RUNNING THE GAUNTLET

McGraw-Hill

Contents

Chapter One

I had just sat down to dine with some business friends at an upscale Chinese restaurant in San Francisco when the waiters set down finger bowls in front of us, each with a little floating flower.

The friend who was sitting next to me looked at the flower and then asked, "Jeff, I get the finger bowls, but are you supposed to eat the flower?"

"I don't know," I said. It looked harmless enough. "I guess you can."

My friend had no sooner put the flower in his mouth when the Chinese maître d' rushed over, waving his hands and yelling in broken English, "No, no, no, no! Decoration! For decoration!"

My friend spit out the flower and looked horrified. We laughed for a moment, and then I noticed that the flower had turned my friend's tongue black.

"Dude, look at your tongue! It's black!"

"What?" My friend grabbed a mirror and looked at his tongue. "Oh my God! Oh my God! My tongue is black! Do you think I've been poisoned? Do you think it's poisonous? Will it kill me?"

The maître d' rushed over. He looked down gravely at my friend, who looked up in sheer terror.

The maître d' paused. "No die. Little sick maybe, but no die." My friend was fine that night, and guess what? You will be too. So, before we go any further, remember: no one is going to die when running this gauntlet. Not you. Not your employees. No one. Little sick maybe, but no die.

Yet still, as you start to make the changes you need, you will think, "People are going to die." But they aren't. So don't think that. Your business might die. But that's probably because it already was not breathing well.

Yes, if you are in manufacturing, please: safety first. If you are making lifesaving equipment, please do not cut corners and ignore important details while you are executing change. I don't want to hear anyone saying, "Jeff Hayzlett told me no one was going to die, so I didn't check the defibrillator."

The truth is, businesses that aren't checking their defibrillators are not changing; they are cutting corners and hoping they can survive. Change is not about being irresponsible, reckless, or careless. And while lives are not at stake, livelihoods are. If you are not successful, jobs will be lost. Mortgages and retirement and college funds will be affected. This is not a game. Driving change is about driving success, and it is serious. You know that. You're playing with your reputation, and your future, too. Or you'd better be. Otherwise, please put this down and give it to someone I can respect.

I mean it. Good economy? Bad economy? It doesn't matter. I am sick and tired of people acting scared, whining about all the things they can't do, thinking through every little detail, and then playing it safe. That's the path to mediocrity, and it makes change agents miserable. Heck, it makes everyone miserable. You may think you need to play it safe so you don't "lose." But you don't ever know what's going to work. And so what! Please, tell me: what's the worst that's gonna happen? You make a mistake? People point fingers? You lose a client? You lose some money? You lose your job? Maybe. Most likely, the worst you will get is a paper cut—literally and figuratively.

In the end, most businesses can sustain a little "ready, fire, aim" when they're changing. If you want to test something out, go for it. Think it through, but take risks. Push like crazy, and be persistent. That's the mental edge you need. One mistake or setback does not mean total failure. Seven out of every ten things change agents do will be good, and three will fall flat. Those are good odds. Be strong as you run the gauntlet.

You'll need that strength to overcome your fear—and let's face it: this is scary. In order to enact change, you need to create tension. Causing tension is the foundation of the change agent's no-one-is-going-to-die attitude. You walk around all the time asking, "What can we change? What can we do to make it better?" Having trouble getting started? Do what change agents like me do: look for change everywhere you go. Go to a restaurant you love or a business you admire and ask yourself, what do you think it could do better? Then turn that same spotlight on yourself and your business.

But don't wait for every change to happen before you start selling it. Remember, no one is going to die. Sometimes you need to put things out there and move a little faster than you are actually moving. Or, as I like to say: put a stake far enough out.

Think of this like a business version of what Survivorman's Les Stroud does to film his TV show. Les goes it alone in the woods for seven days with no food and no shelter. Yes, alone. Unlike the people on other knockoff shows, Les brings his own camera. There's no crew. No gimmicks. So, how does he film it? He actually walks to where he wants to shoot, plants the camera, walks back to where he started, and then walks back to the camera.

Leaders need to do this metaphorically. For example, Kodak did this in 2006 when the wonderful Carl Gustin, whom I succeeded as CMO, created a brilliant four-minute video called "Winds of Change" (Google Kodak + "Winds of Change") to tell customers about the company's transformation from analog to digital. Watch it. Were all the changes mentioned in the video already in place? Heck, no. But Carl was putting a stake in the ground for everyone to see. (Kodak and other companies still use this video today.)

And what did I do after I took over from Carl as CMO? I changed it.

I realized the video was perfect for consumers, but we needed a different version for Kodak's rapidly growing business-to-business side, which was dominated by white males. Our editors knew this. Not only did they change the content, but they changed the language, using more colorful expressions—none more so than when the actor on stage gestured at his crotch and said Kodak had "big brass cojones."

I love to cause tension, but that raised even my eyebrows.

When I screened the video for my team members, most of them women, I asked if it passed the "female filter" for crassness. They loved it. I took their word for it and let it fly. Maybe I should have run it through the Hispanic female filter, not just the female filter, because the feedback was immediate: mostly positive from the customers, but negative from a few media people and bloggers and a bunch of people inside the company who found it crude and unfunny ... including my CEO. My Spanish CEO.

Imagine getting that call after being on the job for a couple of weeks. I was thinking, "I'm gonna get fired." I felt like throwing up as I headed to his office.

"Jeff ... do you know the meaning of the word cojones?" he asked. (I was sure at that moment that I didn't in full.) "In Spanish, cojones is the crudest description of the male anatomy."

You can't worry about setbacks like this as a change agent. If you believe it is the right thing to do, you must stand behind what you do and really push to the edge of the table.

And sometimes you don't know you have pushed things off the edge of the table until they hit the floor. I changed the video overnight. It is now a legend—a lightning bolt for representing change.

And no one died.

Chapter Two

Imagine you're living in the 1890s. The dominant transportation technology is the horse. Almost anyone who needs one has one. People know how to take care of horses and to either saddle them up for a one-off ride or hitch them to a surrey, wagon, or buggy. If you live in the country, you turn them loose and they pretty much feed themselves. You can get a horse in any "make," "model," color, and style you want. You could even get a compact one in pony size.

Then, along comes a radical, newfangled idea: the "horseless carriage." But why would people want to change what they have? Why would anyone want a horseless carriage?

"Who would want a horseless carriage?" That's the wrong question. The right ones are: "Why wouldn't you want one? Why would anyone want to put up with the limitations, piles of manure, and inconveniences of the current way of doing things?"

People needed to be reminded of all the inconvenient things about horses. They need food all the time. You've got to clean up after them, and have you ever seen and smelled what comes out of the back end of a horse? Plus, you need hours to get a horse ready. It needs shelter and pampering. (I hear that today, people even pay for a kind of coin-operated massage for their horses. Next time someone wants to spend money for a coin-op horse massage, call me. But I digress.)

Consumers needed to be reminded of the pain-in-the-butt parts of what they had gotten used to in order to see how the horseless carriage did away with those inconveniences. It offered seemingly unlimited possibilities for growth and prosperity. Were there new problems to go with those possibilities? Sure. Affordability, reliability, tires, where to get gas ... the early manufacturers and adopters faced all these problems and more.

But that's not a problem for Americans. We jump to respond to this kind of change. We're what the economist Amar Bhidé, in The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World (Princeton, N.J.: Princeton University Press, 2010), calls "venturesome consumers." He defines "venturesome consumption" as our "willingness and ability ... to effectively use products and technologies derived from scientific research." We don't fear innovation and change. We long to consume it. We were ready for those horseless carriages—if someone could just make enough of them and make them affordable and reliable enough.

As Bhidé notes, American businesses are venturesome, too. Certainly this was true of the father of the mass-produced horseless carriage: Henry Ford, a gifted engineer. After his Detroit Automobile Company failed, Ford continued designing and building cars, and in 1902, he cofounded Ford Motor Company. While other companies produced cars that were like expensive works of art, Ford saw another way: the assembly line, which made it possible for less-skilled workers to turn out more cars than any of his rivals. Productivity was so astounding that Ford stopped measuring it. By 1914, other companies needed five times as many workers to build the same hundreds of thousands of cars as Ford. Ford also developed incredible supply chain efficiencies to complement the assembly line, even having parts shipped in boxes that could be repurposed as floorboards. He turned the economic practice of the time on its head by doubling the wages and reducing the workweek of his loyal employees so that they could buy cars and have the time to drive them. Put another way, he slashed his profit per unit in order to sell more cars.

Ford's Model T thus became the car almost anyone could afford, and America's car culture was born. The car became the thing people needed. Ford had speed, reliability, lower cost, and profit. Venturesome consumption, indeed. Driving change.

Until the next time venturesome becomes fearful. (After all, someone first put a saddle on a horse, too. Imagine being the first person to ever ride a wild horse.) Until intrepid and innovative become comfortable and cautious. Until we fall back on our success instead of adapting and changing to build new futures.

The truth is, we get used to what we have and grow numb to our processes, procedures, and ways of doing things (especially if the profits are still good). Essentially, we resign ourselves to mediocrity. But like taking care of those horses, mediocrity is a lot of work. Mountains and mountains of crap blind you to the fact that someone else is innovating—doing things better, faster, and cheaper than you. Your business may look like it's breathing and fogging the mirror, but as I said in The Mirror Test, you'll look good in your coffin, too.

Change agents have to ask venturesome questions: why would anyone want to put up with the limitations, crap, and inconveniences of the current way of doing things?

If I had worked at Motorola, I might tell tales of the first wireless phones that we carried in bags over our shoulders. But I worked at Kodak. I had it worse. I worked at a company that makes film. When I did sales and marketing presentations, I'd ask an audience of thousands, "How many of you have bought a roll of film in the past year?" One or two hands would go up. (I'd be sure to thank them for helping us.) Then I'd ask, "How many of you own a digital camera or a smartphone with a camera?" Every hand would go up. "Welcome to my world," I'd say.

You think you have sales and marketing problems? Kodak went from $15 billion to a couple of hundred million in film. Unlike, say, Cisco, which killed its popular Flip camera when it saw the writing on the iPhone, Kodak was like so many others: a victim of its own hubris and single-minded focus on what it had done well for so long. Ultimately, mama did not take your Kodachrome away; our customers did. They stopped buying it. Most photographers went digital. A few migrated to other Kodak films. After 73 years and tons of technological upgrades, the bestselling film of all time made up less than 1 percent of Kodak's declining film business and was retired in 2009.

How different might Kodak's fortunes be today if it had stayed venturesome, changed the question, and acted on one possibility that was literally right in front of it—the digital camera? Kodak actually invented it in 1975. Revolutionary. Way ahead of its time. The trouble is, if you had asked an audience in 1975, "Who has bought a roll of film in the past month?" every hand would have gone up. That meant big money—why change? As a result, Kodak never held a perceived dominant position in the digital camera market of the future.

I arrived at Kodak at a time when the company was trying to change in a way that was absolutely necessary but was radically different from its established ways of doing business. A full 60 percent of the people were like me: recent hires. Kodak had invested billions in new technologies and acquiring new companies to speed its transformation from an analog consumer-oriented company to a digital business-to-business-oriented one. Revenue growth from those businesses quickly outstripped that from the established consumer businesses. By 2008, 19 products—all among the top three in their field—accounted for 80 percent of our revenue, and half of them had not existed four years before.

While I was at Kodak, the Financial Times said that in a decade, the Kodak story could be considered one of the great financial turnarounds. I hope that is right. As I write this book, things for the company continue to be tough financially; driving change can't always undo years (in this case decades) of ignoring the need for that change. At the very least, we bought a great American brand more time.

I wish that what I learned from all the financial, technological, cultural, operational, and strategic changes at Kodak could provide a simple road map for changes at any company. But it can't. You think you will have a tough time changing? You're right. Old and new will clash. Things will not work, and systems will break down. You will fail and make mistakes. It will be messy. Even for experienced change agents, "change" is easy to say and hard to do.

Nobody wishes to have these messy things happen, but change agents still need to stand up and say, "What we are doing now is not right, and I'm going to change it." Those changes are the path to seeing your markets and your customers in new ways—a chance to consider new strategies and possibilities, investigate and invest in new technologies, bring in new and different people, invent new ways of doing business, test things, and more. And great leaders take on these challenges by being

• Problem solvers, not problem seekers

• Change agents for the processes

• Cheerleaders who reinforce goals

• Seam operators

We'll get to all of these shortly, but now you've learned how to get started: by seeing that the established way is rife with negatives and change is full of opportunities. You've learned to change the question.

(Continues...)

Excerpted from RUNNING THE GAUNTLETby JEFFREY W. HAYZLETT JIM EBER Copyright © 2012 by Jeffrey W. Hayzlett. Excerpted by permission of McGraw-Hill. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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