SLOW Movement

FT: How to raise your game in 2010

How to raise your game in 2010

By Stefan Stern

Published: December 21 2009 23:36 | Last updated: December 21 2009 23:36

Been a loooong year,” sang John Lennon, as the music faded away on the last track of his 1975 album Rock’n’Roll. This December we know what he meant.

It has been a year of high anxiety. Good news has usually been followed by bad, making it hard (and unwise) to believe that the worst was over. For those who had never experienced it, bumping along the bottom has become a meaningful concept.

But let’s not slump into excessive end-of-year doom. Looking ahead, here are three ideas to help business leaders have a happier time in 2010.

Management with analytics
The New York Police Department was “kind of a classic case of a big organisation not knowing what it knows,” says NYPD chief Ray Kelly in a recent video produced by IBM, NYPD’s technology partner.

Having realised there was a problem, Commissioner Kelly took action. Four years ago, NYPD established its Real Time Crime Center, a 24-hour, seven-day data warehouse that provides information and support to detectives who are investigating violent crime. Information is delivered to them at the crime scene. Clear-up rates and speed of operation have both improved significantly.

This is what managing with “analytics” can do for you. Successful companies – Google, Amazon, Tesco, Netflix – have got terrifically smart at extracting the right amount of relevant data from their businesses, and making it work for them: finding unexpected, unseen patterns in customer behaviour, and exploiting them.

In 2010, it will be time to get serious about managing proliferating data more intelligently. But don’t spend all your time poring over the stuff, because idea number two is going to require putting the spreadsheets down and getting out of the office ...

Management by walking around
OK, so MBWA is hardly new. Dave Hewlett and Bill Packard pioneered it decades ago. But in the “faster, faster” 21st century, when the pressure is on managers to take decisions more quickly, investing time in talking to colleagues can slip a long way down the list of priorities. Big mistake. (In the global era, Rosabeth Moss Kanter has observed, we should think in terms of “management by flying around”).

When I asked the chief executive of the global recruitment business Manpower, Jeffrey Joerres, about his management style recently, he spoke eloquently about the need to get out of the office and meet people face to face. Being a leader involves a lot more than just sending e-mails and “gazing at charts”, he said. “We are a company of do-ers, and if you have this big chasm between executives and [staff], you have no idea what the challenges are.”

Increasingly, the gurus tell us, strategy is execution. In other words, it’s how you do things that matters.

Management with a moral purpose
Business leaders have a lot of work to do to convince a sceptical public that their organisations can be a force for good. Maybe non-financial companies are suffering unfairly as a result of what some banks in particular have done. But that does not remove the need for moral renewal at the heart of business.

Jeff Immelt, chief executive of General Electric, gets it. In a speech at the US military academy West Point two weeks ago, he argued forcefully that business leaders have lost their way. “We are at the end of a difficult generation of business leadership, and maybe leadership in general,” he said. “Tough- mindedness, a good trait, was replaced by meanness and greed, both terrible traits ... rewards became perverted,” he added.

Large sections of Mr Immelt’s speech could have been written by Ken and Will Hopper, authors of one the most important business books of the past decade, The Puritan Gift. Indeed, in it they salute the GE boss as their kind of leader.

The Hoppers’ book emphasises “the importance of a good managerial culture in determining the nature and direction of any society”, as Will Hopper puts it. Good managers master their craft, while also possessing what Mr Immelt calls “domain knowledge” – that is, they know what they are doing in their specific discipline. If only bankers had been better at banking, how much happier we would all be.

It has been a long year. With hard work, and after drawing on these ideas, next year could be better.

For more on management, visit www.ft.com/managementblog
stefan.stern@ft.com

Copyright The Financial Times Limited 2009.

FT: Lunch with the FT - Michael O'Leary

Lunch with the FT: Michael O’Leary

By Pilita Clark

Published: December 18 2009 23:02 | Last updated: December 18 2009 23:02

“Here,” says Michael O’Leary, shoving something the size of a small grapefruit wrapped in red and white cardboard over the table in his office at Dublin airport. “Lunch.”

There is an awkward silence.

You do not expect a banquet from a budget airline boss who has threatened to make his passengers pay to use the toilet.

And you do not want to upset a man who calls regulators “rapists”, rivals “arseholes”, and advises customers wanting a refund to “f*** off”.

But what exactly has he given me here? Eventually, I make out the words on the wrapper and blurt: “Oh! A bagel!”

“It’s got pesto,” says O’Leary. “It was either that or McDonald’s. I figured you for a bagel girl.”

For himself, he has procured a grim-looking chicken salad, entombed in thick plastic, also from somewhere in the airport down the road. An aide arrives with two takeaway coffees. So begins lunch with one of the world’s best-known, least-loved and more improbable airline chief executives.

EDITOR’S CHOICE

More from Lunch with the FT - Jun-12

I had tried to persuade O’Leary’s press officer that lunch in the office would be dull. Surely there was a restaurant he liked in Dublin? No. Lunch with the chief executive of Ryanair would be a Ryanair lunch: at the desk, just your basics, all expenses spared.

In the world of aviation, Ryanair is a phenomenon, a no-frills behemoth that has grown from a tiny operation which, in 1985, used to fly 5,000 passengers a year between Ireland and London in a single plane so small that, according to the company, its cabin crew had to be no taller than 5ft 2in. Since he took over in 1994 O’Leary has relentlessly expanded, with 200 aircraft flying more than 60m passengers a year to 150 European destinations, from the Canary Islands to Constanta in eastern Romania.

Recession has sent bigger, older airlines around the world hurtling into the red. Yet Ryanair has fared much better, coupling average fares of just €32 with a ruthless drive to cut costs and push up revenues by charging for everything from checking in online to buying a cup of coffee on board.

In the middle of this year Ryanair had the highest market value of any airline in the world, after Singapore Airlines. On the day we meet, it is getting ready to announce another quarterly profit and expects to make at least €200m this year.

None of this is evident from Ryanair’s Dublin airport headquarters. Plastic sacks of wastepaper are piled at the entrance. Boxes are stacked up in corridors inside. The paintwork is scruffy, the carpet tired.

The open-plan office feels barely as wide as one of Ryanair’s Boeing jets, and nearly as cramped. There is a single aisle dividing tightly packed teams of surprisingly young-looking workers into departments such as marketing, sales and planning.

It looks less like one of the airline industry’s financial success stories and more like a scene from the television comedy The Office. Except the workers in The Office have bigger desks. And down at the end, peering out from behind the glass walls of his own modest office, is O’Leary.

Wearing jeans, open-necked checked shirt and sneakers, he looks a bit tired and pale up close. This could be because he and his wife Anita Farrell, a former banker, have three children under the age of eight. Or because he seems in a permanent state of exasperation with an endless number of irritants, including his own staff.

As I try to prise off the worryingly sturdy wrapper on the bagel, he says there are two “great things” about lunchtime in an out-of-the-way office like Ryanair’s. “One, there’s nowhere to go and eat,” and two, the only time staff are allowed to use the internet for personal reasons is between five past one and five to two. “So they all tend to stay at their desks at lunch hour!”

The staff get another pasting as he moves on to talk about management consultants (“should all be euthanised”) and MBAs (“bullshit”). “MBA students come out with, ‘The customer’s always right,’” he says, adopting a whiny voice. “Horseshit! The customer’s usually wrong! And, ‘My staff is my most important asset.’ Bullshit! Staff is usually your biggest cost!”

It is hard to say how serious he is about this. Ryanair did once say it had issued a memo banning employees from charging their mobile phones at work to save on electricity bills. But this always sounded like another PR prank by O’Leary, whose flair for using the media is boundless.

Airline entrepreneurs have often revealed a talent for doing their own PR. Richard Branson flew in a hot air balloon for Virgin Atlantic. Stelios Haji-Ioannou wore orange jumpsuits for EasyJet. But O’Leary takes the practice to new heights.

It is not just his willingness to dress up as the Pope to publicise a new route to Rome. Or his (so far unrealised) threat to charge passengers to use the lavatory. It is the sheer savagery of his blasts that make him stand out on the featureless plains of modern corporate life.

For 20 bracing minutes, he runs through a list of his more egregious enemies. There are the “cretins” and “twerps” in the Civil Aviation Authority, the British body that regulates the “bloody evil empire” of BAA, the airport operator whose London monopoly was recently broken up, after prodding from O’Leary, who had griped incessantly about its charges.

There is the “big bloody supertanker” of Boeing, the US aircraft maker that O’Leary has been badgering for months to sell him 200 new jets at recessionary prices. And there is, visible right outside his office window, one of his most hated foes: Aer Lingus, the struggling Irish flag carrier for which O’Leary has made two thwarted bids in the past three years. “There it is,” he hoots, jumping up out of his chair to point out a large squat building facing away from his own. “The gulag!”

He would clearly like to make a third offer for Aer Lingus, but knows this would mean trouble with its “bunch of bearded, sandal-wearing union bosses”, not to mention Ireland’s “utterly useless” politicians.

And then there is that other source of endless aggravation, Ryanair’s passengers. Especially the ones wrecking his efforts to shave luggage-handling costs by checking in their cases (for an extra £30) because they are “too mentally bloody lazy to travel with carry-on bags”.

Surely he doesn’t seriously expect anyone to go on a three-week holiday with just a carry-on?

“Oh, for God’s sake, of course you can for three weeks,” he says.

“I can’t.”

“You can.”

“I don’t want to.”

He stares at me, then admits his wife feels the same way.

“My wife goes away on holidays for a couple of weeks, and she wears bikinis and a few flips-flops, but she needs her 40 pairs of shoes,” he says theatrically. “What do you need 40 pairs of shoes for?”

So, who exactly is the ideal Ryanair passenger? “Our ideal passenger is someone with a pulse and a credit card, who will follow the simple instructions to lower our costs to the maximum.”

By this point, hunger is driving me to make a fresh attempt on the bagel wrapper. Off it comes, and there sits a sad-looking bagel containing a pile of pesto, tomato and cucumber. I start picking at it. O’Leary’s salad sits menacingly on his desk, untouched.

This is a typical lunch for him, he says, when he isn’t at the gym.

What does he like to do in the gym?

“Look up and down a slim girl’s rear,” he says. “Sadly there’s not that many of them. They’re a bunch of old sweaty farts.”

Though greying a little, O’Leary is, at 48, not that old. Before he became a loud-mouthed chief executive, he was a tax accountant, before that a businessman’s son, expensively educated at some of Ireland’s best schools. According to one newspaper’s estimate he is worth more than £300m, partly thanks to a 4 per cent stake in Ryanair. But for years now, he has been saying he will retire “in two or three years”. So what is it today?

“Three years,” he says, suddenly trying to look serious. By then it will be time to “Tesco-ise Ryanair”, by which he means time to ditch him for someone more suitable for a larger, more sedate operation.

“In certain respects I am our best salesman,” he says, explaining the “pantomime villain character” he plays for the airline is done purely for the free publicity (the net spend on advertising last year was €5m, he says, not much for an airline Ryanair’s size). “But I’m also negative in that a lot of my antics detract from the fact that Ryanair has the youngest fleet of aircraft, the best punctuality record, delivers a terrific customer service.

“I think you need me for the rapid growth and for the in-cost reduction initiatives, but once they’re all done you then need to hand over to somebody who’s a bit more respectful of politicians and bureaucrats, talks about caring about the environment and old people and f***ing jungles and fish in the sea and all that shite.”

Goodness knows what O’Leary will do if he ever retires. He claims to have no interest in holidays. “I go to the Algarve with the family for two weeks, because I have to. And I can build the sandcastles with the children. You know, the sandcastle’s fine for the first five minutes, and after that it’s, ‘Oh Jesus, will someone come and rescue me!’ I’m praying for a crisis.”

What about close friends? “My wife, occasionally. My children on a good day.”

He hates the theatre. Only sees films when dragged by his wife, “just for marriage maintenance reasons”. His main interests, apart from Ryanair, consist of farming, football and racehorses, of which he has a few including one called War of Attrition, which won the Cheltenham Gold Cup in 2006. I had always assumed this was an O’Leary-esque joke at a rival’s expense – Aer Lingus, perhaps – but he says the animal had the name when he bought it.

FIVE FURIOUS BOSSES

‘If you want a friend, get a dog’

Samuel Goldwyn (1879-1974)
A bullying, vainglorious style, enormous ego and buckets of charm – Goldwyn had what it took to get films made in Hollywood in its golden age. A Polish Jewish émigré, he once said, “I don’t want to be surrounded by ‘yes men.’ I want people who’ll disagree with me, even if it costs them their jobs”.

Robert Maxwell (1923-1991)
The Czech-born newspaper proprietor terrified employees and family with his forceful style. He had courage and nerve but this tipped over, ultimately, into illegal excess. In a letter to his wife, Maxwell described how during the second world war he had dealt with a German mayor whom he felt had betrayed him: “As soon as we marched off a German tank opened fire on us. Luckily, he missed, so I shot the mayor and withdrew.”

Donald Rumsfeld (born 1932)
Rumsfeld, US secretary of defence from 2001-2006, was famously decisive. In the 1990s, while still a corporate executive, he attended a seminar run by James O’Toole, professor of ethics at the University of Denver. In Transparency (2008), O’Toole recalls questioning the factual basis of a Rumsfeld assertion. “He came after me with bone-chilling intensity,” he writes, “‘No one questions me! Do you understand that? I am never wrong.’”

Al Dunlap (born 1937)
At Scott Paper in the early 1990s Dunlap sacked thousands of people and sold the business on for a profit. Dubbed “Chainsaw”, he relished his ruthless image. “If you want a friend, get a dog,” he once said, adding: “I’ve got two.” He was fired from the Sunbeam Corporation and later investigated by the Securities and Exchange Commission and agreed to pay a settlement.

C Montgomery Burns (born c1909)
The fiendish boss of the Springfield nuclear power plant in the cult cartoon series The Simpsons. Burns’ philosophy of management is, “I’ll keep it short and sweet. Family, religion, friendship: these are the three demons you must slay if you wish to succeed in business.” According to The Simpsons website, he is “more misunderstood than evil”.

Stefan Stern is the FT’s management columnist

There is a strange lack of sophistication about O’Leary. His success has made him one of the industry’s most prominent airline chiefs, his name constantly on the lips of his peers, his business model aped around the world. Willie Walsh, a fellow Irishman and the chief executive of British Airways, once told me, only half-joking, that O’Leary’s success had even driven other airline executives to copy his dress sense: “You get these CEOs who, because O’Leary doesn’t wear a tie or a suit, feel that to have any sort of respect, you can’t wear a tie.”

Yet his world view has curious gaps. At one point, I ask him what he thinks of other well-known figures in his industry. Stelios? “A rich kid who got off his arse.” Richard Branson? “A genius in the way he has made a fortune out of the Virgin brand, but he doesn’t add up to much.” But, when asked about Tony Tyler, chief executive at Cathay Pacific, one of Asia’s biggest airlines, he looks blank. “Never heard of him,” he says. “Anyone in the airline industry outside of Europe, I wouldn’t know who the hell they are.”

There is also something rather quaint about him. He doesn’t have a BlackBerry, there is no computer on his desk. He even claims not to have an e-mail address. “E-mail is rubbish. If there’s something important, I’ll send a fax, or we’ll speak.”

Each day a team compiles two reports on paper for him, one for sales, one for punctuality, which give an instant overview of how the business is performing. He gets up and grabs a sheet showing the day’s bookings, the month’s sales, next month’s sales, available seats, how it all compares with the same month last year, and so on. “Business should be simple,” he beams.

Lack of e-mail does not stop him being an enthusiastic correspondent. When UK advertising standards authorities chided him for claiming Ryanair’s flights were faster than the Eurostar train, he sent them a copy of Everyday Maths for Dummies. Journalists who write about him sometimes get an unsolicited, though frequently charming, missive. A colleague on the FT who wrote a column comparing Ryanair to Aeroflot received a two-page letter along with the latest “Girls of Ryanair” calendar, featuring bikini-clad photos of Miss Check-In and Miss Fuel Pump, a regular production that O’Leary insists uses only company cabin crew.

The admiration is reciprocated, at least in the financial media. On a cabinet in a corner of his office is a dusty collection of awards sent by the likes of Barron’s, the financial magazine that has named him one of the “world’s most respected CEOs” ever since it started handing out the award in 2005. “Barf!” says O’Leary, looking embarrassed, when asked about the prizes.

His constant obsession with cost-cutting, however, not to mention his foul mouth, has also spawned less adulatory attention, such as the website www.ihateryanair.co.uk, dedicated to what it calls “the world’s most hated airline”.

Before today, I say, every person I spoke to and said I was having lunch with Michael O’Leary reacted with horror or pity. Doesn’t he find it wearying to be such a hate figure? “It would be wearying if you weren’t growing by 9m passengers a year,” he says. “We know, fundamentally, that we have huge public support.”

Outside, the light is fading. My flight home is getting near. My bagel is still there, still half-eaten. O’Leary’s salad still sits on his desk.

A few days later, I get a letter from O’Leary, thanking me for taking the time to come to Dublin to see him and hoping I enjoyed my “five-star gourmet lunch”. By the way, he adds: “I forgot to charge you for the coffee, so you owe me one.”

Pilita Clark is the FT’s aerospace correspondent

...........................

Ryanair HQ
Dublin airport

Takeaway coffee x 2 €3.60
Chicken salad x 1 €5.50
Pesto, tomato, cucumber bagel x 1 €5.50
Total €14.60

Copyright The Financial Times Limited 2009.

FT: Value added by best CEOs

Value added by best CEOs

By Stefan Stern

Published: December 14 2009 23:14 | Last updated: December 14 2009 23:14

A rare event in the business world last week: everyone seemed to agree about something. When Procter & Gamble’s former chief executive, A.G. Lafley, announced he would be retiring as its chairman in the new year, there was universal acclaim for his work at the company. Fortune magazine’s verdict was typical. “It is not overstating things to say that Lafley brought P&G into the next century,” it said.

Well done, A.G. But just to disrupt this mood of consensus for a moment, let me restate my belief that, sometimes, too much attention gets paid to individual CEOs, and not enough to the work that goes on elsewhere inside businesses. A.G. did not invent P&G’s blockbuster cleaning product Swiffer, for example, or lead on every aspect of the company’s merger with Gillette.

How important are CEOs, exactly? “The CEO is responsible for creating and leading the team that will deliver great performance,” says Morten Hansen, professor of management at the University of California at Berkeley, and also at Insead. “A CEO can have great impact by creating a strong team.”

Prof Hansen should know what he is talking about. With his Insead colleagues Herminia Ibarra and Urs Peyer, he has just finished researching the performance of almost 2,000 CEOs at 1,200 public companies over the past 15 years. (No CEO already in post in 1995 – Bill Gates, Warren Buffett, Jack Welch – was included.) The full results will be published later this week at www.hbr.org/top-ceos and in the new year edition of the Harvard Business Review. But here is a sneak preview.

After crunching through a wealth of data on total shareholder returns (TSR) during a CEO’s tenure, which were adjusted for movements in stock markets and within industry sectors, and then looking at inflation-adjusted changes in the company’s market capitalisation, the researchers drew up their list of top-performing CEOs.

Some expected names appear in the top 10: Apple’s Steve Jobs comes first, with Cisco’s John Chambers not far behind in fourth place. Jeff Bezos of Amazon, Meg Whitman, formerly of Ebay, and Google’s Eric Schmidt are placed seventh, eighth and ninth respectively. But some less familiar figures crop up too. Yun Jong-yong, CEO of Samsung between 1996 and 2008, is second only to Mr Jobs as a wealth-creating boss. John Martin, head of Gilead Sciences, the California-based pharma company – maker of the antiviral drug Tamiflu – is sixth. Monsanto’s Hugh Grant comes 10th. One or two prominent bosses do not make it into the top 400: JPMorgan Chase’s Jamie Dimon, for example, and GE’s Jeff Immelt.

The research indicates that, when they reach the top job, company insiders tend to do better than those who are brought in from outside. In countries where reliable information is available, those with MBAs seem to do better than those without – although more than half the top 50 bosses do not have one. It also helps to take over from someone who has not performed well, in a company that is struggling. All the leading bosses proved their worth over an extended period, and not just in a brief period characterised by luck or (fleeting) brilliance.

One last revealing discovery: there was virtually no correlation between fame, a strong reputation and actual performance. Out of the 30 “most respected CEOs in the world” named by the US magazine Barron’s in 2009, only five made it into this new list of top performers. Many celebrity CEOs got nowhere near the top.

Time for a few caveats. However carefully the researchers adjusted the data, TSR numbers, which are derived from the sometimes irrational and excessive movements of stock markets, can never be a wholly reliable guide to the performance of a company. Messrs Dimon and Immelt, for example, might argue that, for different reasons and at different times, stock markets have not reflected the true value or strength of their businesses. And bosses who run privately held companies cannot by definition feature in lists such as these, which focus only on public companies. A.G. Lafley, incidentally, came 189th: inside the top 10 per cent, if not quite as high as the response to his retirement might have suggested.

Here is the executive summary. Bosses set the pace and direction, and lead the top team. Their judgment and people management skills are vital. So how important are CEOs, exactly? I admit it. Very.

Please leave your comments below.

For more on management, visit www.ft.com/managementblog

Copyright The Financial Times Limited 2009.

FT: Procter & Gamble - Tumble cycle

Procter & Gamble: Tumble cycle

By Jonathan Birchall in New York

Published: December 17 2009 19:31 | Last updated: December 17 2009 19:31

EDITOR’S CHOICE

P&G warns over growth of global protectionism - Dec-17

Lafley retires as P&G chairman - Dec-08

Procter & Gamble’s ‘green’ campaign to target mainstream consumer - Sep-27

P&G to sell drugs unit for $3.1bn - Aug-24

Lex: Remaking Procter & Gamble - Jun-09

P&G set to replace Lafley as chief executive - Jun-09

On a recent visit to Moscow, Bob McDonald took time out to drop in on a Russian housewife. The chief executive of Procter & Gamble wanted to check up on what she was buying amid a severe economic downturn and an annual inflation rate running at about 9 per cent.

“The lady’s reaction to the economic crisis in Russia was to buy large sizes of everything,” recalls Mr McDonald of his visit to the suburban apartment. The working mother with two children was already buying bumper packs of laundry detergent. But she wanted large-sized bottles of shampoo and Fairy dishwashing liquid too. “Her whole purchasing habit had changed.”

In an interview at P&G’s headquarters in Cincinnati, Ohio, Mr McDonald notes that the world’s largest consumer goods company had seen this kind of change before: in Turkey, for example, during the dramatic currency devaluation of 2001, when he was head of P&G’s global fabric care business. “During every recession we’ve seen a change of behaviour,” he says. “During our 172 years of operation, [for] more than a quarter of them we’ve operated in a recession. So we’ve been there before.”

Rise of private labels

An advertising campaign for Charmin, Procter & Gamble’s US toilet paper brand, invites consumers to “soften your bottom line”, saying it may cost more but lasts four times longer than “leading value brands”. This is part of P&G’s “performance-based value messaging”, targeting retailer private- label brands that have gained market share in the downturn. A survey by research firm Consumer Edge suggests 30 per cent of US households now use private-label toilet paper. Just over 53 per cent of households surveyed were “very satisfied” with it, indicating shoppers might stick with private labels after the recovery, the firm says, underlining the challenge to P&G.

Mr McDonald’s sang froid amid the worst consumer recession since the 1930s is in tune with the style of A.G. Lafley, his unflappable predecessor, as well as his own background in the US army’s officer corps before he joined P&G 29 years ago. Previously chief operating officer and right-hand man to Mr Lafley, Mr McDonald had long been seen as his likely successor. But the timing of his appointment in June took the industry and Wall Street by surprise.

“It was probably a year earlier than we were expecting,” says Bill Pecoriello, analyst at the Connecticut-based Consumer Edge Research. “But we were totally confident that it would be a smooth transition, despite the fact that it was happening in the middle of a global economic crisis.”

With more than 4bn customers, and just over 30 per cent of its $79bn (£49bn, €55bn) annual sales coming from developing markets, P&G is both a barometer of the health of global consumer demand and a standard-setter for consumer goods marketing.

Sales of its brands such as Pantene, Head and Shoulders and Wella account for one-fifth of all the hair products used around the world; more than 70 per cent of the world’s razors and blades are made by its Gillette brand. Over the past decade P&G has led the creation of new product categories with products such as Crest dental whitening strips and Swiffer cleaning mops, delivering new products at a rate that has outstripped Unilever and other global rivals.

Mr McDonald (pictured left) argues that his arrival in the top job represents “continuity with change”. But the switch in leadership has been accompanied by a shift in strategy that, if successful, could put P&G on the list of companies, such as Estée Lauder and Avon, for which this recession turned into an opportunity – they pushed through restructurings that otherwise would have been harder to achieve. “Maybe when we look back, we’ll see P&G as being one of those companies,” says Lauren Lieberman, an analyst at Barclays Capital.

News of the change came after a quarter in which P&G’s sales were hampered by the price rises it had instituted in 2008 to deal with inflation and the jump in commodity prices the world was experiencing at the time. Mr McDonald admits that when he took over, the company was running in “crisis mode”, trying to stabilise its business as a fall-off in global consumer demand followed Wall Street’s precipitate slide the previous September.

“In October through December, things fell apart and they fell apart relatively rapidly,” he says of the post-crash universe. “It was clear to us ... that we had to take dramatic steps quickly to restore the financial structure of our business.”

Last week it was announced that Mr Lafley, who stayed on as chairman after the handover, would next month relinquish that post too to Mr McDonald.

Ms Lieberman argues that the crisis exposed weaknesses and missteps by P&G, such as launching Tide Total Care, the most expensive version of its Tide detergent, in July 2008 rather than the “value tier” Tide Basic line it is now testing in the US. The company had “the wrong product portfolio for the [economic] environment”, skewed towards higher-end products and discretionary items such as Wella. Its global business was also strong in Russia and eastern Europe and comparatively weak both in south-east Asia, where consumers were less affected, and Latin America, where they were more accustomed to inflation-related price increases.

Initially, P&G’s response included price rises in its overseas markets to defend the profitability of its brands, combined with a review of its planned product introductions and a shift in its marketing. That move, still under way, is towards “value-based metrics” such as stressing that its Charmin toilet paper may cost more than an alternative but lasts four times longer.

But it was the price increases that had the most immediate effect on its business. In Russia, for instance, it raised prices four times in a row on products such as Ariel detergent and Head and Shoulders shampoo, as it tried to offset falls in the value of the rouble. The rises had been expected to hit sales. But by spring and early summer of this year, the company came to recognise that its had fallen by more than it had reckoned for – just as it began to discuss the transition in the top job.

In the US and western Europe, the main beneficiary of those losses were the “private label” goods produced for retailers. By the time of the succession, P&G had determined a short-term plan of action to reinvigorate sales by boosting spending on marketing to rebuild market share. It also cut prices on 10 per cent of its product lines, undoing many of the price rises it had instituted in Russia that its competitors had chosen not to follow.

To allow it to invest more in marketing and brand building, the company also dropped its 2010 diluted earnings per share growth below the long-term double-digit target that had been a shibboleth of the Lafley era, as it shifted spending into the drive to win back market share. Having initially predicted that it would see an “inflexion point” for a return to top-line sales growth in the current three months, the company returned to growth by the end of its July-September quarter.

Mr McDonald maintains that the group is now placed to deliver profitable growth over the coming five years. “In those five years, we’re going from reaching 4bn consumers using our products to 5bn consumers. And we’re going to go from the average consumer in the world spending $12 a year on P&G products to $14 a year. And we have all the building blocks that lead to those results,” he says.

Ms Lieberman argues that the leadership transition also marks an evolution in P&G’s strategy, albeit one that was evolving even before the recession hit. After improving margins by creating innovation that customers will pay more for, Mr McDonald is focusing on building global scale through unit sales. “P&G was getting an existing Tide consumer to trade up to another version of Tide, rather than getting someone who is not a Tide consumer to buy one of the products. There’s not enough growth in that strategy.” Changing that, she argues, “is what Bob is all about”.

The new strategy includes a direct assault, both through marketing and new “value tier products”, on the private labels that have gained market share during the recession. “We don’t think there is any reason any consumer should have to use a private label. We should be able to innovate at multiple price points to delight all consumers,” says Mr McDonald.

In the US, P&G had already launched “basic” lower-cost versions of its Charmin toilet paper and Bounty paper towels before the recession hit. But this year it not only started testing “basic” Tide in the southern US but, in Europe, introduced the lower-cost Simply Dry version of its Pampers nappies. It is continuing the expansion of its Naturella female pad brand originally developed for low-income women in Mexico: after its recent expansion into Saudi Arabia and Khazakstan, a launch in China may follow.

In 2009, only about half of its product categories offered “value tier” versions in its top 17 country markets. The proportion is expected to increase to about 75 per cent by P&G’s 2011 fiscal year. “There is renewed commitment that this is very strategic, and we need to get it done more quickly than ever before,” says Mr McDonald.

To support what it calls “white space” expansion into new categories and markets, the company is in the midst of its largest ever increase in international manufacturing capacity, with almost 20 plants being built outside the US. That includes facilities in India, where consumers currently spend less than an annual $1 a head on P&G products, and China, where the amount is only $3 – compared with $20 in Mexico.

Mr Pecoriello at Consumer Edge argues that P&G is “still playing catch-up” against competitors in developing markets. “They have the opportunity to expand. But the reality is they are very competitive markets and there are entrenched local and multinational competitors, such as Unilever, L’Oréal and Colgate. It’s going to take investment, but it is absolutely the right strategy, because that’s where the growth is.”

Last week, P&G announced the $470m acquisition of Ambi Pur air fresheners and other household products from Sara Lee, one of its US rivals. The move gives it access to Ambi Pur’s markets and distribution network in Asia and Europe where P&G’s Febreze brand is not sold.

As the world edges out of recession, Mr McDonald says he is not among those who believe that basic consumer behaviour will have been permanently affected or demand reduced by the experience. “Is there going to be a new ‘reset’? I don’t know. I don’t think it’s going to be to the extent that people think it is. The US may reset to a somewhat less credit-driven level, but that has arguably a relatively minor impact in the world.

“We’ve been to the movie before,” he says. “We see behaviour change during the recession, we see [demand] come back with resilience at the end of the recession.”

How bonds beyond borders reveal the culture of the fabric conditioner

Bob McDonald argues that Procter & Gamble needs to look for new consumers not only in the developing world, but also in the company’s existing markets in developed economies.

The 56-year-old head of P&G says senior executives recently “committed to redouble efforts to serve Hispanics and African-American minority consumers” in the US. Although minority communities account for a little more than one-third of the population today, “some time between 2035 and 2045 the minority will become the majority in the US, and looking at the US as a homogenous country is a big mistake.

“Country boundaries are irrelevant,” he says, citing the influence on his thinking of Samuel Huntington’s 1996 book, The Clash of Civilizations and the Remaking of World Order, published when he was working for P&G in east Asia. Huntington’s stress on ethnic and cultural bonds over national identity “resonated” with his own experiences while selling haircare, fabric and beauty products. As a brand manager for laundry products in Canada from 1989 to 1991, he had observed that French-Canadians loved lavender-scented fabric conditioner, while the English parts of the country “hated” it. Then he found a similar love of lavender in parts of Europe and Latin America and the Philippines. “You start wondering why these cultures develop certain needs and similarities,” he says.

In east Asia in the 1990s, he saw cultural similarities between the transnational ethnic Chinese community in countries such as Indonesia, the Philippines, Malaysia and Singapore. “Why can’t we market our products to these civilizations? Well, now, with global retailers and with digital technology, we can do that.”

He plans a new commitment to the internet and e-commerce, with the company seeking to expand the small percentage of goods it sells online. “We’ve got to learn about that shopping experience the way we understand the shopping experience in bricks-and-mortar stores.”

Part of his challenge now is to persuade P&G’s country-focused managers to join him in his belief that borders are irrelevant. That would mean “the integration of approach from northern Mexico to the southern US” in America, for example. “You’ve got people going across the border and they need to understand that the brand that they know and love is available on both sides.”

Copyright The Financial Times Limited 2009.

BusinessWeek: Open Innovation's Champs and Also-Rans

Innovation November 30, 2009, 12:17PM EST text size: TT

Open Innovation's Champs and Also-Rans

Collaboration can pay off, as Procter & Gamble shows, but only if companies jump in with both feet

By Stefan Lindegaard

Open innovation is a hot topic at almost every company that is serious about innovation. Why? Because the idea of combining internal and external resources to increase innovation productivity and prowess is just too good a value proposition to miss out on.

Nevertheless, I believe that only about 10% of all companies are adept enough at open innovation to get significant benefits. Another 30% have seen the light and are scrambling to make open innovation work and provide results that are worth the bother. I call them contenders. The other 60% are pretenders—companies that don't really know what open innovation is and why or how it could be relevant for them. Some might figure out how to follow the leaders one day, but today they're mostly going through the motions.

When it comes to open innovation, Procter & Gamble (PG) is the undisputed champ. Its efforts began in 2000 with what a Web site called Connect & Develop. It's a two-way street, accessing externally developed intellectual property in its own markets while sharing its internally developed assets and knowhow with others.

Pictures on Pringles

Connect & Develop is about much more than just technology transfer. It encompasses everything from trademarks to packaging, marketing models to engineering, and business services to design. This approach has already resulted in more than 1,000 active agreements with external partners.

Here's an example of open innovation at work. P&G had an idea to print words or images on Pringle chips. It then went outside the company for technology to make this happen. P&G found a small bakery in Bologna, Italy, run by a professor who had invented an ink-jet technique to print pictures on pastries. Within a year, these customized Pringles were on the market, a launch that was much faster than usual and that cost a fraction of doing it in-house.

What makes P&G a champ in my view is that management no longer views open innovation as something new, unique, and different. It is just the way the company innovates. Not many others have reached this level of confidence.

Intuit (INTU) and General Mills (GIS) seem to be champs in the making. The reason I like Intuit is its Entrepreneur Day, held for the first time in October for 40 selected startups. Although I have not yet heard of specific outcomes on this initiative, it's a great display of setting clear goals, establishing a filter process, and showing strong commitment to creating new partnerships. All are important aspects for open innovation.

Smooth Linkage

At a first glance, the portal for General Mills Worldwide Innovation Network (G-WIN) might be mistaken for the other open innovation portals that are popping up right now, where hosts seek new business-boosting ideas and technologies. But based on an interview with Jeff Bellairs, who directs G-WIN, I picked up on some sharp thinking behind the scenes.

General Mills is making the linkage between outside and inside resources as smooth as possible. One of its tools for this is an "external speed team," a cross-functional group that meets biweekly to discuss projects, share insights, and make sure the external partners are talking with the right people. In addition, General Mills recently launched an innovation entrepreneur program. These individuals have a number of responsibilities, including ensuring that outside ideas make their way into the company's innovation pipeline.

These efforts by General Mills are highly relevant because they position the company to become a preferred partner, which means getting the first peek at new technologies and ideas and, in turn, a competitive edge.

Then there's Campbell Soup (CPB). The company jumped on open innovation through its Ideas for Innovation portal earlier this year. Unfortunately, this is more like a gimmick than a serious attempt to engage customers and business partners. While I'm singling Campbell out, the truth is that many other companies are just as clueless. Here are my specific problems with Campbell:

• Its intentions are too vague and unfocused. Campbell declares that it wants "ideas for new products, packaging, marketing, and production technologies that will help us meet the needs of our consumers and customers better, faster, and more completely." Gee, that could be almost anything, couldn't it?

• The company should be turning us on, not away. Campbell says it will take three to six months to respond to a suggestion, and if it turns down your idea, you won't receive any explanation. Why not try to make it more inviting?

• The whole thing reads like an ego trip. The Campbell Web site talks only about why open innovation is good for Campbell. If the company wants help, it should at least mention how collaboration can benefit its would-be partners.

In an e-mail, a Campbell spokesman told me that the company considered the site to be only an initial step. He added that management was pleased by receiving nearly 5,000 submissions, but acknowledged that the effort was not perfect and Campbell is working on future enhancements of the site.

To become a champ and not a pretender, here are issues that you need to deal with early in the process.

First of all, you need to ask the why question. Many people believe open innovation is the Holy Grail and race out without asking why it's relevant. Open innovation works only if it aligns with the overall corporate strategy. Many companies mess up here. They simply do not have an innovation strategy.

The next step is defining what open innovation is. Innovation, and even more so open innovation, can be defined in many different ways. Companies need to know what they're after, as Procter & Gamble and General Mills have done.

Before moving on to implementation, you must remember your people. A paradigm shift like this requires that employees change their mindset and obtain new skills. The key things here are the ability to view innovation in more holistic terms and to become better networkers.

Open innovation is by no means easy. But as I said at the start, the value proposition is just too good to miss out on.

Stefan Lindegaard is a Copenhagen-based speaker, network facilitator, and adviser on open innovation and intrapreneurship. His book, The Open Innovation Revolution, will be published in May, 2010.

©2009 Bloomberg L.P. All Rights Reserved.

BusinessWeek: Economic Recovery Inspires Innovation and Frustration

Innovation November 16, 2009, 4:54PM EST text size: TT

Economic Recovery Inspires Innovation and Frustration

As innovation revives, companies struggle to make it boost profitable growth. GE, Tata Motors, Marvel, and Virgin Galactic offer diverse models

By Robert Shelton

While they continue to slog through the longest economic downturn in decades, companies are no longer making cost-cutting their primary focus. Innovation is now front and center on the corporate agenda, according to a global survey we recently conducted with 65 senior executives from diverse industries. Executives are adding more breakthrough innovations and business model changes to their portfolio to fuel the growth engine for the recovery.

Yet our survey reveals that companies by and large are having trouble making innovation efforts work. Executives are struggling to find the right combination of business strategy, operational model, and execution to deliver profitable growth.

Why the concern with execution? Currently every aspect of business is fair game for reinvention—revenue and margin models, functional areas, and even the organization itself. The risks are also a lot higher than in the past. With so many moving parts and so much riding on the outcome, it's no wonder executives are anxious that they will miss the target when they execute. As one executive told us: "Management feels very comfortable about our ability to manage costs—we have a good track record. We don't have the same track record for organic growth from innovation." In other words, it's harder to innovate than it used to be.

There's no magic formula for successful execution, of course. But there is evidence of growing interest in business model innovation, whereas in the past the focus was mostly on product and technology innovation. Roughly one-quarter of the companies surveyed are developing bundled products and services to provide solutions. General Electric (GE), for example, created Power by the Hour, bundling jet engines, financing, fuel services, and operations and maintenance contracts. Bundling products and services creates stronger customer loyalty and improves both revenues and margins.

serving future needs: Virgin Galactic

An additional quarter of companies is developing B2B offerings, or back-office services, with the goal of improving customers' business performance. These business model innovations typically improve a customer's return on assets by squeezing more out of what they already have. They are potent ways to refresh customer relationships and gain competitive advantage.

A further 25% of companies are investing in anticipation of entirely new customer needs, such as the space flights planned by Virgin Galactic. Creating the next new thing can be risky, but this type of business model innovation provides rapid growth via entirely new products and services.

It's perhaps as noteworthy that two further areas of business model innovation are receiving scant attention. Only a small number of companies are significantly expanding the boundaries of their offerings. Marvel Entertainment (MVL), for one, moved from comics into feature films with Marvel Studios, which produced the blockbuster Spiderman movies. Expanding into an adjacency to leverage a core competency, as Marvel did, is fraught with risk, which is probably why few companies do more than dabble in this area. It's likely, however, that this area will grow as companies learn to manage new business models and feel comfortable outside of traditional confines.

Paradoxically, the area of business model innovation that is receiving the least attention may turn out to have the greatest impact. Only 10% of companies are expanding the scale of their traditional offerings. Consider, for example, Tata Motors (TTM), which developed the $2,500 Nano for the millions of Indians who previously could not afford a car. In addition, GE recently launched "reverse innovation," an initiative to develop innovations in emerging economies such as India and China and then market them worldwide, instead of introducing them first in developed markets. No other type of business model innovation has such global reach and growth potential. Although few companies are pursuing it at the moment, we think this will change over the next few years as more attention is focused on emerging markets.

How to achieve innovative growth

The recession did more than shrink revenues and margins. It changed the way executives think about innovation. Everywhere you look, innovation is taking on a new face. Large auto companies are departing from their traditional approach and investing heavily in new, clean mobility—from hybrids to electric vehicles. Pharmaceutical giants say their innovation operational model is broken and executives such as Eli Lilly (LLY) CEO John Lechleiter have called for a revitalization of medical innovation. Even utilities are getting into the game. Smart grid initiatives are revolutionizing electrical generation, transmission, and distribution.

With the tried-and-true approaches no longer delivering like they used to, three practices are essential to ensure that innovation remains a major engine of growth:

Make sure your innovation strategy supports your business strategy. As the economy and competitive environment shift, companies know they must make changes in their business strategies. It's important to recognize that the innovation strategy must shift as well. Use the innovation strategy to send clear signals to the organization about the execution approach and the expected business outcomes.

Reconfigure operational models to deal with the increasingly complex nature of innovation. The old models can't handle the new types of innovation, either breakthrough or business model. GE, upon realizing that it was not effectively harnessing innovation for organic growth, added reverse innovation to its arsenal and made the requisite changes in its operational model.

Above all, get the execution right. There will probably never be a single approach that works every time. Each company will have to find one that fits their particular strategy, culture, and operational model. That discovery may be the most important innovation companies can make.

Robert Shelton is a director and a leader of the global innovation practice at PRTM, a management consulting firm based in Waltham, Mass. Shelton, who has more than 30 years of innovation experience, also is a co-author of Making Innovation Work.

©2009 Bloomberg L.P. All Rights Reserved.

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Fortune: The decade of Steve

The decade of Steve

How Apple's imperious, brilliant CEO transformed American business.

By Adam Lashinsky, editor at large

Last Updated: November 5, 2009: 8:13 AM ET

(Fortune magazine) -- How's this for a gripping corporate story line: Youthful founder gets booted from his company in the 1980s, returns in the 1990s, and in the following decade survives two brushes with death, one securities-law scandal, an also-ran product lineup, and his own often unpleasant demeanor to become the dominant personality in four distinct industries, a billionaire many times over, and CEO of the most valuable company in Silicon Valley.

Sound too far-fetched to be true? Perhaps. Yet it happens to be the real-life story of Steve Jobs and his outsize impact on everything he touches.

The past decade in business belongs to Jobs. What makes that simple statement even more remarkable is that barely a year ago it seemed likely that any review of his accomplishments would be valedictory. But by deeds and accounts, Jobs is back.

It's as if his signature "one more thing" line now applies to him as well. After a six-month leave of absence in the early part of this year, during which he received a liver transplant, he is once again commanding a 34,000-strong corporate army that is as powerful, awe-inspiring, creative, secretive, bullying, arrogant -- and yes, profitable -- as at any time since he and his chum Steve Wozniak founded Apple (AAPL, Fortune 500) in 1976.

Superlatives have attached themselves to Jobs since he was a young man. Now that he's 54, merely listing his achievements is sufficient explanation of why he's Fortune's CEO of the Decade (though the superlatives continue). In the past 10 years alone he has radically and lucratively reordered three markets -- music, movies, and mobile telephones -- and his impact on his original industry, computing, has only grown.

Remaking any one business is a career-defining achievement; four is unheard-of. Think about that for a moment. Henry Ford altered the course of the nascent auto industry. PanAm's Juan Trippe invented the global airline. Conrad Hilton internationalized American hospitality.

In all instances, and many more like them, these entrepreneurs turned captains of industry defined a single market that had previously not been dominated by anyone. The industries that Jobs has turned topsy-turvy already existed when he focused on them.

He is the rare businessman with legitimate worldwide celebrity. (His quirks and predilections are such common knowledge that they were knowingly parodied on an episode of "The Simpsons.") He pals around with U2's Bono.

Consumers who have never picked up an annual report or even a business magazine gush about his design taste, his elegant retail stores, and his outside-the-box approach to advertising. ("Think different," indeed.)

It's often noted that he's a showman, a born salesman, a magician who creates a famed reality-distortion field, a tyrannical perfectionist. It's totally accurate, of course, and the descriptions contribute to his legend.

Yet for all his hanging out with copywriters and industrial designers and musicians -- and despite his anticorporate attire -- make no mistake: Jobs is all about business. He may not pay attention to customer research, but he works slavishly to make products customers will buy.

He's a visionary, but he's grounded in reality too, closely monitoring Apple's various operational and market metrics. He isn't motivated by money, says friend Larry Ellison, CEO of Oracle (ORCL, Fortune 500). Rather, Jobs is understandably driven by a visceral ardor for Apple, his first love (to which he returned after being spurned -- proof that you can go home again) and the vehicle through which he can be both an arbiter of cool and a force for changing the world.

The financial results have been nothing short of astounding -- for Apple and for Jobs. The company was worth about $5 billion in 2000, just before Jobs unleashed Apple's groundbreaking "digital lifestyle" strategy, understood at the time by few critics. Today, at about $170 billion, Apple is slightly more valuable than Google (GOOG, Fortune 500).

Its market share in personal computers was plummeting back then, and the cash drain was so severe that bankruptcy was a possibility. Now Apple has $34 billion in cash and marketable securities, surpassing the total market cap of rival Dell (DELL, Fortune 500). Macintoshes make up 9% of the PC market in the U.S. today, but that share is increasingly beside the point.

With 275 retail stores in nine countries, a 73% share of the U.S. MP3 player market, and the undisputed leadership position in innovation when it comes to mobile phones, Apple and its CEO are no one's idea of underdogs anymore.

In 2006 Disney (DIS, Fortune 500) paid $7.5 billion to acquire Pixar, the computer animation film studio Jobs had nurtured and controlled. Jobs, in turn, became a Disney director and the blue-chip company's largest shareholder. His net worth, solely based on his stakes in Apple and Disney, is about $5 billion. Other executives have had stellar decades but none can compare with Steve's.

With Jobs back at the helm of his company, plenty of challenges lie ahead. Will the Goliath role suit him nearly as well as playing David clearly has? How will he respond to the competition he has awakened, particularly in smartphones, even as the personal computer fades in relative importance? Has he fashioned an organization that can succeed him? Can he possibly be as dominant in the decade to come as the one that is ending?

The "decade" of Steve actually began in 1997, when he returned to Apple after having been ousted a dozen years earlier. That was a year of triage, of a humbling investment from Microsoft (MSFT, Fortune 500), of paring Apple's product line to a bare minimum of four computers.

By the following year Steve's regime had kicked into gear. Jobs completed the hiring of a new management team, which included several executives from his previous company, Next. Those top players would form the nucleus of the Jobs brain trust for nearly 10 years.

Then came the first Macintosh after Jobs' return, the iMac, a breakthrough all-in-one computer and monitor that heralded Apple's return to health. The success of the pricey iMac, coupled with drastic cost cutting, allowed Jobs to build a cash cushion. By repairing Apple's balance sheet, he prepared the company for big investments to come, a shrewd business move if ever there was one.

Jobs laid the foundation for Apple's leap from stable to stratospheric when things looked darkest. In 2000, Apple missed its financial targets in a September earnings announcement, sending its stock price plummeting in subsequent months to the equivalent of $7 in today's prices. Yet Jobs by this time had set in motion the key elements of Apple's rejuvenation.

Over the course of 2001, as global markets fell and the world headed into recession, Apple launched the iTunes music software (in January), the Mac OS X operating system (March), the first Apple retail stores (May), and the first iPod (November), a 5GB model that Apple bragged would hold 1,000 songs.

The market didn't catch on quickly to the significance of those events. iTunes was just music-playing software embedded into Macs and lacked an online store that sold music. The new operating system, though impressive, powered a niche product. The iPod was a snazzy MP3 player in an established market.

As the company's stock languished, takeover rumors appeared from time to time. What was never reported was that Jobs seriously contemplated taking the company private with the help of newly formed buyout group Silver Lake Partners. An Apple buyout would have been the deal of the century, but according to people familiar with the talks, Jobs ultimately shut them down.

That was actually the second serious proposal to buy Apple. In 1997, Jobs' friend Ellison, later an Apple board member, lined up financing to take over the company on the assumption that Jobs would run it. In a recent interview Ellison said Jobs didn't like the idea of being "second-guessed" if it looked as if he'd returned simply to make money. "He explained to me that with the moral high ground, he thought he could make decisions more easily and more gracefully," says Ellison.

For those paying attention after Jobs' return, the CEO was telegraphing Apple's trajectory. "I would rather compete with Sony (SNE) than compete in another product category with Microsoft," he told Time in early 2002. "We're the only company that owns the whole widget -- the hardware, the software, and the operating system. We can take full responsibility for the user experience. We can do things that the other guy can't do."

Jobs was convinced that the masses would turn to Apple, but only if he could speak directly to them -- and not just to faithful Macintosh users, a club that included mainly artists and students. The strategy of building company-owned retail stores, so integral to Apple today, was derided at the time as a risky cash drain.

"He did this with a nervous board," says Bill Campbell, a former Apple executive who went on to become chairman of Intuit (INTU) and an Apple board member. "He knew that this is what customers wanted." What's striking looking back is how little there was to sell in the original Apple stores. Jobs knew how he'd fill them.

Jobs made it his business to know everything about Apple. "He's involved in details you wouldn't think a CEO would be involved in," says Ken Segall, a former Chiat/Day creative director who has worked with Apple on and off for years. Jobs commissioned the iconic "Think different" campaign, says Segall, well before any of Apple's new products were introduced -- or even described to the ad team. "He'd say, 'The third word in the fourth paragraph isn't right. You might want to think about that one.' "

The rare pairing of micromanagement with big-picture vision is a Jobs hallmark. Early in his return to Apple, he recognized that gorgeous design was a differentiator for Apple in a computer industry gripped by the successful blandness of Dell, Microsoft, and Intel (INTC, Fortune 500).

"I cannot count the number of clients who have marched in and said, 'Give me the next iPod,' " writes Tim Brown, CEO of product-design consultant Ideo, in his new book "Change by Design." "But it's probably close to the number of designers I've heard respond -- under their breath -- 'Give me the next Steve Jobs.'"

Jobs also has a knack for pouncing at the right moment. The music industry had failed repeatedly to develop its own digital-music sales site before Apple came along with iTunes, which was by then prepared to become a store for buying music.

Jobs cleverly made his pact with the record labels when iTunes worked only on Macs, which in 2002 had a personal-computing market share in the low single digits. Apple's humble position -- before iTunes became compatible with Windows, expanding its potential market share to nearly all PCs -- was a virtue. This made iTunes an experiment rather than a destructive paradigm shift.

"I don't understand how Apple could ruin the record business in one year on Mac," said Doug Morris, the head of Universal Music, according to "Appetite for Self-Destruction," a new book about the record industry's ills by Rolling Stone writer Steve Knopper. "Why shouldn't we try this?" Writes Knopper: "By the time Steve Jobs came around, he was the last resort. He was merely smart enough to know it. He played tough, but not any tougher than any lawyer for a major label who had negotiated an artist contract in recent decades."

A key Jobs business tool is his mastery of the message. He rehearses over and over every line he and others utter in public about Apple, which authorizes only a small number of executives to speak publicly on a given topic.

Key to the Jobs approach is careful consideration of what he and Apple say -- and don't say. Harvard professor David Yoffie estimated that in the months between announcing and selling the first iPhone in 2007, Apple received $400 million in free advertising by not making any public statements, thereby whipping the media into a frenzy.

Jobs himself is careful to avoid overexposure, preferring to speak only when he has products to promote. He didn't disclose his 2004 cancer surgery until after it occurred, and then only in an employee e-mail that was strategically released to news outlets. Similarly, he told the world of his recent leave in another employee missive, with no additional comment from him or anyone else at Apple.

Nobody in Jobs' sphere speaks without the permission of the company's media relations team, which reports directly to Jobs. Apple declined to make Jobs available for an interview for this article. It did bless the participation of some people in Apple's orbit to speak about him, while nixing requests for others.

The secrecy has rankled corporate governance experts, who insist the health of such an indispensable CEO warrants greater disclosure.

Jobs was initially mum as well about a stock options backdating scandal that embroiled the company's former finance chief and general counsel. In an eventual SEC filing, Apple said Jobs was aware that the company had adjusted option grant dates so that the grants were more profitable for employees. Jobs apologized for the backdating, calling the episode "completely out of character for Apple."

Jobs manages the money, the message, the deals, the design, and more. Consider the case fairly made that the long-ago enfant terrible of the computer industry has built up impressive business chops and that his company is peerless. But if nothing else, his recent illness is a reminder that Steve Jobs is mortal. When he's gone, how long will his company thrive without him?

Apple's future.

This past September, when Steve Jobs made his triumphant return to the public eye, he thanked precisely one Apple executive by name: Tim Cook, Apple's chief operating officer.

At an event to introduce a new line of iPods, Jobs first informed a crowd of journalists, analysts, and Apple developers that he now possessed the liver of a "twentysomething liver donor who had died in a car crash." Then he thanked Cook and the rest of the management team for "ably" running Apple in his absence. Cook, in turn, led a standing ovation for Jobs, his arms raised over his head from the front row of a San Francisco auditorium.

With Jobs back at work, the conversation has been postponed as to whether Cook, or anyone else, is prepared to fill Jobs' shoes. "At Apple the hierarchy is determined by who Steve calls," says a former Apple executive. "There's a lot of value in 'Steve said.'"

Larry Ellison, a CEO known to dislike the topic of succession, says of his friend, "He's irreplaceable. He's built a fabulous brand. He's got a wealth of products. Whenever he leaves, I hope he retires in good health and he's sailing off in his yacht in the Mediterranean. But they're going to miss him terribly, because it's a consumer products company. The product cycle is so fast."

There are signs that Jobs has inculcated the troops enough to last awhile without him. "The organization has been thoroughly trained to think like Steve," says someone with contacts among the Apple executive team. "That's why the six months went so smoothly. People could envision, 'This is what Steve would do.'"

Jobs, in fact, inspires far beyond Apple. Larry Page and Sergey Brin recently told The New Yorker that Jobs is their hero. When Jeff Bezos released Amazon.com's smooth, shiny Kindle 2, the Jobs envy was obvious. Venture capitalist Marc Andreessen, who co-founded Netscape, says he often evokes Jobs in his advice to entrepreneurs. He says, "The threshold for the release of the first product should be, 'What would Steve Jobs do?'"

Looking out on the next decade, Jobs may well be asking himself a variation of that very question: After creating more than $150 billion in shareholder wealth, transforming movies, telecom, music, and computing (and profoundly influencing the worlds of retail and design), what should Steve Jobs do next? Given his penchant for secrecy and surprise and his proven brilliance, it's a fair bet that he'll let us know when he's good and ready.

Reporter associate Doris Burke 

A decade of hits (and a few misses) Check out our interactive timeline to see Jobs' early struggles and recent victories, Apple's coolest product launches of the past 10 years, and how investing in Apple stock has paid off.

FT: Big lessons we can learn from Little Chef

Big lessons we can learn from Little Chef

By Stefan Stern

Published: November 2 2009 22:03 | Last updated: November 2 2009 22:03

Hard work and relentless attention to detail: that’s management for you. Talk is cheap. Visions can inspire, for a moment or two. But without graft – and competence – things go wrong. Any business, no matter how successful, will struggle if it forgets this. There are no quick fixes for organisations that have big commercial and cultural problems.

That is the lesson to draw from the story of Little Chef, the 51-year-old British roadside restaurant chain. For generations, these little cafés, with their red and white signage, have formed a familiar part of the UK landscape. “Fat Charlie” is the diminutive chef in question, smiling out at travelling businesspeople, families and lorry drivers from the side of motorways and A roads.

At its peak, in the 1970s and 1980s, Little Chef enjoyed a dominant market position. But you did not seek out a Little Chef for a thrilling culinary experience. You went there for a reliable cooked breakfast, for plaice, chips and peas, for something acceptable to tired and hungry children. It worked.

What happened? Change happened. Customers got more sophisticated in their tastes. Cheaper competitors offering US-style fast food won new fans. And our Little Chef? He fell asleep at the griddle pan, offering an increasingly tired-looking selection of relatively pricey meals.

He also fell prey to financial engineers. Between 1970 and 1996 Little Chef was owned by Forte. But in the wake of one the most spectacular takeover battles of the 1990s, Little Chef became part of the Granada group. Over the next 11 years, the company had four different owners, before going into administration in 2007 with losses of £3m. Its current owner is R Capital, the turnround specialist.

So why bother telling this story? Because Little Chef is currently going through a potentially transformative relaunch, following advice from one of the world’s most distinguished real-live chefs, Heston Blumenthal. It has all been played out in front of a television film crew at a specially chosen Little Chef site. Last week, the second documentary covering the company’s rebirth was shown, and the management lessons in it were striking.

The fact that a Michelin-starred chef has dedicated time to a struggling restaurant chain tells you something about the affection in which Little Chef is held. But nostalgia is part of the problem here. The business’s current boss, Ian Pegler, worked for the company in the early 1990s and, as the cameras revealed, he has struggled to grasp how sad Little Chef’s offering is.

The fish in the fish pie is “cooked to buggery”, according to Mr Blumenthal. Little Chef, he observes, is “hardwired into spending as little as possible on ingredients”. Even after he has shown the kitchen staff (and Mr Pegler) a better way of doing things, standards drop once he is no longer there. Real chips are replaced by the oven-baked variety. Elegant sauces lose out to instant gravy granules – “an interim solution”, according to Mr Pegler. Presumably no pun was intended.

The superchef puts his foot down, and at the end of episode two all is well. The prototype branch of the reinvigorated restaurant chain wins the unexpected accolade of inclusion in the Good Food Guide 2010.

So, they all lived happily ever after, then? Not so fast. No sooner had the film crews gone away than your columnist, and family, rolled up at the now celebrated branch of Little Chef just off the A303 one lunchtime a couple of months ago. And our experience was not quite the joyful one that Mr Blumenthal had.

Service was poor. The waiting staff were distracted and inefficient. The food, which had delighted Mr Blumenthal only a few weeks earlier, was mainly pretty bland. This was not what you expect from a new Good Food Guide entrant.

Signs of that hardwired approach to costs already reasserting itself? Perhaps so. More important, here was more evidence that success in business is down to getting the basics right. Supervision, that unfashionable term, is vital.

Management is hard work. Attention must be paid. Change can only be driven through by well trained and motivated staff, who understand what they are supposed to be doing, and believe in it.

What happens at branches of Little Chef when Mr Blumenthal and his camera crew are not there and the hype from the series dies down? That is the question that matters. Customers will find out.

For more on management or to comment, visit www.ft.com/managementblog

Copyright The Financial Times Limited 2009.

FT: Open your mind to idea of innovation

Open your mind to the idea of innovation

By Stefan Stern

Published: November 16 2009 22:37 | Last updated: November 16 2009 22:37

The three most dangerous words in management? “Not invented here.” Only complacent leaders believe that their way of doing things cannot be improved upon. But that attitude can lead apparently successful businesses astray.

As Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Berkeley, has pointed out, senior management teams can fail to spot important innovations because the new business models they rely on do not easily fit in with the way things are being done now.

Researching the performance of Xerox, the copier and printer company, between the late 1990s and early 2000s, Prof Chesbrough found that, out of 35 projects that had been rejected as part of a review process, 10 had gone on to become highly successful businesses. Indeed, the combined market capitalisation of these 10 new ventures, even after the “new economy” crash of 2001, was twice that of the former parent itself. He calls these unfortunate rejections a “false negative”: the innovations had looked bad, but that was because senior managers were unable to recognise their virtues.

Prof Chesbrough was one of the speakers at last week’s Financial Times innovation conference in London. The good news is that the war on corporate complacency seems to be going quite well. Delegates were keen to hear about examples of successful innovation, and many speakers were able to provide them.

Tough times can be the mother of invention. Consider EMI Music. The EMI story, recently at least, has been an unhappy one. Consumers have been rejecting CDs in favour of digitally downloaded music, most of which they are getting for free.

Elio Leoni-Sceti, EMI’s new-ish chief executive, gave a presentation which suggested that, very late in the day, the company has started to come to terms with the new world.

“You have to leave your baggage behind,” he said. Some EMI artists – Coldplay, for example – have started experimenting by offering free downloads of some tracks with a view to attracting future purchases.

More ingeniously, a new service called Abbey Road Live gives music fans a chance to buy a CD recording of the live gig they have just attended. And to think that, in the old world, we had to wait 13 years before EMI had cleaned up its recordings of The Beatles performing live at the Hollywood Bowl for them to be good enough to go on sale.

Speaking of the Fab Four, EMI has imaginatively recycled their back catalogue, providing the digitally remastered complete works for £180, or $260 in the US. A USB memory stick version is now also available.

The company has joined forces with Viacom to offer a new video game called The Beatles: Rock Band, which allows for rare (and pirate-resistant) digital downloads of Beatles songs – at 99p each.

Not all innovations are so glamorous or high-tech. The conference also heard from Brian Dunn, chief executive of Best Buy, the electrical goods retailer. He told a story of how his company had in the past 20 years brought in new ways of doing things again and again, innovations which were usually “born of desperation”, he said.

Whether it was abolishing commissions for sales staff, or embracing the internet as a medium for selling, or revamping the company’s approach to customers, or expanding abroad: each time, Best Buy’s leadership agonised over the decision.

Each time, there were smart people at the top who resisted change, he said. Necessary innovations are hard to introduce when, as in Best Buy’s case, the business seems to be doing fine.

One slightly odd phrase, or a variation of it, cropped up again and again during the conference: “Be where the customer is.” I took this to mean that innovation should not be a question of shoving more, slightly better products out into the market. Rather, as Matt Kingdon of What If?, the consultancy, put it, businesses should ask themselves: “What is the job that customers need doing for them?”

Companies still struggle with this. New survey data from the consultancy Accenture reveal deep dissatisfaction among corporate leaders with their efforts to innovate. For some of them, the greatest innovation of all might be waking up to what they have to do to allow innovation to flourish. Try new things, see what works, pursue the ones that do, and then try again.

For more on management or to comment, visit www.ft.com/managementblog

Copyright The Financial Times Limited 2009.

FT: Drucker's ideas stand the test of time

Drucker’s ideas stand the test of time

By Stefan Stern

Published: November 23 2009 22:06 | Last updated: November 23 2009 22:06

In 1974, the New York Times reported that sales of Peter Drucker’s latest book, Management: Tasks, Responsibilities, Practices, had overtaken those of Alex Comfort’s illustrated primer The Joy of Sex. For one brief moment, management was the hottest topic of all.

Only Drucker could have achieved this. “No other person has had the impact on the practice of management that he did,” according to one of today’s leading authorities, CK Prahalad. This November marks the centenary of Drucker’s birth – he died in 2005 just short of his 96th birthday – and the anniversary has been celebrated in a series of events round the world.

EDITOR’S CHOICE

Columns from Stefan Stern - Nov-23

Last week in Vienna, the city where Drucker was born and spent the first 18 years of his life, an international conference debated his significance and continued relevance. But the idea was to look forwards and not back, as Richard Straub, the conference organiser, explained. “We are not opening a museum here,” he said. “We have plenty in this city already.”

Debate centred on the views and legacy of the father of modern management. What would he be advising us to do now? And what would be his response to the great financial and economic crisis?

Unsurprisingly, perhaps, Drucker’s disciples chose to give business school orthodoxy (particularly the “Anglo-Saxon” kind) a clobbering. Armed with MBAs, personal profit maximisers had selfishly pursued their own interests, ignoring their moral responsibility to concentrate on the sustainable success of the organisation (and society) as a whole. As Ira Jackson, dean of Peter F Drucker and Masatoshi Ito Graduate School of Management in California, put it: “If we were producing doctors, they would have some difficulty getting insurance cover against future malpractice.”

Drucker’s critique of greed and irresponsibility pre-dated today’s crisis. He admired what managers and organisations could achieve when they put their minds to it. But having witnessed managerial incompetence as well as political extremism at first hand in Europe in the 1920s and 1930s, he understood what the worst consequences of bad practice could be.

Joseph Maciariello, a colleague of Drucker’s, told the conference that he believed organisations needed to be structured “to counteract, minimise or redirect the darker forces of human nature”. Harvard Business Review has this month reprinted Alan Kantrow’s 1979 article on Drucker, in which he argued that “[he] is so deeply concerned about the profession of management because he is profoundly afraid of what might happen if the major institutions of western society fail in their essential responsibilities”.

In this spirit, Professor Prahalad argued that the true Druckerian task for the 21st century would be “to reinvent the social compact of business”. While that sentiment seemed, to a few delegates, to be straying too far from Drucker’s Schumpeter-inspired emphasis on entrepreneurialism, innovation and even “creative destruction”, the majority felt the profession of management would benefit from rededicating itself to an explicitly moral approach.

If one word was mentioned more than any other at the conference, it was “purpose”

In fact, Drucker’s greatest virtues were his plain-spoken insights and practicality. If one word was mentioned more than any other at the conference, it was “purpose”. Drucker’s “five most important questions you will ever ask” should help any manager ensure that he or she leads a purpose-driven enterprise. Those questions are: What is our business (or mission)? Who is our customer? What does the customer value? What are our results? What is our plan?

Although hailed as a visionary by some – he first started talking about “knowledge workers” some 20 years before anyone else – Drucker rejected that label, and the “guru” one as well. “I never predict,” he once said. “I simply look out the window and see what is visible but not yet seen.”

Drucker might also have been a little impatient with the reverence with which he is now discussed. “I do not intend to be an icon,” he declared.

Too late. There are Drucker Societies all over the world, and he continues to be the one management writer almost everyone agrees is worth reading. Prof Prahalad summed him up in admirably Druckerian terms: “He tells us how to do stuff, not just how to think.” I expect he will still be remembered 100 years from now.

For more on management or to comment, visit www.ft.com/managementblog

Copyright The Financial Times Limited 2009.

FT: A question all leaders should ask themselves

A question all leaders should ask themselves

By Stefan Stern

Published: December 1 2009 00:07 | Last updated: December 1 2009 00:07

Four hundred feet above the ground, rock-climbing in the Eldorado Canyon near Boulder, Colorado, the teenage Jim Collins was seconds away from death. The knot in his rope had come loose, he was slipping out of his harness and his hands were tiring.

“I was very lucky because there was an old piton [metal peg] in the crack right in front of me ... I could clip a sling in the piton, grab the rope and tie it ... Had I been 10ft above it or 10ft below it at the same moment it would have been a different story ... I would have died. And I remember that. It’s just so seared in my brain.”

EDITOR’S CHOICE

Columns from Stefan Stern - Nov-23

He’s not kidding. That much was clear sitting across the table from Collins – one of the most intense people I have ever met – in London a couple of weeks ago. Think of it: the co-author of Built to Last and author of Good to Great and How the Mighty Fall was very nearly lost to us before he had got started.

Collins is one of the world’s most important management thinkers. Those titles have become part of the management lexicon. He was in the UK last month for a combined work and holiday, so there was time for a long chat about management and leadership. It was a fascinating and challenging conversation.

‘To be in a position of power, you are signing up for sacrifice’

Collins’s passion for rock-climbing explains his lean, muscular frame. The only sign that he has reached middle-age (he is 51) is his grey-white hair. When he speaks, he fixes you with a penetrating stare.

“If you think being in a position of power and responsibility is something that you want to go to because it will be good for your life, you don’t understand the job,” he told me. “You are signing up for sacrifice.”

Collins is at least as hard on himself as he is on those business leaders who fail to recognise what their job entails. Consider the way he writes. A Collins production takes years. First, there is the lengthy analysis of data (he has a large team to help with that), and then there is the honing and polishing of the text. He sends his “bad first draft” to about 60 readers.

“I don’t want them to tell me they like it,” he explained. “That’s not of any use. What I want them to do is to really identify its weaknesses so that they can be addressed long before the world sees it.”

In Good to Great, Collins urged leaders to “confront the brutal facts” about their businesses. In his own work, he seeks out brutal criticism. “I really thrive on criticism because it’s always a chance to get better,” he said. “If you’re not suffering, you’re not making yourself better.” And then, to confirm the point, he offered a parallel from rock-climbing: “I’d much rather have a really severe coach and then go on the big climb than avoid the severe coach and go on the big climb unprepared.”

Collins’s work contains several key lessons. In Built to Last (with Jerry Porras) he argued that successful companies have core ideologies by which they operate. In the more recent How the Mighty Fall, Collins set out the “arc of tragedy” that apparently sound businesses follow to their eventual demise.

But perhaps most important, and most controversial, Collins argued in Good to Great that so-called “level-five leaders” – self-effacing, driven, relentless – are far more likely to prove effective than dazzling, celebrity leaders.

He reiterated that point when we met. One question can reveal what sort of leader somebody is: “What are you in it for?” (As he uttered this question, his eyes narrowed and his gaze seemed to grow even more intense than before.)

Most leaders are ambitious, but with a level-five leader, “that ambition is channelled into something bigger than you, or beyond you, or it’s ultimately not about you”. It is about making the organisation great, and sustainably so. “That’s the essence of level five ... What are you in it for, and do you have the capacity to suffer for it?” he said.

Charisma alone is not enough to turn somebody into a leader. In fact, it may do more harm than good. “If I’m enormously charismatic, I can convince you to do a lot of things because of the force of my personality,” Collins told me. “But force of personality is not an argument ... It’s not facts, it’s not evidence, it’s not data ... Charisma is irrelevant. It’s not good or bad, it’s irrelevant.”

So, time to take the Collins test. Put the paper down, find a mirror, look into it, and then ask yourself: what are you in it for?

For more on management or to comment, visit www.ft.com/managementblog

Copyright The Financial Times Limited 2009.

FT: Britian's first female diplomats

For 26 years – from their entry into the Foreign Office until the marriage bar was lifted – the UK’s women diplomats had to choose between a husband and public service.

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Britain’s first female diplomats

By Alex Barker

Published: November 6 2009 14:25 | Last updated: November 6 2009 14:25

Lady Cicely Mayhew, first woman to join the British diplomatic service, this year

Cicely Mayhew, the first woman to join the British diplomatic service, lives in a handsome cottage near Blenheim Palace, on a street that once served as a set for “Miss Marple”. Now well into her eighties, her memory is not what it was. But she still recites long passages of Shakespeare, chants marching songs from Tito’s Yugoslavia and enjoys a pot of vanilla ice-cream most days to make up for wartime rationing.

She is remarkably matter-of-fact about having blazed a trail for women by becoming the King’s first female emissary in 1947. “My attitude was, about time too!” she says. Mayhew had already come up against the barriers that ambitious working women faced – during her wartime service at Bletchley Park, where the codes that protected German communications were cracked, she received lower pay and ranked beneath men who could not boast a first from Oxford. By comparison with that, the diplomatic service was a step forward, albeit a touch patronising. “Our new lamb, that’s what they called me,” Mayhew recalls. “They were all very kind, very courteous.”

The Foreign Office had fought for decades to keep Mayhew’s kind out, often going to great lengths to prove women unworthy. In response to one 1930s committee investigation, it called on every head of mission to consider the question of women in the service, the results of which FCO historians recently reprinted in a striking paper. Even by the standards of their era, the views are extraordinary.

One ambassador said it was “unthinkable” for a diplomat to “produce babies”. Our man in Berne feared that “the clever woman would not be liked and the attractive woman would not be taken seriously”. Then there was this from Bucharest: “The hard-bitten Englishwoman nurtured in the London School of Economics, with a Marx and Engels outlook; the product of Girton or Somerville, interested chiefly in ancient Greek theatre, but wielding from time to time a forceful hockey stick; the shires girl who breakfasts off an ether cocktail and who will abandon the Chancery entirely for the polo field – none of these would be suitable representatives.”

When women, led by Mayhew, finally breached the Foreign Office ramparts, little was changed to accommodate them. Old habits endured. New applicants were still taken to a grand country house, plied with stiff Martinis and tested after dinner, without warning, on administering a fictitious island. There was no special guidance for female entrants and, in age-old Foreign Office tradition, no training either. “You were just flung into a department head-first and told to get on with it,” said Rosamund Huebener, who joined the year after Mayhew. “I had no idea what I was doing and nobody knew what to do with me. It was tremendous fun.”

Some continents, however, remained out of bounds: the Middle East and, more surprisingly, South America. “They thought any young woman would suffer what was euphemistically called a fate worse than death at the hands of some Latin lover,” says Dame Margaret Anstee, who went on to a glittering career with the UN in Bolivia among other places.

Lady Cicely Mayhew in Yugoslavia in 1948

For her first posting, in the late 1940s, Mayhew asked to “have a look behind the Iron Curtain” and embarked on an adventure to Belgrade with her shaggy dog, Hamlet, at her side. Her next assignment was Geneva. It didn’t last long. A dashing foreign office minister – dubbed “the Socialists’ most eligible bachelor” – arrived on an official visit in 1949. At dinner Mayhew commended a speech the minister had delivered earlier that day. “Then he said something about how he had another speech to make – and proposed,” Mayhew recalls. “I was so surprised I said yes.”

And that was the end of Cicely Mayhew’s career as a diplomat. More than anything else, her future had depended on one thing: staying single. Along with all female diplomats, Mayhew’s letter of service stated that she would be “required to resign on marriage”. Other Whitehall departments had dropped the so-called “marriage bar” after the war. The one exception was the diplomatic service.

Very little official explanation was offered, save that diplomats could be sent anywhere in the world at short notice, a condition deemed incompatible with married life. (What on earth would their husband do?) Diplomatic Service Regulation No 5 was just “the order of things”. Those women who left to marry were stripped of their pensions and given a dowry, amounting to a month’s salary for every year they had served. The marriage bar remained in place, rigorously enforced, until 1973.

For 26 years, from the moment women were admitted to the diplomatic service to the point the marriage bar was lifted, Britain’s pioneering female diplomats faced the starkest choice possible between their careers and their private lives, between public service and a husband. There was no middle way.

. . .

The Foreign Office’s decision to do away with the marriage bar was inevitable. Debate was already under way in Britain about the need to guarantee basic equality in the workplace and elsewhere, and in 1975, Harold Wilson’s Labour government passed the Sex Discrimination Act. If the Foreign Office had not removed the bar voluntarily, it would not have been long before it was forced to do so. The mandarins knew they would eventually have to bend with the times.

But – bizarre anachronism though it now appears – the existence of the marriage bar for female diplomats as recently as 36 years ago underlines both how much has changed in the relationship between people and their jobs, and how little. Society still agonises over trade-offs made by working mothers and the halting progress women are making towards equal representation, particularly in senior executive and professional positions. The solution has been to seek – and to legislate for – the “work-life balance”, a state of being we are all enjoined to achieve.

The pioneering female diplomats who served in the Foreign Office between 1947 and 1973 had that balance struck for them. Their superiors concluded that no accommodation between career and family was possible – at least not one involving a husband or children. It was a bar that at some point applied to professions ranging from teaching to the law (see panel below). The tide of equality legislation swept it away, implying to the generations who followed that no job is inherently incompatible with a family life.

But, as any female diplomat will attest, some jobs lend themselves less well to family responsibilities. The barriers may have gone, but the personal trade-offs remain. Moving across continents every three or four years takes a toll on any family or relationship. Women remain significantly underrepresented. To this day the Foreign Office struggles to design a system that is flexible, meets equality legislation, is fair to both sexes, is kind to families and effective. It may be a puzzle with no solution.

. . .

Faced with the stark choice between professional ambition and desire for domesticity, most of Cicely Mayhew’s contemporaries also chose a husband over a career. Mayhew, in common with others, admits it was not a straightforward decision to leave the job she loved. “It is silly to pretend I didn’t have doubts, then or later,” she said. “Did I do the right thing? Should I have stayed? Now of course I have my family, two boys, two girls. How could I possibly wish them away?”

Departures such as hers touched off something of a brouhaha among the male superiors left behind. “The Foreign Office is perturbed,” declared one newspaper article (which described Mayhew as a “glamour girl”). “Its women diplomats are so attractive that it is losing them too fast. All their training and experience is being lost.” In the face of this exodus, foreign secretary Ernest Bevin apparently snapped: “We’ve turned the Foreign Office into a matrimonial bureau!”

Dame Anne Warburton, our first female ambassador

Of course, it was not the marriage bar that was blamed so much as the fact that women had been allowed into the service at all. Grace Gardner, who joined in 1947, came up against similar bunkum. When she announced she was leaving, a “rather crusty” senior colleague blurted out: “The trouble with you women is that you will go and get married.”

“You’ve had 11 of the best years of my life,” Gardner replied. “What are you grumbling about?”

Yet it is wrong to assume that the pioneering female diplomats saw the marriage bar as unjust at the time. The gravity of the choice it forced upon them certainly added an extra edge to marriage proposals (one Foreign Office veteran admitted that it took her six years to decide). But many took the marriage bar for granted or never thought of mixing a family and a career, regardless of the rules. There was no push to remove it.

Some of those who persevered came to rationalise the direction their careers had taken as the result of never having met the right person. One put it this way: “If you are very much in love, it is pretty clear what you do.” Some pioneers are candid about the emotional price of a career in diplomacy, of options narrowed, of paths chosen “in spite of yourself”. But none admits to having forgone pure love for a job.

“It didn’t bother me very much. If I wanted to marry, I would have been ready to leave the service,” Anne Warburton told me as we sat drinking coffee, looking out at her Suffolk garden. “There were times when I enjoyed that side of life, but not to the point of wanting to leave the service. I was enjoying life as I was.”

Warburton became Britain’s first female ambassador, presenting her credentials to the Danish court in 1976. Others followed, but there were no more than a dozen senior women through the 1970s and 1980s, and until 1987, when Veronica Sutherland took up her post in the Ivory Coast, every British female ambassador was unmarried and childless.

Warburton is still regarded inside the diplomatic service with some awe. But she is unassuming and modest to a fault. If there were barriers in her way because of her sex, she bears no grudges. She recalls the odd case of discrimination. (Our ambassador in Helsinki once turned down a woman for a posting, claiming “policy is so often made in the sauna”.) But Warburton was never seriously put out. “If you arrive as the herald of other people, maybe you feel that that’s good, that’s progress and you don’t start complaining.”

Some pioneers acknowledge that later generations may find it odd that they did not protest more. “If the Service has changed its attitudes, so too have the women who belong to it,” explained Juliet Campbell, the former ambassador to Luxembourg and probably the first to lead a majority-female mission overseas. “In retrospect, I am struck by how those of us among my contemporaries who thought of ourselves as feminists felt we had to prove ourselves, without concessions. To have suggested that any special allowance be made was a tacit admission of inferiority.”

Juliet Campbell, former ambassador to Luxembourg

Campbell married in her mid-forties, long after the marriage bar had gone. Had she come close to leaving? “I did have moments. But, to be honest, I used to ask myself why I didn’t get married, and I think maybe belonging to the Foreign Office was part of it,” she said. “You had this life, you moved on every two or three years or whatever, and you didn’t form quite the same forms of relationship.”

It is a common gripe. Diplomacy is a peripatetic business that leaves little time for blossoming romances or ageing parents. Every diplomat’s contract includes a mobility clause, meaning they can be sent anywhere at any time. “There was an assumption that you couldn’t expect to spend all your time in green pastures,” said Campbell. “I remember being told that it was time to go and get my knees brown. You couldn’t expect because you had children or, as I later discovered, elderly parents, to think that this was a reason you could stay in easy touch, because you would be told, rather briskly, ‘we all do at this stage of life’.”

A stint as a single woman in Bangkok was particularly hard. “Society moved in certain sorts of groups and circles and as a relatively senior woman you were neither fish nor fowl, nor good red herring,” she said. “There were the wives, there were what were then known as dolly-birds, the pretty secretaries, and there were lots of gorgeous Thai girls all over the place. I somehow felt I didn’t belong. That’s probably the biggest price, at times: you can gather I’ve had a pretty good life and I’m not fussing, but I would say I had periods of being acutely lonely.”

. . .

There was no party to say goodbye to Baroness Pauline Neville-Jones when she left the Foreign Office. It was Christmas 1995 and she was a 32-year veteran, the most senior woman diplomat of her time and arguably the most influential the service has ever had. But there was no card, no carriage clock, no leaving do. “You must be joking,” she told me as we sat in her small Chelsea house. “I just left. It was not very nice. Everybody had a sense it was a failure, which it was, in a way.”

Baroness Pauline Neville-Jones, whose glittering Foreign Office career ended in regret

Too much time has passed to unpick properly the rights and wrongs of why she resigned. One fact stands out: she is the only political director in living memory not to move on to a top ambassadorial post. She wanted Paris, the plum appointment, and asked not to return to Bonn, where she had just served. In the event, a man six years her junior was given Paris, while she was only offered a ticket to Germany. She walked.

Neville-Jones admits playing her hand badly. But she is still smarting at the sniping that followed her exit. Anonymous diplomats were quoted saying her mind was not up to scratch, that she was “strong-willed and abrasive”, not “sufficiently emollient for the niceties of diplomatic life”, a touch heartless. “It’s unpleasant, isn’t it?” she said, jumping forward in her chair. “That is not something that you would ever hear about a man.”

Who did she confide in during this difficult period? “Well that’s one of the hard things about not being married, because you’ve nobody else to talk to. I talk a bit with my brother, my brother’s very supportive,” she said. “My mother couldn’t begin to understand what was happening. Though, interestingly enough, she said to me afterwards, ‘I sensed you were unhappy in that job.’ So it must have shown.”

She pressed on in business, and recently joined the Conservatives as David Cameron’s national security adviser. But almost 15 years on, her premature departure still splits opinion. The controversy survives, in part, because the women’s diplomatic revolution is unfinished. Not long after Neville-Jones, another senior woman fell at the Paris hurdle. And a woman has yet to hold one of the seven top Foreign Office jobs.

I wondered if Neville-Jones sacrificed anything to the marriage bar. “Well, I’m not married,” she said, after a moment’s pause. Over the years she rejected a few suitors, but only came close to accepting one proposal, and even then never really “agonised about it”. She admits the marriage bar played a part. “Do I regret it?” she went on, anticipating my question. “It would be nice to be married. But do I look back and say, this is a fearful regret? No, I don’t. The one thing I do think about my life is – for God’s sake – don’t complain. You choose to do something, you take what goes with the territory.”

. . .

Yet there is little doubt that, from a woman’s perspective, what goes with the territory is changing. The marriage bar is long gone. Our man in Havana is now our woman. The number of women in senior management remains woefully low – 21 per cent of the total and just four out of the top 29 jobs – but compared even with a decade ago, when the proportion was 6 per cent, it is a small triumph.

The new watchword is flexibility. Sir Peter Ricketts, the well-regarded head of the Foreign Office, has introduced schemes to help balance family and career. A “mobility clause” still appears in every contract, but it is far less strictly enforced. Job shares are more common: a husband and wife team now head the mission to Zambia. So is remote working. So the schemes are in place – the real battle is to change the culture. A Foreign Office survey found that more than 40 per cent of staff still feel issues of work-life balance and flexible working cannot be openly discussed.

Anne Pringle, ‘rock chick’ and Britain’s first female ambassador to Moscow

One symbol of the new female-friendly service is Anne Pringle, the first female ambassador to Moscow since diplomatic links were established 450 years ago. A self-described “rock chick”, she joined the service four years after the marriage bar was lifted and benefited from the new regime. Early on, she still sensed that “people didn’t hear the message till a bloke had said it”. But once she started being noticed, she was supported.

As a man who has just married a diplomat, I’m understandably concerned about the peripatetic lifestyle. Moving countries every four years – kids and careers in tow – sounds like the opposite of settling down. Pringle spoke to me with some trepidation – knowing my wedding was just a few weeks away. “I hope I don’t put you off,” she said.

She didn’t. But her lifestyle would not suit everyone. Since they married 20 years ago, her Moscow posting is the first time she has worked in the same country as her husband. “I don’t think anyone would pretend it’s easy. I’d say my husband and I are past masters at shuttle diplomacy,” she told me. For a while it was Paris and Brussels, then Singapore and London. “It is quite a long haul. But it’s worked for us. We have barely missed a beat and certainly barely ever missed a weekend,” she said.

At this point, she must have noticed the wobble in my voice. “Most people find it slightly bizarre that we are still very, very together. But you have just got to find what works for you. The joy of nowadays is that you are not in a straitjacket. Spouses 30 years ago were in quite a straitjacket in terms of not having many choices for what to do. Now things are a bit more flexible and that helps both sides.” I do hope she is right.

Alex Barker is an FT political correspondent

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A brief history of the marriage bar

Airline stewardesses
c. 1930-1968

Boeing Air Transport’s hire of eight young nurses as flight attendants in 1930 set the precedent for employing only attractive, unattached women, writes Sonia Van Gilder Cooke. In the 1960s, stewardesses challenged the industry’s tacit marriage bar and in 1968, airlines dropped the policy along with forced retirement at the age of 32.

Postal workers
1875-1946

In the early 1870s, the Post Office opened the doors of its Returned Letter Office and Savings Bank to women workers. In 1875, however, the Office introduced a marriage bar that stayed in place for seven decades, until 1946.

Bank workers: Barclays
c.1915-1961

Women first joined Barclays during the first world war, yet had to wait until 1961 to retain their positions after marriage. The Bank of England and Lloyds Bank had abolished their marriage bars by 1952, but Barclays continued the policy, with its chairman suggesting as late as 1964 that “family commitments” rather than career should be the priority of young female employees.

Broadcasters: BBC
1932-1944

Despite the eminence of many married female employees in its early years, the BBC adopted a marriage bar in 1932. The bar was jettisoned in 1944, the same year the BBC reporter Audrey Russell became the nation’s first accredited female war correspondent. Gender discrimination persisted, however: women could not become general trainees or newsreaders until 1960.

Teachers
1923-1935

In 1923, London County Council banned the hiring of married women teachers; it was followed by educational authorities nationwide. The National Union of Women Teachers argued that marriage brought “human understanding” to the classroom and won the right to continue working after marriage in 1935.

Copyright The Financial Times Limited 2009.

Forbes: The Snack King of China - Want Want

On The Cover/Top Stories
Extending His Reach
Russell Flannery, 10.19.09, 12:00 AM ET

At age 19 Tsai Eng-Meng took over his father's food business and promptly came up with an idea for a new product: crackers made from rice flour. It was unconventional--back in 1977 most crackers in Taiwan were made from wheat flour and took far less time to make. Then, when he traveled to Japan in search of technology from the Iwatsuka Confectionery Co., the 65-year-old boss told Tsai that he was too young to work with.

Tsai kept trying for two and a half years and finally landed a deal. Soon the family's Want Want rice crackers became a hit as gift packs for Chinese New Year and other holidays. They also became popular offerings at temples as Taiwanese asked for favors from deceased ancestors and powerful spirits. "Want Want relied a lot on people's prayers to ghosts and spirits at temples," he says. "When you go, you have to bring a gift. The spirits know what you want and what you leave behind."

Today the onetime teenage entrepreneur has turned the rice cracker maker into a snack empire. He moved into China in 1992, and, switching the focus to children (and their parents), Want Want China is now unrivaled in the country's rice cracker market, with a two-thirds share. It also has scored with flavored milk, where it controls 40% of the market, and has won 30% of the soft-candy business; it is also China's biggest maker of flavored frozen treats on sticks. Sales last year rose 42%, to $1.6 billion, and net profit, buoyed by its grip on high-margin rice crackers, climbed 30% to $263 million.

That performance helped propel Want Want onto our Fabulous 50 list of the best large listed companies in the region this year. Tsai, now 52, owns 47% of the company and ranked No. 246 on the Forbes Asia list of the world's billionaires in March with a fortune of $2.6 billion. On the list of Taiwan's richest people in July he placed No. 3, and his wealth had risen to $3.6 billion. His businesses, which include hotels, financial services firms, real estate and media companies that aren't part of Hong Kong-listed Want Want China (see box, p. 24), employ 45,000 people.

The road ahead for Tsai may get a lot tougher. Want Want, which is pronounced "Wang Wang" and means prosperity and fortune, is moving deeper into the beverage industry. Here it might face much bigger rivals such as Coca-Cola and PepsiCo from the U.S. and Tingyi, another Fab 50 member, from Taiwan. Tingyi is big in ready-to-drink tea and mineral water. (At the same time Want Want is planning to expand in instant noodles, Tingyi's mainstay.)

Yet Tsai is confident. He entered the fray with sweet milk for children in the 1990s, and today he sells it in unconventionally small kid-size packages; he charges twice as much per ounce as domestic rival Mengniu's white unsweetened version. And he says the company is "just getting started" in beverages. In his sights: fruit juice. This is a segment that's already crowded, plus dominating the $750 million rice cracker market is a lot different from barging into the $7.85 billion juice market. But juice sales are growing fast--8.6% this year--and because he already sells to China's booming hypermarkets and convenience-store chains, he should get good economies of scale from adding juice to the mix.

Tsai thinks his trump card in juice will again be customer convenience and packaging. This year Want Want started selling juice in soft, aluminum-based containers that feel like small bags and are popular in the U.S. "We're the first in China," he says proudly in an interview at the company's headquarters in Shanghai; Want Want relocated from Taiwan in 2001. Targeted at young women on the go, the new drinks fit into backpacks and pockets more easily than bottles. And the small nozzle means "you don't have to open your mouth as wide as with bottles," a point popular with women, he says, seated at a table lined with the company's snacks and drinks.

The way Tsai sees it, Want Want isn't going to be facing many new rivals in China. It's not easy for foreigners to gain entry--Coca-Cola's bid to add to its share of China's beverage market by buying juicemaker China Huiyuan was turned down by the Chinese government this year. Last month, after a long dispute, France's Groupe Danone pulled out of a joint venture that made the popular Wahaha soft drinks.

Yet the players already in the market are potent, and Tsai says he has to run hard as per capita income grows and the world's most populous country eats more. "If I can't increase sales to $10 billion within ten years, I may be squeezed out," he says. "Larger companies will look at each other and worry that they need to be bigger themselves."

The growth will come from drinks, and the key to success, he says, is to focus on profitable goods. "If your gross profit margin [for a new product] isn't 40%, you shouldn't to it," he says. "If it's that much, then you have the money to do enough advertising."

Tsai hasn't avoided failure. Mr. Bond coffee, launched in 2003, has been a dud. The company expected coffee to do well after the Beijing Olympics last year, but it didn't take off.

Underscoring the stakes if his margins don't hold up, Want Want's shares took a 10% dive in August after the company posted a rare loss in the first half. It blamed the early arrival of Chinese New Year this year, meaning that many orders for gift packages were on last year's books; a one-time gain in 2008 made the year-on-year comparison look even worse. With his stock still trading at 30 times last year's earnings, clearly few investors are willing to bet against Tsai.

Want Want traces its roots to 1962, when the company was founded in the northern Taiwan city of Ilan as I Lan Foods Industrial. Tsai's father, Tsai A-Shi, was a partner and semiretired when the owners decided to auction the company in 1977. The elder Tsai made the only bid and assigned his son, who had started working there as an assistant to the president a year earlier, to lead the business. Today the younger Tsai's own son, Tsai Shao-Chung, sits on the board.

Tsai succeeded with his cracker idea in part because Taiwan has ample, low-cost supplies of a key ingredient--rice. But the pivotal development for the company was Tsai winning over as a mentor the Japanese businessman who had initially spurned him. A statue of Iwatsuka's then leader Maki Keisaku graces the first floor of Want Want's 16-story headquarters. An Iwatsuka representative still sits on Want Want's board. The maiden flight in 2006 of Want Want's corporate jet, a Gulfstream ten-seater, was a sentimental journey back to Iwatsuka's head office. (Today Want Want is far bigger--its market capitalization of $7 billion dwarfs Iwatsuka's $125 million.)

Other symbolic gestures to the past abound at Want Want. Just outside of Tsai's office is an enormous painting of his childhood dog, Happy. While he was raising Happy as a teen, the dog was hurt in an accident. It bounced back, though, and today under the name "Yappy," his image is part of Tsai's collection of brands and mascots aimed at young consumers, promoting the rice crackers as well as products such as Aiyou yogurt drink, QQ Gummy sweets and O-Bubble fruit milk.

The common denominator across all of Tsai's products is Hot-Kid, the smiling cartoon boy in a tank top that serves as the company mascot. Overlooking the entrance of Want Want's headquarters hangs a pure gold 34.4-kilogram Hot-Kid logo.

Want Want's move into China changed everything for the company. It says that in 1989 it became the first Taiwan company to apply for a trademark on the mainland as decades of tension between the two sides began to lift. Citing a Chinese expression, he says of the move to the mainland: "The timing was right, the location was advantageous, and people were in harmony."

While most Taiwanese opening factories on the mainland looked to Guangdong and Fujian provinces because of easy access to ports or a similar dialect, contrarian Tsai in 1992 picked a spot in inland Hunan Province. The local government offered cheap land, but the town's name was an attraction, too: "Wangcheng," which sounds like "Want City." At first it was a disaster. "We didn't know what we were doing," says Tsai. The company had a hard time getting paid, even though consumers gobbled up its rice crackers as the flavor popular in Taiwan caught on quickly in China and there was little competition.

Want Want solved its collection problems, in part, with people such as Xiao Hujie. Xiao started with one truck in 1995 and went into business with his wife and one employee. Now he has ten trucks, including two that Want Want gave him, and a staff of 63. Tsai, says Xiao, is personable but doesn't waste much time on small talk. "He likes to ask about what's selling and what's not," he says. The original Hunan factory is still cranking out rice crackers, loading shipments into 70 trucks a day. Plaques lauding the company as one of the city's biggest taxpayers line the doorway. Changsha, the provincial capital, has a Want Want hospital. Now Want Want has 106 other factories around China and 10,000 distributors like Xiao.

Tsai says he ended up targeting kids in China partly because Want Want couldn't play up the religious element of its sales to templegoers that it used in Taiwan--the Communist government didn't allow it. It's turned out just as well, given China's huge population. "Where there are lips, there is a market" for his products, he says. And a big advantage was the similar taste in food across the Taiwan Strait. Aside from Want Want and Tingyi, Uni-President Enterprises also has been a big Taiwan winner in the mainland's food-and-beverage industry.

Over the years Tsai has tried his luck at different financial markets. He listed in Singapore in 1996 under the Want Want China name, making I Lan Foods a subsidiary. But the listing included his hotels, an approach that didn't interest investors, and the valuation never got very high. He restructured and listed in Hong Kong last year, and his shares have gained two-thirds since. The company also this year listed Want Want back in Taiwan. China is going to be a good bet for companies such as Want Want for years to come, he says, and that means his company should be a good bet for investors. "Compared to people from other countries, Chinese love to eat," he chuckled. "I have a lot of confidence."

MARKET SQUEEZE

Want Want is breaking into China's $7.85 billion fruit-and-vegetable juice manufacturing business, which is highly fragmented. Market shares of the top players for 2008:

China Huiyuan Food	6.0%
Yantai North Andre	5.5
Shanghai Jilong	4.5
China Haisheng	4.0
Shandong Tianfu	3.1E
Thai Beverage/Thailand	2.5

Sources: IBISWorld; All China Marketing Research.

===

On The Cover/Top Stories
Nibbling on the Media
Russell Flannery, 10.19.09

It's not unusual for powerful businesspeople looking to ensure a public outlet for their views to invest in the media. In Taiwan legendary billionaire Y.C. Wang was successful in plastics and ran a marginal newspaper, too. Property developer Lin Rong San, who ranked No. 8 on the Taiwan rich list with $2.3 billion, owns the Liberty Times, a popular independence-leaning daily.

The latest entrant into the island's freewheeling media market: Tsai Eng-Meng. Using private money rather than funds from his publicly traded Want Want China, the snack billionaire bought publisher and broadcaster China Times Group from the Yu family for an undisclosed sum last year, outbidding Hong Kong's Next Media. Tsai followed that up with an investment in Hong Kong moneylosing broadcaster ATV.

Tsai says the main reason for his media foray is simple: He enjoys the industry. "Media is entertainment for me," he says. "My main business it still my main business. If Want Want is in trouble, I'm in trouble, too." So, says Tsai, investors don't need to worry that he'll be distracted from his core business.

Yet there's a profit motive to Tsai's media spending, too. He thinks the industry has good long-term investment prospects in the mainland's now-protected news arena. "Chinese have more and more money, and they will enjoy leisure," benefiting media companies that provide entertaining content, he says. He also sees synergy between Want Want's business and his media companies--at least some spending on snack ads will now flow back into Tsai's own pocket.

In divided Taiwan, where pro-China and anti-China groups can't agree on much, Tsai's purchase of the China Times sparked worries about free speech. Since his wealth now comes almost entirely from the mainland, critics worried he will try to turn the China Times Group into a mouthpiece for Beijing in Taiwan. Tsai disagrees, and so far, both he and his critics may be partly right. The newspaper has tilted its coverage toward China, yet the entertainment-oriented broadcasting business that Tsai coveted more than the newspapers is little changed, says Antonio Chiang, a longtime Taiwan media industry executive.

Marketing Daily: P&G Exec - Innovation Needs To Be Purpose Driven

Story

P&G Exec: Innovation Needs To Be Purpose-Driven

Karlene Lukovitz, Oct 19, 2009 03:55 PM

Procter & Gamble's mantra, "The consumer is boss," has become a part of the fabric of marketing. But there's another related concept that is also critical to the company's successful record of innovation, according to P&G group president, North America Melanie L. Healey. "You need to be purpose-driven. You need to know what it is that you really want to do for the consumer," she told attendees at last week's Magazine Innovation Summit in New York, the Magazine Publishers Association's new format for its annual conference. "Having a purpose for the brand and going after it in several different ways is really important" because it inspires passion in the team, she said, "and that, in turn, brings in creativity." In P&G's feminine care division, for instance, one key purpose defined is to "create life-improving experiences that women live every day, everywhere," Healey said. The mission provides discipline, as well as creative momentum. "It inspires everything we do. If something doesn't serve that purpose, we don't do it," she summed up. In this division, the mission helped the team identify ways to communicate that are "really meaningful" to the consumer, Healey said. One of these channels, a Web site that introduces teens to menstrual periods in a positive way (beinggirl.com), has become one of P&G's most successful sites. Another is "Protecting Futures," a cause-driven program that has involved teenagers and young women in helping P&G and the Center for Gender Equity address the problem of girls in Africa missing school and falling behind in learning for lack of sanitary supplies and hygiene education. This effort appeals to teenagers' empathy, and has won their loyalty, providing an ongoing communications and outreach vehicle for P&G's Tampax and Always brands. Healey repeatedly emphasized the importance of putting in place structures and people that provide a balanced environment of discipline and creativity. "You need leaders that inspire and encourage the organization to go after creative solutions that add value for the consumer, but you need structure as well, because otherwise, you end up going after everything," she said. P&G focuses on three types of innovation, she explained: disruptive (changing markets or going after new markets); sustaining (adding new value to existing product); and commercial (finding new insights that will "unlock growth" without changing the product or packaging). "You need different forms of organizations and resources, different types of people and even different ways of managing" each type of innovation project, Healey said. For example, in disruptive innovation, where the risks are very high, "learning and failing and learning again quickly" is extremely critical, she said. "Designing small, nimble organizations that can really nail the opportunity and design around that opportunity" enables the company to "fail cheaply," rather than "spend $500 million around something that's not going to work." P&G's many different structures for fostering different types of innovation include an entirely separate division, called FutureWorks, dedicated to disruptive innovation; a corporate innovation body made up of board members who vet ideas from employees and reward seed money to those that are deemed potentially valuable; and various "hot houses" for tackling specific areas, such as one devoted to in-store innovations aimed at "transforming the shopping experience."

BusinessWeek: Why Design Thinking Matters

Book Review October 26, 2009, 1:32PM EST text size: TT

Why Design Thinking Matters

"Design thinking" proponent and business school dean Roger Martin argues that the discipline provides executives with competitive advantage critical for success

By Helen Walters

The Design of Business: Why Design Thinking Is The Next Competitive Advantage
By Roger Martin
Harvard Business Press; 208pp; $26.95

One of the most compelling examples in Roger Martin's new book is a personal tale from his own days as a consultant. Asked by a Canadian bank to come up with a new strategy to cater to high-net-worth clients, Martin and his team came up with a bold plan they thought might revolutionize the bank's entire business. The bank's chief executive met the excited presentation with one question: Had any competitor already gone this route? "No!" Martin replied brightly. "You would be the very first!" And with that the meeting was over, the idea was killed.

The story, and others in Martin's new book, The Design of Business: Why Design Thinking Is The Next Competitive Advantage, illuminates more than just the risk-aversion of so many members of the C-suite. Instead, Martin is calling for a new way of thinking to permeate business that embraces the tricky reality of executing innovation and in doing so transforms it into action. He calls the technique "design thinking" and argues that it provides the necessary balance between the poles of analytical and intuitive thinking that are commonly taught and nurtured in today's professionals.

Dean of the Rotman School of Management at the University of Toronto since 1998, Martin has been a key figure in driving understanding of the concept of design thinking for some time now. Here he again outlines his theory that this perspective provides a new—to his mind, critically important—method of running a business in today's fiendishly complex world.

With examples from companies such as Procter & Gamble (PG) and Research in Motion (RIMM), Martin shows the power of design thinking in action. He also makes the case that it can—and should—be adopted by any department within an organization.

Indeed, the most interesting insights within the chapter on P&G are not the well-trodden stories of A.G. Lafley and Claudia Kotchka shaking things up by holding mandatory hands-on innovation workshops. Instead, it's the work of Filippo Passerini, head of P&G's global business services, that emphasizes the potential impact of the technique. By applying design thinking within the traditionally uncreative corporate engine room of the organization, Passerini brought about radical transformation that could both support and spearhead the turnaround of the company at large. Without this in place, the flashier, more talked-about product introductions would not have had the strong foundation needed to flourish in the marketplace.

dealing with the backlash

Design thinking has received more than its share of attention in recent years, not least from magazines such as BusinessWeek. Somewhat inevitably, a backlash has bubbled up, with designers grumbling that the concept detracts from the purity of the design discipline itself, and some executives skeptical of its worth outside of design agencies or creative consultancies.

Smartly, Martin acknowledges the tension and he remains steadfastly nuanced in his own argument that balance remains the key. Sometimes Martin's language reflects his long tenure as a university professor, but bushwhacking through the academic terminology is a worthwhile exercise. An accountant can learn to embrace the concept of validity, or leap-of-faith ideas, through the help and guidance of a more creative thinker. Likewise, structure and data can help the free-wheeling, blue-sky dreamer make a difference. Neither can exist without the other for long, and Martin's is a clarion call for all parties to lay down their defensive weapons in order to move toward a culture of openness and acceptance that nurtures a culture of sustainable innovation.

And while Martin emphasizes that design thinking is of the utmost importance within the C-suite itself, he doesn't let readers off the hook. Instead, everyone can learn to become a design thinker, and should try to understand the position of their colleagues.

As he explains, his own mistake as an excited consultant pitching a new strategy to that Canadian bank CEO was to speak in the language of validity when what the CEO really needed to hear was the language of reliability. Had Martin reassured the chief executive that while there were no direct comparisons, some well-performing European banks had employed a similar approach with some success, the CEO might have been persuaded to take the leap. The purpose of this useful book is to equip the reader with the tools needed to make sure that happens.

Helen Walters is the editor of Innovation and Design at BusinessWeek .

Copyright 2000-2009 by The McGraw-Hill Companies Inc. All rights reserved.

FT: The leader who falls will emerge stronger

He who never made a mistake never made a discovery.

===

The leader who falls will emerge stronger

By Luke Johnson

Published: October 27 2009 19:19 | Last updated: October 27 2009 19:19

F Scott Fitzgerald said: “There are no second acts in American lives.” An awful lot of entrepreneurs, investors and executives must hope he was talking nonsense.

The past 18 months have seen many reputations ravaged, plenty of high-profile sackings and a lot of business failures. I am afraid that in this digital world, such blemishes are recorded for all time.

Not many of us will emerge entirely unscathed from the battering of this downturn – a great deal of mistakes of different sorts have been exposed. So we should all maintain an optimistic belief that the world is more forgiving than is commonly supposed.

Career comebacks from disaster are both difficult and, oddly, easy. Difficult because your record has been blighted; easy because if you have achieved triumphs before, you know how it’s done. While we are suspicious of someone who has suffered a serious setback, we also respect hard-won experience.

Moreover, the doctrine of redemption is a central part of our culture. The idea that someone is an irredeemable loss seems incredibly brutal. Such a judgment feels as if it should be reserved for those who have been criminal, repeatedly negligent, or created damage on a grand scale.

Of course, society exalts management talent too much, so when the pendulum swings we relish having fallen leaders to blame. Those who rise to the top are lavishly rewarded, and vilification for incompetence is part of the bargain. If you cannot stomach the risk, do not strive for high office.

When you dig deep into a CV, most reveal missteps – and some outright cock-ups. These negatives are rarely highlighted by the author, but I always prefer an interviewee who is honest when questioned about past errors, rather than evasive. Straightforward admission and an explanation of the lessons learnt appear to me the best policy. After all, we all know life is an imperfect affair. I am convinced that the world’s mental hospitals are full of misguided souls who believed otherwise, and cannot cope with the messiness of reality. As Samuel Smiles said: “He who never made a mistake never made a discovery.”

Success often breeds arrogance; one of the benefits of defeat – and there aren’t many – is that it tends to produce a humbler personality. Most of us are more rounded characters for having got things wrong. I read recently that executives should not consider their work done until they have tackled a turnround. Those who have overcome adversity are likely to be better equipped to deal with such challenges than someone who has sailed along without even a hiccup. A pummelling toughens you up, makes you fitter for the next engagement. And as long as you don’t cave in to disappointment, recovery is always a possibility.

Big wins early on can be a curse. They may give you the impression that everything else is a downward trajectory. After all, no one wants to be labelled a has-been.

One of the cures for this disease is the ability to adapt your expectations and reinvent yourself if the door has slammed shut on your first profession. There are many sorts of hero, and most of us have more than one skill. The danger of obsessive specialisation is that if that field dies, where do you go? I hear of former financiers, fired from their bank and fed up with the City, who are retraining as schoolteachers. Now that I admire.

Switching disciplines can be a tonic, but complete withdrawal from the fray must be avoided if you are to make progress. Action is the antidote to despair. Equally, self-pity is harmful. Focus instead on building a mutual support network, finding a new mission, and discovering ways to add value all across the waterfront.

Just as bankruptcies never happen just because of bad luck, so a rebound is not simply a matter of chance – it requires industry, motivation and intelligence. So, whatever your misfortunes, you should endeavour to stay busy and bear in mind that everyone gets another opportunity or two if they keep trying.

lukej@riskcapitalpartners.co.uk
The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm

Copyright The Financial Times Limited 2009.

FT: Living strategy and death of the five-year plan

Living strategy and death of the five-year plan

By Stefan Stern

Published: October 26 2009 23:12 | Last updated: October 26 2009 23:12

Is strategy dead? Chief strategy officers will deny it. Some strategy consultants may reject the idea, too. But, right now, markets are unpredictable. The economic outlook is uncertain. The world has changed. If old-style strategy formulation is not exactly dead, then it is hardly in the best of health.

For months, many leadership teams have had only one strategic goal in mind: survival. Grander visions have been filed away or forgotten. This hedgehog-style approach – roll up into a ball and wait until things are less scary – may keep a company alive temporarily, but does little to prepare it for the future.

Analysis by Boston Consulting Group suggests that corporate hibernation only works if recessions are short, if the outside world goes back to the way it was before, and if all your competitors are equally inactive, tucked up for the economic winter. In 2009, not one of these conditions applies.

In a recent paper, “Thriving under adversity”, senior BCG partners Martin Reeves and Michael Deimler argue that, in past recessions, simply cutting costs has not been enough to ensure a healthy recovery. “If survival buys time, it does not guarantee sustainable competitive advantage,” they write. The winners in previous downturns have pursued, and achieved, increased sales.

So companies need a strategy for growth. But I began this column by arguing that the traditional approach to developing strategy – long, internal debate leading to the announcement of three- or five-year plans – seems to belong to another era. So what does smart, 21st century strategy development look like?

Unsurprisingly, some sharp minds in the strategy consultancies have been giving this question some thought. In New York last week, I had several interesting conversations on the subject.

At BCG, the same double act of Reeves and Deimler has produced another paper, “New bases of competitive advantage”, that looks at something they call “adaptive advantage”. This is strategy, too, but not as we know it.

“Organisations with adaptive advantage recognise the unpredictability of today’s environment and the limits of deductive analysis,” they write. New problems are constantly emerging. Well-run businesses respond effectively to them.

How? First, they process relevant data – “signals” – quickly, and react to them. Google is an obvious master of this, getting closer than anyone else to understanding how online advertising works. Second, they see clearly how their business fits into a wider context. Amazon has made sure its Kindle e-book reader is supported by a network of valuable partners. Third, they are alive to social change and shifting customer preferences. Toyota managed this with its hybrid Prius car. Fourth, they experiment effectively, as Procter & Gamble does when trialling products. Lastly, they draw on the talents of the best people they can find – whether they employ them or not. Software companies such as Red Hat and TopCoder oversee large networks of programmers, using the best people with great flexibility. Their permanent staff is relatively small. But they have access to many more.

This vision of a far more free-flowing, less hidebound corporation, ready to change strategic direction fast, is shared by Lowell Bryan, a director at McKinsey. He may be a 30-year veteran of the firm, but he discusses these ideas with the enthusiasm of a new hire.

“You have to give up the pretence that you can predict the future,” he says. “This is about managing much more dynamically. It is a complex adaptive world, and leaders have to navigate their way through it rather than assuming away uncertainty, as people do in an annual budgeting process. How can you say today what the economy will be like even six months from now?”

Leaders need to show a bit more humility, while living with all this uncertainty. “Strategy is really an evolving idea which develops over a long period, on a long and winding road,” he says. “And this new world calls for just-in-time decision-making.”

Adapt to survive. The danger for successful companies, Mr Bryan says, is that over time they lose the very abilities or qualities that earned them their market-leading position in the first place. They no longer have the same flexibility, awareness and resilience they once did. Building in some slack – unscheduled meeting time, for instance – might create the space where some resilience can be re-established, Mr Bryan adds.

Strategy has changed. While the eternal truths – about market position, scale and capabilities – endure, a more dynamic and adaptive approach is now needed. Leaders need to be more flexible and less heavy-handed, ready to make necessary adjustments and bigger changes.

Don Sull of London Business School has likened old-style leadership to a car driver who is either too heavy on the accelerator (growth strategy) or too heavy on the brakes (cutbacks). “It makes for a jerky ride,” he says.

Something like recovery is on its way. You will need a strategy to make the most of it.

For more on management or to comment, visit www.ft.com/managementblog

Copyright The Financial Times Limited 2009.

FT: The new etiquette of greeting

The new etiquette of greeting

Published: October 26 2009 23:44 | Last updated: October 26 2009 23:44

Minimal touch: the fist bump popularised by President Obama and wife Michelle

Andrew Gormley, director of men’s wear at fashion supplier Harvest Group, says that in his business kissing is pretty prevalent. “Fashion can be a bit ‘Ab Fab’ and a lot of people are very ‘dahling, dahling’ and camp it up.” But, he adds, “You probably wouldn’t plant a smacker on the face of the fashion director of a major chain.”

These days, if you offer someone your hand at a business meeting in the US, they might refuse to shake it, according to Jacqueline Whitmore, author of Business Class: Etiquette Essentials for Success at Work. The reason is not because bad manners are the latest fashion, but because of widespread fear about the H1N1 virus.

However, assuming you’re sufficiently cool about swine flu to touch those you do business with, what is an appropriate workplace greeting? Is it a firm, businesslike handshake? An embrace? A kiss on the cheek? A kiss on both cheeks? And how does this vary with the gender of those you meet and the continent, country and industry you are in?

Mr Gormley also has experience of different greetings in different countries: “I do a lot of work in China where business interactions are very formal and respectful. But I used to work in Turkey where men put their arms round you, hold on to your hand for quite a while and kiss as a greeting.”

Meredith Hanrahan, chief marketing officer at travel company Cheapflights, takes a similar line. “In some of the more conservative Middle Eastern countries, greetings between men and women are limited to either a handshake at most, or a pat on the chest indicating respect.

“However, it can be quite common for men to greet each other by kissing on both cheeks while shaking hands, depending on how well they know each other. This is a sign of brotherly familiarity, representing the importance of family ties.”

Of course, Ms Hanrahan notes that there are exceptions: “In Lebanon, for example, mixed gender interaction involves not one or two kisses but three.”

But beneath any attempts to generalise, there are further subtle differences and conventions. In northern Europe where the handshake is presumed king, it masks untold, smaller etiquette variations.

In Germany, for example, you shake hands but you would not dream of calling someone by their first name. In Iceland, however, people only really use first names.

And needless to say, attitudes can vary within countries. “I do a lot of work down in Miami, which has a far more Latin culture that the rest of the US,” says Ms Whitmore. “Kissing business contacts on the cheek is much more normal there than it is in other parts of the country.”

And as for differences within industries, Don McGown, a London-based partner at law firm Allen & Overy, notes: “If it was a private client you knew pretty well and had been dealing with for years, you might embrace them. But that would be pretty much unheard of with commercial clients.”

UK-based etiquette expert Rachel Holland is a firm believer in the primacy of the handshake. “A handshake says, ‘I want to meet you, touch you, look at you and do business with you’,” she says.

“You should start and finish a meeting with a handshake. If you kiss at the beginning, you cross a line and it disarms you. It can make it harder to have a tough meeting.”

She adds that kissing too early can exhaust all your familiarity. “If you start with a kiss, you have nowhere to go, but with a handshake you do,” she says.

Meanwhile, says Ms Whitmore, in the pandemic-panicked US, kisses and handshakes might be rather thin on the ground this winter. But she is seeing the emergence of a new, minimal touch greeting in business circles – one that was popularised by President Barack Obama and his wife Michelle during his campaign for the presidency.

“Because of H1N1 we’re now seeing a lot of fist bumps,” she explains.

Copyright The Financial Times Limited 2009.

FT: A detached style of leadership

A detached style of leadership

By Peter Marsh

Published: October 25 2009 22:12 | Last updated: October 25 2009 22:12

Enlightened: Bulent Bulgurlu looks for consensus when dealing with the family behind Koç Holdings

Bulent Bulgurlu, the chief executive of Koç Holding, Turkey’s biggest industrial group, is enthusiastic about a novel machine made by its Arcelik domestic appliance subsidiary. Retailing for about $200, the machine makes cups of “perfect” Turkish coffee.

“This is a device that uses some special mechanisms to boil the water and treat the coffee in such a way that when you taste it you know you are drinking Turkish coffee, not Italian coffee,” says Mr Bulgurlu during a visit to London.

Dressed smartly but soberly in the manner of a professor, Mr Bulgurlu likes to talk in studied phrases and without showing too much emotion.

It is a style that seems to have worked well for a man who during a 33-year stint at Koç has gradually worked his way up to the top position, getting on with the members of the Koç family who own the business and, by his own account, never giving way to any show of naked ambition.

“I was always the last one [at Koç] hearing about my promotion,” says the 63-year-old engineer, who has been in the top job since May 2007.

Beyond the family

When Bulent Bulgurlu was made chief executive of Koç Holding in 2007, he became the sixth person who was not a member of the Koç family to be given the role.

The company, Turkey’s biggest industrial group, was set up in 1926 as a retailer by Vehbi Koç, who stewarded it for most of his life and had the reputation of being Turkey’s most prominent business person of the past century.

Koç expanded into industry, most notably through a joint venture in 1948 with General Electric to set up a Turkish light bulb factory. Today, Mustafa Koç, Vehbi’s 49-year-old grandson, is chairman. Rahmi Koç, Mustafa’s 79-year-old father who has worked at the company since 1958, is officially retired from executive responsibilities but remains on the 15-member board.

The Koç family, which also provides two other directors, owns 80 per cent of the company, with the remaining shares being traded on the Istanbul stock exchange.

In such a company, the relationship between the professional chief executive and the members of the family is highly important, and in the case of Koç, the interactions between the two sides seem good. A person who knows about Koç says of Mr Bulgurlu: “My impression is that they [Rahmi and Mustafa] listen to him. He is always very well prepared and knows the complex structure of the company and its many activities very well.”

Mr Bulgurlu is likely to retire next year and the company is now mulling over a successor, who once again will almost certainly come from outside the family.

With sales last year of TL56bn ($38bn) and 68,000 employees, Koç is an unashamed conglomerate. It operates Turkey’s only oil refinery, which is also Europe’s eighth biggest, it owns the country’s fourth-biggest banking network and, via joint ventures with Ford and Fiat, is responsible for almost half of Turkey’s car production.

The company also mines coal and metals, makes tractors and owns a chain of petrol stations.

Outside Turkey – in activities that contribute about a quarter of the group’s revenues – the company’s best-known products are its “value for money” washing machines and refrigerators, sold under the Beko brand and especially popular in the UK, France and Russia.

To complement the company’s existing operations in operating fossil-fuel and hydro-electricity generation plants, Mr Bulgurlu says that at some stage Koç could play a part in a network of nuclear power stations in Turkey – an as yet unexplored technology for the country.

One person who counts himself a fan of Mr Bulgurlu is John McArthur, a former dean of Harvard Business School, who has been a non-executive director of Koç for the past 10 years. “Bulent is a global player who understands the context of all the areas of industry the company is involved in,” he says.

It is not uncommon for chief executives of such broadly based and complicated groups to require a somewhat detached style: one in which attention is focused on the key performance indicators of different parts of the group, rather than on the details of specific products and services.

In this regard, Mr Bulgurlu seems to fit the bill, notwithstanding his occasional foray into describing the specifics of gadgets such as coffee machines.

In a previous job at Koç running the company’s tourism division, which was sold off some years ago, he recalls that he surprised his more junior employees by not being very interested in their descriptions of what they did all day.

“At the first meetings with general managers of my group, I was always asking questions about financial performance, while they were talking about ambiance [of hotels], the quality of their tour programmes, and so on,” he says. “We had some difficulties finding a common ground at first, but after that we overcame all of this and got along very well.”

Mr Bulgurlu says a six-year spell in the unhurried atmosphere of Norway probably contributed to what he says is his generally “tranquil take” to life. He was persuaded to go to Scandinavia in 1971 to do a PhD in hydraulics engineering, followed by a job as a research engineer – by his Norwegian girlfriend, who is now his wife.

Even though he enjoyed his time away, he found Norway a little too calm, even for his laid-back personality, and missed his family and friends. On his return to Turkey, he got a job in Koç’s construction division – another part of the company that now has been hived off.

He eventually moved on to running its Arcelik subsidiary, which is now the world’s eighth-biggest maker of white goods by volume, and the fourth-biggest in Europe.

Of the decisions made at Koç around the time he took over as chief executive in 2007, perhaps the most important was the drive to reduce the breadth of the company to make it somewhat more focused.

While some moves had been made to do this in the past, for instance, through selling off activities in construction and tourism, the company had also in some ways broadened out. It moved heavily into the oil industry, for instance, by buying its first refinery, a formerly state-owned plant, in 2005.

“We realised we’d spread ourselves a little too much, and there was also the need to [sell off operations to] reduce debts,” Mr Bulgurlu says.

As a result, between 2006 and 2008, Koç sold its stake in 11 businesses for $3bn, ensuring that today the company has a net cash surplus of $700m.

The biggest of these transactions was the sale of its 50.8 per cent share in Migros, Turkey’s largest supermarket group, for $1.6bn to a venture capital group.

In the event, the timing of the move could hardly have been better, since the asset sales took place before the broad economic slowdown and when transaction prices were still high.

“I’m not saying we knew the financial crash was coming, but we had the idea the world economy was going to slow down,” Mr Bulgurlu says. “It seemed a prudent thing to do to move into a position of having cash in the bank and looking back I am glad we did it.“

Asked about how he shares decision-making with the members of the Koç family – who are heavily represented on the company’s board (see box) – Mr Bulgurlu answers with his trademark tact.

“We generally arrive at a consensus at to what is in the group’s best long-term interests,” he says. “I normally find that when you deal with good and intelligent people, a consensus of views is possible.”

Copyright The Financial Times Limited 2009.

Fast Company: A Problem-Solver's Guide to Copycatting

December 1, 2009

A Problem-Solver's Guide to Copycatting

By Dan & Chip Heath

FISH TALE The Antarctic icefish digests oils in extreme cold. That process offers lessons and inspiration for cold-water stain-fighting detergents. | Wikimedia Commons

Your business has a big problem. You've thought about it, but you can't seem to crack it. So you consult your colleagues -- to no avail. Then you turn to the big guns -- your industry's top experts. They've got nothing. (Well, to be precise, they've got 40 PowerPoint slides worth of nothing, and you've got $225,000 less of something.) Now what?

You might take some inspiration from Pete Foley, associate director of the cognitive science group at Procter & Gamble, who was looking for an inspired solution to challenges faced by P&G's feminine-care business unit. Its R&D staff had pursued several approaches, but none of them offered the breakthrough that Foley craved. So he did the next logical thing: He took his team to the San Diego Zoo.

The zoo is developing a specialty in biomimicry, a discipline that tries to solve problems by imitating the ingenious and sustainable answers provided by nature. In a working session with the company, the zoo's biomimicry experts made an unexpected connection between P&G's problem and the physiology of a gecko. Other ideas came quickly, inspired by flower petals, armadillos, squirrels, and anteaters. (Full disclosure: Chip led a workshop with the biomimicry team on another issue.) By the end of the day, the working group had generated eight fresh approaches to the challenge. It was as if Ideo had opened an office on Noah's Ark.

Most of us don't solve problems this way. We start by tapping the local knowledge, and if it's insufficient, we go looking for specialists. But what if we're following the wrong protocol? We should stop looking for experts and start looking for analogues. It's a big world: Chances are someone has solved your problem already. And she might be an anteater.

Let's say you're looking to create a detergent that works superbly in cold temperatures. This would seem to be a Chemical Engineering Problem. But, as the zoo's scientists tell us, it's also an Antarctic Icefish Problem. When the icefish eats other fish, it has to digest the oils of its prey, and this process is remarkably similar to what happens in the wash with the oily taco stains on your T-shirt. Furthermore, the icefish typically dines in water as cold as -- 2 degrees Celsius. (Try that, All-Temperature Cheer!) So, thanks to this cold fish, you have a working model for an ultra-low-temperature detergent -- and it's a solution that would have never occurred to an expert. The model also suggests that the world's auto-safety leaders ought to be studying cockroaches, which routinely walk away from newspaper swats that must be the equivalent of dropping the city of Cleveland on your Corolla.

Exotic animals are clearly not the only place to look for answers. What if another industry has solved your problem? In 1989, the pilots of the Exxon Valdez ran it into Bligh Reef, spilling enough oil to cover 11,000 square miles of ocean. To finish this cleanup job, you'd have to clear an area the size of Walt Disney World Resort every week for about five years. One major obstacle was that the oil and water tended to freeze together, making the oil harder to skim off. This problem defied engineers for years until a man named John Davis, who had no experience in the oil industry, solved it. In 2007, he proposed using a construction tool that vibrates cement to keep it in liquid form as it pours. Presto!

Why is it counterintuitive to look outside our own turf for answers? "If you've spent five or six years getting a PhD, or 5 to 10 years in the field itself, you're a domain expert," says Karim Lakhani, an assistant professor at Harvard Business School who studies innovation. "You can't imagine that someone else may have a different perspective. But problems that are difficult in one domain may be trivial to solve from the perspective of a different domain."

The trick, of course, is locating that elusive person who'd find your problem trivial. If this hunt were easy, we'd all be problem free. We could resolve life's great mysteries with epiphanies sparked by toucans and frozen-yogurt machines.

But while the hunt may not be easy, it's not random either. It's about pattern matching. Ask yourself who might have solved a problem similarto yours. For instance, health-care advocates trying to reduce medical errors have learned from total-quality-management experts in the manufacturing world who obsess about ways to reduce product-defect rates. Olympic swimwear designers, intent on reducing the water's drag on swimmers, have enlisted help from NASA engineers who make aircraft more aerodynamic.

The biggest barrier to the idea hunt, in fact, may be you. It may never occur to you to start searching because we all commonly keep our thinking penned up within our company or industry. How can you overcome this conformist instinct? We're not entirely sure, but a good first step might be a workshop with the Hells Angels.

Dan Heath and Chip Heath are the best-selling authors of Made to Stick: Why Some Ideas Survive and Others Die. Their next book, Switch: How to Change Things When Change Is Hard, will be released in February 2010.

Feedback: heaths@fastcompany.com [1]

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