The joke's on Richard Branson

My new book post is up on strategy+business:

The Virgin Chronicles

 

It wouldn’t surprise me to look up “entrepreneur” in the dictionary and find Richard Branson’s picture next to the definition. Heck, given his success at promoting himself and the Virgin brand over the past five decades, his picture could be there instead of a definition.

Branson founded Virgin in 1970 as a small mail-order business that sold discount records. Following a strategy that he describes as “screw it, let’s do it,” he went on to build eight billion-dollar companies in eight different sectors. Today, the Virgin Group employs more than 60,000 people in more than 100 companies. Its revenues are somewhere in the neighborhood of US$24 billion annually.

 

Branson has written seven books recounting his adventures in business and elsewhere. From Losing My Virginity: How I've Survived, Had Fun, and Made a Fortune Doing Business My Way (Crown Business, 1998) to his newest effort, The Virgin Way: Everything I Know about Leadership (Portfolio, 2014), they’re all pretty much the same—humorous descriptions of Branson’s romps through a bewildering array of businesses, many of which were in mature industries with what were once deemed high barriers to entry, like airlines, telecom, banking, railroads, and soft drinks.

The Virgin Way and the books that came before it don’t contain blueprints for building and leading your own business empire. Indeed, they strongly suggest that it might be better to chuck all your well-laid plans out the window and just say “yes” to the next business idea you hear…and the next…and the next. (Branson’s staff nicknamed him “Dr. Yes” for good reason.)

But therein lies the real value of the peripatetic entrepreneur’s oeuvre: Branson’s books reveal how passion, imagination, a sense of fun and adventure, and just plain ballsiness can trump not only the status quo, but also everything they teach you in business school. You can hire plenty of people who will talk about the way things are and the way things should be done, but the qualities that a guy or gal like Branson brings to the table are much harder to come by.

There are also lots of great stories and some surprising lessons in Branson’s books. In The Virgin Way, he tells us about his love of elaborate April Fools’ Day pranks. In 1986, for example, when Virgin Megastores were popping up throughout the United Kingdom, Branson decided to play a joke on the music industry: He did an exclusive interview with Music Week, the industry’s leading trade publication at the time, in which he announced that his company had been “secretly developing a giant computer, on which we had stored every music track we could lay our hands on.” For a small fee, he said, consumers would be able to download any song or album they wanted.

The story, headlined “Branson’s Bombshell: The End of the Industry,” broke on the morning of April 1 and Branson’s phone started ringing off the hook as music executives called “to beg, threaten, and plead with me not to go ahead with such a crazy scheme.” At noon, he held a press conference revealing that “Music Box” was a prank.

Years later, Branson met Steve Jobs who said that he, too, had been taken in by the Music Box story, and that the idea had stuck in his head. The real punchline came later still, when Apple launched iTunes and the iPod, which sounded the “death knell” for Virgin Megastores—which now only operates in the Middle East.

“Clearly the moral behind this story,” explains Branson, “is that if you’re going to let others know—even as an April Fool’s joke—how you think your industry might look in the future, then you had better make sure that your company has a plan already in place to get you there first. If you don’t, then the joke could very easily be on you!”

Killer quotes #10

"Between stimulus and response there is space. In that space is our power to choose our response. In our response lies our growth and our freedom" -- Viktor Frankl

 

 

 

 

 

 

 

The best sales book of 2014

My new book post on s+b's website is up:

Reframing Sales Effectiveness

I’m calling it early: Aligning Strategy and Sales: The Choices, Systems, and Behaviors That Drive Effective Selling (Harvard Business Review Press, 2014), by Frank V. Cespedes, is the best sales book of the year. I know we’ve got a few months left in 2014, but I’m not too worried that I’ll be proven wrong—I’ve been waiting for a sales book like this one for a long time and the odds that another will appear before December 31 are long indeed.

With rare exceptions, sales books are about one of two things: the sales process or sales skills. The process books are aimed at providing the sales force with a path it can follow to close deals; the skills books are aimed at bolstering an individual salesperson’s results. Good ones of both ilks can be worth their weight in gold. “But,” warns Cespedes, a consultant and senior lecturer at Harvard Business School, “they also treat selling in isolation from strategy, and the focus of much sales training can have a perverse effect: It often leads a company’s sales force to work harder but not necessarily smarter .” Worse, he adds, the sales force can get “better and better at things that customers care less and less about…and the cycle can be self-reinforcing.”

 

In Aligning Strategy and Sales, Cespedes enlarges the frame in order to show us the bigger picture. That picture reveals a set of linkages:

• A combination of company strategy and market/customer characteristics dictates sales tasks (i.e., the sales process). This suggests it is highly unlikely that a generic sales process will be optimal for your company—unless your strategy is also generic, in which case you’ve got a different problem.

• Sales tasks dictate selling behaviors. You need to know what you are trying to accomplish before you can determine how to accomplish it. This suggests that generic lists of sales traits probably will not be optimal either (and I write this as the coauthor of a book that derived a list of desirable selling behaviors from the correlation between the behavioral traits of several hundred thousand newly hired salespeople and their subsequent performance).

• Sales behaviors dictate sales hiring, sales systems, and the sales environment. The latter three buckets are the levers by which you get the behaviors that you need to execute the sales tasks that enable you to deliver on your strategy in the marketplace.

This type of framework is not rocket science and it shouldn’t be unfamiliar to executives. After all, every function in a company is subject to the same—dare I say it, generic—set of linkages. But they are rarely articulated in a sales context and so one or more of them are often neglected when companies set strategy or seek to enhance sales performance. And, as you might expect, the results aren’t pretty in either case.

What I really like about Cespedes and his book is that he knows achieving success in sales isn’t simple. The parts are always moving. Executives are adjusting their strategies in response to a host of variables. Salespeople are changing their processes and adjusting their behaviors in response to ever-changing conditions on the field. Sales managers are coming and going. Sales incentives are constantly changed based on inventory levels and margins and demand. “In any situation where you have interacting variables like this, you must confront the interactions and diagnose the problem,” he says. “That’s what’s needed to improve selling and strategy.”

(That little italicized and is worth a brief aside: Strategy informs sales, but sales also informs strategy. Your salespeople are in the market and they are tripping over vital strategic intelligence on a regular basis. You might want to start actually listening to their bitching and moaning.)

Back to the business at hand: Let’s say your sales aren’t exactly cause for celebration and, as is their wont, everybody is pointing the finger at each other. How do you fix it? The answer to that question is the core content of Cespedes’s book. Chapter by chapter, the author deconstructs the big picture, explaining how to tell where there are disconnects in linkages and how to approach the job of repairing them. Again, not rocket science—but in a business world where sales is often seen as a black box and sales misses are addressed by firing underperformers, giving big signing bonuses to new managers and salespeople, and chucking money at motivational speakers, Aligning Strategy and Sales is well worth the cover price.    

Mia Farrow's army

My new book post on strategy+business:

The Price of Privatizing War

My experience with mercenaries extends about as far as Abbott and Costello in the Foreign Legion, a comedy that ran repeatedly on a New York television station when my brothers and I were young and never failed to tickle our funny bones. Yeah, yeah, I know—très sophistiquè. But in those days, private military companies (PMCs) were well beyond the ken of four kids from New Jersey.

These days, on regular drives to the Outer Banks in North Carolina, I pass a turnoff that leads to a 7,000-acre training center belonging to a PMC named Academi.

According to the company’s website, it “boasts many unique training facilities, including 50 tactical ranges, five ballistic houses, multiple MOUT/scenario facilities, four ship-boarding simulators, two airfields and three drop-zones, a three-mile tactical driving track, 25 classrooms, multiple explosive training ranges, a private training center, accommodations for over 300 personnel, and other training support activity centers.” Academi acquired the center from Blackwater, the notorious PMC whose employees killed 17 civilians in Baghdad’s Nisour Square in 2007.

Both companies supply services in the “market for force,” as Sean McFate, an assistant professor at the National Defense University and adjunct social scientist at the RAND Corporation, puts it. They are part of a multibillion-dollar industry (estimates range from US$20 to $100 billion annually) that includes public multinational companies run by veteran Fortune 500 executives and represented by their own trade association.

McFate explores this industry in Modern Mercenary: Private Armies and What They Mean for World Order (Oxford University Press, 2014). And happily, he does it in a way that eschews moral hysteria in favor of a dispassionate, academic approach. That may be because he has worked as a defense contractor (helping Liberia build its army, for example, among other assignments), and studied the industry. No matter what you think about “for-profit killing and the commodification of conflict,” McFate makes a strong case that demand for PMCs will expand in the decades and, perhaps, centuries ahead. The privatization of war is a growth business.

McFate acknowledges that PMCs are an emotionally charged subject. But he also puts them in historical perspective. They’re not a new concept. Xenophon’s Ten Thousand—whose story Peter Drucker said taught him everything he needed to know about leadership—were Greek mercenaries. Mercenary companies (condottieri) were the go-to guys if you wanted to wage war in the late Middle Ages. “By the middle of the seventeenth century,” explains McFate, “the conduct of violence was a capitalist enterprise no different than any other industry.” Around that time, states began to monopolize the market for force by building standing armies, and private armies were outlawed. What better way to guarantee the security of your kingdom than to have the only army in town?

Mercenaries didn’t disappear entirely after that, but the demand for their services was relatively limited, until the United States started hiring PMCs to bolster its downsized standing army in Iraq and Afghanistan around 2003. And it’s unlikely that demand will fall again, even as the U.S. buying binge subsides. The reason, explains McFate, is that we are entering a period of neomedievalism, in which “the world’s order is polycentric, with authority diluted and shared among state and non-state actors alike.”

This means that the market for force is diversifying, with the demand stemming from more and more countries, transnational organizations like the United Nations, NGOs, corporations, and even movie actors. Yep, as McFate reminds us, Mia Farrow approached Blackwater and several human rights organizations in 2008 with a plan to end the genocide in Dafur. She wanted to pay Blackwater to stage an armed intervention aimed at creating protected refugees camps, while the human rights organizations mounted a media campaign to force a U.N. peacekeeping mission. The well-intentioned idea fell through, but could Farrow really hire a private army and invade Sudan? Yes, and successfully “for days and perhaps even weeks,” concluded McFate, who was called on to evaluate the feasibility of the plan shortly after it was conceived.

The Modern Mercenary is filled with fascinating stuff, and its bottom line is that there is no stopping the continuing development of the market for force. So, what—if anything—should be done? McFate says we have to regulate the industry while the free market for its services is still dominated by the demand from a few big customers, mainly the U.S. If we don’t, he warns, the profit motive could cause PMCs to perpetuate armed conflict. And then, we might really get a look at what the world was like in the Middle Ages.