3

Combating
Overload

How the Founder’s
Mentality Overcomes the
Chaos of High Growth

Most founders fail. The numbers are large—hundreds of thousands per year. Early failure usually comes because the business idea didn’t fly high enough to attract continued funding and justify growing it. But we’re not writing about those companies here. Our focus is on the survivors: the few start-ups that get significant traction. One reward for their success is the right to proceed to the next level of the game—and that’s where they confront overload (see figure 3-1).

So what do you do when overload hits? To answer this question, let’s return to the story of Norwegian Cruise Line, which we began in the previous chapter. It’s the story of a company that ran aground, despite a strong position in a growing market, and reversed its course by rebuilding from the front line up while sharpening its insurgent mission.

The Power of the Founder’s Mentality

When we left off, the company’s new CEO, Kevin Sheehan, had just taken over and was realizing that he had a real mess on his hands. A victim of its own rapid growth, Norwegian had been blown off course by the westward winds, and Sheehan’s job was to get the company back on track, headed once again for scale insurgency.

Sheehan acted fast. During his first year with Norwegian, he changed more than 80 percent of the company’s top-tier executives, looked for ways to rediscover the company’s core mission, and began the work of transformation from the front line up. This involved a number of key learning initiatives rooted in the power of the founder’s mentality, among them the following:

Opening up lines of communication. One of the central dysfunctions that plagued Norwegian during its decline was that shipside personnel didn’t believe that shoreside personnel understood the challenges of their work, and vice versa. Sheehan made connecting these two sides a key priority. To make sure each learned from the other, he and his team began including shipside staff in processes and decisions that had previously been handled exclusively in the corporate office, and invited officers from across the fleet to attend the company’s leadership retreats.

Celebrating and rewarding front-line heroes. Sheehan and his team introduced what they called the Vacation Hero program, which taught employees how to better engage guests and identified employees who had gone out of their way to make a passenger’s stay special or to solve a problem. The emphasis in this program was on sharing knowledge within the company to better serve customers.

Making constant improvement a focus. Company leaders put in place a kaizen (or continuous improvement) system to gather ideas from the front line on how to improve and streamline operations and processes everywhere in the organization, and created extensive discussion forums and recognition for the best ideas. They even developed a method to involve employees in the details of ship design, a powerful example of their new emphasis on the vertical rather than the horizontal.

Codifying best practices. The company developed a new software program, delivered through iPads, that defined and gathered inputs on Platinum Standards—that is, the best practices in terms of both operations and passenger loyalty drivers.

Keeping staff focused on core principles and customer needs. To make this happen, the leadership team delivered what it called Freestyle Fundamentals to staff: daily tips for customer-facing staff to think about each day.

Introducing measures of employee engagement, partner satisfaction, and customer advocacy. Norwegian put such measures in place for each ship and each cruise, and has made improvement in each category a priority. We’ve checked the numbers ourselves and can attest that they show a consistent increase.

Sheehan’s transformation of Norwegian is a true success story. In early 2013, the company went public and became one of the most successful IPOs of the year, closing the year 87 percent above its IPO price. From 2008 through 2013, EBITDA margins increased for twenty consecutive quarters, from 5 percent to 25 percent. Revenues have grown by 50 percent since Sheehan took over, and measures of health such as net yield and average fleet age are now the best in the industry (see figure 3-2).

We asked Sheehan to reflect on the turnaround. Recalling the state of the company when he took over, he said, “We were unfocused, operations were sloppy, and it was putting huge strain on our employees. Nothing seemed repeatable across ships or cruises or shore relationships. In five years, we changed all that and now have the basis for a unique and repeatable business model built around Freestyle Cruising that we can apply over and over.”

The crisis of overload is stressful because it usually happens when people are working as hard as they have ever worked in their lives, with limited capacity to deal with more, in pursuit of something they care about a lot. The first signs of overload are bottlenecks, things falling through the cracks, systems that are not scaling, talent stretched to the breaking point, increasing tension among colleagues, and maybe even the first onset of organizational malaise and loss of confidence; it then ripples to the outside in terms of sub-par performance in the marketplace, customer frustrations, and financial shortfalls. A helpful image to keep in mind is that of a plate spinner. In overload, the spinner has to set more and more plates in motion, and then keep them in motion. Quickly, what had been a satisfying process of growth (more plates) becomes a troubling one: plates start to wobble, the spinner can’t keep them all in motion, and they begin to fall to the floor. The spinner’s mission now changes: no longer is it to serve and delight his audience (customers); it’s merely to cope with this crisis of growth and avoid catastrophe.

Let’s turn now to some general ways in which companies have used the founder’s mentality to prevent or mitigate the crisis of overload.

Building the Insurgency

There can be little of greater importance to a growing company than its unique reason for existing, its insurgency, and the expansion that mission enables. Yet, despite its importance, a sharp definition of what the company stands for and what makes it special is one of the easiest things to let drift in the crush of daily to-do lists and overscheduled agendas. Here are some of the ways that successful leaders have maintained the insurgency as they have scaled their businesses.

Make It a Group Effort

Let’s start with the case of Harsh Mariwala, the founder and CEO of Marico, a consumer-products company in India. Mariwala started his consumer product journey in the early 1970s with a single product line—edible oils. Annual revenues then were just $8,000 per year—or $15,000 at current exchange rates. By any measure, the odds were stacked against Marico. But Mariwala thought there was room to grow.

To give but one instance, edible coconut oil was then sold in fifteen-liter tins. After much deliberation, he introduced Indians to smaller and more convenient plastic containers. These were designed so that pests like rats couldn’t gnaw through them.

In doing this, he achieved two things. First, he made an otherwise unwieldy product accessible to the masses in an easy-to-store form. Second, he drove down prices of what had been a luxury product until even those at the bottom of the pyramid could afford it.

This innovation in place, he traveled throughout rural India and started to build a mind-boggling distribution network of three million outlets. The outcome was there for all to see. Even the remotest villages started to stock Marico’s products. Between these innovations and distribution network, the brand soon became a source of competitive advantage and fueled the company’s resurgence.

Marico is now the largest hair-oil company in the world. It controls a significant market share and occupies the number-one position in 90 percent of the segments it operates in. A robust overseas franchise brings in 25 percent of its revenues. The company now has a market value of over $4 billion and during the last fifteen years has maintained revenue growth of 15 percent and profit growth of 20 percent.

Part of his success, Mariwala told us, stemmed from actions he took to embed Marico’s strategy and principles when the company had five hundred employees and forty managers on its rolls. With managers coming in from different organizations, everybody had his own views on how the business should be run. “It started to get chaotic,” he said.

I realized that to manage properly, I had to define what we stand for. So I started to codify it on how people ought to treat each other in the company and what our culture should be. When I was done, the document was about forty pages long and covered people, products, strategy, customers, our view of the markets, and how we ought to look at profits.

I shared this with the team, and the response was positive. No one had seen something like this in firms where they worked earlier. But I soon realized this was my view. It had to become theirs as well. So we initiated a process with the top few layers of the company to discuss, modify, and operationalize it. We gathered inputs and refined our thinking in about twelve full days of discussions across a year. When we were done with it, we had a document on hand with three sections in it: People, Products, and Profits.

We then went to the next layer of employees and went on an offsite to discuss and refine it further. This level of discussion was important to create ownership, eliminate cynicism, and drive an understanding that this is how we intend to run the business—and that these are not just words on paper.

We did this all across the company. It defined what is right and acceptable and what is not. Our priorities and goals were in it as well. We then worked hard to create policies and procedures to make these real, enforce, and embed them. It proved to be a document that empowered people closer to the front line to take action themselves, as long as their actions were consistent with our principles and values.

Mariwala and his team made sure every element of the document they had labored on for over a year led to actions that changed daily procedures to run the company. Take a value Marico calls “openness.” To emphasize this value, Mariwala created an office where employees could all see one another and didn’t have to go through an assistant to talk to the CEO.

To reinforce this value further, Mariwala initiated open house meetings. He’d visit every office and factory, and make himself available for hours to employees who had questions. He also initiated training programs focused on values and started to reward and celebrate people for reinforcing them.

He worked hard to minimize hierarchy as well. In many Indian organizations, supervisors and senior executives are typically addressed as Sir or Ma’am. Mariwala insisted that employees at all levels be called “members” and address one another by their first names.

Looking back, Mariwala says that codifying, socializing, and embedding purpose at the company’s core—and relying on everybody to do the same—is what lies at the heart of Marico’s success. His achievements are impressive. Today, Marico employs about 2,400 people, and its stock price has increased twelvefold over the last decade.

Leaders in rapidly growing companies need to set aside enough time to ensure that everyone understands and feels connected to the purpose of the company, including involving them directly in shaping it. In chapter 5, we’ll consider the extreme version of this strategy: the complete “refounding” of a company, as exemplified by DaVita, which between 1999 and 2015 went from near bankruptcy to being the best-performing health-care company of the decade.

Disrupt Your Own Insurgency

In chapter 1, we told the story of Yonghui, the Chinese grocery business, to illustrate the importance of having a clear, insurgent mission. But the company has other lessons to teach about how to harness the power of the founder’s mentality. It has been very successful, for example, in disrupting its own insurgency.

Let’s explain what we mean. The company’s founders, the Zhang brothers, disrupted Chinese retail with their original stores, which they ran themselves. But as they scaled the company, they realized they needed to bring in and carefully integrate professional managers to take those stores to the next level and make them their primary, stable engine of growth. They called these stores their “red stores.” At the same time, they recognized the ways in which professionalization and more-complex systems opened their business up to disruption from smaller, nimbler, insurgent competitors. So they decided to build a second set of stores in which employees could focus on innovation, without the burdens of managing the increasingly large and complex red stores. They called these new stores their “green stores,” and their reason for being was simple. As one of the brothers, Xuanning, told us, “We either disrupt ourselves or leave it to others.”

He explained the approach in detail:

Our insurgent mission is simple: safe, fresh, good-value food for the Chinese mother. We have stood for this since we opened our first store. To deliver that mission demands we focus on our supply chain. We need to source high-quality food from trusted suppliers and deliver this food fresh to our customers every day—not always that easy to do in rural China. As we grow, expanding our stores and product range, the importance of our supply chain at the center of our competitive advantage also grows. So you’d think it would be clear to all—while we want to improve everywhere, what really matters is our supply chain. This is where we must “spike.”

We are still a young company, going through a transition from two young brothers barely able to manage the chaos of growth, to a more professional organization. We are bringing in outside experts, from finance to HR, from pricing to category management. We need this. But what we have learned the hard way is that each professional has their agenda based on their past experience that creates lots of expert voices competing against our supply-chain agenda. How do you keep focus on the critical capability in a company building lots of capabilities through lots of initiatives? We can run around the company and shout, “It’s all about the supply chain! It’s all about the supply chain!” But, of course, our people have already heard that. So they can easily get seduced by the next shiny toy. One of the jobs of the leader is to keep the organization really focused on the one or two things that matter above all else.

This leads to the second part of the story. One of the main reasons the brothers shifted management responsibilities for their red stores to professionals was that they wanted to shift their attention to what they do best—starting new businesses and innovating. They wanted to stay in touch with the founder’s mentality as their company grew.

Xuanning described the ongoing challenge. “Growth is getting harder as our industry becomes more saturated and more competitive,” he said. “My brother and I realized we must continue to be the innovators. We did it once with our ‘red-store format’—what we call our original-store model. But we need to do more, hence, our ‘green-store format.’ These are our incubators for innovation. If the ‘red stores’ want to adopt a green-store innovation, they are welcome to do so, but they cannot constrain green-store innovation, even if that innovation might hurt red-store sales. While always painful, this is a good thing and keeps our insurgency alive.”

Embedding Front-Line Obsession

An organization is ahead of the game in preventing overload if its front-line employees love the details of the business and feel empowered to solve tactical problems on the spot. Organizations that work this way create more capacity to grow and keep decision processes swift and smooth. Their employees are more loyal and productive, and the result is a self-correcting organization that learns and changes almost automatically. Here are some ways in which we have seen successful companies accomplish this.

Put the Front Line First

In our FM100 workshops worldwide, we ask every audience of CEOs about their biggest growth barriers. And what they point to most frequently is their inability to hire, retain, and grow the capabilities of employees at the front line of the business and at the most pivotal operational points. We have talked with the leaders in a wide range of companies that have effectively overcome this problem. Here are a few examples.

Let’s start with Oberoi Hotels, whose story we began telling in chapter 1. When we visited Vikram Oberoi, the group CEO, we asked him about the company’s talent management. “We never select for a specific position,” he told us, “but select on a few fundamental traits, including that everyone we hire has the potential to grow at least two levels up in the organization. We begin to think of people’s long-term paths right at the start, which creates a greater sense of mutual commitment.” To that end, Oberoi doesn’t limit itself geographically when hiring. When the Oberoi Hotel in Jaipur was hiring for its opening, the management team visited eighteen cities to staff the hotel over a period of forty-two days, reviewing nearly nine thousand applications for only about two hundred positions. During the interviews, the team didn’t look for technical skills, but for personal values and a track record of being, as Vikram Oberoi put it, “driven, hungry, and really wanting to succeed.”

From the point of hire on, everything at Oberoi is designed to make employees feel a sense of long-term commitment. Within three months of their hiring, employees are invited individually to a special meal with management in the hotel restaurant; their families are invited, too, and everybody who comes, Vikram Oberoi told us, is “made to feel like royalty.” After six months with Oberoi, employees receive their “confirmation”: a rite of passage that includes photos with their team sent to their family to celebrate their progress.

Trust is a key value at Oberoi. Remarkably, even junior employees have access to such information as financial results and hotel performance with customers. Nearly all management meetings are open to any employees who want to sit in on them. Everything—from how reviews are done, to kudo cards that any employee can give out, to awards for people who deserve special recognition, to role modeling humble behaviors—traces back to the practices of the founder.

Balance Heroes and Systems

Insurgent companies thrive on heroics, epitomized by the many amazing Horatio Alger stories of the great founders. But eventually they need to grow up. They have to add new expertise, capabilities, and systems to bring order to the chaos of rapid growth, the unsustainable hours, the lack of control. They have to professionalize. Too often, however, professionalization can take on a life of its own or devolve into an exercise of mimicking the very incumbents they are attacking. Here are some ideas for how to reduce that risk.

Ensure that the professionalization agenda is set by the strategic agenda. The job seems obvious. Of course the strategic agenda should set the professionalization agenda, right? The problem is that as an insurgent company professionalizes, it adds functions, and each new function comes with a new leader and a new staff determined to improve that function. This creates a growing collection of disparate functional agendas that can quickly overwhelm a company and cause it to lose focus. Many of our FM100 meetings have focused on this. At one meeting, a founder (who has chosen to remain anonymous) told us a particularly illustrative story:

My first step was to recognize I had a big problem. I had brought in a half-dozen managers to help professionalize my company, but after a while I couldn’t even understand what was being discussed at our management meetings. The head of HR would stand up and talk about HR excellence and outline a ten-step program to bring us up to a world-class standard. Then our head of supply chain would do the same, but he called his program “In pursuit of functional excellence.” Our management meetings became long report-outs of all these ten-step programs, and we stopped talking about the customer or what we were trying to do to change our industry. So I told everybody to stop. I asked each of our functional heads to come back with the two or three things they were going to do to support our insurgent mission, and that mission only. Two weeks later, we met as a team and reviewed their work. Now I could see the connection between our strategy, our capability-building program, and our professionalization agenda. And the most surprising thing was that our functional heads all thanked me. They finally had clarity and focus on what they were doing and felt far more connected to the business.

This last point is critical. When they arrive at insurgent companies, professionals usually want to do the right thing. But they get little direction. Because the founding team is unsure how to professionalize, they are reluctant to give the experts direction. But the story just told shows what the founding team can do: they can help newly arrived professionals link their agenda to the insurgent mission. This provides much-needed focus and integrates them much more tightly into the company.

This brings us to another important job in managing heroes and systems: overriding systems. The risk-reduction ideas that follow all offer ways for leadership teams to stay fast and sharp as their processes become more complex and impersonal.¹

Commit to Monday meetings. One way you can ensure a balance between heroes and systems as you pursue rapid growth is by implementing a “Monday meeting.” We are not, by the way, suggesting that businesses have more large, internal meetings. On the contrary, what we are describing is one particular type of meeting that can have the effect of reducing work and increasing the metabolism of a business. The simple idea is for leaders of the company to meet once a week with a promise: at this meeting, no matter how long it takes, they will work to unblock any obstacle that is preventing key players from doing their jobs.

A meeting of this sort (which doesn’t have to happen on Mondays) has four immediate benefits. First, it signals to the whole organization that the problem-solving cadence of the company is now four days. Leaders can no longer blame the organization (or new systems and processes) for delays. Second, it forces the leadership team to talk in an integrated way about the problems that are making it hard for key players to get their jobs done. Leaders can’t hide. Third, the meetings keep the senior team action-oriented and reduce the cycle time from decision to action. Team members can’t leave the meeting until they solve problems, so they learn to deconstruct problems and to make big issues small enough to be fixable, precisely the kind of bias to action that animates the founder’s mentality.

Les Wexner has made the Monday meeting into one of the most important management routines at L Brands. It helps keep the cycle time of solving problems short, he told us, and removes blockages to action. The wrinkle at L Brands, which makes it an even more powerful management technique, is the Tuesday follow-up, a check-in on the progress of decisions and any new bottlenecks encountered. This strategy is employed by one of Wexner’s most successful CEOs, Nick Coe, who runs Bath & Body Works and the new start-up White Barn. Coe attributes a lot of his success to these meetings. “The Monday and Tuesday meetings are companywide, fifty-two weeks per year,” he told us, “and you never miss it. It is the most disciplined thing we do. It has morphed to ‘we can’t live without it.’ It is done for each business, no matter how new.”

Another master of the Monday meeting is Galip Yorgancioğlu, the CEO of Mey Içki. The story of Mey, the leading spirits company in Turkey, is well known. For about sixty years, the Turkish government ran a state monopoly that manufactured and distributed all raki: the anise-oil-based spirit that is Turkey’s national drink. Turks will sit for hours at their raki table ritual, drinking glasses of raki while nibbling at meze, a collection of small dishes of hot and cold food. When the government decided to privatize the industry in 2004, some construction entrepreneurs bought what would become Mey and set to work. They didn’t know much about consumer goods, but knew enough to recruit Yorgancioğlu as their CEO. He was their first employee and remains in charge today. For good reason: the first owners bought the company for roughly $292 million and sold it to TPG Capital two years later for about $810 million. And then TPG sold it to Diageo for about $2.1 billion. That’s an increase of ten times in value in about ten years—not a bad value-creation story.

We had the privilege of meeting with Yorgancioğlu and his sales and marketing directors in Istanbul. He is a massive proponent of the Monday meeting, when his leaders can get together and solve issues fast. He said:

One of the hardest things to do culturally is to make everyone understand that conflict is okay. We build the possibility of conflict into our organizations, and the worst thing we can do is then avoid the inevitable conflict that arises. I want my supply-chain team to deliver to our consumers the benefits of “sameness.” I want them fighting to rationalize, to look for scale benefits. And I want my marketing guys to deliver to our consumers the benefits of difference. I want them fighting for new variants, new products. And my job is to make sure that we address the conflicts that inevitably arise when our people are doing their job.

One trick I’ve found to do this is what I call double hatting. When we first talk about an issue, I want each person to represent that organizational hat they’ve been assigned. So if you’re in charge of supply chain, fight your corner. This makes sure we get the issues on the table and everyone understands that the conflicts we are raising are conflicts we want. Then I say, okay, now let’s switch hats. We’re all owners of the business; we now have all the issues on the table. What is the right answer? I now want people to debate the answer on behalf of the whole company.

Embracing conflict keeps Mey agile. “Speed and agility demands fast decision making,” Yorgancioğlu told us. “Fast decision making demands that we get all the issues on the table and then make the right decision for our consumers and our company. The Monday meeting lets us do that. The whole company knows that we’ll deal with the issues that come up each Monday, so they raise any issues that are stopping them from taking action. It’s a social contract, and if we do it right, it ensures that we move faster than our competitors.”

Draw lines in the sand. Probably the greatest insurgent growth story of the 1990s was the rise of Dell and its direct model for selling computers. During the high-growth phase, Michael Dell and his team identified four physical measures of health that they applied to each segment of the business (product, geography, customer) and to the business as a whole. Each was designed to be highly measurable, relevant to every level of the company, and require immediate action if they slipped. One of the measures, for example, was the percent of products slipped on time: a key profit driver, and a real line in the sand.

Create a council of franchise players. Every company can identify some employees, not necessarily department heads or people with big titles, who have a disproportionate impact on the performance of the company and its delivery to customers. We call these employees “franchise players.” Examples might be the account manager for a customer who represents 25 percent of all sales, or the leading product developer. Creating a council of these franchise players lets a senior team cut through layers of bureaucracy and engage in an open dialogue directly with the most influential and perhaps highest-potential employees. One CEO we know has brought many small founder-led businesses into his company and holds periodic meetings with only their founders, who provide an animated and unique perspective on the company. Another CEO holds periodic sessions with what he calls his “high potentials” to stay in touch with some of the biggest influencers, not all of whom have big titles.

We could list many more tactics that help a growing insurgent company balance heroes and systems. But these three tactics—Monday meetings, lines in the sand, and giving special attention to franchise players—are among the most powerful. We’ve seen them implemented in many different situations and have witnessed their effectiveness firsthand.

Demanding an Owner’s Mindset

The owner’s mindset at its best is focused on the long term, has a strong bias to speed and action, and demands that personal responsibility guide business decisions and actions. Let’s now look under the hood of several companies that have maintained their owner’s mindset and ask how they have embedded this lasting source of strength.

Build a Lean and Hungry Organization

What does the owner’s mindset really mean? What does it feel like? How can a large company embed it deeply in its employees and its culture? For answers, we turned to AB InBev, the world’s largest beer company, whose story we introduced in chapter 1 (“We create restaurant owners, not waiters”).

AB InBev has adopted a number of very visible approaches to embedding the owner’s mindset. It demands that every budget item be defended in the open every year. It sets aggressive goals around the key profit drivers in every part of the business. It makes sure that leadership targets cascade down and are disaggregated to the next level of leaders, so that every person is clear how he or she connects to the whole; no one escapes, there is no place to hide, and all face challenging gaps to fill. AB InBev challenges key managers to dream up threats that could disrupt part of their business model, such as changes in packaging. It maintains a widely publicized list of ten core principles and their prominent use in the company.

Each of these programs has a significant role in maintaining the competitive intensity, amazing work ethic, and founder’s mentality of AB InBev. But to get to the deeper answer of how AB InBev has maintained its edge as it has scaled so profoundly, you need to look deeper. And when you do, you find that the secret to the company’s success—and to achieving scale insurgency in general—is the replication throughout the company of the core values and beliefs of the founder’s mentality. The best analogy we can think of is the replication of plants from an original seed. That’s what the image on the cover of this book symbolizes.

We spoke with Jo Van Biesbroeck, one of AB InBev’s longest-serving employees, about this process. His roles at the company have included leading European operations, the export business of smaller countries, the finance department, the acquisition team, and, most recently, the strategy team. He explained to us a number of ways in which the process works at AB InBev:

Hiring at AB InBev is very selective. As much as possible, it’s internal breeding. That is on purpose. For instance, the last time I recruited in Europe, I screened nine thousand applicants for twenty-five jobs. New people are followed especially closely for the first five to seven years. They are tested right from the start to see if they can thrive in the meritocracy. Everyone talks about it in the company. It is a target system built on aggressive and big targets. People who make it through our process receive opportunities at a young age that you would not get in another company until you had proven yourself five times. We pressure-test the people we hire to make sure they embrace big, risky targets. It is pure meritocracy within the company. If you achieve your targets over time, you will do extremely well financially in our system; the origins go back to the behaviors of the founders that have been passed on.

We treat our people as if they own their part of the business. No delegation or excuses are tolerated. I have worked with our CEO for years. He is the toughest but fairest boss I have ever had. It was extremely difficult sometimes, but I would get instant feedback, totally blunt, and totally transparent. That is how we want everyone to behave. We probably spend as much as one-third of top executive time on selecting, coaching, and developing people. We are at the extreme of believing in investing this way. We insist that people feel like entrepreneurs and push everything down toward the front line. For instance, we have a company of 155,000 people, yet only about 300 of them are in the corporate headquarters. We have benchmarked against other large consumer companies where there are thousands and thousands in the headquarters. That is not us.

There is no delegation and little tolerance for excuses. You either perform or not; you are paid for solutions, not effort. You are paid to bring proposals, not wait around. People don’t write twenty pages of explanation of what happened, but tell it in five minutes and then turn to what you are going to do. Just look at the best neighborhood bakers. They have no one to blame, know the smallest detail of pricing the product, know the customers by name and preference, and feel personally responsible for every detail.

AB InBev’s CEO, Carlos Brito, summed things up succinctly for us. “The way we’ve built our company has always been with this constant dissatisfaction about our results and our achievements,” he said. “So we’re never happy with where we are. We always think we can do more.”

We’ve observed that kind of thinking time and again in studying scale insurgents and, in doing so, have come up with five important techniques for embedding the owner’s mindset in an organization. All business leaders should ask themselves how often and how well they employ them.

• Dream big at every level.
• Unfailingly embrace the principles of meritocracy. Do it openly, without apology. Promote fast, honest feedback.
• Promote from within as much as possible. Ensure that senior leaders invest massively in the people around them.
• Set big but simple targets for the units of value creation in the company, and empower the leaders to act like entrepreneurs.
• Have a zero-base mentality for everything, from yearly budgets to the future of the business model itself.

Liberate Trapped Resources through Zero-Based Budgeting

The CEOs of big companies often complain about the problem of trapped resources. The problem isn’t a lack of resources. The companies have plenty. The problem is that most of those resources are locked away in market, product, or functional silos, and seem impossible to redeploy on a moment’s notice, even though that’s precisely what’s required for a company to successfully tackle the dynamic challenges of growth. No matter how hard they try, these CEOs feel they can’t create the right culture or incentives to encourage employees to offer up resources to be redeployed elsewhere. This isn’t surprising: professionals in bureaucracies get territorial about “their” talent and money, and develop highly sophisticated strategies for defending it. It’s the owner’s mindset in reverse.

Companies experiencing or aspiring to hypergrowth can’t afford to have this happen. So they have to work constantly to simplify and to reinforce transparency. And one of the most effective ways they can do that is by constantly “zero-basing” budgets and the deployment of resources.

What does this mean? Regularly examining every process and every key activity with a fresh eye, and asking these questions: If we could start over, would we still invest here? Is this still the best use of resources, or is it an artifact of history and past budgets? Are our core customers willing to pay for this cost or that process?

These kinds of questions are what AB InBev asks reflexively, almost unconsciously, across the business. At budget time each year, for example, management has to defend and justify every element of its spending. The company eschews perks such as special parking, high-end transportation, and lavish lunches. It does not hold major management meetings at exotic resorts but at AB InBev facilities around the world. This top-to-bottom attention to detail and spending has allowed AB InBev to achieve a level of profit per hectoliter of beer that, according to our calculations, is significantly higher than its global rivals. As a result, AB InBev has grown to be the largest and most profitable beer company in the world. It is, in fact, one of the great insurgents of our time. And here’s the thing: despite its boot-camp culture, the company has people beating down its doors to get in. In 2014, it had nearly 100,000 applications for 147 graduate jobs—numbers that top most of the tech firms of Silicon Valley. That’s the power of the owner’s mindset practiced across an entire company.

These three strategies—building the insurgency, embedding front-line obsession, and demanding an owner’s mindset—represent the powerful core traits of the founder’s mentality. In this chapter, we’ve shown how useful they can be in helping insurgents successfully survive overload as they make the journey north. In our next chapter, we’ll show how they can help more-mature companies successfully survive stall-out.

USING THE FOUNDER’S MENTALITY IN YOUR ORGANIZATION

Create a forum of franchise players to provide a front-line viewpoint on how to restore the founder’s mentality. Give them three immediate tasks:

–Review the agendas of key management meetings during the past six months with the goal of assessing whether the meetings focused enough on customers and front-line employees.

–Identify immediate actions to speed up their ability to serve customers.

–Decide how best to design and test next-generation business models to respond to new insurgents.

Start “Monday meetings” to speed decision making and unblock barriers.