GUTS!

Companies that Blow the Doors
Off Business-As-Usual

Kevin & Jackie Freiberg

Excerpts

Chapter 1: Go With Your Gut

Gutsy leaders devise smart and purposeful strategies that show respect for people, anticipate their needs and inspire high performance. They create open, collegial cultures where valuable input is shared and celebrated, whether it comes from the top, bottom or somewhere in between.

But it is never easy. It takes guts to give the status quo a swift kick in the butt and venture out to the seemingly lunatic fringe where breakthroughs are born. It takes guts to come down from the ivory tower to listen and talk to people in a human voice. It takes guts to lead with love and trust rather than power and fear. For too many people, it is easy to be hard, and hard to be soft.

To be a gutsy leader, do you have to do every gutsy thing we’ve written about? Absolutely not! There is no one-size-fits-all prescription for becoming a gutsy leader. Many of the techniques of the leaders we write about would mix about as smoothly as ice cream and hot salsa. But if you can borrow judiciously from the leaders profiled in these pages, applying their ideas to your own talents and personality, you and all the people in your organization will be at an advantage—and much more likely to perform at higher levels.

You have to be gutsy enough to stand up to those who stand in your way. You have to be big enough to admit your mistakes. You have to be vulnerable and say, “I don’t know.” You have to be humble enough to surround yourself with people smarter and more capable than you. You have to be open and flexible enough to adjust to ever-changing circumstances. You have to ignore those calling for a quick fix or a cut corner. You have to go with your gut, the instinct that feels right and knows best. Do what’s right because it’s the right thing to do. That’s gutsy leadership.

Chapter 2: Down With “Satisfaction”

down with satisfactionCompanies with branded cultures—employers of choice—aren’t filled with merely “satisfied” employees. Would you be content to create a culture in your workplace that simply satisfies people? We don’t think so! Gone are the days when employee satisfaction was the target to hit. We believe employees need to be far more than satisfied. They need to be overwhelmingly enthusiastic about the company. It’s time to get rid of those surveys that measure employee satisfaction—or, at the very least, rename them. Think about it: Are satisfied employees likely to go beyond what’s required to serve colleagues or customers? Are satisfied employees likely to strive to drive costs out of the business without compromising quality, service or safety? Are satisfied employees likely to engage with their hearts and minds to come up with innovative approaches to doing business? Are satisfied employees likely to be great ambassadors for your company, your brand? Instead, create an opinion survey or a loyalty index. Remember, words are powerful—consider carefully the words you use and the things you measure.

Chapter 2: Loyalty Rules

In today’s highly competitive talent market, employee loyalty must be uppermost in the minds of those making hiring decisions. What are you doing to become an employer of choice? In other words, how are you creating a branded culture that inspires loyal (rather than merely satisfied) employees?

We know from experience that when your employees are dedicated to their work and their workplace, they will enthusiastically showcase your brand. And predictably, customers and investors respond whenever a culture becomes so attractive and powerful that it constitutes a brand, in and of itself. Avon, for example, has created a culture based on its respect for the women who sell and buy its products; The Body Shop, on its concern for the environment; and Southwest Airlines, on fun and freedom. In other words, it’s more than the product or service that generates interest; it’s the company’s values, as well. The people, the work environment, the values, all contribute to branding the culture. Culture then assumes a life of its own and becomes synonymous with the brand. Culture brands create and reflect emotional, moral and social bonds among employees, customers and communities. In some cases branded cultures transcend the products or services that the companies offer and, gain as much, if not more, fame than their products.

Bottom line: A branded culture separates an organization from its competition and places it in a league of its own. Another example is the ice cream purveyor, Ben & Jerry’s, which is famous for tithing its revenues to environmental causes. For any customer sympathetic to such issues, spending a few dollars for a Ben & Jerry’s product buys more than delicious ice cream; it also makes a small contribution to the health of the planet. A branded culture is, quite simply, value added. A branded culture attracts the “right” kind of talent—people who are drawn to the culture as well as to the work. Since it establishes its own reputation, recruitment is easier because potential hires know much more about the company than just what it produces.

Chapter 3: Ownership Creates Commitment

What gives people at some companies the discipline to transcend petty politics and competition to concentrate on building a better organization? The answer is that they feel more like owners than just employees of the business. Owner-employees are inspired to take responsibility because their own success and that of the business are intricately linked. They know they are part of something special, and their pride motivates them to care and act in extraordinary ways.

Gutsy leaders know that giving employees ownership and responsibility is a way of saying, “I trust you, I believe in you and you are an integral part of this company’s success.” When you walk into organizations where employees don’t have a sense of ownership, you find a psychological wall between those individuals and the company. This atmosphere is precisely what Dilbert represents—the soulless world of corporate cubicles in which people show up, do the minimum, assume no responsibility, avoid the landmines and collect a paycheck. It’s a waste for the individual, who is locked in an unfulfilling cycle of mediocrity, and it’s a waste for the organization, which fails to capitalize on the gifts and talents of people who are capable of far more than they are achieving.

Ownership is a powerful force that can inspire even the most productive workforces to surpass themselves. Whole Foods, the nation-wide chain of gourmet organic and natural-food stores, operating in an industry notorious for its workers’ indifference, is just one of many remarkable enterprises that is unparalleled regarding its empowered, motivated and entrepreneurial employees. Read GUTS! and you’ll gain great insights on how Whole Foods inspires this kind of productivity and commitment. Imagine the possibilities if everyone in your company had an ownership spirit.

Chapter 3: Keep No Secrets

The more people know about your business, the more they will care. When an organization keeps secrets, people disengage because they feel left out. Morale and productivity suffer because employees bring less of themselves to work. How can we expect people to think for themselves and work to build a strong, profitable enterprise if they have no idea what goes into creating the bottom line? How can we make them responsible if they don’t know how their actions affect the business? We are baffled by CEOs and CFOs who will share financial information with golfing buddies, business reporters and analysts, but clam up when it comes to the employees who have the biggest impact on the organization’s success.

You might be thinking, “Yes, but what if the information we share gets out to our competitors?” We’ve got news for you: Your competitors already know most of that. Internet chat rooms, former employees, suppliers and customers, not to mention the media, all are powerful sources of intelligence. In fact, if you want to try something gutsy, get your information-technology or marketing people to identify two or three industry chat rooms and find out what people are saying about your products and your business. How much they know might surprise you. Our advice: Spend more time figuring out how to keep your people on the cutting edge of information and worry less about keeping it away from the competition.

Secrecy is the enemy of trust and is responsible for much of the distrust that exists between business and society, corporations and customers, managers and employees.

Keshavan Nair

Keeping people informed conveys trust and inspires accountability. It treats people as responsible adults who are fully capable of learning how the business works, and who are willing to do what is best for the organization. It tells them, “We want you to have all the information you need to be creative and more deeply engaged in the business.”

Whole Foods is especially passionate about sharing information with everyone in the company. John Mackey calls it a “no-secrets” management philosophy: “In most companies, management controls information and therefore controls people. By sharing information, we stay aligned to the vision of shared fate.”

The curious Whole Foods team member has access to nearly as much operating and financial data as top management. In all stores, there is a sheet posted next to the time clock that lists the previous day’s sales, broken down by team. Another sheet lists the sales numbers for the same day the year before. Once a week, sales totals for every store in the company are posted. And once a month, stores get a detailed report that analyzes sales, product costs, wages and salaries, and operating profits for every store. Because the data is so sensitive, it isn’t posted publicly, but is freely available to any team member who wants to see it. And store managers routinely review it with their team leaders. Since individual teams make decisions about labor costs, ordering and pricing — the factors that determine profitability—the reports are indispensable.

Chapter 4: The Hiring Conundrum

The biggest challenge is not building a company of bricks and mortar, but establishing one of hope, love, service, freedom, communication, fun and trust. These values create, protect and promote your corporate reputation, your culture, and ultimately, your ability to attract and keep the right people. GSD&M, Planet Honda, SAS, Synovus and USAA are organizations that understand the importance of these values. Clearly, it isn’t easy to discover or rediscover your corporate values and core purpose, but it is necessary since they are the basis for your hiring decisions. Your corporate community will not accept a new employee who is not compatible in these areas. He or she will sabotage your organization’s future.

Chapter 4: Become World Famous For Hiring

Let’s face it, a company is who it employs. Is your company famous for going after great people? Are your hiring practices well known? From their creative recruiting ads and annual reports to their speeches and interviews, gutsy leaders broadcast the message loud and clear: Getting, developing and keeping the right people are essential to future success; therefore, hiring is a strategic priority.

Remember, you’re not only hiring technicians, engineers, software developers and sales representatives. You’re hiring ambassadors without whom you can’t deliver world-class service. And there’s one more, not-so-incidental point: You have to live with them. The people you hire today will set the tone of the corporate culture you enjoy—or endure—tomorrow. Kevin once asked the entertainer Garth Brooks if he was scrupulous about hiring only world-class musicians for his band. Garth answered, “After 160 shows, a guy ought to be able to play an E-minor. The question is: What’s he like to live with and travel with the other 22 hours a day?”

What gutsy leaders know is that your competitors can copy your products, improve on your processes, undercut your prices, perhaps even match your quality. What they can’t replicate are the attitudes of your people.

Chapter 5: Have The Guts To Love

In some circles, love is considered un-businesslike—an amorphous concept that may be appropriate in the professional lives of nurses, physicians, social workers and teachers. Clearly, in this view, it doesn’t belong in a big brawny business. We disagree. Inherent in the human condition is the need to be loved, to be cared for; why would we think that need evaporates when we enter the workplace? In fact, it doesn’t make sense to expect your employees to function effectively in an environment that doesn’t acknowledge their psychological or emotional needs.

This concept applies to customers as well as employees. People want to conduct business with companies that care about them as individuals (as opposed to objectified market segments). We believe that there’s a place for such caring, for—dare we say it—love in business. Certainly, we aren’t proposing that your company become a social-service agency. We’re suggesting that you acknowledge compassion for and concern for others as a valuable business asset.

Trish Derho, the infamous marketing queen of our Freibergs.com, once said, “I work better when I’m loved. Try it!” Maybe we should all try it? People act differently, less defensively, when they feel loved. Employees are willing to be more flexible and more accountable when they’re drawn by love rather than driven by fear. Customers will become passionately devoted to your company if your ambassadors genuinely care about them.

Inherent in the human condition is the need to be loved.

Why, then, are so many business leaders reluctant to express love, a genuine care for each other at work? Perhaps they fear being viewed as soft-hearted romantics instead of hard-headed realists. Maybe they equate love with self-indulgent, non-business-like behavior. Yet, neither is the case in the organizations we studied. More than an intermittent sentiment, love is gutsy, a decision of the will made out of an altruistic commitment to the well-being of others, even when such a decision is inconvenient or even costly.

Rising above self-interest requires a strong will, discipline and a sense of security that not everyone can pull off. It takes guts, for instance, to tell people the truth about their rough edges in a performance review because you want them to succeed. Taking a risk and “going to bat” for someone with the boss may be politically incorrect, but it also may be the right thing to do.

Acting out of genuine concern for other people is gutsy because it often asks us to do what may be uncomfortable or counterintuitive. At times it asks us to take a stand on issues that may not be in our personal interest, as well as to be open and vulnerable. If I leave a meeting in which my manager was unreasonable, I can either complain about him or her to my colleagues or I can request another meeting to work out the problem behind closed doors. The latter is the smarter—and more diplomatic—choice. The former can lead to tribalism (discussed in Chapter 2) and only makes for a toxic work environment. My manager also has a choice. While he or she may not feel apologetic, the response that shows a genuine concern for my feelings is to admit that he or she can see things from my point of view. We can wallow in defensiveness, denial and self-pity, or we can transcend the moment and act in accordance with the more charitable values by which most of us live.

Chapter 5: “Love” Is Good Business

Southwest’s Herb Kelleher expressed this idea well: “I’d rather have a company bound by love than a company bound by fear.” This isn’t just the worldview of an Irishman known for his demonstrative displays of affection. Herb understands the business argument for a culture “bound by love.” Employees working at companies that care about them are far more than satisfied—they are engaged, loyal and fully committed to the organization with their minds and their hearts. And such organizations are much more likely to attract and retain world-class talent. Their employees are far more likely to perform at higher levels of commitment and productivity, which helps create loyal customers and increases profitability.

Most of the gutsy leaders we came across— including those highlighted in this book— would not describe their recipes for success as “love.” Yet, all would point to critical ingredients that characterize an organization, in Herb Kelleher’s phrase, bound by love.

Chapter 6: It’s More Than A Paycheck

We all want to believe in what we do. If you have held a job that conflicted with your value system or that, in your view, contributed little to the world, there is no way you would give your heart and soul to your work. It assures mediocre performance and higher than average turnover. People come to work not only for a paycheck, but to make a difference. Studies that ask employees to rank their priorities at work show that meaningful work outranks compensation. We think that virtually everyone wants to be part of something that transcends his or her everyday life. When our hearts and minds are engaged, we feel inspired to use our gifts and talents generously to the benefit of others.

The gutsiest leaders in history—Jesus, Gandhi, Joan of Arc, Martin Luther King, and Mother Teresa to name a few—did not set out to become world-renowned leaders. They set out to pursue a cause so compelling and so powerful that others got caught up in the movement. Their passion to address a need and create a better world captivated people’s hearts and minds, drawing them to make personal and professional sacrifices for the good of the cause. Gutsy leaders believe in their causes so deeply that their faith ignites the power and potential of those around them. Define your business in terms of a cause that makes the world a better place, and you will cut to the very heart of true motivation.

Several years ago, we led a seminar that was attended by a number of people from Kodak. We asked everyone in the room, “What’s heroic about what you do?” We received a lot of answers: “We exceed our customers’ expectations.” “The clarity of our prints is unmatched.” “Customers can count on the reliability and speed of our service.”

When you cease to make a contribution, you begin to die.

Eleanor Rosevelt

Finally, a woman in the back of the room stood up and said, “That’s all true, but it isn’t heroic. Our work is heroic because we preserve people’s memories—the birth of a child, a wedding, an exotic vacation. We capture some of the most important times of people’s lives.”

There was silence for a moment. Then a murmur of excitement coursed through the room. We could feel the level of energy and engagement rise. Why? Because that woman got it right. What ignites enthusiasm and inspires performance more? Saying that you process film and paper better than anyone else or saying that you capture the moments that make life rich and interesting? Suddenly, these photo processors had a cause that put their work in a larger context, one that made a positive contribution to the world. What had been an advertising slogan was suddenly a reality in their lives, something that gave their work meaning and significance.

Sometimes, it is a heroic cause that distinguishes one company from the next. While Kodak and Fuji both manufacture and develop film, Kodak has differentiated itself by turning the customer’s need for a solution into the inspiring cause of preserving people’s memories. What does MasterCard do that’s different from Visa? It enables people to engage in experiences that are priceless. But the difference is more than an advertising spin; it reflects the employees’ belief that their work is noble and meaningful. They are helping to create a better world.

Chapter 6: What Is The Biggest Payoff?

What happens when an organization’s leader gives his or her people a heroic cause—a way to believe that their work contributes to a better world? For one, people may feel more contented or relaxed. They become fully engaged mentally, physically, spiritually. And their zeal, of course, translates into financial reward for their leaders. Almost by definition, in our experience, a company with a heroic cause attracts heroic people whose dedication translates into impressive profits.

A leader gutsy enough to create a heroic cause surely knows that profit isn’t everything, neither for the leader nor for his or her enlightened workers. At the end of the day, helping people become heroes is the essence of gutsy leadership. For leaders, the incomparable payoff is a meaningful life and a chance to leave more than a windblown footprint in the sand.

Jim Goodnight of SAS is such a leader. He and his people really do want to know that at the end of the day what they create actually makes a difference. As an example, he described how SAS aided the U.S. Navy Bureau of Medicine and Surgery commonly known as BUMED (BYEW-MED).

As the healthcare provider for the U.S. Navy and Marine Corps, BUMED serves 2.6 million active service members, family members and retirees through 140 facilities all around the world. It got to a point where there was a huge amount of data from many different types of systems, over five levels of geographic hierarchy. Needless to say, BUMED struggled to balance capacity and demand. It needed a software fix that would somehow protect the confidentiality of patient data.

SAS teams worked closely with BUMED to meet those needs, and also to identify places where processes could be optimized. The result? Better use of Navy resources and improved healthcare for the people who rely on BUMED.

Speaking to a group of senior navy officers, Goodnight described what the significance of the project was to his workforce: “This means that from our employees’ perspective the software that they write, document and support is able to make a real difference in people’s lives. Fundamentally, people who feel that they can make a difference will make a difference!”

Chapter 7: Fun Pays

Far too many managers believe that fun and business aren’t compatible. And they pay a price both professionally and personally. When we visit somber, uptight organizations that discourage fun, we consistently find low morale and productivity. More importantly, once customers experience the stifling environment, they tend to take their business elsewhere. Many people are trapped by what our dearly missed friend and colleague, Moose Millard, called “the tyranny of the ‘or.’” Within this “either/or” logic, we can be either professional or lighthearted; be profitable or love people; be productive or have fun. Yet, evidence suggests otherwise. Companies run by the gutsy leaders we have studied embrace “the genius of ‘and’.” These organizations have stronger morale, higher recruitment and retention rates, superior levels of productivity and customer satisfaction, and greater profitability—and feature fun on the job.

>He who does not get fun out of every day…needs to reorganize his life.

George Matthew Adams

You can sense the difference the minute you walk in the door. While each of these companies has its own culture, they all share a spirit of hospitality and aliveness; you know immediately that people are genuinely glad to see you; their smiles aren’t forced, and they feel free to express their unique personalities.

Needless to say, organizations such as Quad/Graphics that must meet critical deadlines, or Southwest Airlines that is responsible for safely transporting more than 500,000 customers a day, or a leader like the Navy’s Captain Mike Abrashoff who guided USS Benfold through the Persian Gulf, know how to take their businesses seriously.

But for these leaders and their successful enterprises, fun is a core business strategy that doesn’t interfere with seriousness. In fact, it complements it, which gives these organizations and their leaders a distinct advantage over competitors who see fun as peripheral or even counter-productive.

Fun Fosters Trust And Levels Hierarchy

Leaders who laugh at themselves are able to disarm others, creating an immediate rapport with them. Suddenly, such leaders are seen as human, with their foibles on display. Fun frees people to be authentic and instantly diminishes the usual anxieties of dealing with higher-ups. It’s hard to feel fearful, rigid, hostile or inflexible when you laugh. Humor, in other words, opens the channels of communication and increases trust.

Conclusion: Gotta Have GUTS!

Put 50 people in a room and ask them to identify what the world’s greatest leaders have in common. We think that there’s at least one common denominator that will cut across every name on the list. Guts! They had the guts to go places, try things and make sacrifices for which others didn’t dare.

The leaders we have described in this book also share that common ingredient. They are ordinary people who believe that they can make a difference and then demonstrate the guts to act on that belief. By poking a finger in the eye of business as usual, they have accomplished what many say can’t be done—at least profitably. In a “free agent” world, these leaders have created cultures that are extraordinary magnets for world-class talent.

Gutsy leaders know that people matter, they care about their employees as people, not as just another kind of asset along with machine tools and building sites. They find ways to make their employees’ lives better, on and off the job. They nourish a culture that calls upon all employees to behave ethically, support their co-workers and fulfill the needs and dreams of customers— while earning a profit to support the enterprise and reward its owners. These leaders inspire their people to bring the totality of who they are—heart, mind, and spirit—to work every day. It is reflected in the creativity of their product and service innovations. In essence, gutsy leaders are the kind of people we love to follow, and they run the kind of companies all of us want to work for.

The gutsy leaders highlighted in GUTS! are not superheroes. They simply have learned to lead in a manner quite separate and distinct from the usual command-and-control model. Why do we call them “gutsy?” Because what they do goes against the grain of traditional management theory; because they are pioneers in their industries; because if they fail, they face greater disgrace and humiliation than those who fail doing the expected. Of course, with very few exceptions, they don’t fail. The risks they take with their gutsy behavior are always calculated, pure in motive and long-term.

The good news is you can examine the ideas and strategies used by these gutsy leaders just as you would any best practice and then borrow from them to fit your own circumstances. Their long-term success can be yours as well. But don’t wait for your boss or your colleagues to get gutsy. This challenge is personal. Besides, they’re counting on you. If you take personal responsibility for improving the lives of others, guess what? The part of society to which you belong will change for the better, and who knows, maybe you too, will play a small part in giving history a good swift kick.