CHAPTER

2

FOSTER A SHARED OBSESSION

More than a Business, Less than a Cult

The founder of Patagonia, Yvon Chouinard, is a man of strong convictions. He openly declares, for example, his preference for some customers over others. He favors those he fondly calls “dirt bags”—people, like himself, who engage in high-intensity outdoor activities such as rock climbing, whitewater kayaking, and surfing.¹ They push themselves to the extremes and take full advantage of how his firm’s products perform under demanding conditions. They also care about the environment and do their part to protect it. Chouinard is equally direct in expressing his disdain for those who wear his clothing as fashion statements while running errands in gas-guzzling Range Rovers.² When asked if his views might alienate some of his most loyal customers, he says,

I couldn’t care less. I could get 10,000 letters saying “Take me off your mailing list” and it wouldn’t bother me. . . . What they don’t realize is that I’m not in the business to make clothes. I’m not in the business to make more money for myself, for Christ’s sake. This is the reason Patagonia exists—to put into action the recommendations I read about in books to avoid environmental collapse. I’m in business—to try to clean up our own act, and try to influence other companies to do the right thing, and try to influence our customers to do the right thing. So we’re not going to change. They can go buy from somewhere else if they don’t like it.³

Chouinard doesn’t see himself as a businessman. In fact, he hates the term. He is an environmentalist who built a $750 million company.⁴ His disregard for common business practices has resulted in some missteps along with way—including a near-death experience for the company several decades ago.⁵ Chouinard admits that Patagonia made some classic blunders. The firm at one time had an unwieldy organizational structure, poor inventory management processes, and little or no training for its new managers. The firm also suffered, early in its history, with significant turnover at the senior levels—people, in Chouinard’s view, who didn’t fit the firm’s culture. Some of those who departed had a different view—suggesting that Chouinard was a difficult and divisive boss. Others view Yvon as a highly idiosyncratic leader but one whom they trust. One noted, “Yvon is an interesting leader in that he is not particularly charismatic. He is passionate about what he believes but can, at times, be cynical and introverted. He is, however, the most authentic leader I have seen over my career. There is no BS and no backing down from what he believes is right.”⁶

Patagonia survived, learned from its mistakes, and became an iconic clothing brand. Over the years, Chouinard has ignored offers to buy Patagonia. He also refused to take his company public regardless of the financial windfall that he and his family would realize in doing so. Keeping Patagonia private gives him more freedom to run the company as he sees fit. No shareholders pressuring him to grow faster. No quarterly earnings call to explain his investments and donations. No analyst asking questions about profit margins.

Chouinard has dedicated his life to reducing the harm that individuals, and companies, have on the planet. Patagonia is his primary means of achieving that goal—starting with his firm’s charitable support of environmental causes. Each year, Patagonia donates 1 percent of its annual revenue to conservation groups. Patagonia also gives employees time off, up to two months with pay, to work on environmental efforts. One employee, for example, tracked the movement of wolves in Yellowstone National Park in an effort to enhance their survival and, in so doing, help maintain a healthy balance in the park’s ecosystem. Patagonia also strives to be a good corporate role model, inspiring other firms as well as its customers to live in a planet-friendly way.⁷ Chouinard’s focus on the environment has resulted in a unique corporate culture and, at times, some surprising actions. Perhaps the most notable occurred when the company ran an advertisement asking people not to buy its clothing (with the headline “Don’t Buy this Jacket” placed above a photograph of a popular Patagonia jacket). The ad’s subtext stated that to lighten their environmental impact, people need to consume less and companies needed to make less. It may be the first time in history that a business asked people not to buy its products.⁸

Causing no unnecessary harm to the environment is one of two key priorities at Patagonia. Making the best possible product is the other. The importance of quality was evident early in the firm’s history. The precursor of Patagonia was little more than a blacksmith shop operating out of a garage. Chouinard made climbing hardware for a small circle of his friends, all outdoor enthusiasts. The goal was to make equipment that was stronger, lighter, and more reliable than competitive products. Chouinard wrote in his biography, “Quality control was always foremost in our minds, because if a tool failed, it could kill someone, and since we were our own best customers, there was a good chance it would be us!”⁹ Patagonia’s sales took off when the firm began selling high-quality shirts that were more durable and colorful than anything on the market at the time. The firm’s product offering shifted from climbing gear to outdoor clothing, but Chouinard’s passion for quality remained steadfast. A colleague recalled how agitated Chouinard would become when Patagonia received product returns (for example, shirts with buttons that had fallen off). He demanded that his staff do whatever was needed to ensure that their products were of the highest quality—regardless of the effort or cost of doing so.¹⁰ Chouinard sees his firm’s two core values, protecting the environment and producing quality products, as closely linked. He wants people to buy fewer products, but the products they buy must perform better, last longer, and, when possible, be recyclable.¹¹

Some believe that corporations, when all is said and done, are legal entities created to earn returns for their shareholders.¹² A well-known business pundit argues this view when he says, “Here is the truth: The DNA of a business is to maximize returns to its shareholders.”¹³ Nothing more or less. Those with this view argue that the concern that companies show for customers, employees, and the environment may be sincere but are always secondary to the need to maximize profits. The problem with this argument is that many successful companies are dedicated to something beyond making money. Whole Foods says it wants to change the world through better nutrition. Pixar strives to touch people through its movies. Zappos sees its highest calling as creating happiness, not only for customers but for the world at large. Airbnb wants to create a sense of belonging and community, providing lodging where people feel at home wherever they travel. Those with a cynical bent view these statements as public relations and marketing ploys designed to enhance their brands. But these companies back up their lofty statements with their actions and investments. They fully understand the need to earn a profit—and the consequences if they fail to do so. But they don’t focus on profit as their highest calling.

A small story from Zappos illustrates this point. Several years ago the firm’s founder and CEO was attending an all-day out-of-town meeting with individuals from Sketchers, a manufacturer of shoes. The group went back to the hotel after the meeting and too many drinks at a local bar. They wanted to order a pizza, but room service at the hotel was closed (as it was far past the 11 p.m. deadline). One person in the group suggested that they order out from a pizzeria. Zappos CEO Tony Hsieh suggested, half in jest, that they call the Zappos 800 number for ordering shoes. He said they should, without telling the Zappos call-center employee who they were, ask for help in finding a pizzeria that would deliver to the hotel. Hsieh made a bet that the Zappos call-center employee would help because his firm is dedicated to serving others—regardless of the request. One of the Sketchers people took the CEO up on his boast and made the call, with others in the group listening in on the speakerphone. The Zappos call-center employee was initially confused as to how to respond. But, as Hsieh predicted, she then helped locate the desired pizza. Tony Hsieh tells this story to illustrate that his firm’s first priority is not selling shoes but, instead, creating happiness through service to others.¹⁴ This statement is more than rhetoric at Zappos. The company, for example, trains team members on how to fully engage callers, with the goal of meeting their needs whenever possible. It wants each caller to Zappos to leave the interaction happier. The company does not use efficiency metrics (number of calls per hour) to reward its call-center employees. Nor does it promote “upselling,” where callers are encouraged to buy more products beyond their initial purchase. Zappos likes to publicize that some customers stay on the line with its call-center reps for hours at a time (with a recent call breaking the firm’s previous record in lasting 10 hours and 43 minutes). Paying its employees to stay on the phone for hours is hard to justify from a profit perspective—yet that is what Zappos does.

A paradox of cutting-edge firms is that they make more money because money is not what they care most about. In this regard, they don’t act like the stereotype of a firm focused only on quarterly earnings. They are not even fixated on growth, even though many of them are among the fastest growing firms in history. Pixar, for instance, has produced a string of blockbuster films that in total have made billions of dollars. Pixar takes pride in its films being commercially successful and even rewards its employees with bonuses when a film does well. But revenue is not the firm’s ultimate measure of success. Pixar’s primary goal is to make films that touch people at an emotional level. This sounds idealistic, even a bit naive, but that’s the goal. The Pixar film Finding Nemo, for example, was a commercial success in part because of its technical brilliance in animating underwater scenes. However, the film is a success because of a well-crafted storyline of an overprotective father learning to be a better parent. Other movie studios, or at least those seeking to maximize their financial results, would have quickly followed a hit like Finding Nemo with a sequel—and, in so doing, profitably captured the audience from the first film. Pixar, however, was not going to make a sequel just to cash in on an obvious commercial opportunity. It waited 13 years to make the follow-up film, Finding Dory, because the storyline wasn’t yet up to its standards.¹⁵ The cutting-edge firms in this book don’t exist to make money, even though they are exceptionally successful. They make money because it allows them to do the work they love.¹⁶ Profit, in these firms, is necessary and important—but insufficient as a reason for being.

Cutting-edge firms and their teams often have a religious, or more accurately a quasi-religious, quality to them. They are, of course, not aligned with any formal religion. But consider how they operate. First, there is shared belief in serving a larger purpose (better health, better planet, greater happiness). The goals vary across firms, but they are similar in their pursuit of something beyond making money. Second, there is a deep personal commitment on the part of their members to serve that purpose—which is not simply a slogan on the wall at the entrance of a company building or posted on a website under the banner “Our Values.” These firms consist in large part of true believers. Work becomes more of a vocation than a job. Even when people could work fewer hours or take off during weekends and for vacations, many do not because work to them is much more than work. Third, these firms often believe they are special in regard to their purposes, capabilities, and histories. Each views itself as unique in its beliefs and practices—and, humility aside, superior to other firms. Each of these factors can create what some view as a religious-like culture within these companies—particularly to outsiders seeking to understand how they operate.

Most of these firms have origin stories showing how they came into existence and overcame obstacles to become what they are today. These are their signature narratives that bring to life the larger purpose of each company. In particular, they create a shared mindset about what is expected of people and teams within the company. The themes in these stories vary by company depending on its history and the values it wants to emphasize. But their intent is similar in communicating what each company wants from its people—how it wants them to think and act. Whole Foods, for example, tells a story about surviving the worst flood in 70 years in the city of Austin, where its first store was located. The store’s inventory was ruined and most of its equipment damaged. The losses totaled over $400,000, and the recently founded company had no insurance. Customers and neighbors voluntarily joined the store’s team members to clean up the damage so it could reopen. Creditors and vendors also provided help in giving Whole Foods time to recover and pay its debts. This story is on the company’s website, and told to new hires, because it reinforces the passionate commitment of its employees as well as their connection to the local community—something that Whole Foods still values even though it is now a multi-billion-dollar corporation.

Going further, we can compare cutting-edge companies to cults. The comparison is inevitable given the degree of passion one finds within these companies, particularly when they are led by a highly charismatic leader who engenders a strong sense of loyalty. Zappos, for example, is very much the creation of its founder Tony Hsieh. His personality is stamped on most of the company’s beliefs and practices. For example, he believes that the lines most people draw between their work and personal lives are artificial and unhealthy. He requires Zappos managers to actively socialize outside of work with others on their teams. Hsieh believes this fosters closer relationships and allows good ideas to surface more naturally. Managers who are unwilling to do so are not hired or don’t remain with the firm. A second example of Zappos being an expression of Hsieh’s thinking involves his dislike of hierarchy. He is now implementing a new organizational approach in Zappos with an emphasis on self-managing teams, called holacracy.¹⁷ In the simplest terms, holacracy eliminates most of the authority structures found in traditional firms (including titles). This radical approach is designed to create a company of entrepreneurs who identify and seize opportunities as they arise and, in so doing, help the company operate more effectively. Traditional management roles are replaced by governance groups called “circles.” These groups review and then approve or deny the improvement ideas generated by individuals. Members of the company then pull together as needed to execute an approved idea. The model is robust in having a set of formal group processes to surface, vet and act on new ideas, replacing the chain of command that is found in most firms. Hsieh believes holacracy will spark innovation in Zappos and allow it to thrive over the long-term.

As founder and CEO of the company, Hsieh is implementing his new organizational model even though some employees disagree with the approach.¹⁸ Hsieh told them to embrace the paradigm or leave the company. Reports indicate that a significant number of his employees took him up on his offer, which included a generous severance buyout, and quit. Hsieh, of course, is not alone in being a leader who puts his imprint on the firm he leads. Patagonia largely embodies Yvon Chouinard’s personality and values. The same is true for Whole Foods in regard to the imprint of John Mackey. The same for Reed Hastings at Netflix, Ed Catmull at Pixar, and Brian Chesky at Airbnb. These firms may not be cults, but they are very much the creation of their founders.

Comparing cutting-edge firms to cults, however, ultimately fails because the reality of running a business means that a leader’s beliefs are always tested in the marketplace—they can’t simply be based on the persuasiveness of those beliefs or willingness of others to join his or her cause. A business leader’s ideas are proven over time to be productive or not. Tony Hsieh’s willingness to try new approaches in pushing Zappos forward is admirable. But implementing holacracy is not simply getting people to believe what he believes. His organizational model will be tested against the results it produces in the marketplace with customers, as well as the impact it has on the firm’s culture and people. Time will tell if Hsieh has pushed his company to the next level of its evolution or, in his zeal, has undermined what he and others spent years building.

A second reason that the cult analogy fails is that these cutting-edge firms work in ways that benefit not only their members but the world at large—unlike cults, often secretive, which ultimately take advantage of their members and are destructive to society. Airbnb, for example, is described by some as a cult-like company. Its founders shared an unwavering conviction that they could change the way people experience travel—facilitating room rentals among its hosts and guests. The firm’s larger goal, however, is to foster trust and a great sense of community around the world—a lofty, ideological, almost religious goal. But the firm’s business model, tested and refined, now produces millions of annual guest rentals in 91 countries.¹⁹ It provides a benefit valued by millions of people. If Airbnb was a cult in the beginning, it evolved into something else—perhaps a contradiction of sorts in being a secular religion. The challenge for cutting-edge firms is to stay idealistic, pushing the boundaries of what it means to be a business without becoming detached from the need to attract customers and earn a profit. The challenge is to be cult-like without becoming a cult.

In Chapter 1, I stated that extreme teams achieve two things above all else—deliver results and build relationships. More importantly, they push results and relationships to the extremes—far beyond what is found in more conventional firms. To this end, they need to attract individuals who are “all in”—fully committed and deeply passionate about their work and company. The term that best describes these people is obsessive, which is a state in which team members are constantly thinking about their work and company, and working diligently towards the achievement of their shared goals.²⁰

I describe cutting-edge teams as obsessive because it suggests a level of commitment far beyond what is found in more conventional firms, where people may be professional but not completely immersed in their work. People who are concerned about work-life balance suggest that obsession with one’s work is unhealthy both for individuals and their firms. This is often true, as evident in the Pixar “parking lot” story. But great success rarely happens without a critical number of people on a team or in a company who have this trait. Obsession may not be healthy, but it describes a core attribute of great companies and teams. The downside of obsessive behavior is the price to pay for doing something extraordinary.

Let’s start with the obsessive nature of those who lead cutting-edge firms. Justine Musk is the former wife of Elon Musk, the highly respected founder of the car company Tesla and other ventures such as PayPal. She describes Elon’s obsessive personality as a key to his extraordinary success:

Extreme success is different from what I suppose you could just consider “success,” . . . you don’t have to be . . . Elon to be affluent and accomplished and maintain a great lifestyle. Your odds of happiness are better that way. But if you’re extreme, you must be what you are, which means that happiness is more or less beside the point. These people tend to be freaks and misfits who were forced to experience the world in an unusually challenging way. They developed strategies to survive, and as they grow older they find ways to apply these strategies to other things, and create for themselves a distinct and powerful advantage. They don’t think the way other people think. They see things from angles that unlock new ideas and insights. Other people consider them to be somewhat insane.²¹

Justine Musk’s language is extreme in describing visionary leaders as freaks and misfits. But it is fair to say that these leaders are abnormal in their outsized drive to succeed and their complete immersion in their work. This is not to say that obsession, in itself, leads to success. There are plenty of obsessed people who lack the talent needed to be successful. The capabilities needed for obsession to produce “extreme success” vary depending on the demands on a leader and the specific challenges facing his or her group. In some situations, for example, a leader needs highly developed analytical capabilities. In other cases, the key is an ability to build partnerships and manage conflict across groups. But the inverse is equally true—there are highly talented people who lack the obsessive drive needed to produce something significant. These individuals may have more raw talent than others but lack the ability to realize their talent in contrast to those who are fixated on their work and are relentless in their desire to succeed.

There is much written about the so-called 10,000 hour rule.²² It states that mastering an activity requires 10,000 hours of disciplined practice performing that activity. Talent is needed to obtain mastery, but mastery does not come without the necessary hours of deliberate practice. If we apply this rule to a sport such as tennis, this means that a highly talented athlete needs to practice every day for four hours for seven years. The player Andre Agassi said that he did more than that—he estimates he hit at least 2,500 balls a day from the time he was six years old. Close to a million balls a year. Ten million balls before he turned professional.²³ How many people, even those with extraordinary hand and eye coordination and in Andre’s case unrelenting pressure from a demanding parent, have the resolve needed to hit that many balls? Imagine what is sacrificed in one’s life to hit 2,500 balls a day, every day of your life. The same is true for the work done by visionary leaders in cutting-edge firms—they will stay with a task and strive to reach a goal to a degree that can only be described as abnormal.

Obsession, then, is essential to reach the highest levels of performance. But most people view obsession as a negative quality—a type of psychological disorder. In Japan, the word karoshi refers to those who die as a result of working around the clock. In English, it roughly translates into “worked to death and died like an ox.” Japan, of course, is not alone in having a segment of its population that is addicted to work. In the United States, there is an association that calls itself Workaholics Anonymous. This group views compulsive working as a disorder, similar to other more well-known addictions such as drinking or gambling.²⁴ Work obsession, from this perspective, is an attempt to block out stresses in another part of one’s life. There is always a risk that those with obsessive personalities become destructively consumed by their work, taking a toll on their health and family lives. There is a difference, however, between being obsessed and being addicted to work. Those who are obsessed, as I am defining the term, find meaning in their work and enjoy it. In contrast, workaholics do not—they use work as a means of avoiding something else in their lives that provokes anxiety or discomfort.

Most think of obsession, even in its best form, as an individual trait—but it also describes cutting-edge teams. Examples include the team in Pixar that produced Toy Story 2 and the Patagonia team that executed the firm’s shift to organic cotton. A team’s leader is often the catalyst for obsession, but a team will sometimes operate, at a collective level, in a likeminded manner. Most groundbreaking products, for instance, are developed by a small cadre of intense people who love what they are doing and the product they are creating. These teams often fade into the background, and the team leader becomes the focus of attention once a product is successfully launched. The Pixar team, for example, that produced the movie Finding Nemo is unknown to the public and even to a large degree within the industry. The film’s director, Andrew Stanton, gets the accolades, which he clearly deserves, but it is his team that is ultimately responsible for creating that successful movie. This does not mean that a team consists of people with the same level of commitment or that a leader doesn’t set the direction and tone for the group. But the group, and in particular its level of commitment to the task, is the key to success.

Obsession also works at a company level. Each of the seven firms profiled in this book have been described by outsiders and the media as being populated by true believers. They are portrayed as people who are consumed by their firm’s mission and are “all in” in striving to make a contribution to its achievement. The founder of Alibaba, Jack Ma, touches on the role of obsession in describing how his firm operates. The following occurred after he gave a speech at Harvard about his company:

After my talk, a CEO from a foreign company said that I was a mad man. He said he had been in China for many years, and didn’t believe that my way of managing a company would work. I invited him to visit Alibaba. After a three-day stay, he said, “Now I understand. Here you have 100 mad men just like you.” I agreed. People in a madhouse never admit they are crazy. They believe the outsiders are. That’s why people here in Alibaba are united.²⁵

Obsession comes in three, frequently interconnected, forms. The first, and most important, is an obsession with the work itself and resulting product. In many cutting-edge firms and teams, people view work as central to their identities—not something they do but something they are. Paul Graham, a well-known investor in startup firms, suggests that these people are ridiculously committed to what they produce—fixating, for example, on product details that customers don’t even notice. These are also people who persevere and survive when others are defeated by the challenges they face.²⁶ Obsessive people work primarily to satisfy their own needs. Not the needs of customers or shareholders. Not the needs of those above in an organization’s hierarchy. They strive to produce something they personally value that meets their own standards of excellence. In this respect, they are self-centered and even narcissistic in being their own customers. Their reasoning is that if they produce something they love, others will love it as well. Brad Bird, a respected director at Pixar, describes this philosophy as follows:

If you say you’re making a movie for “them,” that automatically puts you on an unsteady footing. The implication is, you’re making it for a group that you are not a member of—and there is something very insincere in that. . . . So my goal is to make a movie I want to see. If I do it sincerely enough and well enough—if I’m hard on myself and not completely off base, not completely different from the rest of humanity—other people will also get engaged and find the film entertaining.²⁷

Even the emphasis at Zappos on creating happiness is not customer driven. It comes from the founder of the firm articulating a higher purpose for himself and, by extension, others in his company who hold the same belief. Customers benefit from that obsession, but they are not its source. It is also interesting to note that many of the cutting-edge firms are obsessed with a purpose that is distinct from what they sell. Patagonia says that it is not in the business of selling clothes. Zappos says that it is not in the business of selling shoes. Airbnb says that it is not in the business of renting rooms. These statements sound absurd because they appear to be denying how they make money—selling shirts, selling shoes, renting rooms. But these firms, and particularly their leaders, view these activities as secondary, or derivative, of that which truly matters to them. What they do, the actual work, is different than why they do it.

Another aspect of obsessing on work is a willingness to fixate over a long period of time on the task at hand. In particular, people and teams in these firms act with a relentless focus on getting it right. This is not to suggest that people in conventional firms and teams are not detail oriented or lacking in commitment; it is, however, to indicate that this behavior is more extreme in cutting-edge firms. People in these groups will obsess over details that others might gloss over or pursue only so far. Obsessed people and teams don’t let go. People in Pixar, for example, view Walt Disney as an icon in the field of animation. In particular, they value his life-long dedication to his craft. His level of commitment to movie animation was evident in that he was still talking about the movie Snow White and the Seven Dwarfs decades after its completion. In particular, he was upset that some of the technical aspects of that film’s animation were less than what he wanted because of the time and budgetary constraints his team faced when making the film. Snow White’s facial features, in particular, weren’t as consistently sharp as Disney wanted. He was concerned that “The bridge on her nose floats all over her face.”²⁸ The film had long become a classic, but Disney was still thinking about what his team didn’t get right 20 years earlier.

A second obsession of cutting-edge firms is an emotional investment in building a great company. As noted in the Chapter 1, cutting-edge firms deliver results and build relationships. A singular obsession with the work itself will often produce better results, at least in the near term. But an obsession with the work does not mean that relationships are valued. In fact, it can mean that relationships are seen as peripheral in comparison to the product or service being produced. Cutting-edge teams realize the risk in this approach and, instead, want people to be equally obsessed with the culture of their firms. They want those who are consumed not only with their work; they want people who are consumed with creating relationships that are the foundation of a great company. Again, consider Tony Hsieh of Zappos. The firm he founded prior to Zappos was an Internet advertising group. It was eventually bought by Microsoft for $265 million. Hsieh says he sold his first firm because, as it grew, he no longer wanted to work there. He notes,

When it was starting out, when it was just 5 or 10 of us, it was like your typical dot-com. We were all really excited, working around the clock, sleeping under our desks, had no idea what day of the week it was. But we didn’t . . . pay attention to company culture. By the time we got to 100 people, even though we hired people with the right skill sets and experiences, I just dreaded getting out of bed in the morning and was hitting that snooze button over and over again.²⁹

Hsieh wanted to work with people whom he enjoyed being around—which was no longer the case in the firm he founded. As a result, early on he focused on creating the culture he wanted at Zappos. The emphasis on creating an organization with the right environment surfaces in myriad managerial practices that make Zappos unique. For example, Zappos does not hire seasonal workers to help with the increased workload that comes with holiday sales. It believes that temporary workers will not necessarily possess the cultural values it wants and, as result, will compromise the larger culture if they are hired. Instead, people within the firm are asked to work longer hours to meet the seasonal demand. Zappos rejects a common industry practice, the hiring of seasonal workers, to protect the culture it values.

An obsessive focus on culture is found among all of the firms profiled in the book. The leaders of these firms spend much of their time working to get their cultures right. Each has a different view of what is the right culture—but each is clear on what he or she wants and doesn’t want.A story about the importance of culture is found at Airbnb. That firm’s CEO, in a note he sent to his employees, described a meeting he had just had with a major investor. The CEO and his team were reviewing Airbnb’s growth plan, looking for support and guidance from the investor, who had deep experience working with a range of start-up companies:

Midway through the conversation, I asked him what was the single most important piece of advice he had for us. He replied, “Don’t fuck up the culture.” This wasn’t what we were expecting from someone who just gave us $150M. I asked him to elaborate on this. He said one of the reasons he invested in us was our culture. But he had a somewhat cynical view that it was practically inevitable once a company gets to a certain size to “fuck it up.”³⁰

Airbnb’s CEO took the investor’s advice and initiated an internal review process in the company to identify what was important in the culture and what it needed to do to avoid its potential erosion. Alibaba is another example of a cutting-edge firm valuing its culture. The company is run by a unique partnership of 28 individuals—who collectively assume responsibility for the firm. Alibaba has policies that require future partners to have at least five years of tenure with the company and a strong record of promoting its unique mission, vision, and values. No one can become a partner unless he or she is an advocate for the culture and committed to sustaining its core attributes.³¹ Jack Ma maintains that outsiders, those he calls airborne troops, should never be allowed to hold the most senior positions within a company, including CEO—as they can’t understand the firm’s culture and its importance to the firm’s survival.

A third obsession of cutting-edge firms is the desire to have an impact on society—in most cases, this involves improving the world through one’s products, services, and way of operating.³² The CEO of Whole Foods tells, for example, how early in the firm’s history some wanted his company to focus only on its most dedicated consumers and, in so doing, sell a limited set of products (no sugar, no meat, no processed foods). He rejected this recommendation because he wanted his company to have a broader impact in society. He writes, “Whole Foods is not a business for a clique, or for the elite . . . . We wanted to change the world.”³³ “That is what animates me personally. That is what animates the company.” Other highly visible firms have a similar view of their missions.³⁴ The new leader of Apple’s retail stores, Angela Ahrendts, spent most of her first six months on the job visiting 40 different markets, interacting with new colleagues. She concluded afterwards that the company was successful primarily because of its strong culture—one dedicated to changing people’s lives and leaving the world better as a result of its efforts. These are lofty words, but in her mind, they describe the essence of the company she just joined. The strength of Apple’s culture surprised her despite everything she read about the company—a culture that she didn’t fully appreciate until she joined it.³⁵

Academic research underscores the importance of working with a purpose. Amy Wrzesniewski, who teaches at the Yale School of Management, examined how people view meaning in their work.³⁶ She found that the majority of people view their jobs as a way to earn money. They are employees doing their jobs. But some people, up to one-third of those she studied, felt their work was connected to a higher purpose. This purpose typically took the form of helping customers or benefiting society. She found that people who view their work as a calling are more satisfied with their jobs, work longer hours, and take fewer days off. Other research suggests that people whose managers emphasize the higher meaning of their work are more dedicated to their firms and less likely to leave their companies for other jobs.³⁷ In short, they view their companies as more than businesses and their work as more than jobs.

The leaders of the firms profiled in this book all meet the three obsessive criteria noted here. They have an unrelenting focus on their work and the products they make. They love their companies and see the cultures they have created as their crowning achievements. They strive to have an impact on society—wanting to “make a dent in the universe.”³⁸ These obsessive qualities are each important in their own right but are most effective when pursued in combination. In particular, leaders and teams who obsess only on their work without an equally strong commitment to their companies and society run the risk of becoming toxically self-absorbed. In contrast, embracing the work, company, and society turns obsession into a positive quality.

Yvon Chouinard, for example, cares about the environment and the quality of his products. He is not particularly charismatic as a leader but is unwavering in his beliefs and willingness to act on them. If he focused only on the quality of his products, Patagonia would be a good but not a great company.

Obsession is closely related to what some call grit—the “passionate commitment to a single mission and an unswerving dedication to achieve that mission.”³⁹ Grit is what obsession, at least its productive form, looks like in action. The research on grit began with an effort to understand why some individuals are successful and others fail. Angela Duckworth, the University of Pennsylvania professor who did the pioneering work in this area, studied people in a variety of settings—including the military, schools, and companies. She found that the most important predictor of success, beyond intelligence and social awareness, was grit.⁴⁰ The research found that high achievers are successful, in part, because they are better able to overcome the inevitable obstacles and challenges that arise in the pursuit of their particular passions.⁴¹ An important point to note, however, is that grit is not simply tenacity—it also requires a commitment by the individual to a higher goal. This is the case because success is not just the ability to persevere when others give up—it is moving deliberately toward a goal to which the individual is passionately committed. In particular, the findings indicate that people with grit are better able to persevere when facing the inevitable setbacks that occur in any great undertaking.

The research on grit focuses on the thinking and behavior of individuals. But grit within a team may be even more important in that most endeavors involve some element of collaboration. Any complex and challenging initiative almost always requires a team, or team of teams, to achieve the desired result. Team members, in the best case, push each other in ways that increase commitment to a shared goal and sustain motivation to achieve that goal. A real-world example of grit is the ability of Airbnb to overcome problems early in its history when it encountered a security issue in one rental unit. A property in San Francisco was ransacked by an Airbnb renter, and the personal property stolen. The host posted a detailed description of what happened online, including her disappointment in how Airbnb’s staff worked with her after the event. Her post then went viral—creating media headlines and concerns on the part of some homeowners who were allowing strangers into their homes. Airbnb was largely unprepared to deal with the crisis, as well as the larger problem of security and safety. The firm, at the time, had a customer-support hotline that consisted of an answering machine that was checked once a day. It failed to hire the staff needed to manage this type of problem and had no formal protocol in place to deal with a crisis. The firm’s response, as a result, was slow and ineffectual in meeting the needs of the host whose home was damaged. Brian Chesky, CEO of Airbnb, described the event as “a crash course in crisis management . . . . We felt paralyzed and over the last four weeks, we have really screwed things up.”⁴² He said, “We should have responded faster, communicated more sensitively and taken more decisive action to make sure she felt safe and secure. . . . But we weren’t prepared for the crisis and we dropped the ball. Now we’re dealing with the consequences.”⁴³ Airbnb, after its initial missteps, pulled together a team to develop and implement a variety of measures to address the problem, including the doubling of its security staff (a group that now has over 600 people) and offering what eventually became a $1 million host guarantee program (which pays for damage resulting from a rental). Airbnb also developed, over several years, practices to give both its hosts and guests more background information about each other, in order to increase the level of comfort felt by each. The firm’s safety processes continue to evolve and now include verifying the identification of those renting rooms and user ratings of both hosts and guests. Airbnb, demonstrating its grittiness, used the initial crisis it faced to improve how it minimizes risk of future adverse events and, in so doing, increased the level of trust among its users.

Obsessive teams have greater upsides and downsides than conventional teams. The dilemma is that you don’t get the upside without risking the downside. These teams can, for instance, obsess on the wrong things, as the obsessed are always fixated on something. Just because a group is obsessed doesn’t mean that it is obsessed with the right thing. Many teams, for example, fixate on near-term results and, specifically, delivering on their quarterly financial targets. In itself, this is not a bad thing. But they do this in some situations to the point of undermining the actions and investments needed to sustain long-term growth. Obsessed teams can also strive, in their passion, to do something that can’t be done—and in so doing waste a great deal of time and money. They ignore useful data and feedback and stubbornly push forward in an inflexible manner. They refuse to kill projects that should be killed earlier rather than later. Moreover, obsessive teams can be perfectionistic and fail to understand the tradeoffs that exist in any business or product—resulting in missed deadlines and blown budgets. They are more likely to burn out their own team members with unreasonable demands and excessive work hours. Obsessive teams can be so task focused, so lacking in empathy, that they damage relationships within the teams as well as with those in other teams. Their members are narrowly focused on achieving their objectives and often lack the emotional and political skills needed when working within a company. These groups can also go rogue, seeing those above them in a firm’s hierarchy as being hostile to what they want to achieve and, in so doing, alienating those whose support they need. All of the above are potential problems once obsession enters the picture—all with very real downsides. This is the reason that many firms don’t want people and teams that are obsessive. But far worse is a group where people are simply doing their jobs—even if they do them well. Obsession is the foundation for making great things happen. Beige doesn’t win in business.

TAKEAWAYS