The Lamborghini brand sixty years ago was not known as the luxury car brand it is commonly associated with today. They were actually well-known for making tractors. Apparently its owner Ferruccio Lamborghini was unhappy with the fact that the clutch on his Ferrari car wasn't working as well as he expected and decided to give this feedback to Enzo Ferrari, who tells him off that he is better off sticking to manufacturing tractors. Insulted, Ferruccio later went on to build the first Lamborghini supercar a year later. Fast forward a series of technology innovations and many years later, both Lamborghini and Ferrari are now associated with the league of prestigious car brands.
So when Apple announced last week that it had hired someone from Lamborghini to lead its electric vehicle program, it got me thinking: how does one go from high-end consumer products into cars? And is that even possible? Why would any veteran in the right frame of mind and who spent the last few decades of his life working in a zone of familiarity jump into a totally new business?
Can you imagine the kind of conversations he would possibly be having with the engineers on the ground: Calibrating watts to kilowatts. Migrating from small iPhone and Mac enclosures to designing large car chassis. To top it off, ensuring the religious compatibility with the entire Apple ecosystem - which I am sure will be an important part of the design process. This guy has to basically get management's buy-in to look and do things in potentially a whole different way.
How do you convince someone in management who has done things a certain way their whole careers to get out of his comfort zone and embrace a totally different way of doing things?
And had it been another company not as big as Apple championing such an initiative, would they also be able to headhunt and convince someone of similar calibre to drive this innovation?
Why viruses are important.
Businesses in their early phases struggle with sourcing for capital and achieving profitability. But once they have crossed that chasm and survive, they then have to deal with grabbing other important resources such as attracting and retaining talent.
You can use capital to buy talent. But to keep talent, you need more than just money. You can retain the existing employees and management teams that have been comfortable with a certain way of doing things, keep the status quo, and you may most likely continue to survive.
But to get to that next level, you will need introduce a change agent, a different way of looking at things and someone who dares to challenge conventional wisdom. Sometimes I like to think of it as introducing a virus to the system.
Vaccines work that way: Bring in a small enough dose of a foreign agent to the body without killing it, allowing the host to learn and adapt. There will be discomfort. But over time, you will grow and acquire immunity.
Professional experiences, both good and bad, follow a person around for a long time.
Well established companies like Apple have better leverage over smaller companies to attract and inoculate talent because of their brand equity. Branding doesn't necessarily apply only to consumer or retail facing businesses. It is how people outside the firm view the company - the customers and suppliers (existing and future), as well as employees: past, present and potential.
Are existing and past employees proud to say that they have worked at a particular firm? Despite the expected grunt of having to work long hours under tremendous pressure and high expectations, do they feel a sense of accomplishment and pride after leaving the firm? Do these people feel like they have learned something or contributed to something during their stint within the company? Do past employees simply drop off the radar once they leave the company or does HR make it a point to keep it touch with them? An example of those who make it a point to keep in touch with past employees or alumni include KPMG, Goldman Sachs, McKinsey, the list goes on.
Most alumni who reminisce their time within the firm over drinks tend to mostly remember the struggles, the tough times and the nasty people. For good or for bad, these moments represent shared experiences. And no matter what kind of impact it has left on them, these shared experiences inevitably shape their professional outlook and approach towards their future careers. Those experiences and intangible skills acquired form a sense of identity - much like how people feel a sense of loyalty to their countries although the majority will continue to complain about taxes and how their governments are not doing enough to help them.
This sense of identity in the context of the corporate world is basically brand equity.
But how do you nurture brand equity?
Encourage people to embrace discomfort as a normal
Dare to try (and fail) attitude - don't over-penalize for the lack of results from trying, penalize for the lack of trying.
Encourage idea generation and reward execution - it's good to have ideas, but remember that execution is everything
Hire well - Test for ability and skills, but once employees and managers come onboard, be genuine in understanding what drives them deep down and make an effort to help them achieve their personal development goals
Remember that all employees (past & present) are brand ambassadors for the firm - never under-estimate the extent how much advertising (good or bad) they can do when they are not at the workplace
Customers, suppliers, employees and basically anyone who comes into contact with the company directly or indirectly needs to form an impression of the business that resonates with its values and corporate culture. But culture cannot be built overnight. Like a good habit, it is formed from months and years of iterating and improving. A distinctive company culture sticks long after employees have come and left. And with all things in good time, culture becomes brand equity.
Rewarding behaviour rather than performance.
"We only incentivize performance" - that's impossible... performance is a result. You can only incentivize behaviour. And so the best companies are aware of their own values... and build a culture around those values. The ones that go toxic, they forget about those values, they think it's performance at all costs. - Simon Sinek
Any new product or venture has risk, but beyond a strong balance sheet, the companies who are most genuine, willing to adapt and embrace change with a little discomfort to build a good culture and brand equity will find themselves in the best position to attract talent and succeed in the long run.
[Disclaimer: I hold shares in AAPL]
[The story of Lamborghini and Ferrari can be found here.]
Management is: Get it done, follow-up, discipline, planning, analysis, facts, facts, facts. It’s [getting] the right people in the room, kill the bureaucracy, all of these various things... ...Humility, openness, fairness and being authentic are most important – it's not about being the smartest person in the room or the hardest working person in the room. - Jamie Dimon, 2020
Sitting inside a glass box has certain kicks. I can do calls in private, talk as loud as I want and frivolously use the bigger table space and cabinets for stashing paperwork. But it takes some getting used to. Why? For most parts of my banking life, I've worked out of communal spaces in which senior directors sit out in the open and fraternise with the rest of everyone across the ranks. There weren't many physical boundaries. Everyone works out of a common row of desks or cluster of cubicles. When a director needs some stuff to be done, he/she just gets up, walks a few steps over to the analyst's table to talk.
In one of my previous transactions involving an airline company, the Chief Operating Officer actually sits openly in the geographical centre of the entire office, no walls, no barriers, just a table with a desktop computer and stacks of documents. When I asked them why they had done it this way, they said it was to ensure that the key person is easily accessible by everyone in the office - much like the control tower of an airport.
So it takes a bit of getting used to when I get to sit in a glass box.
While I don’t see this as a privilege, there is indeed a price for people who sit in a glass box. There are subtle ‘expectations’. Expectations on capability, responsibilitiy, and many more. People on the outside usually see those sitting inside glass boxes as 'senior management' regardless of whether they think so.
So it is along this train of thought that got me thinking: What makes management a good management?
Over the last couple of years, I've been observing, listening, reflecting and even experimenting through interactions with different people, in the process constantly asking myself - what makes an outstanding leader, how do people learn management skills and if business schools really impart any tangible (and usable) skills on this. After all, there are many academic modules covering organisational behaviour, strategy, international business, as well as many ideologies drawing references to notable thought leaders and practitioners: Peter Drucker, Michael Porter, Jack Welch, Bob Iger and so on...
It is refreshing to read so much literature and draw a wide variety of insights from these accumulated experiences on what defines good leadership and management. But application in reality is much more difficult.
Since I started working, I have also had numerous first-hand experiences in 'receiving' and 'practising' management - both good and bad ones. Most of my previous stints involve elements of conflicting work styles and company cultures. I have seen and experienced how managers and colleagues try to adapt and assimilate these. Obviously, not all were successful. At times, I wonder if there are perfect solutions, and who decides whether the outcomes had been effective.
(1) Get it done.
Perhaps the most important principle is to deliver the goods. Results are basically everything: Topline and cashflow. Quantifiable metrics are not only tangible, they are surgical, honest and most of the time beyond contestation.
To contextualise this to military ops: The mission is everything. The spirit is: If it needs to be done, it will be done. And you'll do whatever it takes to get the job done.
(2) It's not so much about ability, it’s about responsibility
I've seen too many managers try to impress, in different ways. They try to look the part, exert authority, flaunt their past experience or pedigree sometimes. The reality is that most people (especially employees) only care about ability to the extent it affects their bonuses or whether or not they will need to work overtime. Looking good is overrated. Responsibility is not about taking credit but mostly also about the taking the rap when shit hits the fan.
You will look stupid screwing up or when someone in your team screws up. But that's part of the job that no one tells you when you become a manager. It's not about taking credit for good performance but also 'taking credit' for the slip ups.
Responsibility also means developing the technical and personal aspects of the people around you. By helping those around you, you are indirectly relieving yourself of unnecessary management work freeing up more time for doing the more important things and in the process delivering the point above on getting the job done.
(3) Motivate rather than manage
The office environment is full of "Do this", "Do that". One of the things I like to ask after any meeting or conference call is: "what do you think?". Because no one, especially in the junior ranks, expects their opinion to be taken seriously. Most of them believe that it is not in their place to make decisions.
This mindset, if not managed well, can lead to prolonged apathy at the work place, overburdening managers with decision making, which may not always be the best judgement. This is also how good corporate culture gets destroyed. Employees at the workplace get increasingly disconnected because "no one listens to me any way."
I am genuinely interested in developing colleagues and staff - across all ranks. Money aside, there is no better satisfaction of seeing how someone goes out of his/her comfort zone to overcome their limitations. This can even be as simple as delivering a presentation, facilitating a conference call or even achieving a breakthrough in a seemingly impossible project.
It is also very encouraging to see managers get excited brainstorming on a new strategy, daring to experiment with possible solutions, not being afraid to try, and perhaps more importantly, not being afraid to fail or look bad.
After all, we are all about just getting the job done aren't we?