Back in 1996, we published our own up-close account of one of America’s great businesses. We called our book Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success. Much as we admired that legendary airline and its irreverent culture, we were flabbergasted by the book’s success. As of 2003, Nuts! has sold more than 500,000 copies, and it continues to sell thousands more each month.
Why such interest? Well, it seems that people all over the world crave stories about extraordinary achievers, and Southwest fits the bill. Even in the aftermath of 9/11, with other airlines hammered by financial turbulence, Southwest Airlines soars on wings of success.
Instead of laying off people and cutting flights, it has hired 6,500 new employees and added new routes. Instead of alienating customers, it has generated such loyalty that its passengers often donate unused portions of their tickets to the company and even send in cash. Post-9/11, Southwest is the only major carrier to make a profit every quarter.
Inspired by the Southwest story and its impact on all those who hear it, we set out to find other Southwest-like companies with unusual strategies for attracting talent and ensuring success. Nuts! became our passport to amazing organizations, not only those on Fortune magazine’s various “best” lists, but also companies that may not be on any list at all yet are known as the best within the communities they serve. We discovered organizations full of great people who are turned on, passionate, in love with what they do, and eager to use their skills, gifts, and talents to the fullest. We were determined to pinpoint just why such companies are so unusual.
We confirmed that Southwest Airlines is still outrageously unique and still ingeniously nuts even after all these years, but we discovered something else as well. Many other enterprises, all nutty in their own ways, share an uncommon characteristic with Southwest. They’re all run by what we call “gutsy leaders,” meaning passionate men and women who don’t hesitate to slaughter the sacred cows of convention. We discovered such organizations in Welds ranging from software to advertising to the U.S. military. All are led by people with the courage to discard traditional management rules, rituals, and expectations. They are gutsy enough to forge new paths, consistently serve their people first, and pursue a brilliant new way of working, one that we are convinced must dominate business in the decades to come.
Our hope is that this book will help you become more gutsy, too–more engaged, more considerate, more courageous, and most important, a better leader. You may just blow the doors off business as usual in your corner of the world. All it takes is guts.CHAPTER 1
Gutsy leaders reject the mercenary notion that their employees are nothing more than human resources, akin to capital, fuel, oil, or machine tools, that can be allocated or discarded at will. Instead, they see their people as individuals with unique gifts and talents, eager to realize their potential. Gutsy leaders aren’t afraid of being criticized or even mocked by their competitors. With bravery and vision, they have dismantled fear-based management and replaced it with heart, soul, discipline, loyalty, humor–and long-term record profits. By being gutsy leaders, they have led their enterprises to new levels of performance. Exactly why and how gutsy leadership produces such impressive results is the focus of this book. These leaders teach us that it is absolutely possible to work hard, have fun, love what you do, live your values, and still make lots of money. After six years of observing these leaders in action, we want to spread the word.Jim Blanchard Has the Guts to Work for His People.
Employees work for their boss, right? Not if you work at Synovus Financial. James H. Blanchard, chairman and chief executive officer of Synovus, told us repeatedly that he works for his company’s people. His mission is to provide whatever they need to thrive, including inspiration, training, resources, and peace of mind. Blanchard’s offbeat style is called “servant leadership,” a radical concept sweeping many successful businesses today. One of Blanchard’s rituals is a weekly meeting with a rock-the-boat agenda. First question at the meeting: “What are the 25 dumbest things we do around here?”
Servant leadership has delivered all sorts of benefits to Synovus’s employees–and to its bottom line. For a hint on the employee side, consider this: The corporation, which employs 10,400 people, consistently ranks high on Fortune magazine’s list of “the 100 best companies to work for in America.” In 1999, it was number one. As for the bottom line, hear this: As of 2002, it had a market capitalization of $71 billion, assets of more than $21 billion, revenues of more than $1.7 billion, and profits of $365 million. Challenged, dedicated employees and rock-solid financial–see a connection there?
Synovus is a financial-services giant based in Columbus, Georgia. It started more than a century ago as a local bank, Columbus Bank & Trust Company (CB&T), and now encompasses 40 community banks in the Southeast, along with Synovus Insurance, Synovus Mortgage, Synovus Securities, and Synovus Trust.
In addition, Synovus owns more than 80 percent of TSYS, one of the largest payment-processing operations in the United States. CB&T was a pioneer in the credit-card business, in 1959 becoming one of the first banks in the world to issue the cards. Fourteen years later, the company developed a breakthrough software product that permitted electronic access to bank-account data, and began processing other banks’ paper, particularly their booming number of credit-card accounts. In addition to its card-processing business, TSYS provides computer-equipment sales and leasing, direct-mail and telemarketing services, and commercial bank-card printing.
As big as it is, Synovus is all about serving small towns, where its community banks offers retail banking, mortgage banking, and credit cards and play a major role in local affairs. It’s a name to do business with in more than 250 locations, and the number is growing. Though most of its banking revenue comes from Georgia, the company has been crossing state lines over the last decade, with bank acquisitions in Alabama, Florida, South Carolina, and Tennessee. Synovus has also increased its stake in Internet and investment banking, while gradually diversifying its portfolio, buying auto- and life-insurance companies and Wallace & De Mayo, a leader in the debt-collection field.
In case you were wondering, the name change from Columbus Bank & Trust Company to Synovus came in 1989. “Synovus” is a coined combination of the words “synergy” and “novus,” which the company defines as “of superior quality and different from the others listed in the same category.”Roy Spence Has the Guts to Build a City of Ideas
GSD&M, the nation’s third-largest advertising agency and now a subsidiary of the Omnicom Group, is, in reality, in the idea business. In 1971, six graduates from the University of Texas started the organization, based on the premise that big ideas will generate big results. At Idea City, GSD&M’s headquarters in Austin, Texas, people develop visionary ideas and strategies that consistently make the client a winner faster than anyone thought possible. As the company’s leaders once wrote, “The entrepreneurial–almost primal–drive to create something that was not there before is the simple idea that has fueled GSD&M from the start. We didn’t know it then, but that idea was to become the essence of our agency. The pursuit and creation of an idea is exhilarating, thrilling, draining, and addictive. It is what we do. It is what drives us.”
Roy Spence, president of GSD&M and one of the original six, dreamed of building his own city, and he didn’t stop with the dream. Determined to recruit the best creative talent, Spence sought unconventional office space to excite his elite team of fantasy merchants. Genius knocked: He conceived and built Idea City, a far-out complex aimed at sparking creative friction by throwing people together in unexpected ways. Part ancient Greek marketplace, part SoHo atelier, it is carefully designed to smack down conventional wisdom wherever it raises its predictable head.
By not taking itself too seriously, Idea City avoids the pretentiousness that often stifles innovation in other companies. One of the city’s two “idea towers” features a huge stuffed cow on a retractable pulley; the other, soundproofed with padded walls, includes a Ping-Pong table, ideal for batting ideas as well as balls back and forth. GSD&M people work in “neighborhoods”: a graffiti-adorned Greenwich Village for the copywriters, the financial; district for the numbers crunchers.
On the theory that “your butt’s connected to your brain” (that is, where you sit shapes what you think), GSD&M has 30 small “war rooms” designed to trigger creativity. The Chili’s Bar & Grill war room, for example, is furnished with a booth, menus, and a Tiffany-style lamp hanging over the table. Other rooms are stuffed with assorted branded products and memorabilia from client companies.
No doubt Spence took a risk when he chose to build Idea City in Austin rather than a familiar ad-agency center, such as New York or Los Angeles. Over the years, the risk has paid off in double- digit annual revenue growth. The company now boasts more than $1 billion in annual billings–from the likes of Ameritech, Charles Schwab, Southwest Airlines, Wal-Mart, the U.S. Air Force, and the World Golf Championships. GSD&M has been named “Agency of the Year” six times by Adweek magazine. Along with its rivals, the business has been hard-hit by the millennial recession, with a 25 percent drop in sales in 2002 to $60.8 million. Undaunted, it increased its staff almost 6 percent to 565.
An occasional economic downturn, though, seems unlikely to dishearten a company with the kind of gutsy idea power GSD&M demonstrated for upscale Doubletree Hotels, a division of Hilton Hotels that is based in SpringWeld, Oregon.
Rather than the usual industry focus on fancy rooms, swimming pools, and service, the agency convinced its client to develop a new trademark, a chocolate-chip cookie. The cookie, delivered to guests at check-in, became a symbol of the “sweet dreams” and peace of mind that would be Doubletree’s chief new selling proposition. The campaign exploded call volume to the chain from 2,000 to 13,000 a day, and helped make Doubletree the fastest-growing U.S. company in the first-class hotel category.Harry Quadracci Had the Guts to Trust
It takes guts to entrust the business you created to someone else. No one did that more than the late Harry V. Quadracci, founder and president of Quad/Graphics, one of the world’s foremost printers, which handles such magazines as InStyle, National Geographic, Newsweek, People, Time, U.S. News & World Report, and the prepress business of Condé Nast. It also prints direct-mail pieces, books, retail inserts, and the catalogs Lands’ End, Lillian Vernon, and Victoria’s Secret. Quadracci believed in “management by walking away,” a bet that the more you delegate power, the better your employees perform. Quadracci fully trusted his people to rise to the occasion to the extent of establishing, over the years, six separate businesses of which employees are part-owners and full-time managers.
The ultimate example of his “management by walking away” is Quad University, an annual event that continues even after Quadracci’s sad, accidental death by drowning in July 2002. During the event, all Quad managers take part in a two- to three-day conference hundreds of miles from the Quad/Graphics facilities, leaving rank-and-file employees in charge of everything–scheduling work, running state-of-the-art presses and binders, shipping finished goods, handling crises, and dealing with customers.
Was Quadracci crazy? No, just gutsy.
His baby, Quad/Graphics, was started on a shoestring in 1971 in an abandoned factory in the hamlet of Pewaukee, Wisconsin. He had 11 employees, a rented press, and a borrowed binder. Pewaukee was so far off the beaten printing-industry path that the only jobs it got were those no one else wanted. “We were pretty much known as the company that could do anything,” said Bill Deja, the transportation vice president, who epitomizes Quad’s “can-do-against-all-odds” culture.
Quadracci couldn’t afford to hire experienced people at first, so he took on beginners instead and trained them. As the company prospered, he promoted them and gave them more responsibility. Part of his walking-away agenda was to keep the management structure as flat as possible and to be personally accessible to everyone–but only in those rare circumstances when his people needed his input. The mix of empowered employees and top-management presence gave Quad tremendous flexibility to match its people’s do-anything attitude.
In 1977, the corporation had a chance to strut its stuff after landing its first big client, Newsweek. That relationship, which lasts to this day, also provided the wherewithal to install state-of-the-art technology, which the company made a tradition. By reason of its private ownership, Quad escaped the merger-and-acquisition mania and debt escalations of the 1980s; banks were happy to lend it the cash it needed to keep upgrading its equipment.
In the last decade, Quad/Graphics has gone global, taking a major stake in an Argentine printer and entering into joint ventures with printers in Brazil and Poland. It also created Parcel/Direct, which provides large-scale shipping services of items such as catalogs. About 11,000 employees do the work and own a substantial chunk of the business, which, as of 2002, enjoyed sales of $1.8 billion, up almost 6 percent from the previous year.Colleen Barrett Has the Guts to Value Values,
To many she is known as the Queen of Hearts. Colleen Barrett, president and chief operating officer of the more than 35,000-person-strong Southwest Airlines, is the highest-ranking woman in the U.S. airline industry. A publicity-shy executive who helped found the company more than 30 years ago in Dallas, Texas, Barrett has been the inspiration behind Southwest’s amazing culture. In 1990, she formed Southwest’s Culture Committee to preserve and promote the organization’s core values, known collectively as “SPIRIT.” At the time, culture had nothing like the acceptance it has since gained. From day one, Barrett perceived the essential role that culture would play in differentiating Southwest Airlines from its industry rivals. Without a doubt, SPIRIT is the superglue that holds it all together.
Thousands of articles have been written about Southwest and its legendary founder Herbert D. Kelleher; they rarely give Barrett the credit she deserves. Her priorities reflect her values, and both are demonstrated in a foregone prize: From 1997 to 2001, Southwest was in the top five of Fortune’s list of the “100 best companies to work for in America.” In 2002, it didn’t make the list. Why? Because Barrett had the guts to remove the company from the competition, saving more than $100,000 worth of employee time that goes into applying for the honor. As she told her people: “It’s far more important for each of us to ‘walk the talk’ than it is to . . . compete on paper with other companies.”
Was it a smart call? You decide. In the wake of the 9/11 terrorist attacks, many U.S. airlines were forced to borrow cash, cancel aircraft orders, cut flights, lay off employees, and slash fares. Southwest’s story was dramatically different. The airline’s people remained strong, dedicated, empathic, united, and highly spirited.
The post-9/11 results speak for themselves:
• Southwest operated at 100 percent of capacity without a single layoff.
• It fully met its obligations to its employee profit-sharing and savings plans, which totaled $197.5 million.
• It inaugurated new routes.
• Its revenue-per-passenger-mile (RPM) share of the U.S. domestic market increased by approximately 25 percent.
• It reported 2002 revenues of more than $5.5 billion, with net income of $241 million and a gross margin of 30.5 percent, compared to 26.02 percent for the industry.
The bold and gutsy leadership that started with Herb Kelleher and Colleen Barrett has created one of the most extraordinary workforces in the United States, along with service, safety, and performance records that blow the competition off the runway.
Barrett helped build the Southwest brand by doing for Southwest people what she expects them to do for Southwest customers–live by the Golden Rule.Jim Goodnight Has the Guts to Be Extravagant
Is it foolish to pamper people with perks? Not according to Dr. Jim Goodnight, cofounder and chief executive officer of SAS Institute, a world leader in intelligence-software services. The more you help employees focus better on their work, he believes, the more amazing results they achieve for your organization–and he has the results to prove it.
Goodnight was on the faculty of North Carolina State University in 1976 when he and a friend established a business to market the statistical-analysis software he had devised as a student, and they named it after their product’s initials. SAS, which is based in Cary, North Carolina, is still Goodnight’s property–he owns two-thirds of the shares, and his cofounder, John Sall, holds the rest.
In the years since, they have transformed their enterprise into the largest private software company in the world, with 9,000 employees, offices in 53 countries, and revenues of more than $1 billion. Until the technology crash of the recent past, the company boasted 24 consecutive years of double-digit revenue growth. That came, in part, because of the corporation’s remarkable ability to develop state-of-the-art analytic software for virtually every industry, enabling organizations to mine their databases and use the results to better manage everything from their finances to their human resources to their ability to spot money-laundering transactions. In addition to its technical skills, SAS leads the industry in its wraparound, 24/7 customer service, with an amazing annual renewal rate of 98 percent, and 80 percent of its sales come from those renewals.
Aiding the company’s retention rate is an unusual payment arrangement. Unlike most software makers, SAS does not sell product licenses. Its customers pay a yearly license fee of about $50,000 for every 50 users. If a customer doesn’t renew its license, its SAS tools and all the applications built on them become inoperative.
Of course, what keeps the products flowing, and the customers content, is a gung-ho, dedicated workforce, which may just be the most important of Jim Goodnight’s many achievements. Make employees’ lives easier and they will give their all at work! He makes employees’ lives a lot easier and much more pleasant. Needless to say, SAS employees give their all at work. In an industry notorious for footloose employees, they stick to SAS like glue, which allows the company to avoid the costly headache of recruiting, training, and assimilating new hires.
According to Jeffrey Pfeffer, a Stanford University professor, “Software companies the size of SAS have to replace more than 1,000 people a year; SAS loses fewer than 100, a difference that saves the company between $60 million and $80 million annually.”
Goodnight’s gutsy coddle-the-employee policy takes many forms. You’re expected to work only 35 hours a week. Your sick days are unlimited and can be used to care for ailing family members. Company specialists can arrange expert help for your aging parents. Your benefits are extended to domestic partners. If you work at headquarters, you can take your preschool kids to one of the two on-site and two off-site Montessori-based childcare centers for $300 a month, meals included.
Each of the 24 buildings on the 250-acre campus has break rooms on every floor stocked with fruit, juices, soda, peanut butter, crackers, and other free snacks. For a full meal, you can choose between two full-service cafeterias, one featuring down-home Southern food, the other offering a broader range of fare. As of 2002, the price of a cafeteria lunch was fixed at $3.50, and you can work all that off in a 54,000-square-foot gym with free personal trainers, an Olympic-size swimming pool, yoga classes, and a dance studio, or on the soccer Weld, tennis courts, and putting green.
Someone once asked Jim Goodnight if sickrooms could be provided for children who weren’t feeling well. “We will never have sickrooms,” he answered. “When your children are sick, you need to be at home with them.”
Clearly, Goodnight is a man who knows what he wants: employees who are at peace with their families and their lives so they can be devoted to their jobs. He's discovered that gutsy perks pay.From the Hardcover edition.
Excerpted from Guts! by Kevin and Jackie Freiberg. Copyright © 2003 by Kevin Freiberg and Jackie Freiberg. Excerpted by permission of Crown Business, a division of Random House LLC. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.