the government constructing this downtown area over the last 20 years. It is such an ideal setting for the Final Four.” And the daring of one leader inspired it all.
Avoiding the Short-Term Mentality
Admittedly, being able to determine whether taking an action or not taking it will put employees and/or customers in jeopardy is not always easy. What’s more, some managers are so determined to protect their own turfs that they prefer the status quo to any proposition that might threaten their position, no matter how reasonable. This is akin to the “short-term mentality” that we discussed in Chapter 3, and it is the kiss of death for innovation and risk taking. Many great companies have slipped into decline because of this mindset, which combines an inability to take on challenges with a dangerous self-satisfaction with past achievements.
Walt Disney, of course, exhibited the exact opposite of that mindset. When it came to technological advances, for example, he knew that no one could cling to past achievements and survive, so he always had his antennae out for new technology. When the movie industry stubbornly refused to sell or lease any of its products to the television networks in the 1940s and early 1950s, thinking it could stop the juggernaut, Walt took a different view. He saw television’s potential market value, and he embraced the opportunities the new medium offered, realizing that it presented yet another outlet for his product.
Although Disney was clever enough to recognize the potential television held, he still spurned the networks’ initial approach. As always, Walt was determined to control the environment in which his work was released, and he feared that the black-and-white screen would not do justice to his color cartoons and films.
When he did make a television deal in 1953, he made it with the fledgling American Broadcasting Company, in part because that network agreed to help finance Disneyland. In return, ABC received access to Disney’s backlog of films and cartoons. Thus, just as movie audiences were declining markedly in the 1950s, lured away by the flickering screens right in their own living rooms, Disney was cementing an alliance that would plant his product firmly in the new medium. Today, Disney not only has a string of TV successes to its credit, including its own cable channel, it also owns ABC outright.
In our work with the Mead Johnson Nutritional Division of Bristol-Myers Squibb, we encountered a leader who had to make the courageous decision to focus on the long term in the face of very difficult near-term problems.
When we began our talks with this leader, Dr. Bill Cross, who happened to be the division’s vice president for quality, his reception of our proposals for change was distinctly lukewarm. Dr. Cross told us later that his first reaction was, “Why do we need to change?” He knew that his division already had a culture of quality and never let bad products go out the door. Then he realized that more than quality was at stake. Dr. Cross began to get excited about implementing a culture where team members could enjoy working together toward common goals and objectives.
As we were laying out plans for the implementation of the change effort and the initial Dream Retreats, Dr. Cross phoned to say that the division was going to have its first-ever layoff in only a few months. “Should the implementation be postponed?” he asked. We couldn’t answer his question, of course, because, ultimately, the decision was his to make. But in the end, he proceeded as planned. “Okay,” he said, “I’m going to plunge ahead because I feel so sure about its worth to us.”
Thus, when the layoffs came, the shock that everyone understandably felt was mitigated by the fact that a plan was in place to change the culture to one in which people could enjoy and take pride in their ability to meet customer needs and problems.
After the initial teams were well on their way to success, the vice president took the initiative to enlist the entire division in the change process. Now, the new cultural orientation has spread throughout the unit. It was this leader’s belief in the change effort and his recognition that the long-term future of the division was at stake that made the success possible.
Another leader at a Fortune 500 manufacturing company with which we work also exemplifies the kind of long-term perspective that Walt Disney showed. Traditionally, manufacturing a new product at this company required the installation of an assembly line costing between $80 million and $100 million. If the product failed, a large investment was lost. Obviously, finding an alternative way of doing things was in the company’s best interests.
Deciding to experiment with the possibility of running multiple products on the same assembly line, our client turned to an engineering manager with eight years of service with the company who was known as someone willing to experiment to try out new ideas—in short, someone ready to take risks. When the company approached him, however, he was in the enviable position of being head of the division that manufactured the most profitable product in its line.
Although managing this pioneering project carried the possibility of enormous benefits, success was by no means guaranteed. How many leaders would be willing to give up a sure thing to take on a risky, albeit potentially consequential task? Yet rather than fearing failure, this individual was excited about the ultimate goal of limiting capital risk, and he welcomed the chance to take on a new challenge. He was enticed to accept the company’s offer by the chance to spearhead something new. “That’s how you learn and how the best products are developed,” he said.
The Many Forms of Risk
It is usually taken for granted that risks in the business world are financial, but in our experience, risks come in various forms. A risk might involve change in a leader’s personal behavior, management style, or willingness to place more trust in co-workers or lower-level employees. Generally, a number of risks must be taken if a company is to reach its peak performance.
One of our clients was unable to risk making needed behavioral change until he was forced into it by circumstance. He was an executive and part owner of a family company. Within the company, he was perceived as an autocrat. Workers complained about his high-handed behavior and his abrupt way of giving orders. The complaints finally reached the company’s CEO after it became clear that the executive in question had completely lost the trust of his workers. The output of his department was suffering, and it was losing money.
During discussions with this executive, we pointed out that discontent with his management style was undermining employee morale, and, even worse, affecting his efficiency. He had a tough time accepting our assessment at first, but in the end, he acquiesced. We encouraged him to take what for him was an enormous risk: He empowered his staff by giving them information on business goals and performance and by asking them to participate in problem solving.
After three years of coaching, this executive was finally able to relax control and stop micromanaging everything in his department. He eventually became so comfortable with trusting his employees that he could even skip meetings, thus giving them more say. Because he was able to take a difficult personal risk, he reversed his department’s decline.
Over the years, we have discovered that the risk of changing often holds a company or an individual back until the time comes when it is forced to make a choice. Threatened by competition or saddled with a product that has ceased to satisfy contemporary needs, many of our clients have come to us and asked, “What shall we do?”
A few times we’ve encountered companies that talked a good line when it came to making changes, only to discover that all management really wanted, in effect, was to throw up a smoke screen. They planned to go through the motions of change by attending meetings with us, but they had no intention of even attempting to implement the suggested actions.
In some ways, however, such behavior is not all that surprising, because it takes courage to accept the fact that you must change. Some companies are never able to do it, and, ultimately, they slip quietly beneath the waves. But others, such as British Petroleum, manage to summon the resolve to do what must be done. As previously discussed in Chapter 2, management admitted that its resources were fast being depleted and that a complete structural overhaul was needed. Circumstances may have forced management’s hand, but it still took courage to risk making the fundamental change required to survive.
Shake Up Your Hiring Policies
When a client is truly serious about adopting a management style that encourages appropriate risk taking, one of the things we usually recommend is a change in hiring policies. We suggest looking for people who are not wedded to conventional business paradigms—people who may appear to be a bit radical for the prevailing atmosphere at the company but who possess vision and a willingness to try to bring that vision to life, even if it means that they might not succeed. Seek out those whose breadth of experience may indicate that they’ve taken an alternative or unique path to your door. The value of having people who are not carbon copies of the leader can’t be overstated.
Before Michael Eisner became chairman and CEO of Disney in 1984, he spent eight years as president of Paramount Pictures, a period in which the studio had a string of hits and critical successes. Yet he was rejected for the top job at Paramount because he was thought to be “too childlike.” In the years since, Paramount has had its share of successes while undergoing a couple of ownership changes. Its performance pales, however, in comparison to that turned in by Eisner in the first decade of his tenure at Disney.
There is little to be gained from empowering employees whose careers have been geared to obedience and suppressing their individuality as they move politely and gingerly up the corporate ladder. If you want to banish the “It can’t be done here” mentality, support employees who challenge those rules that threaten creativity and stifle imagination.
Sometimes, however, that creativity can turn sour. Several years ago, the vice president of stores at Men’s Wearhouse fired an employee for stealing a suit and tie. As soon as George Zimmer learned the details of this situation, he told his vice president to rehire the young man. When the baffled V.P. inquired as to the reason his company needed a thief working among their loyal team members, George provided a rationale that is most uncommon in corporate human resource practice.
First of all, the employee had stolen a suit and tie in his own size, George had explained, so he wasn’t selling it on the street. George honestly believed that the employee likely needed the suit and couldn’t afford to buy one. Second, the store where the employee had worked was touted as a top-performing Men’s Wearhouse for a number of years. And third, the vice president told us that George reminded him that the next person hired to replace this employee might be someone totally incapable of running the business.
According to the written corporate philosophy of Men’s Wearhouse, “When mistakes are made, leaders focus first on their coaching role, not their umpire role. Mistakes are opportunities for both mentoring and learning—not for instilling fear into the workplace. Reducing fear draws out our employee’s best efforts and most positive attitudes.”
George Zimmer isn’t blind to people’s faults. Within the walls of Men’s Wearhouse, it is widely understood just how strongly George believes in giving his team members second and third chances, and that he chooses to focus on the positive aspects of their personalities.
The leader who dares to take risks is often an outsider who doesn’t feel constricted by the establishment’s rules. Such divergence from the established norm is typical in the arts, and art history is full of examples of innovation prompting outrage among the mainstream. The French Impressionist Claude Monet, for instance, was ridiculed by the art establishment early in his career because his daring experimentation with bright color violated traditional artistic conventions.
It may seem odd to describe Walt Disney as an outsider, yet that is exactly what he was for many years in Hollywood. As the producer of cartoons, he was looked upon as small time, the supplier of filler material shown by movie houses before the “real” feature presentation came on. Even the special awards given him by the Academy of Motion Picture Arts and Sciences in the early 1930s were discounted as something of a public-relations ploy by the industry. Some thought that Disney, with his reputation as a producer of “family” products, was being singled out to counter the accusations of immorality that then dogged the industry. Not until he received an Oscar for the full-length Snow White and the Seven Dwarfs did Hollywood bestow any real recognition on Disney.
Throughout his lifetime, Walt continued to maintain a distance from the movie-making elite. He never used big-name stars in his pictures, nor did he invite them to lavish parties or Disneyland events. Walt also shunned deals with big-time agents. Early on, he established his own standards and went his own way.
Make It Fun!
Fun is a bad word in old-economy companies. Their management still believes, “If there’s too much fun, there’s too little work.” In reality, the opposite is true. Companies which champion fun have higher productivity and profitability. American Psychological Association has published surveys about this, and it’s a fact. Take the example of Southwest Airlines. The company boldly requires job candidates to indicate on their applications whether or not they possess “a sense of humor.”
In our work with numerous organizations, even some whose core businesses are highly regulated by standards-driven agencies, we’ve seen how a fun-filled workplace builds enthusiasm. And, that enthusiasm leads to better customer service, a positive attitude about the company, and higher odds that employees will stay. “Most business practices repress our natural tendency to have fun and to socialize,” says George Zimmer of Men’s Wearhouse. “The idea seems to be that in order to succeed, you have to suffer. But I believe that you do your best work when you are feeling enthusiastic about things.”44
If fun is truly a good thing—for human beings and for business—why are so many workplaces fun-free zones? One reason for sure is because times have changed: the effects of 9/11, a recession, downsizing, and the prevalent “do more with less” mentality. The good news is that companies around the country, from Motorola to Sprint, have discovered the benefits of humor in the workplace. The posture of some executives is traditional business heresy: “I know our company is doing well when I walk around and hear people laughing,” remarks Hal Rosenbluth of Rosenbluth International, a Philadelphia-based travel agency that has made the lives of corporate travelers across the country much easier.
The dentist office is just about the last place one could think of to go for a good time. But a visit to Dischinger Orthodontics in Portland, Oregon, would make you think you’d arrived at The Walt Disney World of dentistry. “We have always tried to make our office fun, with fun things happening all the time,” says Terry Dischinger. “It is in our mission statement to produce a unique personal experience for those who encounter our office—and part of that is having fun!”45 Perhaps Terry learned the value of fun as a professional NBA basketball player in the 1960s. He was also a three-time All-American and Olympic Gold Medalist: a member of the winning U.S. basketball team at the 1960 Games in Rome.
Keeping the energy high and incorporating fun takes a little thought, but there are many simple and inexpensive ways to do this. You don’t have to fly to Four Seasons Istanbul for a Dream Retreat (although that would be nice!). Even something as simple as a pizza lunch, a “Hawaiian Shirt Day,” or a karaoke party can turn poor attitudes during a slow quarter into positive attitudes for the next quarter.
Some years ago, the fishmongers of Pike Place Fish Market in Seattle, Washington, committed themselves to becoming “world famous.” To date, the now World-Famous Pike Place Fish Market has never spent a dime on advertising. Their goal is simply to interact with people and give them the experience of having been served and appreciated, whether they buy fish or not.
These fishmongers are the subject of the best-selling book FISH!, coauthored by our friend John Christensen (who also penned the foreword for this edition of The Disney Way). In FISH!, readers learn the benefits of a fun and happy workplace. Some may find the story line and principles—like Play, Be There, Make Their Day, and Choose Your Attitude—elementary. Others, however, find a framework of solid management techniques that can transform a workplace into one where energy, productivity, and incredible teamwork drive out boredom, toxic energy, and burnout.
The FISH! philosophy and principles give people a common language, one that empowers and energizes the entire employee base. And here’s the best thing of all: as the culture is transformed, new attitudes develop, trust increases, performance improves, and, yes, customers notice.
The idea that work should be fun is not new. In the 1985 book Reinventing the Corporation, John Naisbit noted, “Many business people have mourned the death of the work ethic in America. But a few of us have applauded the logic of the new value taking its place: ‘work should be Fun.’” That outrageous assertion is the value that fuels the most productive people and companies in this country.” And to that, we say amen!
The Sleeping Giant Is Reawakened
When Walt Disney died in 1966, the spirit of adventure with which he had imbued his company seemed to die with him. For almost two decades, the company continued to revere the image of its founder, but the old spark and inspiration were missing. The movies that were made during this time were lackluster in content and poorly received at the box office. Walt Disney World, Walt Disney’s brainchild, did open in 1971, but Disneyland in California installed no new attractions, and the parks were not refurbished. Moreover, the cost of the EPCOT Center was a huge drain on profits, and attendance at the park was not living up to expectations.
“What would Walt have done?” became the most frequently heard question at company headquarters. Some employees said they felt that they were working for a dead man. Net income dropped 18 percent in 1982 and slid another 7 percent the following year. The Walt Disney Company, an American institution, was on a slippery slope, and with its low stock price reflecting the company’s disarray, it became ripe for takeover by corporate raiders who were circling like vultures.
Enter Michael Eisner. With the backing of Roy E. Disney, Walt’s nephew and the son of cofounder Roy O. Disney, Eisner came on board in 1984 as chairman and chief executive officer, with Frank Wells assuming the post of president. Both men won the blessing of the wealthy Bass brothers of Fort Worth, Texas, who owned a sizable stake in the company. The support of the Bass family was crucial because it assured the team a significant period of time in which to rescue the foundering company without interference from outside investors.
Disney’s legacy was now in the hands of men who understood how to run the company as Walt had done and how to take calculated risks. It didn’t take them long to rekindle the magic. New investment in feature-film animation and a string of live-action hits that reflected the tastes of contemporary movie-going audiences vaulted the company into the ranks of major movie studios, a place it had never occupied before. With the large-scale syndication of Disney’s huge video library, the release of animated classics on videocassette, expansion and renovation at the theme parks (the whirlwind of activity was astonishing), Eisner and Wells managed to double Disney profits within two years. The duo had remade Disney into a company that dared to excel. Tragically, Wells died in a helicopter crash in 1994.
Along the way, Eisner and his management team made some mistakes, to be sure, but they did not destroy the culture that Walt Disney instituted nearly 80 years ago.
That is not to say that every new movie has been an artistic and commercial success. For example, the movie Tron, released in 1982, was a box-office failure, but in true Disney fashion, it introduced more advanced technology that the company will be able to utilize in future films. “When you’re trying to break ground creatively,” Eisner commented, “you do sometimes fall short. That’s risk, and we try to manage it well.”46
One of the company’s great success stories was the launch of the Disney Stores. What began as theme-park shops where customers could buy Mickey Mouse shirts and other Disney memorabilia has developed into a place where not only a wide array of merchandise is available, but also tickets to Disneyland and Walt Disney World may be purchased.
The idea to expand the company’s retail presence into malls and shopping centers came from former Disney employee Steve Burke, now president of Comcast Cable Communications and COO of Comcast Corporation. Steve was able to eventually convince both his mentor at Disney, the well-respected Frank Wells, and Michael Eisner that Disney Stores would eventually yield handsome returns. In November of 2004, Disney sold its mall-based chain of stores to The Children’s Place Retail Stores, Inc., a leading specialty retailer of children’s merchandise. They currently own and operate over 300 Disney Stores in North America as well as its online store; however, Disney maintains a strict license agreement governing the business practices and ways Children’s Place synergizes with The Walt Disney Company. Children’s Place has redesigned the Disney Stores to communicate that Disney is forward-thinking, as evidenced by a new sleeker and more modern design. Richard Giss, a partner in the retail services group of Deloitte Touche Tohmatsu in Los Angeles, says, “They’ve got premium locations, and the Disney name is a good place to start out for any enterprise.”
That risk taking is alive and well at The Walt Disney Company is nowhere more apparent than in its dramatic entrance onto the Broadway stage. Disney’s first foray, Beauty and the Beast, raised skepticism about the wisdom of transferring an animated film to live theater, but after more than a decade, the play still delights Broadway audiences. More recently, the highly acclaimed The Lion King has been setting Broadway records.
The opening of The Lion King represented bi-level risk taking for Disney. First, the company poured millions of dollars into renovating the dilapidated New Amsterdam Theater on New York’s 42nd Street, helping the city to turn around a seedy neighborhood in the process. Then, the theatrical version of the movie musical was brought to life on the Amsterdam’s stage. With its innovative staging and imaginative use of puppetry designed by its multitalented director, Julie Taymor, the production broke new ground in the long and glorious history of Broadway. One reviewer said that “as visual tapestry, there is nothing else like it.”
Not surprisingly, the show instantly became an enormous hit, proving that The Walt Disney Company still dares to take risks, still dares to excel and, in doing so, still dares to provide sheer magic to its audiences.
Looking ahead to Chapter 8, we’ll see how those who dare to take risks to further their dreams implement the final piece of the four-pillared Disney philosophy: Do. To make your dreams come true, you must know how to execute. It all begins with the right kind of training and orientation for every one of your cast members.
Questions to Ask
Is your culture stuck in paradigms that are no longer effective for your business?
Do you squelch long-term thinking in favor of short-term rewards?
Do you avoid micromanagement of employees?
Do you routinely give employees the opportunity to grow beyond their current responsibilities?
Do you create an atmosphere where failures are accepted and analyzed for learning purposes and possible future innovation?
Do you promote cross-functional teams for the purpose of re-engineering outdated processes and procedures?
Actions to Take
Grant employees the opportunity to develop and implement innovative ideas in all areas of their jobs: product, process, and service.
Schedule off-site retreats and meetings to encourage breakthrough, risk-taking ideas that may fundamentally change the way you do business.
Assign cross-functional teams to re-engineer products, processes, and services. Examine projects that failed and celebrate employee efforts, despite the outcome.
Communicate to employees how the study of so-called “organizational failures” is essential for planning future projects and strategies.
The Spirit of Challenge
When the Whirlpool Global No-Frost project started, Jerry McColgin was faced with a real challenge. Not only was the schedule cut by a third, but so was the budget. He thought he could deliver on time if—but only if—he had the team fully behind him. “I felt it was doable, but the team would tell me if I was right or not. I decided, for my benefit and for the team’s benefit, that we had to decide very quickly. We couldn’t get halfway through and then realize that we couldn’t deliver. This was one of the main reasons I took everyone off for a five-day retreat. We all concluded that the project was feasible within the time and budget limits the company had given us.”
Of course, by its very nature, the team took risks all along the way. Inviting the suppliers to work as partners was a major risk. Everyone involved was under a microscope from top management. Management had cooperated all the way—by setting up an international team, by giving the team specially outfitted and expensive offices, and by allowing personnel to be taken away from their regular functions to work full time with the team. All of these moves created some resentment and jealousy among coworkers.
The Global No-Frost team was always under pressure to reach its milestones on schedule. “From a risk point of view,” says McColgin, “we were carrying a heavy load.”
There were personal risks too. Take the case of the finance manager. When the project began, McColgin interviewed various people within the company and found no one he felt was really right. Then an American, who had been working as a controller in Brazil, came to see him. He wanted to relocate back to his own country. He was offered the job but expressed reservations at the risk involved in taking on a two-year job when he needed permanence. But he accepted the risk and took the job. In the end, he was given a management position in the company.
Our Featured Organization: Ernst & Young
BIG FOUR LEADER PUTS ITS PEOPLE FIRST
No one would argue that it’s risky to attempt to change a culture that has been successful for over 100 years. But to publicly announce that you are putting your people ahead of your clients might be considered by some as downright foolish. In 1989, the firms of Ernst & Whinney and Arthur Young combined to create Ernst & Young. Rather than attempting to merge two cultures together as a single entity, the leaders painstakingly worked as a team to create a new culture. As Phil Laskawy, retired chairman of Ernst & Young told us, “Those of us involved saw this as an opportunity to create a better culture than either firm had.”47 Ernst & Young International is one of the Big Four global professional services firms with over 100,000 employees stationed in 700 offices throughout 140 countries. The company audits over 100 of the Fortune 500 companies, consistently posts double-digit growth, and leads the competition in tax services and technology.
Bill Capodagli, coauthor, is a proud alumnus of Ernst & Young (from the Ernst & Whinney side of the firm). Bill fondly remembers his tenure at Ernst and Whinney but believes to this day that the company viewed its clients as more important than its people. Jim Turley, E & Y chairman and CEO, confided in us, “In the past, we looked at our people issues from the ‘program-driven’ side forward instead of from the ‘employees’ delight’ backward. We never trusted ourselves that if we put our people first, listened to them, and really made them the center of the firm, that they will help drive whatever we need to have from a program or policy perspective.”48
Ernst & Young’s unique “People First” philosophy dared to shake the century-old paradigm which dictated that only clients are entitled to first-class treatment. As Jim stated, “It is not only the decisions that I make that are important; it is the decisions that everyone makes day to day.” At most of their competitors, “People are viewed as numbers or like inventory,” remarked Phil Laskawy.
Jim Turley personally dedicated himself to championing a “People First” way of doing business. He began by visiting all of his North American senior managers and managers to assess reactions to the philosophy. It would no doubt have been easier to stage a formal presentation to the masses than spend precious time in small group discussions. Jim Turley is the kind of leader who fully understands that such programs and ideas are often viewed by employees throughout corporate America as a “flavor of the month”; therefore, he dared to integrate “People First” as a cultural philosophy, not as a program initiative. In order to accomplish this, Jim continued to meet with thousands of employees in small groups to solicit candid feedback and address their concerns. The big question that came out of this road trip was, “How do you go about changing the behaviors of senior managers and partners in order to achieve a ‘People First’ culture?”
After “People First” was launched in 2001, Fortune magazine invited Jim to participate in a conference panel discussion to present Ernst & Young’s “people strategies.” This was the very first time the philosophy was discussed publicly. Jim recalled, “I began to sweat. All of a sudden it hit me. I was going to tell 100–150 CEOs, half of whom were our clients, that our people are more important to us than they are.” Jim’s daring was rewarded when nearly all of the CEOs in the room told him that “People First” was indeed a smart move. Jim made a sure bet that his team of highly motivated and highly satisfied professionals would result in the very best service to clients.
Yet a mammoth challenge lay ahead: how to abandon the “old-school” philosophy. There is the traditional, “I’m partner, you’re the grunt mentality,” Phil Laskawy explained. “It’s the 80–20 rule or maybe the 60–20–20 rule. Sixty percent are going to accept it, 20 percent are going to leave, and 20 percent are going to resist the philosophy. Hopefully that last 20 percent keeps getting lower and lower.”
From the massive amount of employee feedback Jim gathered, it was clear that some leadership behaviors desperately needed changing. As a prescriptive measure, the human resources team created “People Point.” In this anonymous rating system, every employee in North America receives a request via e-mail to answer one question as it applies to a specific PPD (principals, partners, and directors): “How effective is this individual at creating an environment of mutual respect and encouraging personal growth?” A non-numerical scale allows employees to rank the individual on a scale from “Not,” to “Extremely.”
The “People Point” review system is completely voluntary. Reviewers are encouraged to evaluate as many or as few PPDs as they wish. Reviewers are also afforded the opportunity to submit additional comments as they deem appropriate. At the onset of “People Point,” Jim Freer, vice chairman of human resources, said management speculated that they would receive 10,000 to 15,000 responses. Much to their surprise, they received 30,000. A PPD will receive a report only if he or she has had five or more reviews. Eighty percent of the almost 3,000 PPDs receive reports with an average of 13 reviews. Partners with unfavorable reports are offered coaching to help change undesirable behaviors, while partners with favorable reports are interviewed to discover how desirable behaviors can best be communicated to others.
“People Point” would be a risky endeavor for companies without solid leadership. Even Jim Freer pondered the questions: Are we creating a situation were the only people that can win in this process are the nice people? And, do we want to tell people they can’t deliver tough messages or their “People Point” score will go down? “So we took a group of high-performing partners, from virtually every role you can imagine: client service for big clients; client service for small clients; area managing partners; administrative staff. Then we compared those groups. We found that within each group, there were high “People Point” reports and low “People Point” reports, but between groups it did not vary much. What this proved to me was that “People Point” scores are not dependent on whether you have a job that requires you to deliver tough messages. They are much more dependant on the individual, not the job.”49 That is to say that people whose jobs typically required delivering tough messages had the same percentage of low and high “People Point” scores as those whose jobs did not require delivering the same number or degree of demanding communiqués.
So, is “People First” really working, or is it just a corporate slogan? Deborah Holmes, director of Ernst & Young’s Center for the New Workforce told us, “Here people talk about how smart the practice is. One partner included her client in a conversation regarding her team’s work calendar that includes personal commitments as well as business. The nature of client relationships has changed; they have become much closer, from both a business and personal perspective. We still have our busy season, but everyone pulls together to make sure that important personal commitments are met.” Asked what makes Ernst & Young different from the other Big Four, Deborah replied, “A culture of entrepreneurship at E&Y makes it different. It allows people to innovate. No other firm puts people first.”50 Deborah reports directly to the chairman, sending the message that this is an ongoing way of doing business.
The “People First” philosophy was put to an early test on September 11, 2001. Ernst & Young was fortunate not to lose any employees as a result of the horrific acts of terrorism. On that day, hundreds of E&Y employees were working in the New York area, and some of them were on the eighty-second floor of World Trade Center’s South Tower. When the first plane struck the North Tower, the employees opted to leave the building. Many were temporarily stranded in the stairwell near the floor where they were working when the second plane hit the South Tower. Twenty-four Ernst & Young employees lost close family members in the World Trade Center disaster.
Ernst & Young chairman & CEO, Jim Turley, was at a global partners meeting in Rio on September 11, 2001. At the end of the day, Jim sent a company-wide e-mail message to his Ernst & Young family and entitled it, Day 1. He expressed his thanks for all who were safe and his sorrow for the loss of employees’ loved ones. He urged his people to take great care of themselves in those days of uncertainty. He continued to send daily e-mails, entitling them Day 2, Day 3, and so on. Jim received hundreds of responses to his communiqués. On Day 2, he established a disaster relief fund with the option of payroll deductions. “We didn’t have a process for a payroll deduction system,” Jim recounted, “but someone took responsibility and got it implemented overnight.” Many employees that we interviewed were convinced that Jim’s display of deep, genuine concern for his employees as individuals was the glue that held them together during those initial days and nights after the disaster. Jim said, “I was getting credit for all these ideas, but they were actually coming from people all over the firm. It created connectivity with people. It was just people who were thinking about what should be done and not worrying about the cost, and saying, ‘Look this feels right; just do it.’”
The other Big Four firms reportedly also conveyed support to their employees in the wake of the 9/11 attacks. As Jim Speros, E&Y chief marketing officer, remembers, however, “Other firms did a lot of similar things, but they were also focused procedurally as to how to continue billable hours and what people could do at home. There was no reference to billable hours in any of Turley’s communications; in fact, quite to the contrary. Our chairman was encouraging people not to fly. It was not business as usual, and he realized how people were feeling. On our own time, at our own pace, we would get back to some sense of equilibrium. Just the level of empathy, care, and concern that was shown throughout the organization really said, ‘This a place that puts its money where its mouth is.’”51 That’s “People First” in action.