THERE ARE lots of books written on various companies and CEOs—some by the CEOs themselves and others by biographers who are given the mandate to eulogise the rise of the protagonist. These stories sound great but, at times, appear contrived to create a good impression. Also, these books have a limited audience, as internal stories rarely gel with the reader, who gets caught in the details of the person or company. In fact, often, the critical message is lost.
This is where Daniel McGinn in How I Did It provides a good collection of essays written by CEOs, who have made a difference to their organisations, and written in brief about what their challenges were and how they surmounted them. Being original publications in the Harvard Business Review, McGinn has classified the essays under six headings, which broadly cover a lot of what has to be addressed by companies to succeed. These stories are readable and could inspire as they are told in the first person, with a lot of modesty, though.
There is one section on ‘finding a strategy that works’, which will appeal to all CEOs. It tells companies how to compete and gain from their businesses. Here, the author gives the example of GE, which reversed the trend of outsourcing to investing heavily in renewing manufacturing operations internally. Prada expanded into India, China, Russia and Brazil to market luxury products, which was unheard of earlier. It was a case of identifying the potential of growing affluent markets and targeting them. One takeaway is that when one has a luxury product, the utility is not to be reasoned—one does not need to sell only flat shoes in places like Prague or Milan, where roads are laid with cobblestones. It is the brand that matters, which brings in a snob value.
Then there is the case of eBay, which got into philanthropy and actually made money from the OMIDYAR Network of microfinance. The example of Novartis is enlightening, where the company ran into the challenge of a patent cliff on its Diovan drug, which was a leading component in its sales basket. It changed strategy by directing its attention on emerging markets and further diversified into cancer drugs and diagnostic centres to retain its growth momentum. These stories are surely inspiring.
The second set of stories is centred on ‘picking of right people’, who actually make an organisation. In fact, the author believes that the main job of the CEO is to get in the right people, especially at the top. Further, references are a better way of getting the right people than interviews or CVs. Gilt Groupe believed that if one has more than 50 people, then the main job for any organisation is to use these resources optimally. The HR department’s role is as important as that of the CFO’s. CEOs also have to be selfless. There is the case of the CEO of Seventh Generation who told the board that he should be replaced because even while the company was doing very well, he felt he was not equipped for future challenges.
The CEO of Xerox spent almost a decade looking for her replacement, as the incumbent had taken over from a CEO who lasted just 13 months. A lesson drawn from this experience is that when selecting a successor, one should not have two or more candidates as, if it were so, then invariably one would leave when the other gets selected and the organisation would suffer.
Marriot went a step ahead and had a non-family member take over the company. In fact, a lawyer associated with the company was given the role of heading M&A operations and later asked to take on the role of the CFO. He was then made in-charge of overseas operations before being made the CEO. Honeywell had a policy of not firing any employee during the 2008 recession and sent staff on unpaid leave. The ideology was that if a company downsizes, it would be difficult for it to get the right staff once the cycle gets corrected. This is a lesson for all companies.
Next, the author believes that ‘building the right culture’ is important, as it affects the company’s performance. This, he believes, should be the priority of CEOs and, here, he gives several examples of what was done, which can serve as templates for other companies. ZAPPOS, for example, did not conduct its call-centre work from India because it needed people to connect with customers. An Indian sitting in Bangalore could not ask a customer personal questions like about the weather. HSN went ahead and actually repainted its offices and repaired broken furniture to provide a good working environment for employees. Tsingtao, a Chinese company, had to change its entire way of working, as the Chinese are risk-averse and getting senior officials to do business was a challenge.
At times, companies need to ‘tell the right stories’ to get the confidence of various constituencies, especially in today’s world where companies are accused of spoiling the environment or damaging local community assets. Under Armour changed its suppliers of cloth for the T-shirts produced, while Timbaland had to change its supplier’s way of producing raw materials on account of opposition from activists. Maclaren voluntarily recalled its strollers when it realised that children were getting hurt using them. These actions actually make a difference to the communities around and the companies are able to build respect.
McGinn also has a section on ‘doing smart deals’ and this, he feels, is important because very often CEOs, who do well in their own lines of business, flounder or are apprehensive when it comes to making deals or going for an IPO, as they are not sure how the company will get affected.
Finally, the author talks of how ‘companies grow around the world’. Here, there are interesting examples of how Amway had faced a problem in China when the government suddenly outlawed doing direct business. The entire business model had to change. Burberry had to dispense with several designers and keep only one across the world to keep the product unique. In fact, it went to markets, which had an appetite for luxury products. Reckitt Benckiser followed a policy of not having any of its senior executives work in the country of their origin. This way, they spread cross-cultural fertility. Genpact gave up its normal business and became a back-office for GE due to bureaucratic issues in India when regulation said banks could not lend to foreign financial firms. Heinz followed the policy of making inroads into the emerging markets based on the ‘4 As’ principle—applicability to local culture, availability in the right outlets, affordability to suit the purse and affinity to local employees and customers.
Each of these stories provides some clues to senior management of companies who would, at some time or the other, be confronted with similar conundrums and challenges. While admittedly, there are no generic solutions across the board, these experiences would serve as valuable inputs to be considered by executives for moving forward. This book is a must-read for CEOs, as it could also present the fault lines in their own way of working. And if they do recognise them and take corrective action, it would be good for all.
This is where Daniel McGinn in How I Did It provides a good collection of essays written by CEOs, who have made a difference to their organisations, and written in brief about what their challenges were and how they surmounted them. Being original publications in the Harvard Business Review, McGinn has classified the essays under six headings, which broadly cover a lot of what has to be addressed by companies to succeed. These stories are readable and could inspire as they are told in the first person, with a lot of modesty, though.
There is one section on ‘finding a strategy that works’, which will appeal to all CEOs. It tells companies how to compete and gain from their businesses. Here, the author gives the example of GE, which reversed the trend of outsourcing to investing heavily in renewing manufacturing operations internally. Prada expanded into India, China, Russia and Brazil to market luxury products, which was unheard of earlier. It was a case of identifying the potential of growing affluent markets and targeting them. One takeaway is that when one has a luxury product, the utility is not to be reasoned—one does not need to sell only flat shoes in places like Prague or Milan, where roads are laid with cobblestones. It is the brand that matters, which brings in a snob value.
Then there is the case of eBay, which got into philanthropy and actually made money from the OMIDYAR Network of microfinance. The example of Novartis is enlightening, where the company ran into the challenge of a patent cliff on its Diovan drug, which was a leading component in its sales basket. It changed strategy by directing its attention on emerging markets and further diversified into cancer drugs and diagnostic centres to retain its growth momentum. These stories are surely inspiring.
The second set of stories is centred on ‘picking of right people’, who actually make an organisation. In fact, the author believes that the main job of the CEO is to get in the right people, especially at the top. Further, references are a better way of getting the right people than interviews or CVs. Gilt Groupe believed that if one has more than 50 people, then the main job for any organisation is to use these resources optimally. The HR department’s role is as important as that of the CFO’s. CEOs also have to be selfless. There is the case of the CEO of Seventh Generation who told the board that he should be replaced because even while the company was doing very well, he felt he was not equipped for future challenges.
The CEO of Xerox spent almost a decade looking for her replacement, as the incumbent had taken over from a CEO who lasted just 13 months. A lesson drawn from this experience is that when selecting a successor, one should not have two or more candidates as, if it were so, then invariably one would leave when the other gets selected and the organisation would suffer.
Marriot went a step ahead and had a non-family member take over the company. In fact, a lawyer associated with the company was given the role of heading M&A operations and later asked to take on the role of the CFO. He was then made in-charge of overseas operations before being made the CEO. Honeywell had a policy of not firing any employee during the 2008 recession and sent staff on unpaid leave. The ideology was that if a company downsizes, it would be difficult for it to get the right staff once the cycle gets corrected. This is a lesson for all companies.
Next, the author believes that ‘building the right culture’ is important, as it affects the company’s performance. This, he believes, should be the priority of CEOs and, here, he gives several examples of what was done, which can serve as templates for other companies. ZAPPOS, for example, did not conduct its call-centre work from India because it needed people to connect with customers. An Indian sitting in Bangalore could not ask a customer personal questions like about the weather. HSN went ahead and actually repainted its offices and repaired broken furniture to provide a good working environment for employees. Tsingtao, a Chinese company, had to change its entire way of working, as the Chinese are risk-averse and getting senior officials to do business was a challenge.
At times, companies need to ‘tell the right stories’ to get the confidence of various constituencies, especially in today’s world where companies are accused of spoiling the environment or damaging local community assets. Under Armour changed its suppliers of cloth for the T-shirts produced, while Timbaland had to change its supplier’s way of producing raw materials on account of opposition from activists. Maclaren voluntarily recalled its strollers when it realised that children were getting hurt using them. These actions actually make a difference to the communities around and the companies are able to build respect.
McGinn also has a section on ‘doing smart deals’ and this, he feels, is important because very often CEOs, who do well in their own lines of business, flounder or are apprehensive when it comes to making deals or going for an IPO, as they are not sure how the company will get affected.
Finally, the author talks of how ‘companies grow around the world’. Here, there are interesting examples of how Amway had faced a problem in China when the government suddenly outlawed doing direct business. The entire business model had to change. Burberry had to dispense with several designers and keep only one across the world to keep the product unique. In fact, it went to markets, which had an appetite for luxury products. Reckitt Benckiser followed a policy of not having any of its senior executives work in the country of their origin. This way, they spread cross-cultural fertility. Genpact gave up its normal business and became a back-office for GE due to bureaucratic issues in India when regulation said banks could not lend to foreign financial firms. Heinz followed the policy of making inroads into the emerging markets based on the ‘4 As’ principle—applicability to local culture, availability in the right outlets, affordability to suit the purse and affinity to local employees and customers.
Each of these stories provides some clues to senior management of companies who would, at some time or the other, be confronted with similar conundrums and challenges. While admittedly, there are no generic solutions across the board, these experiences would serve as valuable inputs to be considered by executives for moving forward. This book is a must-read for CEOs, as it could also present the fault lines in their own way of working. And if they do recognise them and take corrective action, it would be good for all.
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