Passing on the culture of business building

cranesI was in Jakarta recently meeting with founders of some of Indonesia’s leading companies. One of these was Dr. Hc. Ir. Ciputra, a serial founder who has started and floated three businesses and is one of Indonesia’s top philanthropists. One of these businesses, the Ciputra Business Group, specializes in residential and commercial real estate projects. Dr. Ciputra is the company’s president commissioner (in addition to founder and chairman). We met at the company’s new headquarters, in the center of the Ciputra World Jakarta complex: a $1.3 billion, 12-hectare development in one of the top commercial and office areas of Jakarta. When completed, it will consist of 15 towers that will include shopping centers, several hotels, apartments and condominiums, and a large green.

After introducing me to his leadership team to discuss Founder’s MentalitySM, Dr. Ciputra explained his belief that maintaining Founder’s Mentality at the company requires that he pass on a culture of business building.

“It is the classic story of family businesses,” he said. “The first generation builds the business through hardship. The second generation witnesses and often suffers from the parents’ sacrifice as they help to make the business successful. But the third generation often only knows success,” he said.“ They know how to run a successful business, but don’t often know the values and behaviors required to build a successful business. My goal is to pass on the values of a business builder to the third generation and to the management team.”

This distinction between building and running a successful business is important. The business builder is an insurgent fighting against the odds. The founding team bets everything and lives with the knowledge that each customer, each sales call can win or lose it all.

The incumbent often created by a successful business builder runs the risk of being overly focused on sustaining the business, protected behind the high walls that its hard-won scale and scope provides, and becomes preoccupied with fighting the future. Founders are usually obsessed with preserving the values of a business builder, but that desire is often a victim of their success: The business they hand off to the next generation seems fully built and ready for careful preservation.

As Dr. Ciputra talked to me about the importance of business building, he told some extraordinary stories about fulfilling customer promises at the cost of personal sacrifices and significant losses for the company. Founders constantly remind us how important these foundational stories are in preserving Founder’s Mentality. And founders are quick to make some important points about these stories:

  1. Foundational stories are not a company history. Company histories are wonderful documents—you often see them on the company’s websites, or as coffee table books in reception or as videos of an older founder telling about the early days. But histories don’t always serve to reinforce behaviors. Foundational stories may involve some history, but they are stories that describe the founding values and how they forced the leadership teams over time to make trade-offs, usually to protect customers or employees even if it hit the short-term P&L.
  2. Foundational stories define values, not financial or operating targets. In a recent workshop, I heard a founder ask his leadership team, “What are the main values you have learned from the founders?” One executive answered, “Always hit your revenue goals.” Another replied, “Always complete your work on time, no matter what.” This continued for a while until the founder interrupted: “This isn’t my legacy! These aren’t lessons from me. These are the demands from your bosses. We were established to improve the lives of shoppers and home owners. We were determined to build good stores and homes, with the right materials and obeying the right regulations so our customers could sleep at night in our buildings.” He continued: “The industry was all about cutting corners, using shoddy materials and paying off regulators. We wanted to stand by our work and keep our promises.” The founder then told three stories, each of which was a tale of how he had made a decision that cost the firm dearly in short-term profits but protected the customer. Next, he asked, “Have any of you heard these stories?” Except for some of his children, no one had. Too often these stories get lost in a sea of targets and KPIs.
  3. Foundational stories must change behaviors and routines. The purpose of foundational stories is not to make people feel warm and fuzzy about the company’s history; it is to change or reinforce the behaviors and routines of the company’s people. In our recent DM100 meeting in Brazil, the chairman and founder of Localiza told a story about his customers not being able to reach his people. This led the company to enshrine as a core value the idea that customer demands always take priority over any internal meeting or commitment. It is a foundational story, but it is about today’s behavior.
  4. Ultimately, foundational stories are about today’s heroes, not yesterday’s founders. There is a danger that foundational stories create an “us vs. them” culture: The “us” are those who were around at the beginning, knew the founder and lived the stories, while the “them” are the rest of the company who are standing on the shoulders of those founding members. This is wrong. The best foundational stories tie the founding team and its early employees directly to the current team. They highlight today’s heroes, and the new heroes improve on the stories of the original founding team. After all, the best companies have their best stories ahead of them.

In Dr. Ciputra’s case, his foundational stories reinforce the importance of business building and of sacrificing it all to deliver the original customer promise. It is no wonder, then, that when the Ciputra Business Group moved into its new offices, one of the things it did was to offer to host a venture lab for incubating small businesses as part of GEPI, the Indonesian arm of the US State Department’s Global Entrepreneurship Program, which promotes entrepreneurship as a key pillar of economic development among developing countries.

“I want us to be surrounded by business builders—from our own organization, and also from the best and brightest entrepreneurs in Indonesia,” emphasized Dr. Ciputra. In other words, the best foundational stories don’t explain the past; they guide the future.

This entry was posted in Revenue grows faster than talent by James Allen. Bookmark the permalink.

About James Allen

James Allen is a senior partner in Bain & Company's London office and recognized as a leading expert in developing global corporate and business unit strategy. He is co-head of Bain’s Global Strategy practice and a member of Bain & Company's European Consumer Products practice. He is co-author, with Chris Zook, of Repeatability (HBR Press, March 2012) and Profit from the Core (HBR Press, 2001 and 2010).

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