Where the heck are my seals?

FM-blog-post-11-24-15-220x207No, this isn’t a blog about careless trainers at SeaWorld. You are about to learn far more about splash-proof electrical sockets than you ever realized you needed to know.

But before we get into that, let’s start with a question that inevitably comes at the end of almost all conversations with CEOs on Founder’s Mentality: “OK, so if you were me, what would you do starting tomorrow?”

In almost all cases, we suggest five near-term actions:

  1. Rediscover your insurgency. There is simply no better way to energize your people than to reconnect them with the core purpose of the firm. Every great company starts as an insurgent, at war against its industry on behalf of underserved or new customers. But over time, the sense of that insurgency is lost or your people become disconnected from the insurgent mission. So start here.
  2. Reconfirm who the “franchise players” are in your company and start meeting with them regularly. Your franchise players are on the teams that deliver that insurgent promise to your customers. But too often, the CEO grows disconnected from them, and they become disconnected from the firm’s purpose. So find them, set up a forum to connect with them regularly and start to reorient the rest of the organization to supporting the franchise players with speed and purpose.
  3. Co-create the “compass” for your company as the first major task of your franchise forum. Now that you’ve dusted off the insurgency and created a way to connect regularly with your franchise players, there’s no better thing to do together than work with your frontline employees to create a compass—that is, a set of nonnegotiables that translate your strategy into daily routines and behaviors. I was reminded of the importance of these nonnegotiables at a recent DM100 meeting in Monterrey, Mexico. One founder said a core nonnegotiable of his company during its first three decades was, “We will never let the phone ring three times.” This locked in the notion of customer responsiveness: Nothing is more important than a customer trying to reach our people. I loved this one.
  4. Establish Engine 2 now. So many CEOs face huge market turbulence. They must adapt quickly, but they remain deeply frustrated by how slowly their organizations respond. To them, we offer another no-regrets move: Start Engine 2, the business that will be responsible for your next wave of growth. It will take six to eight years to build and will become a great entity to test new partners, new ways of working, new sources of talent and more.
  5. Shake things up with a few surgical strikes. This is the fun one. We have created lots of examples of surgical strikes, from the Monday morning meeting to setting up lines in the sand. Another of these surgical strikes is for the CEO to create hero stories, finding those leaders throughout the company who on a daily basis do whatever it takes to serve customers. By making heroes of these folks, the CEO signals that the organization doesn’t need to wait for the CEO to direct every initiative; it is up to everyone to live the insurgency on a daily basis.

Last week, over a classic full English breakfast in London, I had one of these CEO conversations with Jo De Backer, CEO of the Niko Group. As we went through the list of five actions, he latched onto the idea of hero stories and said he had a perfect example. He then whipped out his mobile phone, called someone in his organization, had a brief conversation, turned off his phone and said to me, “And now I have his permission for you to tell his story.”

So, first some background on Niko Group. Niko was founded in 1919, and by the early 1980s had become the Belgian market leader in electrical sockets and switches. From its founding, Niko’s key competitive weapon was its ability to adapt to changing customer demands faster than its competition. This was critical in the early days of electrification, as standards and regulations were in constant flex. As Jo says, “Electricity was then what the Internet is now: A new technology that constantly evolved and changed customer needs. We won because we maintained a start-up mentality. The process that made all this happen was a weekly meeting during which the CEO met with key salespeople to identify the next wave of customer issues and develop a new set of product solutions. We were able to keep the agility of a start-up for decades, and this helped us become the leader.”

Now, we’re moving closer to Dimitri’s story, but you need a bit more background on splash-proof boxes. Here’s Jo: “A splash-proof box is a box which you screw onto the wall, lead your cables into and finally in which you connect and install your socket or switch. It is made in such a way that you can spray it with a liquid, but the liquid will not go into the box, and thus won’t cause a short circuit or, ultimately, a fire. The weak point in all this is the hole through which you lead your cables. This is where Niko has differentiated itself from the competition: We have a better sealing technology.” In the residential segment, splash-proof boxes are used for installation in “wet” environments (terraces, garage, washrooms and so on). In the commercial segment, they are used in industrial kitchens, livestock stables, slaughterhouses and other environments where water is often present.

When the authorities changed the product standard sheet for splash-proof boxes and prescribed that a seal of different dimensions be used, Niko had to make the switch to the new dimensions as fast as possible in order to maintain its leading market position. This was a one-time change, so either Niko came up with a solution or its customers would have to move to a competitor. As a result, it was all hands on deck in order to adapt the plastic molding tools, build up stock levels of new product, prepare advertising and so on.

This was the setting for Dimitri’s story. As Jo tells it: “Dimitri was a young designer who had just been promoted to project manager. It was his responsibility to manage this change-over project and to hit our goals on time and within budget. And, by the way, this was his very first project to manage. He did a great job managing the project towards its objectives, except for one critical supplier who refused to take him seriously. This was the company that made the seals. On multiple occasions, Dimitri explained why he needed the new seals by the given deadline and asked that they please send him the first order so he could start up the first production run.

“The deadline came closer and closer, but no seals arrived. Close to his final deadline, Dimitri called again to find out where his seals were. The supplier simply replied that the cartons of seals were ready and waiting, but they did not have the time to ship. They would ship at their convenience. When Dimitri answered that he would get in the car and come over to pick them up, they started laughing: Niko is in Sint-Niklaas, Belgium, and the supplier was in Frankfurt am Main—an 850-kilometer round trip. They stopped laughing when Dimitri arrived at their doorstep four hours later to pick up the Niko seals.

“Dimitri got back at the factory that same evening and by the next morning, we were producing new splash-proof boxes with new seals. Dimitri pulled out all the stops to deliver: This was the spirit that first made the company the market leader in that particular segment, but you also need that same spirit to maintain that position and to build on it. Had Dimitri not gone the extra mile, it would have been open hunting season for all competitors.”

In the terms we use in Founder’s Mentality, Dimitri’s story is the story of a leader acting like an insurgent. He didn’t wait; he acted. He didn’t focus on explaining away his failure; he moved fast to create success. He didn’t ask permission; he asked forgiveness. He signaled internally that a leader does what it takes to keep promises. And he signaled externally, first and foremost to the rather shocked supplier, that Niko Group would do whatever it takes to serve its customers.

We know that CEOs can’t maintain or revive Founder’s Mentality in their companies by themselves. CEOs must rely on the efforts of hundreds of heroes. We also know that leaders in organizations don’t need to wait for the CEO to start acting like an insurgent in order to begin reviving it on their own teams.

It is critical, therefore, that CEOs collect and share these hero stories like so many rare baseball cards. The Dimitris of the world are the way insurgent companies maintain their Founder’s Mentality and how incumbent companies recover it. Tell their stories.

This entry was posted in Death of the nobler mission, The erosion of accountability 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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