Freedom, Inc_ - Brian M. Carney [22]
Like Elixir, Glide was launched with a guerrilla marketing campaign. Gore associates knew that floss made from PTFE had great potential, but they knew nothing about selling dental floss, so they didn’t try. They gave it away instead—to dentists. Patients loved it so much that they asked their dentists for some more for their family and friends. When Gore convinced some drugstores to carry it, they could barely keep it in stock. And, yes, we are talking about dental floss.
Few “how” companies have Gore’s reputation for organic growth powered by outstanding capacity for innovation. Some, such as Hewlett-Packard, Sony, Samsung, and Procter & Gamble, have had long spells of innovation, but they aren’t many. If there were more, we wouldn’t hear 3M and Apple repeated every time that innovation and organic growth are discussed.
But if bureaucracy does not produce great innovation and organic growth, perhaps it’s at least good at keeping costs under control. After all, cost containment is something most traditional “how” companies care deeply about. Repeated waves of rationalization—from “delayering” and downsizing to “reengineering” and outsourcing—have regularly trimmed the corporate body fat—sometimes leading, ironically, to layoffs for the people who designed and supervised the myriad procedures and layers of control in the first place. The argument that traditional bureaucracies have a good record—appreciated on Wall Street—of keeping costs in check would be easy to accept but only on one condition: that we stick to the costs measured by accountants and stock analysts. But these costs are not the end of the story. There are other costs, swept under the proverbial rug. Welcome to the under-rug costs—or the underworld.
THE COSTS THAT YOUR ACCOUNTANT
IS NOT TELLING YOU ABOUT
There is one kind of cost that all “how” companies have, one that never shows up on the books. It’s the cost of all the things that didn’t get done because of the stifling effects of Zobrist’s “chain of comment,” the chain of “how.” These unaccountable costs—the forgone revenue, the missed business opportunities, the creeping inefficiencies—are the real toll that “how” structures take on a business.
The largest of these unseen costs stems from what we might call the low “execution capacity” of a top-down firm. Whether working on a mundane task or a major corporate initiative, employees who aren’t engaged—and more so the actively disengaged ones—don’t go the extra mile that is so often critical to meeting deadlines or avoiding penalties or the loss of a customer.
“Culture eats strategy for breakfast”: so said a banner hanging in Ford Motor Company’s “war room,” from which the company was plotting an ambitious change strategy to save it from near-bankruptcy in 2005. And for those who didn’t get it, the plan’s czar, Mark Fields, would add: “You can have the best plan in the world, and if the culture isn’t going to let it happen, it’s going to die on the vine.”23 Sure, companies can find ways to coerce, or “bribe,” their employees—and many do—into executing what they are ordered to, but corporate history is full of stories of how badly such workers accomplished their appointed tasks.
By their nature, the precise cost of lost opportunities brought on by disengaged employees is hard to measure directly. But there are some indirect ways of quantifying the losses. One cross-industry study showed that 73 percent of customers who abandoned a company attributed it to an indifferent or bad attitude from customer service employees.24 And a 2001 study of mergers and acquisitions showed that, contrary to the expected boost