CHAPTER NOTES
Introduction – Revolutionizing the Way We Work
1Fortune magazine's annual ratings of best places to work (100 Best Places to Work). Whole Foods has made the top 100 ranking every year since the rating came out (1998) and is the top job creator among those making the ratings over those years.
2Whole Foods does not use the term employees—those who work for the firm are called team members. Outsiders may view this as semantics, but the difference is important to Whole Foods. I do, however, use the term employee in this book for the sake of clarity in some instances.
3Whole Foods has recently increased the degree to which it orders products centrally in order to compete more aggressively on price with a host of emerging competitors. But the firm’s basic model of store and team autonomy remains intact.
4See Charles Fishman, “The Anarchist’s Cookbook,” Fast Company, July 2004.
5See Charles Fishman, “Whole Foods Is All Teams,” Fast Company, Issue 2 April/May 1996. A manager at Whole Foods noted, “If there’s someone who’s not working hard, who’s not putting in everything they can, the team can say, ‘You know what? We don’t want you to drag us down.’” Abha Bhattarai, “At Whole Foods, a ‘Survivor’-Like Ritual,” The Washington Post, June 24, 2012.
6Matthew Sturdevant, “Whole Teamwork Is a Natural,” Hartford Courant, September 21, 2014. Whole Foods, of course, is not a perfect company, and it attracts critics for a number of reasons, including what some see as its premium pricing. But one thing is certain about Whole Foods—it will never be confused with Safeway.
7John Mackey and Rajendra Sisodia, Conscious Capitalism: Liberating the Heroic Spirit of Business, Harvard Business Review Press, 2014, 91.
8Fishman, “The Anarchist’s Cookbook.”
9See Fishman, “Whole Foods Is All Teams.”
10These Whole Foods inspections are called TCS reviews (“The Customer Snapshot”).
11See Fishman, “Whole Foods Is All Teams.”
12Nick Paumgarten,“Food Fighter: Does Whole Foods’ C.E.O. Know What’s Best for You?” New Yorker, January 4, 2010.
13Rob Cross, Reb Rebele, and Adam Grant, “Collaborative Overload,” January-February 2016.
14See J. R. Hackman, Why Team’s Don’t Work: Theory and Research on Small Groups, ed. R. Scott Tindal et al. (New York: Plenum Press, 1998). Richard provides a thorough list of what can go wrong with teams.
15See J. R. Hackman, Leading Teams (Harvard Business Review Press, 2002)
16See Steven J. Karau and Kipling D Williams, “Social Loafing: A Meta-Analytic Review and Theoretical Integration,” Journal of Personality and Social Psychology 65 (1993): 681–706.
17Pixar now has an ergonomist who comes into the studio on a regular basis to adjust the workstations of animators who spend long hours on the computers.
18Pixar cofounder Ed Catmull interview with Travis Smiley on PBS: “There’s a cultural ethic, which is that we’re making films that touch the world. That’s what we want to do, touch them emotionally. For me, there’s something grand about that view of the world.” www.pbs.org/wnet/tavissmiley/interviews/pixar-co-founder-ed-catmull-2/#
19Ed Catmull notes in Creativity Inc. (New York: Random House, 2014), “The takeaway here is worth repeating: Getting the team right is the necessary precursor to getting the ideas right. It is easy to say you want talented people, and you do, but the way those people interact with one another is the real key. Even the smartest people can form an ineffective team if they are mismatched. That means it is better to focus on how a team is performing, not on the talents of the individuals within it. A good team is made up of people who complement each other.”
20Interview with Robert Bruce Shaw.
21Pixar’s CEO notes, “We will support the leader for as long and as hard as we can, but the thing we cannot overcome is if they have lost the crew. It’s when the crew says we are not following that person. We say we are ‘director led,’ which implies they make all the final decisions. What it means to us is the director has to lead and the way we can tell when they are not leading is if people say ‘we are not following.’” Ed Catmull interview, Economist Innovation Summit, March 2010, www.economist.com/events-conferences/americas/innovation-2010?bclid=608410748001&bctid=596049420001.
22Anthony Lane, “The Fun Factory: Life at Pixar,” New Yorker, May 16, 2011.
23Interview with Robert Bruce Shaw.
24M. S. Clark and J. Mills. “The Difference Between Communal and Exchange Relationships: What it Is and Is Not.” Personality and Social Psychology Bulletin 19 (1993): 684–91.
25Keith Wrightson, English Society: 1580–1680 (New Brunswick: Rutgers University Press, 2003).
26Patagonia’s founder, Yvon Chouinard, wrote of his firm’s child care center: “A family-friendly business tries to blur that distinction between work and family and work and play. For us, a quality workplace includes one of the best child care centers anywhere. The law requires that there be no more than four infants for every caregiver. At our center we have only three infants per caregiver. The law also states that there be no more than 12 two-year-olds per caregiver. At our center there are no more than five.” (Presented at the Conference on Corporate Citizenship, Georgetown University, Washington, D.C., May 16, 1996, clinton6.nara.gov/1996/05/1996-05-16-white-house-conference-on-corporate-citizenship.html.)
27Pankaj Aggarwal, “The Effects of Brand Relationship Norms on Consumer Attitudes and Behavior,” Journal of Consumer Research 31 (2004), 87–101. Also of interest: Josh Barro, “Sorry, but Your Favorite Company Can’t Be Your Friend,” New York Times, December 11, 2015.
28Disney acquired Pixar in 2006. However, Pixar’s leaders were put in charge of Disney Animation (a reverse takeover of sorts).
29Amazon, one of those early competitors, acquired Zappos in 2009.
30Note: All figures are from public sources for 2015 unless noted. The mottos listed are in some cases my interpretation of public statements made by a firm or its leaders (which I used when a recognized motto was absent from the company’s literature).
31See Pixar’s LinkedIn page (www.linkedin.com/company/pixar-animation-studios), which reads: “Pixar’s objective is to combine proprietary technology and world-class creative talent to develop computer-animated feature films with memorable characters and heartwarming stories that appeal to audiences of all ages.”
32This is the worldwide box office as reported from two films—Inside Out and The Good Dinosaur. Note that Pixar does not always release two films each year, and in the past, one film every year or two was the norm. Annual revenue for Pixar is not available; it is included in the Walt Disney Company’s total revenue from all of its studios (which was $7.36 billion in 2015).
33Netflix has tried a number of mission statements/mottos, but none have staying power. The first two listed here are from statements by the firm’s CEO, and the last is from the Netflix company webpage in regard to its competition (ir.netflix.com/long-term-view.cfm). In a recent interview, the firm’s CEO joked that his vision was to make the world less productive
34Patagonia company webpage, www.patagonia.com/us/patagonia.go?assetid=2047.
35See Alibaba Group company webpage: www.alibabagroup.com/en/about/overview
36Leo Tolstoy, Anna Karenina (New York: Penguin Classics, 2004). Peter Thiel, a venture capitalist, appears to suggest the reverse in saying that successful start-up firms are all different in offering something unique while unsuccessful start-ups are all alike in offering similar products and services. His focus, however, is on a firm’s competitive offering and not how it operates in regard to its internal practices and culture (which is my focus).
37This is not to suggest that high-performing teams are monolithic—there are real differences but they also share a common set of core attributes (such as embracing a few carefully selected team norms regarding member behavior). See Richard Hackman, “Why Teams Don’t Work,” Harvard Business Review May (2009). Another well-regarded book on teams is Douglas Smith and Jon Katzenbach, The Wisdom of Teams: Creating the High-Performance (Boston: Harvard Business Review Press, 2015).
38See Tara C. Reich and M. Sandy Hershcovis, “Interpersonal Relationships at Work,” in APA Handbook of Industrial and Organizational Psychology, ed. S. Zedek et al. (Washington, D.C.: American Psychological Association, 2011), 241.
39For an in-depth analysis of why firms and their teams avoid conflict, see Richard Pascal, Surfing the Edge of Chaos: The Laws of Nature and the New Laws of Business. (New York: Crown Business, 2001).
40Zappos Insights website, “Our Unique Culture: Build a Positive Team and Family Spirit,” www.zapposinsights.com/about/zappos/our-unique-culture.
41Zappos notes on its webpage, “We are more than just a team though—we are a family. We watch out for each other, care for each other, and go above and beyond for each other because we believe in each other and we trust each other. We work together, but we also play together. Our bonds go far beyond the typical ‘co-worker’ relationships found at most other companies.”
42Most of these firms also have critics who find fault with their business model or practices. Airbnb, for example, is found wanting by some who believe it operates in a manner that crowds out low-cost housing in urban areas by turning units into a new form of hotels. Alibaba is criticized by some for its acceptance of the Chinese government’s restrictions on internet traffic. Whole Foods is chastised by some for working hard to keep unions out of their stores. Each of the firms profiled in this book aspires to a higher purpose but few are free of controversy.
Chapter 1: Results and Relationships
1T. S. Elliott wrote: “Only those who will risk going too far can possibly find out how far one can go.” Preface to Harry Crosby, Transit of Venus (1931), p. ix.
2The initial business plan for Netflix was to sell movies on DVDs, but the firm quickly switched to rentals.
3Gina Keating, “Five Myths about Netflix,” The Washington Post, February 21, 2014.
4Gina Keating, “Netflixed: The Epic Battle for America’s Eyeballs,” Portfolio, 2013.
5In 2000, Blockbuster had $5 billion in revenue while Netflix had $10 million.
6Netflix was founded in 1997. Blockbuster filed for bankruptcy on September 23, 2010. Bought by Viacom in 1994 for $8.4 billion, Blockbuster was worth only $24 million at the time of the bankruptcy filing.
7The massive size of Netflix is reflected in how it dominates Internet use. See Neil Hughes, “Netflix Boasts 37% Share of Internet Traffic in North America, Compared with 3% for Apple’s iTunes,” Apple Insider, January 20, 2016.
8“Netflix Culture: Freedom and Responsibility.” Internal presentation, available at www.slideshare.net/reed2001/culture-1798664.
9Nancy Hass, “And the Award for the Next HBO Goes To . . . ,” GQ, January 29, 2013.
10Hastings also believes that putting his firm’s principles in writing promotes productive debate within the company (such as the degree to which the principles are being followed) and how to most clearly communicate them (clarifying statements that may be confusing).
11From Greylock Partners, “Blitzscaling 16: Reed Hastings on Building a Steaming Empire,” www.youtube.comwatch?v=jYhP08uuffs&sns=em.
12Netflix blog post announcing the unlimited maternity and paternity leave policy, blog.netflix.com/2015/08/starting-now-at-netflix-unlimited.html.
13La Verdad, December 27, 2010 (1:06 p.m.), posted on “Hacking Netflix,” www.hackingnetflix.com/2010/12/whats-it-really-like-to-work-at-netflix.html.
14Comment posted by former Netflix vice president on the website Glassdoor. Regarding Netflix, it reads, “A bit of a culture of fear articulated as ‘the sniper in the building,’ as some new hires and long-time employees are either bad fits or fail to grow, and are subsequently let go. Culture emphasizes experimentation, which includes needed organizational experiments, and this type of experimentation also reinforces the fear. Again, most of this well-articulated in culture deck, so no surprise.” www.glassdoor.com/Reviews/Employee-Review-Netflix-RVW2115622.htm.
15Patty McCord, “How Netflix Reinvented HR,” Harvard Business Review January-February (2014).
16Robert J. Grossman, “Tough Love at Netflix,” SHRM 55 (2010).
17“Netflix Culture: Freedom and Responsibility.”
18The firm’s CEO, Reed Hastings, said the company let go of approximately 1,000 people over its history without a single lawsuit. Interview with Blitzscaling 16: Reed Hastings on Building a Streaming Empire. https://www.youtube.com/watch?v=jYhP08uuffs. Nov. 12, 2015.
19Grossman, “Tough Love at Netflix.”
20Jodi Kantor and David Streitfeld, “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace,” New York Times, August 15, 2015.
21The New York Times is a competitor of the Washington Post, which was acquired by Jeff Bezos several years ago. Some of those supporting Amazon suggest that the Times article is biased as a result.
22John Cook, “Facebook, Amazon Staffers Are the Most Stressed: Google, Microsoft Are the Best Paid,” Geekwire, June 6, 2001.
23Amazon is not alone in this practice as other firms, such as Walmart, use similar technologies to eliminate what some refer to as “time theft.”
24Joe Nocera, “Jeff Bezos and the Amazon Way,” New York Times, August 21, 2015.
25Amazon corporate site, “Our Leadership Principles,” www.amazon.jobs/principles.
26Spencer Soper, “Amazon Warehouse Workers Complain of Harsh Conditions,” Los Angeles Times, October 1, 2011.
27The Times did not indicate how often this occurs, but Amazon, in responding to the article, suggested that the large majority of the comments in its feedback process are positive (by a ratio of five positive comments to every one negative comment).
28Amazon grew from $6.92B in revenue in 2004 to $88.99 billion in 2014.
29Those who invested $1,000 in Amazon at the time of its public offering now have stock worth over $350,000, based on an initial IPO price of $18 in 1997 and a price of $531 in 2015 (post stock splits). This stock as of September 2016 is trading even higher, approaching $800 per share.
30Jeff Bezos in Amazon’s 1997 shareholder letter, media.corporate-ir.net/media_files/irol/97/97664/reports/Shareholderletter97.pdf.
31Brad Stone, The Everything Store: Jeff Bezos and the Age of Amazon (New York: Little, Brown and Company, 2013), 131.
32There are various definitions of what constitutes a team and also various types of teams. Susan Cohen, a team’s researcher, suggests the following as the most general definition: “Team is a collection of individuals who are interdependent in the their tasks, who share responsibility for outcomes, who see themselves and are seen by others an intact social entity embed in one or more larger social systems and who manage their relationships across organizational boundaries.” “See What Makes a Team Work,” Journal of Management 23 (1997), 241.
33J. Richard Hackman outlines three criteria to assess a team’s effectiveness: 1) The team’s output is acceptable to its clients, 2) The team’s capabilities improve over time, and 3) Working in the team is satisfying to its members. See Hackman, Leading Teams: Setting the Stage for Great Performances (Boston: Harvard Business Press, 2002), 30.
34Amanda Little, “An Interview with Patagonia Founder Yvon Chouinard,” Grist, October 23, 2004.
35Megan Hustad, “Whole Foods’ John Mackey: Self-Awareness on Aisle 5?” Fortune, March 8, 2013.
36Ian Parker, “How an Industrial Designer Became Apple’s Greatest Product,” February 23, 2015.
37Jay Yarow, “Jony Ive: This Is the Most Important Thing I Learned from Steve Jobs,” Business Insider, October 10, 2014.
38Robert Putnam, Bowling Alone: The Collapse and Revival of American Community (New York: Simon & Schuster, 2001).
39There is a great deal of research on the impact of social cohesion on performance. See D. J. Beal et al., “Cohesion and Performance in Groups: A Meta-Analytic Clarification of Construct Relation,” Journal of Applied Psychology 88 (2003), 989–1004; S. M. Gully, D. J. Devine, and D. J. Whitney, “A Meta-Analysis of Cohesion and Performance: Effects of Level of Analysis and Task Interdependence,” Small Group Research 26 (1995): 497–520; M. A. Hogg, The Social Psychology of Group Cohesiveness (New York: New York University Press, 1993).
40Dora L. Costa and Matthew E. Kahn, Heroes and Cowards: The Social Forces of War (Princeton: Princeton University Press, 2008).
41An important caveat: The authors found the camaraderie exerted this level of influence only when the soldiers saw others in their troop as similar to themselves—in their place of birth, ethnicity, social standing, and age. See Costa and Kahn, Heroes and Cowards: The Social Forces of War.
42“Item 10: I Have a Best Friend at Work,” Gallup, www.gallup.com/businessjournal/511/item-10-best-friend-work.aspx.
43Some observers of culture make a distinction between cognitive culture and emotional culture. Cognitive culture includes shared intellectual values, norms, and assumptions. Emotional culture involves the feelings people have in regard to these values, norms, and assumptions. See “Manage Your Emotional Culture.” Sigal Barsade and Olivia A. O’Neill. Harvard Business Review, January-February (2016).
44The academic literature examines this topic under the banner of social cohesion. An expansive definition of cohesion reads, “The strength of the bonds linking individuals to the group, the unity of the group, feelings of attraction for specific group members and the group itself, the unity of the group and the degree to which group members coordinate their efforts to achieve goals.” iChapters, Thomson Learning, 2006, 14. See also John Bruhn, The Group Effect: Social Cohesion and Health Outcomes (New York: Springer, 2009).
45Christopher Rhoads and Li Yuan, “How Motorola Fell a Giant Step Behind: As It Milked Thin Phone, Rivals Sneaked Ahead on the Next Generation,” Wall Street Journal, April 27, 2007.
46For an analysis of the physical, emotional, and social impact of isolation, see John T. Cacioppo and William Patrick, Loneliness: Human Nature and the Need for Social Connection (New York: Norton, 2009).
47Susan T. Fiske, Amy J. C. Cuddy, and Petter Glick, “Universal Dimension of Social Cognition: Warmth and Competence,” Trends in Cognitive Science 11 (2006): 77–79.
48Teresa Amabile, Colin M. Fisher, and Julianna Pillemer, “IDEO’s Culture of Helping,” Harvard Business Review, January-February (2015).
49There is a long history of group research that looks at the dynamic between results and relationships in small groups. Different terms are used, but the general idea that teams must manage both weaves through the literature. The early work in this area was done at Harvard by Robert Feed Bales. See his book Social Interaction Systems: Theory and Measurement(London: Transaction Publishers, 2001). Later work focuses on the concept of group cohesion and how it impacts performance, as noted above.
50Google bought Fadell’s firm for $3.2 billion in 2014. Fadell departed Google in 2016.
51See Connie Loizos, “Is Tony Fadell in Nest’s Way?” Techcrunch, March 30, 2016. Also see Lydia Dishman, “What’s Going on at Nest?” Fast Company, February 17, 2016.
52Steve Lohr, “Tony Fadell Steps Down Amid Tumult at Nest, a Google Acquisition,” New York Times, March 3, 2016.
53There are cases where firms experience a crisis, identify the need to change their cultures, and then fail to do so. NASA, after the Challenger space shuttle disaster, claimed that it was going to become a “safety first” culture where its employees felt comfortable voicing any concerns they had with the safety of a mission. Years later, the agency experienced another shuttle disaster, and an analysis of the Columbia disaster concluded that NASA’s culture had not changed a great extent after the Challenger tragedy. See Marc S. Gerstein and Robert B. Shaw, “Organizational Bystanders,” People and Strategy 31 (2008), 47–54.
54Caroline Chen and Cynthia Koons, “Valeant Guts Board as It Shifts Strategy, Attempts Fresh Start,” Washington Post, May 2, 2016.
55Xiao-Ping Chen, “Company Culture and Values Are the Lifelines of Alibaba: An Interview with Jack Ma, Founder and Executive,” Executive Perspectives, August 2013, www.iacmr.org/V2/Publications/CMI/LP021101_EN.pdf.
56The individual most responsible for the groupthink concept is Irving Janis. See Victims of Groupthink (Boston: Houghton Mifflin, 1972); Groupthink: Psychological Studies of Policy Decisions and Fiascoes (Boston: Houghton Mifflin, 1982); Crucial Decisions: Leadership in Policymaking and Crisis Management (New York: The Free Press, 1989).
57Matt Palmquist, “The Dangers of Too Much Workplace Cohesion,” strategy+business, February 10, 2015.
58Sean Wise, “Can a Team Have Too Much Cohesion? The Dark Side to Network Density,” European Management Journal 32 (2014), 703–11, www.sciencedirect.com/science/journal/02632373/32/5.
59Edward O. Welles, “Lost in Patagonia: Yvon Chouinard’s Ambitious Social Mission,” Inc., August 1, 1992.
60Adam Waytz, “The Limits of Empathy,” Harvard Business Review January-February (2016).
61Rob Cross, Reb Rebele, and Adam Grant, “Collaborative Overload,” Harvard Business Review, January-February (2016); Radostina K. Purvanova and John P. Muros, “Gender Differences in Burnout: A Meta-Analysis,” Journal of Vocational Behavior 77 (2010), 168–85. Madeline E. Heilman and Julie J. Chen, “Same Behavior, Different Consequences: Reactions to Men’s and Women’s Altruistic Citizenship Behavior,” Journal of Applied Psychology 90 (2005), 431–41.
62The quote is from Adam Grant and Sheryl Sandberg, “Madam C.E.O., Get Me a Coffee,” New York Times, February 16, 2016.
63Barry Johnson, Polarity Management, HRD PRess; 2014.
64Robert Bruce Shaw interview.
65Ed Catmull, CEO of Pixar, notes the downside of moving too quickly on underperformers on those who remain: “It makes them think, ‘oh, if I screw up, they’re going to remove me.’ So the cost to the organization of moving quickly on somebody is higher than it is if you let the person go on too long. You make the change when the need for it becomes obvious to other people. Then you can do it. I will admit that there are a couple of times, though, that we waited too long. This is a hard part of managing.” From “Staying One Step Ahead at Pixar: An Interview with Ed Catmull,” McKinsey Quarterly, March 2016.
66Robert Freed Bales, a pioneer in the research on teams, describes what he calls task-oriented roles (focusing on who contributed the best ideas for solving a particular team problem) and process-oriented roles (focusing on who helps sustain the group morale and keep it moving forward).
Chapter 2: Foster a Shared Obsession
1Noted in Yvon Chouinard, Let My People Go Surfing: The Education of a Reluctant Businessman (New York: Penguin Books, 2006)
2Chouinard hates the concept fashion for two reasons: it encourages people to value style over substance and it suggests that clothing is disposable. See John Swansburg, “Where Fashion Is the F-Word,” Slate, March 15, 2012.
3Emily Rabin, “Don’t Get Mad, Get Yvon,” Greenbiz, October 28, 2004, www.greenbiz.com/news/2004/10/28/dont-get-mad-get-yvon.
4Estimated 2015 Patagonia revenue based on a 2013 company report listing revenue at that time and then extrapolating a projected growth rate of 15 percent a year.
5Edward O. Welles, “Lost in Patagonia: Yvon Chouinard’s Ambitious Social Mission,” Inc., August 1, 1992. The company, after reaching $100 million in sales, reduced its workforce by 20 percent—letting go of friends and friends of friends, in Chouinard’s words. The company planned on 50% growth but, because of a recession, achieved 30% growth.
6Robert Bruce Shaw interview.
7See the Patagonia Annual Benefit Corporation Report, Fiscal Year 2013. The firm states that its goal is to cause no unnecessary harm to the planet by continually seeking to reduce “the impact of its operations in water use, energy use, greenhouse gas emissions, chemical use, toxicity and waste.” www.patagonia.com/pdf/en_US/bcorp_annual_report_2014.pdf.
8The ad reads, “The most challenging, and important, element of the Common Threads Initiative is this: to lighten our environmental footprint, everyone needs to consume less. Businesses need to make fewer things but of higher quality. Customers need to think twice before they buy.” www.adweek.com/news/advertising-branding/ad-day-patagonia-136745.
9Chouinard, Let My People Go Surfing: The Education of a Reluctant Businessman, Loc 320 on ebook.
10A colleague noted that Chouinard had such a strong focus on quality that it resulted in ignoring other business considerations. “I remember when we’d get shirts back with the buttons fallen off. Yvon would be ripped. You wouldn’t want to be around him when those shirts came in. . . . He’s a tyrant on that stuff—to the point of saying, ‘I don’t care what it costs, as long as the buttons don’t fall off,’ even if that meant sales went from 10,000 to 5,000 units. What was important to him was that the 5,000 units out there be fantastic.” Edward O. Welles, “Lost in Patagonia: Yvon Chouinard’s Ambitious Social Mission” Fast Company, August 1, 1992
11Chouinard applies quality to every element of how the company functions. He notes, “I don’t think it’s possible to make a great quality product without having a great quality work environment. So it’s linked—quality product, quality customer service, quality workplace, quality of life for your employees, even quality of life for all living things on this planet. If you miss any one piece, there’s a good chance you’ll miss it all.” (Presented at the Conference on Corporate Citizenship, Georgetown University, Washington, D.C., May 16, 1996, clinton6.nara. gov/1996/05/1996-05-16-white-house-conference-on-corporate-citizenship.html.)
12Josh Barro, “Sorry, but Your Favorite Company Can’t Be Your Friend,” New York Times, December 11, 2015.
13“Why Evil Is Better in Business (or Is It?),” Inc., March 2016, www.inc.com/magazine/201603/inc-staff/kevin-oleary-adam-lowry-debate-mission-vs-profit.html. Milton Friedman says the same when he maintains that “the business of business is business.”
14Alexandra Jacobs, “Happy Feet: Inside the Online Shoe Utopia,” New Yorker, September 14, 2009. Zappos is now owned by Amazon, which has a very different culture. It will be interesting to see if Zappos becomes more like Amazon over time.
15Andrew Stanton, director of Finding Nemo, commented on the pressure to do a sequel: “I was always ‘No sequels, no sequels.’ But I had to get on board from a VP standpoint. [Sequels] are part of the necessity of our staying afloat, but we don’t want to have to go there for those reasons. We want to go there creatively, so we said [to Disney], ‘Can you give us the timeline about when we release them? Because we’d like to release something we actually want to make, and we might not come up with it the year you want it.’” That said, Pixar has made a number of sequels—most of them of very high quality. See Rebecca Keegan, “With ‘Despicable Me 2’ and More, Movies Revisit the Sequel Debate,” Los Angeles Times, July 5, 2013.
16Walt Disney said, “I don’t make movies to make money—I make money to make movies.” Quoted in Hayagreeva Rao, Robert Sutton, and Allen P. Webb, “Innovation Lessons from Pixar: An interview with Oscar-Winning Director Brad Bird,” McKinsey Quarterly, April 2008.
17Steve Denning, “Making Sense of Zappos and Holacracy,” Forbes, January 15, 2014. A more detailed description of the approach can be found at Ethan Bernstein et al., “Beyond the Holacracy Hype,” Harvard Business Review July-August (2016). We will not know for few years if the approach will work at Zappos. My sense is that some elements of it will be retained by the company but it will not survive in its current form due to the complexities of making it work. Another possibility is that it remains as long as Hsieh remains CEO—but is abandoned, in large part, after he departs.
18There is some debate about the number and cause of employee departures at Zappos. The leadership believes that at least half of the turnover in 2015 was due to people pursuing their personal goals and taking an offer to leave the company (which could be as much as a year’s salary depending on an employee’s tenure). The leaders also state that the normal turnover in the firm is about 20 percent (indicating the additional turnover in 2015 was only 10 percent). A second reference suggests that 18 percent of the employee population took the company’s buyout offer in 2015, with 6 percent citing holacracy as the reason they were leaving. See Gregory Ferenstein, “The Zappos Exodus Wasn’t About Holacracy, Says Tony Hsieh,” Fast Company, January 19, 2016. Also see David Gelles, “The Zappos Exodus Continues After a Radical Management Experiment,” New York Times, January 13, 2016.
19See Joseph B. Lassiter and Evan Richardson, “Airbnb,” Harvard Business Review, September 28, 2011. Also see Max Chafkin, “Airbnb Opens up the World,” Fast Company, February 2016.
20Merriam-Webster’s definition of obsession: “A state in which someone thinks about someone or something constantly or frequently especially in a way that is not normal; someone or something that a person thinks about constantly or frequently; an activity that someone is very interested in or spends a lot of time doing.”
21“What It Takes to Be As Great As Elon Musk, Steve Jobs, or Richard Branson,” Inc. Aug 31, 2015
22See Geoff Colvin, (New York: Portfolio, 2008).
23Andre Agassi, (New York: Vintage, 2010).
24See the group’s website, www.workaholics-anonymous.org/.
25Xiao-Ping Chen, “Company Culture and Values Are the Lifelines of Alibaba: An Interview with Jack Ma, Founder and Executive,” Executive Perspectives, August 2013, www.iacmr.org/V2/Publications/CMI/LP021101_EN.pdf.
26Graham describes the best founders as being cockroach like—in that they will survive anything, including a nuclear winter, while others perish. See Airbnb, “Conversation with Paul Graham,” YouTube. www.youtube.com/watch?v=nrWavoJsEks.
27“Innovation lessons from Pixar: An interview with Oscar-winning director Brad Bird,” McKinsey Quarterly Hayagreeva Rao, Robert Sutton, and Allen P. Webb. April 2008.
28Anthony Lane, “The Fun Factory: Life at Pixar,” New Yorker, May 16, 2011. Jon Michaud, “Animated by Perfectionism,” New Yorker, May 16, 2011. “Snow White was finished in a panic, and years later Disney was still fretting over the shortcomings of his heroine . . . the wobbles in her construction. ‘The bridge on her nose floats all over her face,’ he said. He became an industry, but the one thing that links the industrialist, whatever the product, with the auteur, whatever the form, is obsessive pedantry—the will to get things right, whatever the cost may be.”
29“Lessons on Culture and Customer Service from Zappos CEO, Tony Hsieh,” New York Times. January 9, 2010.
30Brian Cheskey, “Don’t Fuck up the Culture,” Medium, April 20, 2014, medium.com/@bchesky/dont-fuck-up-the-culture-597cde9ee9d4#.sncu86iwl.
31Jack Ma, in a letter to his employees, whom he calls the Aliren, noted, “We believe only a group of people who are passionate about the company and are mission-driven will be able to protect the company from external pressure from competition and temptation to seek short-term gains.” Juro Osawa, “Softbank, Yahoo Support Alibaba’s Partnership Structure,” Wall Street Journal, September 26, 2013.
32Paul Graham, a venture capitalist, notes, “The startup founders who end up richest are not the ones driven by money. The ones driven by money take the big acquisition offer that nearly every successful startup gets en route. The ones who keep going are driven by something else. They may not say so explicitly, but they’re usually trying to improve the world. Which means people with a desire to improve the world have a natural advantage.” Paul Graham blog, November 2014. paulgraham.com/mean.html.
33The Anarchist’s Cookbook. Charles Fishman. Fast Company, July 1, 2014. Justin Fox. The HBR Interview: What Is It That Only I Can Do? Harvard Business Review. January-February 2011.
34Paul Graham observes, “It’s unlikely that every successful startup improves the world. But their founders, like parents, truly believe they do. Successful founders are in love with their companies. And while this sort of love is as blind as the love people have for one another, it is genuine.” Paul Graham blog. Paulgraham.com/mean.html.
35This higher purpose doesn’t mean that Apple hasn’t made mistakes over its history, outsourcing some of its manufacturing to plants that operated in manner that calls into question their treatment of employees.
36Amy Wrzesniewski, C. R. McCauley, P. Rozin, and B. Schwartz, “Jobs, Careers, and Callings: People’s Relations to Their Work,” Journal of Research in Personality 31 (1997), 21–33.
37Rachel Feintzeig, “I Don’t Have a Job: I Have a Higher Calling,” The Wall Street Journal, February 24, 2015. “[A] survey by the company found that employees whose managers talked about KPMG’s impact on society were 42.4% more likely to describe the firm as a great place to work. Of those with managers who talked up meaning, 68% indicated they rarely think about looking for a new job outside KPMG; that share fell to 38% for employees whose managers didn’t discuss meaning.”
38Jason Snell, “Steve Jobs: Making a Dent in the Universe,” Macworld, www.macworld.com/article/1162827/steve_jobs_making_a_dent_in_the_universe.html.
39Paul Tough, How Children Succeed: Grit, Curiosity, and the Hidden Power of Character (New York: Houghton Mifflin Harcourt, 2012), 74.
40Angela L. Duckworth, “Grit: The Power of Passion and Perseverance,” TED Talk, May 2013, www.ted.com/talks/angela_lee_duckworth_the_key_to_success_grit/transcript?language=en. In this talk, she summarizes her findings: “I started studying kids and adults in all kinds of super challenging settings, and in every study my question was, who is successful here and why? My research team and I went to West Point Military Academy. We tried to predict which cadets would stay in military training and which would drop out. We went to the National Spelling Bee and tried to predict which children would advance farthest in competition We partnered with private companies, asking, which of these salespeople is going to keep their jobs? And who’s going to earn the most money? In all those very different contexts, one characteristic emerged as a significant predictor of success. And it wasn’t social intelligence. It wasn’t good looks, physical health, and it wasn’t IQ. It was grit.”
41Angela L. Duckworth, Christopher Peterson, Michael D. Matthews, and Dennis R. Kelly, “Grit: Perseverance and Passion for Long-Term Goals,” Journal of Personality and Social Psychology 92 (2007), 1087–101. For a critical view of the grit concept, see David Denby, “The Limits of ‘Grit,’” New Yorker, June 21, 2016.
42Airbnb “Our Commitment to Trust and Safety,” blog.airbnb.com/our-commitment-to-trust-and-safety/.
43Ari Levy, “Airbnb Offers $50,000 Guarantee After User’s Home Is Trashed,” Forbes, August 1, 2011.
Chapter 3: Value Fit over Capabilities
1Jack Ma of Alibaba notes, “You should find someone who has complementary skills to start a company with. You shouldn’t necessarily look for someone successful. Find the right people, not the best people.”
2On average, other cutting-edge firms have an even higher ratio. Patagonia, for example, is reported to receive an average of 900 resumes for every job it fills. Steve Hamm, “A Passion for the Planet,” Bloomberg Magazine, August 20, 2006.
3Zappos just did away with the online posting of open jobs. Now the online community Zappos Insiders manages the talent pool for open positions.
4Jessica Herrin, founder and CEO of the e-commerce apparel firm Stella and Dot, reinforces this point: “I want to hire missionaries, not mercenaries. The challenge, especially when you’re growing fast, is to be incredibly fierce about your hiring filters. You have to commit to caring for the culture more than the quarter.” Adam Bryant, “Corner Office,” New York Times, December 13, 2015.
5See the firm’s website for a list of its 10 values: deliveringhappiness.com/book/zappos-core-values/.
6Interview with Robert Bruce Shaw.
7Zappos HR Leader interview with Robert Bruce Shaw. Also see Dick Richards, “At Zappos, Culture Pays,” Strategy and Business 60 (2010).
8As suggested in this chapter, fit is essential in sustaining a firm’s cultural attributes. That said, fit is also important in the satisfaction of those who work in a company or group. Research indicates an employee’s fit with a firm’s culture is a strong predictor of organizational commitment, job satisfaction, and retention. See Amy L. Kristof-Brown and Erin C. Johnson, “Consequences of Individuals’ Fit at Work: A Meta-Analysis of Person-Job, Person-Organization, Person-Group and Person-Supervisor Fit,” Personnel Psychology 58 (2005), 281–342.
9Patagonia’s founder notes, “Not everyone wants to change the world, but we want a company to feel like home for those who do. Employees who are drawn to Chouinard Equipment, and later to Patagonia, either shared those values or did not mind working among those who held them.” Yvon Chouinard, Let My People Go Surfing: The Education of a Reluctant Businessman (New York: Penguin Books, 2006), Loc 2065 in ebook.
10See Patagonia’s Human Resources Director, “Case 4: Patagonia,” Greenleaf Publishing Ltd, 1999, 17.
11See Michael Housman and Dylan Minor, “Toxic Workers,” Harvard Business Unit Strategy Working Paper #16–057, www.hbs.edu/faculty/Publication%20Files/16-057_d45c0b4f-fa19-49de-8f1b-4b12fe054fea.pdf.
12The research on toxic employees does not directly examine cultural fit. Instead, it looks at a range of beliefs and traits that increase the likelihood that an employee will behave in a manner that hurts his or her firm. The indirect findings, however, indicate that attitudes are contagious—that the more toxic employees there are in a group, the more others will follow their destructive behavior. The assumption is that the same is true in regard to those who fail to support a firm’s culture and core values. Dylan Minor and Michael Housman examined the impact of toxic workers using a large dataset of nearly 60,000 workers across 11 firms in different industries. Michael Housman and Dylan Minor, “Toxic Workers,” Working Paper 16-057, 2015.
13Phil Knight, the founder of Nike, remained chairman after Perez was hired as CEO and was a visible presence in the company. See Michael Barbaro and Eric Dash, “Another Outsider Falls Casualty to Nike’s Insider Culture,” New York Times, January 24, 2006.
14Alfred Lin, “Lecture 10: Company Culture and Building a Team, Part I,” Genius, genius.com/Alfred-lin-lecture-10-company-culture-and-building-ateam-part-i-annotated.
15Glassdoor. Posted 7/15/2013. www.glassdoor.com/Reviews/Employee-Review-Airbnb-RVW2979155.htm
16Patty McCord, former human resources head of Netflix, quoted in “The Woman Behind the Netflix Culture Doc,” firstround.com/review/The-woman-behind-the-Netflix-Culture-doc/.
17Karen A. Jehn, Gregory B. Northcraft, and Margaret A. Neale, “Why Differences Make a Difference: A Field Study of Diversity, Conflict, and Performance in Workgroups,” Administrative Science Quarterly 44 (1999), 741–73.
18“Inside Pixar’s Leadership,” in Creative Thinking, Innovation, Management. scottberkun.com/2010/inside-pixars-leadership/
19This problem is found in some of the firms profiled in this book. Zappos, for instance, has ten values:
1. Deliver WOW through Service
2. Embrace and Drive Change
3. Create Fun and a Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships with Communication
7. Build a Positive Team and Family Spirit
9. Be Passionate and Determined
10. Be Humble
See also: “See Diverse Teams Feel Less Comfortable—and That’s Why They Perform Better., David Rock, Heidi Grant Halvorson and Jacqui Grey. Harvard Business Review, September 23, 2016.
20Andrew M. Carton, Chad Murphy, Jonathan R. Clark, “A (Blurry) Vision of the Future: How Leader Rhetoric About Ultimate Goals Influences Performance,” Academy of Management Journal 57 (2014): 1544–70.
21Edgar H. Schein, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 2010).
22Jessica Rohmanm, “Leading Culture During Rapid Growth: A Conversation with Whole Foods Market Co-CEO Walter Robb,” Great Place to Work, www.greatplacetowork.com/storage/documents/interviews/gptw-whole_foods_interview.pdf.
23Adam Bryant, “Brian Chesky of Airbnb, on Scratching the Itch to Create,” New York Times, October 11, 2014.
24Adam Byant. “Can You Pass a C.E.O. Test?” New York Times. March 13, 2009.
25Tina Fey, comedian and executive producer of the TV show 30 Rock, describes her philosophy for hiring writers: “Don’t hire anyone you wouldn’t want to run into in the hallway at three in the morning . . . . We work long hours on these shows, and, no matter how funny someone’s writing sample is, if that person is too talkative or needy or angry to deal with by the printer in the middle of the night, steer clear. That must be how I got through that first job interview. I was not dynamic, but at least I wasn’t nuts.” Tina Fey, “Lessons from Late Night,” New Yorker, March 14, 2011.
26“How to Test a New Hire for Core Values,” Inc. April 28, 2010
27Adam Bryant, “Your Opinions Are Respected (and Required),” New York Times, August 6, 2011.
28An interesting study examined the fit between a CEO’s leadership style and the culture of the firm that he or she is leading. The authors found that the best outcomes occurred when a leader brought what his or her culture was lacking (e.g., a high results leader was beneficial to a relationship focused culture and a high relationship leader was beneficial to a task-focused culture). This is described in a new study as the positive effects of dissimilarity. I don’t view this research as contradicting the need for cultural fit; instead, the findings underscore the need for both results and relationships within a firm or team. See “Do Similarities or Differences Between CEO Leadership and Organizational Culture Have a More Positive Effect on Firm Performance? A Test of Competing Predictions,” Chad A. Hartnell, Angelo J. Kinicki, Lisa Schurer Lambert, Mel Fugate, and Patricia Doyle Corner. Journal of Applied Psychology. 2016, V. 101, #6, 846-861.
Chapter 4: Focus More, Then Less
1Brian Chesney, CEO of Airbnb, comments on the early mistakes of trying to do too much. “We probably lost six months,” he says. “There are so many things we can do; the most challenging part of this is to figure out what not to do.” Jessi Hempel, “Airbnb: More than a Place to Crash,” Fortune, May 3, 2012.
2Rolfe Winkler and Douglas MacMillan, “The Secret Math of Airbnb’s $24 Billion Valuation,” Wall Street Journal, June 17, 2015.
3Airbnb Faces Growing Pains as It Passes 100 Million Guests. Max Chafkin and Eric Newcomer. Bloomberg Businessweek. July 11, 2016. One Wall Street firm projects that Airbnb will book one billion rooms per year by 2025. The scale of the company is further illustrated by its having 40,000 rooms for rent just in Paris.
4Reed Hastings, when asked about taking time to establish his firm’s cultural principles, noted that during the first four years, Netflix had only one priority, which was to avoid bankruptcy. The company went from having $100 million in startup funding to $5 million before it turned profitable. Airbnb and Netflix were focused on survival.
5Austin Carr, “Inside Airbnb’s Grand Hotel Plans,” Fast Company, March 17, 2014. The CEO noted about his firm’s annual objectives, “If you can’t fit it on a page, you’re not simplifying it enough . . . . I told my team they have to put the entire plan on a page this big by next week—same size font.”
6“PandoMonthly: Fireside Chat with Airbnb CEO Brian Chesky,” Pando Daily, January 14, 2013, www.youtube.com/watch?v=6yPfxcqEXhE.
7Carr, “Inside Airbnb’s Grand Hotel Plans.”
8Owen Thomas, “How Airbnb Manages Not to Manage Engineers,” Readwrite, June 5, 2014, readwrite.com/hack.
9See Airbnb’s website: “Making this environment possible requires a few things. Engineers are involved in goal-setting, planning and brainstorming for all projects, and they have the freedom to select which projects they work on. They also have the flexibility to balance long and short term work, creating business impact while managing technical debt. Does this mean engineers just do whatever they want? No. They work to define and prioritize impactful work with the rest of their team including product managers, designers, data scientists and others.” nerds.airbnb.com/engineering-culture-airbnb/.
10Own Thomas. “How Airbnb Manages Not to Manage Engineers.”
11The importance of experience in Airbnb is suggested when realizing that the head of what most firms call human resources is called the head of employee experience at Airbnb. His job is to enrich what employees experience at Airbnb—creating a sense of belonging through a wide range of factors, including the design of the workspace, communication and education efforts, the food in the company cafeteria, and a variety of recognition and reward programs.
12Thomas, “How Airbnb Manages Not to Manage Engineers.”
13These questions are similar to those proposed by Peter Drucker in his famous five questions in The Five Most Important Questions You Will Ever Ask About Your Organization (San Francisco: Jossey-Bass, 2008).
14“Top Three CEO Bindspots,” Build, December 5, 2011.
15Vijay Govindarajan and Anil K. Gupta, “Building an Effective Global Business Team,” MIT Sloan Management Review Summer (2001).
16“Netflix Culture: Freedom and Responsibility,” Internal presentation, available at www.slideshare.net/reed2001/culture-1798664.
17Ibid.,
18“The Woman Behind the Netflix Culture Doc,” firstround.com/review/The-woman-behind-the-Netflix-Culture-doc/.
19See Paul Adler, Charles Heckscher, and Laurence Prusak, “Building a Collaborative Enterprise,” Harvard Business Review, July-August (2011). They write, “Indeed, we have found that the patience and skill required to create and maintain a sense of common purpose are rare in corporate hierarchies, particularly given that it is not a set-it-and-forget-it process. The purpose must be continually redefined as markets and clients evolve, and members of the community need to be constantly engaged in shaping and understanding complex collective missions. That kind of participation is costly and time-consuming.”
20David A. Nadler and Janet L. Spencer, Executive Teams (San Francisco: Jossey Bass, 1998).
21Yvon Chouinard, Let My People Go Surfing: The Education of a Reluctant Businessman (New York: Penguin Books, 2006), Loc 916 in ebook.
22This, of course, is within the ethical and procedural practices of a company. It is not a “results at any cost” mentality.
23One researcher, David Rock of the NeuroLeadership Institute, describes a role of shared objectives as follows: “If you can create shared goals among people, you create a strong “in” group quite quickly. When you identify a shared goal, you turn an ‘out’ group into an ‘in’ group.” Adam Bryant, “A Boss’s Challenge: Have Everyone Join the ‘In’ Group,” New York Times, March 23, 2013.
24The CEO of Sparta Systems notes, “I’ve learned to be incredibly clear about what we’re trying to do, how we’re going to get there and the outcomes I want from the team. And then when I get that team in place, they can cascade the goals down through the organization so that the front-line people know exactly where we’re going. I’ll say, ‘If you can’t see how what you’re doing today fits my scorecard, then you need to talk to your boss, because we’re misaligned.’ If you don’t have that, then people go off in a lot of directions. They do a lot of work, but they are not really getting to the result that you’re looking for with the company.” Adam Bryant, “Eileen Martinson on Clarity of Leadership,” New York Times, January 9, 2014.
25Some groups go too far in delineating “who owns what,” resulting in a mechanical process of dubious value. The best known tool for those who go down this path is called a RACI—which is a template that allows people to specify the roles of various individuals and groups in regard to specific decisions.
26This past year, domestic DVDs accounted for just over 8 percent of the firm’s revenue.
27Greylock Partners, “Blitzscaling 18: Brian Chesky on Launching Airbnb and the Challenges of Scale,” November 30, 2015, www.youtube.com/watch?v=W608u6sBFpo.
28See Scott Berkun, “How Do You Build a Culture of Healthy Debate?” June 28, 2013, scottberkun.com/2013/how-to-build-a-culture-of-healthy-debate/.
29Reed Hastings, CEO of Netflix, asks a slightly different question but with the same intent: “How would the company be different if you were CEO?”
30Clifton Leaf, “Pixar’s Ed Catmull: If Something Works, You Shouldn’t Do It Again,” Fortune, July 14, 2015.
31Drake Baer, “This Is Innovation: Tippling at Whole Foods,” Fast Company, April 5, 2013.
32“Original Streamed Series Top Binge Viewing Survey for First Time,” TiVo Press Release, June 30, 2015, pr.tivo.com/manual-releases/2015/Original-Streamed-Series-Top-Binge-Viewing-Survey.
332004 Founders’ IPO Letter. https://abc.xyz/investor/founders-letters/2004/ipo-letter.html
34Nicholas Carlson, “The ‘Dirty Little Secret’ About Google’s 20% Time, According to Marissa Mayer,” Business Insider, January 14, 2015.
35See Laszlo Bock, Work Rules! Insights from Inside Google That Will Transform How You Live and Lead, Kindle Edition, 2015.
36Jared M. Spool, “Goods, Bads and Dailies,” UIE, October 3, 2012, articles.uie.com/great_critiques/.
Chapter 5: Push Harder, Push Softer
1The concept of hard and soft edges is from Rich Karlgaard’s book The Soft Edge: Where Great Companies Find Lasting Success (San Francisco: Jossey-Bass, 2014).
2Note that hard and soft are not the same as strong and weak. Strong corporate cultures are those where there is a high level of consistency in what people think and feel. Weak cultures are those where there is wide variation in what people think and feel. Strong is generally better than weak unless the company’s culture is out of sync with what is needed to be competitive (in that case, people share a set of beliefs that are dysfunctional).
3Edgar H. Schein, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 2010).
4While the difference may be subtle, I think of beliefs as being based on deeper-level cognitive assumptions. Feelings, in turn, are based on deeper-level, more visceral emotions.
5Howard Schultz and Joanne Gordon, Onward: How Starbucks Fought for Its Life without Losing Its Soul (New York: Rodale, 2012), 117.
6Ibid. Also, Mark Bonchek, “How to Build a Strategic Narrative,” Harvard Business Review, March 25, 2016, 141–42.
7There is a long-standing debate on the difference between organizational culture and climate. Some authors distinguish between the two by arguing that culture is “the way we do things around here” while climate is “how it feels to work here.” Most definitions, however, are more complex and include different views in regard to the causal relationship between culture and climate (for example, does culture determine the climate?). My position is that culture includes climate and the emotional feelings of people at work. These feelings are not the surface of work life but the most fundamental aspect of how a company operates. For a detailed exploration of culture and climate, see Benjamin Schneider, Mark G. Ehrhart, and William H. Macey, “Organizational Climate and Culture,” The Annual Review of Psychology 64 (2012), 61–88; Daniel R. Denison, “What Is the Difference Between Organizational Culture and Organizational Climate? A Native’s Point of View on a Decade of Paradigm Wars,” The Academy of Management Review 21 (1996), 619–54.
8Mollie West, “Ideo: The 7 Most Important Hires for Creating a Culture of Innovation,” Fast Company, April 19, 2016.
9“Best Places to Work,” Glassdoor, www.glassdoor.com/Best-Places-to-Work-LST_KQ0,19.htm. The rankings are based on a total of 1.6 million employee reviews across all companies in the database.
10Consider that 50 percent of the American population is now single. Nearly the same percent of women don’t have children. While this doesn’t mean that work becomes all important to these people, we can assume that in some cases work will play a more central role in their lives. Nor am I suggesting that those who are married or with children view work as any less important than others—only that those who are single and without children have fewer demands on their time and attention.
11Kim Cameron, Carlos Mora, Trevor Leutscher, and Margaret Calarco, “Effects of Positive Practices on Organizational Effectiveness,” The Journal of Applied Behavioral Science 47 (2011), 266–308. See also Emma Seppala, “Positive Teams Are More Productive,” Harvard Business Review, March 18, 2015.
12“Staying One Step Ahead at Pixar: An Interview with Ed Catmull,” McKinsey Quarterly, March 2016.
13Sonia Kolesnikov-Jessop, “Spotlight: Jack Ma, Co-Founder of Alibaba.com,” New York Times, January 5, 2007.
14Caitlin Roper, “Big Hero 6 Proves It: Pixar’s Gurus Have Brought the Magic Back to Disney Animation,” Wired, October 21, 2014.
15Ibid.
16Note that this is my interpretation of each firm’s culture based on their own statements, articles, and books on how these companies operate and my own interviews. Also note that the cultural themes outlined are different than the missions of these firms—culture speaks to the experience of working in a company versus the mission to which each firm is dedicated. Mission and culture are related but not the same.
17“Netflix Culture: Freedom and Responsibility.” Internal presentation, slide 61, available at www.slideshare.net/reed2001/culture-1798664.
18People in certain Netflix areas, such as finance, can’t take time during a critical period at the beginning or end of a quarter due to the demands of the generating an earnings report. Also, people need to inform human resources if they are going to take more than 30 days off at any point in time.
19Patty McCord, “How Netflix Reinvented HR,” Harvard Business Review, January-February (2014).
20Whole Foods Market website. Creating the high trust organization. http://www.wholefoodsmarket.com/blog/john-mackeys-blog/creating-high-trust-organization
21“Netflix Culture: Freedom and Responsibility,” slide 22: “Unlike many companies, we practice: adequate performance gets a generous severance package.” slide 111: ”. . . We don’t want employees to feel competitive with each other. We want all of our employees to be ‘top 10%’ relative to the pool of global candidates. We want employees to help each other, and they do.”
22“Netflix Culture: Freedom and Responsibility,” slide 38.
23Jena McGregor, “Meet Alibaba’s Jack Ma,” Washington Post, May 6, 2014.
24From the Zappos LinkedIn website posting.
25A kayak trip Chouinard took in 2015 with a group of his friends resulted in the death of Chouinard’s fellow entrepreneur Doug Tompkins. See Stewart M. Green, “Doug Tompkins Dies in Kayaking Accident in Patagonia,” Alpinist, December 9, 2015.
26Robert Bruce Shaw interview.
27Jonny Elwyn, “Lessons in Creativity from Pixar’s Top Creatives,” Premium Beat, March 28, 2014.
28Ed Catmull, “How Pixar Fosters Collective Creativity,” Harvard Business Review September (2008).
29Zappos Family Core Value #7: Build a positive team and family spirit, www.zapposinsights.com/about/zappos/our-unique-culture.
30Zappos Family Core Value #7.
31Steven Rosenbaum, “The Happiness Culture: Zappos Isn’t a Company—It’s a Mission,” Fast Company, June 4, 2010.
32David Foster Wallace, “This Is Full Water,” commencement speech to Kenyon College class of 2005, www.youtube.com/watch?v=8CrOL-ydFMI.
Chapter 6: Take Comfort in Discomfort
1Beth Comstock of General Electric says to her team members, “Tell me one thing I don’t want to hear. It’s O.K. to give me some bad news. In fact, I want it.” Adam Bryant, “Beth Comstock of General Electric: Granting Permission to Innovate,” New York Times, June 17, 2016. The U.S. military has a slang phrase indicating a similar approach: “Embrace the suck.”
2Margaret Mead’s famous remark about groups applies to extreme teams: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.” Nancy C. Lutkehaus, Margaret Mead: The Making of an American Icon (Princeton: Princeton University Press, 2008), 261.
3Jack Ma, when asked what drove the success of his company, noted that it had three essential attributes—no money, no technology, and no plan. For a detailed account of the battle with eBay, see Duncan Clark, Alibaba: The House That Jack Ma Built (New York: Harper Collins, 2016), Loc 262 of ebook.
4eBay, in 2006, folded its operations into a joint venture with a Chinese firm, Tom Online. eBay retained a 49 percent share in the venture but, in essence, had pulled out of the market.
5The comedian Jon Stewart noted after Alibaba’s massive public stock offering that “The communists just beat us at capitalism.”
6Alibaba also provides a range of services in addition to its products, some of which are quite interesting. For example, a customer can hire a date to attend a social event.
7Neil Gough and Alexandra Stevenson, “The Unlikely Ascent of Jack Ma, Alibaba’s founder,” New York Times, May 8, 2014.
8Alibaba is on track to be the world’s first trillion-dollar business (the value of annual transactions through its various platforms in dollars). See Rex Crum, “Alibaba’s Jack Ma Talks Big, Even Trillion-Dollar Big,” Fortune, June 12, 2015.
9See Julie Wulf, “Alibaba Group,” Harvard Business Review, April 26, 2010.
10From “Alibaba Culture & Values. Passion: We Expect Our People to Approach Everything with Fire in their Belly and Never Give Up on Doing What They Believe Is Right,” www.alibabagroup.com/en/about/culture.
11Dai Tian, “Exclusive Look Inside Alibaba’s ‘Kung Fu’ Culture,” China Daily.com, October 10, 2014.
12Charles Clover, “Method in the Madness of the Alibaba Cult,” Financial Times, September 7, 2014.
13Erving Goffman, The Presentation of Self in Everyday Life (New York: Random House, 1959).
14Adam Bryant, “Xerox’s New Chief Tries to Redefine Its Culture,” New York Times, February 20, 2010. Burns notes: “When we’re in the family, you don’t have to be as nice as when you’re outside of the family.” She says, “I want us to stay civil and kind, but we have to be frank—and the reason we can be frank is because we are all in the same family.” Also see Richard Feloni, “Xerox CEO Ursula Burns Explains the Problem with a Corporate Culture That Is Too Nice,” Business Insider, March 5, 2016.
15Adam Bryant, The Corner Office: Indispensable and Unexpected Lessons from CEOs on How to Lead and Succeed (New York: Times Books, 2011), 218.
16George Packer, comment, New Yorker, July 5, 2010.
17Hayagreeva Rao, Robert Sutton, and Allen P. Webb, “Innovation Lessons from Pixar: An Interview with Oscar-Winning Director Brad Bird,” McKinsey Quarterly, April 2008.
18Gregory Bateson, Steps to an Ecology of Mind: a Revolutionary Approach to Man’s Understanding of Himself (New York: Ballantine Books, 1972).
19See Thomas Kilmann Conflict Survey, www.kilmanndiagnostics.com/overview-thomas-kilmann-conflict-mode-instrument-tki.
20Rao, Sutton, and Webb, “Innovation Lessons from Pixar: An Interview with Oscar-Winning Director Brad Bird.”
21Conflict can also be with other groups within a company as well as with those outside of a company. Internally, the best teams face conflict across groups and do so with the political and organizational savviness needed to achieve results. There are teams that develop a capability to deal with conflict internally but lack the skills needed to effectively surface and resolve conflict with other teams inside their organization. For an excellent analysis of how teams need to engage other organizational groups, see Deborah Ancona and Henrik Bresman, “X-Teams: How to Build Teams That Lead, Innovate and Succeed,” Harvard Business Review Press, 2007.
22Scott Berkun notes, “Many talented organizations produce little of merit because of how sensitive people are of criticism, and the fear of offending people or being offended trumps everything else.” “How Do You Build a Culture of Healthy Debate,” June 28, 2013, scottberkun.com/2013/how-to-build-a-culture-of-healthy-debate/.
23Ed Catmull, (New York: Random House, 2014).
24Ed Catmull, CEO of Pixar, notes, “It is the nature of things—in order to create, you must internalize and almost become the project for a while, and that near-fusing with the project is an essential part of its emergence. But it is also confusing. Where once a movie’s writer/director had perspective, he or she loses it. Where once he or she could see a forest, now there are only trees.”
25One of my colleagues describes this as “Rearranging the deck chairs on the Titanic.”
26See Ruth Wageman and J. Richard Hackman, “What Makes Teams of Leaders Leadable?” In Handbook of Leadership Theory and Practice, chapter 17 (Boston: HBR Press, 2010). The authors look at the role of leaders in surfacing that which people want to ignore, as well as designing the team to encourage the same.
27For more suggestions on how to make this happen, see Jean L. Kahwajy, Kathleen M. Eisenhardt, and L. J. Bourgeois III, “How Management Teams Can Have a Good Fight,” Harvard Business Review July-August, 1997.
28See Kristin Behfar, “How We Fight at Work, and Why it Matters,” Strategy and Business, March 2, 2015. She has a two-dimensional model of how people manage conflict (being high or low in directness and high or low in what she calls “oppositional intensity”).
29Daniel Kahneman and Gary Klein, “Strategic Decisions: When Can You Trust Your Gut?” Interview in McKinsey Quarterly, March 2010.
30Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2013).
31Charlan J. Nemeth, Bernard Personnaz, Marie Personnaz, and Jack A. Goncalo, “The Liberating Role of Conflict in Group Creativity: A Study in Two Countries,” European Journal of Social Psychology, 34 (2004), 365–74. See also Annals of Ideas, January 30, 2012 issue. Jonah Lehrer, “Groupthink: The Brainstorming Myth,” New Yorker, January 30, 2012.
32Cited in David Burkus, “How Criticism Creates Innovative Teams,” Harvard Business Review, July 22, 2013.
33David Burkus, “Why Fighting for Our Ideas Makes Them Better,” 99U, 99u. com/articles/7224/why-fighting-for-our-ideas-makes-them-better.
34Jump Associates, “The Inside Story: 5 Secrets to Pixar’s Success,” Fast Company, September 14, 2011, www.fastcodesign.com/1665008/the-inside-story-5-secrets-to-pixar-s-success.
35Burkus, “Why Fighting for Our Ideas Makes Them Better.”
36Anita Williams Woolley, Christopher F. Chabris, Alex Pentland, Nada Hashmi, and Thomas W. Malone, “Evidence for a Collective Intelligence Factor in the Performance of Human Groups,” Science, 330 (2010), 686–88.
37The test probes the degree to which people can assess the emotions of others by looking at photographs of their faces. Those who scored higher on the test were more accurate in their assessments of another’s emotional state.
38Amy Edmondson, “Psychological Safety and Learning Behavior in Work Teams,” Administrative Science Quarterly, 44 (1999): 350–83.
39Edmondson, “Psychological Safety and Learning Behavior in Work Teams,” 354.
40Charles Duhigg, “What Google Learned From Its Quest to Build the Perfect Team,” New York Times, February 25, 2016.
41An important way of viewing these teams involves trust. High-trust teams are those where people respect their peers for their capabilities and feel supported by them as individuals. This combination produces higher levels of trust, which, in turn, provides an environment that can tolerate higher levels of conflict. In contrast, low-trust teams have difficulty surfacing conflict and then resolving it productively because people withhold information or points of view from those they don’t trust. See my book Trust in the Balance (San Francisco: Jossey Bass, 1997).
42Yvon Chouinard believes that extremes are also beneficial in one’s personal life. He has engaged in a variety of risky outdoor activities, such as mountain climbing and kayaking, his entire life
43See Roger Schwarz, “Get a Dysfunctional Team Back on Track,” Harvard Business Review. hbr.org/2013/11/get-a-dysfunctional-team-back-on-track
Chapter 7: Teams at the Extremes
1Alfred North Whitehead wrote, “Without adventure, civilization is in full decay.”
2Ed Catmull at Pixar. Brian Chesky at Airbnb. Yvon Chouinard at Patagonia. Reed Hastings at Netflix. Tony Hsieh at Zappos. Jack Ma at Alibaba. John Mackey at Whole Foods. Note that these founders had at least one partner in the creation of their companies.
3In the movie Whiplash, the protagonist yells at his most promising student, “There are no two words in the English language more harmful than ‘good job.’”
4See Richard Pascale, Mark Millemann, and Linda Gioja, Surfing the Edge of Chaos: The Laws of Nature and The New Laws of Business (New York: Crown Business, 2001).
5“Staying One Step Ahead at Pixar: An Interview with Ed Catmull,” McKinsey Quarterly, March 2016.
6.See Wendy K. Smith, Marianne W. Lewis, and Michael L. Tushman, “‘Both/And’ Leadership,” Harvard Business Review May (2016). The authors examine what they describe as the paradoxes of effective leadership, which stand in contrast to an “either/or” approach.
7Very strong on results or relationships meant that a leader was in the top quartile of ratings provided by over 60,000 employees. See John H. Zenger and Joseph R. Folkman, The Extraordinary Leader (New York: McGraw Hill, 2009), 144.
8One way of understanding the complications of managing results and relationships is to look at the expectations that each creates in a team, organization, or even with customers. Research indicates that leaders and groups that emphasize the importance of results and relationships are judged more harshly when they fall short of the expectations they have created in these areas. A study by Pankaj Aggarwal, for example, indicates that people who view a company as being “personal and warm” in its interactions with them are harsher in their judgments when those firms act in a manner that they believe is driven by financial results. In essence, these firms suffer because they create an expectation (“we care about you”) that is then violated (“we care about profits”). In a similar manner, we can see how firms or teams that emphasize a results orientation are viewed more harshly when they retain or promote people whose performance is substandard. In essence, people in these situations see the firm or its leaders as being hypocritical. For the study noted above that looked at this dynamic in terms of customer perceptions, see Pankaj Aggarwal, “The Effects of Brand Relationship Norms on Consumer Attitudes and Behavior,” Journal of Consumer Research 31 (2004).
9.This table builds directly on the ideas of Amy Edmondson in her well-respected work on psychological safety. In particular, she presents a similar table to the one presented here. In it, Edmondson describes different team cultures, or what she calls zones. She has “ambitious goals” on one axis of her table and “psychological safety” on another. She then describes four types of teams: Learning Teams, Anxious Teams, Comfortable Teams, and Apathetic Teams. See “Competitive Imperative of Learning,” Harvard Business Review, July-August (2008).
10Richard Hackman argues that the common perception that teams, over time, become complacent is not supported by the research findings (with only one exception, which involves R&D teams). My point is not to suggest a trend toward increased complacency; my point is that teams differ considerably in the degree to which they value results or relationships. See Diane Coutu, “Why Teams Don’t Work,” Harvard Business Review May (2009).
11.A study by the consulting group McKinsey asked senior managers about the most important factors in managing their transitions into new roles. Of the 1,200 people polled, 87 percent indicated that it was very or extremely important to “create a shared vision and alignment around strategic direction across the organization” (the highest rated item in the survey). See “Ascending to the C-Suite,” McKinsey Quarterly, April 2015.
12.Ed Schein is the go-to authority on corporate culture. See Organizational Culture and Leadership (San Francisco: Jossey-Bass, 2010).
13See Jesse Sostrin, “Follow the Contradictions,” Strategy and Business, June 6, 2016.
14Paul Graham, venture capitalist, suggests that most startup firms that fail are not cases of homicide but suicide. His observation applies to many teams as well.
15See the following, which focuses on cross-functional teams but makes the point regarding underperforming teams: Behnam Tabrizi, “75% of Cross-Functional Teams Are Dysfunctional,” Harvard Business Review, June 23, 2015.
16Processes and rules also exist to protect employees. For instance, firms need to protect their employees from harassment by supervisors and coworkers. Policies are put into place to delineate what constitutes harassment and the procedures employees can follow to report, and if possible prevent, such behavior.
17Richard Hackman notes that the use of a leader’s authority to set a team direction “inevitably arouses angst and ambivalence—for the person exercising it and the people on the receiving end.” My point is more general in saying that power issues influence a wide range of team behaviors, with the focus here on teams being viewed as a threat by some leaders. See Hackman, “Why Teams Don’t Work,” Harvard Business Review May (2009).
18Charleen R. Chase and Jon Maner, “Divide and Conquer: When and Why Leaders Undermine the Cohesive Fabric of Their Group,” Journal of Personality and Social Psychology 107 (2014), 1033–55.
19Kellogg Insight, “Why Bad Bosses Sabotage Their Teams,” Kellogg School of Management, January 5, 2015, insight.kellogg.northwestern.edu/article/why-bad-bosses-sabotage-their-teams.
20Jeff Bezos noted about innovation in product ideas, “ To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.” His insight applies to organizational innovation as well, including new team designs. Amazon SEC Filing;Form 8-K. 4/5/2016.
21Intellectual breakthroughs, our course, are the result in some cases of individuals working alone. But when putting ideas into action, teams are almost always involved.