Switch - Chip Heath [39]
Rivkin was both GM and coach. As a coach, he knew he needed members of his team to improve their work dramatically, and that meant he needed to script some of their early moves. He started by announcing that he expected analysts to initiate at least 125 client conversations per month. He required them to take notes on their conversations and post them to the internal network. Both the quantity and the quality of analysts’ contacts became a matter of public record. One newly hired analyst said, “Once the report card on analyst contacts was electronically pinned up on a board, all the analysts began trying to get to the front section of the rankings; no one wanted to be near the end…. The analysts started asking one another: ‘How do you make so many calls? Where do you find the time?’”
The 125-call benchmark jolted the department, snapped it out of its lackadaisical attitude. Most of the analysts began working 12 to 15 hours per day, nearly every day of the year. (Note the clarity of the instructions—this is Rivkin’s 1% milk campaign.)
Rivkin also sought to build a team mentality in the department, fighting against the traditional culture of self-interested cowboys. He demanded that, when analysts were making presentations to clients, they cite their colleagues’ work at least twice. “I don’t want to hear ‘I—I—I’ in the presentation. I want to hear ‘we,’ and I want to hear other people’s names.” The forced (at first) sharing of ideas and credit made the team as a whole better, but it also benefited the individual analysts by exposing them to information they otherwise wouldn’t have encountered.
Rivkin didn’t just script the critical moves—Make 125 calls, and cite your colleagues’ work—he also pointed to the destination: We’re going to crack the I.I. (Institutional Investor) Top 5. That was something everyone in his department understood and aspired to.
In fact, there was a joke that circulated in the department: “I.I. or Die.” But the aspiration was serious. Within eighteen months of the turnaround, a full 95 percent of one group of newly minted analysts broke onto the individual I.I. analyst rankings for their industry. Customers were noticing the extra attention they got from Shearson analysts, and for the first time, Shearson analysts were top-of-mind when Institutional Investor magazine called investors to ask who they relied on most.
The direction set by Rivkin prepared the department for a contrarian bet that left the department alone on Wall Street. It was a bet that would cement Shearson’s place in the I.I. rankings.
In 1988, a Shearson analyst began investigating a drug called Epogen, made by Amgen and distributed by Johnson & Johnson. Epogen is a synthetic version of a hormone called erythropoietin, which increases the body’s production of red blood cells. Red blood cells are responsible for ferrying oxygen to all the cells of the body. Epogen would give them a boost, making the drug the perfect treatment for various types of serious anemia—for example, in patients whose blood cells were damaged by chemotherapy. At the time, the drug was winding its way through the drug approval process. With its release imminent, stock investors began to make their bets on how the drug would sell, which would in turn drive Amgen’s stock price.
Other research departments had identified one major market for the drug, but Shearson analysts thought there might be others. Surely, they reasoned, there’d be other uses for a drug that increased red blood cell production. So they dived into the research process. Fred Fraenkel said, “Every analyst and every assistant made calls. They called about 100 hospitals and pharmacies around the world, estimating the market potential for the drug. Once they had the data together, they knew Amgen had a multibillion-dollar drug on its hands. No research department could have possibly made this estimation with just one analyst and an assistant.”
Shearson’s analysts defied the conventional wisdom by predicting that Amgen had a blockbuster on its hands. Shearson’s team