The Learning Leader Show With Ryan Hawk - 157: Chris Zook - The Founders Mentality: A Bias For Action & Front Line Obsession

Starting point is 00:00:00 And I loved what he did on his first days in the job. He said, I don't want to spend a lot of time in the corporate office and staff briefings. I want to take my first six weeks in the field. I'm going to visit every depot. I'm going to travel with the trucks and the delivery people. I'm going to spend time with the salespeople. And I'm also going to send an email to all 70,000 employees and say, send me what you think your view is of what's wrong and of what things we can go back to that we've lost. lost or what things we should change. And so the first email, he only got about a little bit

Starting point is 00:00:35 over 100 responses. Well, he answered them all personally and sent it out again. And then he started getting hundreds of responses and he still tried to answer them all and did answer them all personally. And I think that, you know, those kinds of things are just central. Are leaders born or are they made? Our host, Ryan Hawk, believes that leaders can be made through determined, focused work on learning the art and science behind the makeup of other successful leaders. Now it's time to inhale knowledge and exhale success. You're listening to The Learning Leader Show with Ryan Hawk. Hey, and welcome to The Learning Leader Show. I am Ryan Hawk. Thank you so much for being here. What an intelligent and giving featured leader tonight. It's Chris

Starting point is 00:01:33 Zuck. He's a partner in Bain & Company's Boston Office. When he started there more than 25 years ago, there were roughly 100 employees, and now they have more than 5,000 of them. During his time there, he's specialized in helping companies find new sources of profitable growth. He's also a five-time bestselling author. His most recent book is titled The Founders Mentality, published here in 2016. It's based on a decade-long study of companies in more than 40 countries. I highly recommend all business leaders read this book. A few of the topics we got into.

Starting point is 00:02:07 the three attributes that make up an owner's mindset. Then having a front line obsession. Do business leaders understand that the people who are with the customers are most vital to the long-term success of a company? It's a fact backed up in research. And Chris and I talked about it. Then how to be a leader that has a bias for action, someone who is a doer. Ladies and gentlemen, without further ado, it's Chris Zuck.

Starting point is 00:02:35 Chris, thank you so much. much for being here. I'm a big fan of your work, and I've been really devouring a lot of it recently, especially the founder's mentality. So first of all, welcome to the Learning Leaders Show. Great. Thanks very much. And I got a question around common characteristics of leaders and people you've studied that have sustained excellence. What are some of the common themes or virtues those people all seem to share? Well, most of the people, that I've studied and that I've known over my now pretty long career as head of the strategy practice at Bain working with my own clients, but with many others' clients and also the

Starting point is 00:03:29 hundreds and hundreds of people we've talked to in the course of doing these books is from the world of business or from the world of nonprofit organizations less from government. And within that, what has really struck me is the extent to which, even in the world at large, business founders are in many ways becoming new role models of leadership in the world. I came across a cover of Time magazine in 1988, where Walter Chrysler was on the cover as Time magazine person of the year. And so I was wondering how often it's been a founder. And I took a look at that. And for 60 years since they began doing that award, the first 60 years, the only one was Walter Chrysler.

Starting point is 00:04:18 But in the last 20 years, there's been about six. And then I began looking at schools. And I realized the fastest growing area of discipline in many schools is entrepreneurialism. And then I realized that you have a movie coming out in January called The Founder about the Founder. McDonald's. I think people are becoming more fascinated with that. And when I reflect on what the characteristics are of the great founders, you know, they're certainly all very unique individuals. And they all have their own personality quirks from Steve Jobs, which is well documented, to you know, Henry Ford, who was certainly a very unusual person with unusual views. But when you

Starting point is 00:05:05 ask the question, what seems to be similar across them? For me, I've come up with, I've come up with about four or five, a enormous number of them, intensity inside, or some form of passion. It impelled them in some way, almost to go to war on behalf of underserved customers or constituents, on behalf of their industry, against the industry standards, you know, whether it was what Phil Knight did, going to Japan and importing shoes and then ultimately making the first Waffle trainer to, you know, more recently Elon Musk trying to start SpaceX with one of the missions being interplanetary repopulation of the galaxy by humans. In fact, but, you know, it can also be the founder of your local restaurant who wants to

Starting point is 00:06:06 create the best cheese steak in Philadelphia. I found that lasting founders had a deep burning passion that we called insurgency. You know, a second characteristic of great leaders, great founders from our work is a deep intellectual curiosity, a love of the detail, an amazing tolerance for detail, almost an insatiable desire for that. I just saw that time after time after time in hearing the stories of the great founders. One interesting example that for me was just very graphic was the grandson of M.S. Oberoi, Vickram Oberoi, would tell me about how he would visit his grandfather. MS. was, of course, the founder of Oberoi hotels. He came from one of the most core rural villages in India and worked his way up in a local hotel

Starting point is 00:07:06 to a point where he could buy a hotel in Calcutta that had been hit by a cholera epidemic and nobody wanted to buy it. And he bought it in the 30s and turned it remarkably now into a hotel chain that for quite a number of recent years has won the award of the best luxury hotel in the world. I mean, how incredible is that?

Starting point is 00:07:29 And he would describe how he would visit his grandfather, MS, when he was about 93 years old, and on a Sunday morning, and he'd walk in at 10.30 on Sunday morning in New Delhi and find that he was still studying customer comment cards and scrawling on them about the temperature of the tea. Or, you know, I received a call just the other day from a guy who had spent a lot of his career at Wendy's. and he said that, you know, the founder of Wendy's used to go in, and the first thing he would do would be to look at the nature of the mops and the buckets that were used to clean the floors. And he said, you know, a sign of an unclean restaurant is in that bucket.

Starting point is 00:08:16 And, you know, if the bucket was unclean, then the restaurant floor would be unclean, and he expected people to clean every single detail of it over and over. And I just found this kind of attention to detail, what we call the frontline obsession, led to a desire to empower people at the front line and make them feel very important, as opposed to an organization that over time would be allowed to become a bureaucracy, where most of the decisions were made by people who would never made a product, never, like Steve Jobs did, assembled a motherboard themselves,

Starting point is 00:08:53 and maybe never even met with customers. It's amazing how many decisions in big companies that start to lose their soul are by people who have never served a customer. And the third dimension for me of the attributes of the great leaders is what we called an owner's mindset. And that has many elements to it. You know, it makes you be very careful about your resources as opposed to trying to capture resources, which happens in bureaucracies. And, you know, it also, though, is related to a very deep feeling of responsibility to jump in. You know, like the great late founder, Andy Grove said in his book, you know, only the paranoid survive. And, you know, that's true.

Starting point is 00:09:39 I remember talking to Les Wexner, who is the longest-running CEO founder and best-performing CEO founder in the world of a major company, best-performing. Harvard did a study early this year. And he was number one with nearly 20% return to shareholders per year for 35 years. And he said to me, you know, when you're stopped to smell the roses is when you get a run over, I have felt every day like I got up and there was a bear chasing me. And I think that feeling of deep responsibility for results and the ability to role model that is absolutely critical to leadership. And, you know, very often in large companies, large organizations, you find that over time, leaders gradually turn into managers, sometimes professional managers, who then sometimes turn into custodians. And maybe those custodians down the road turn into curators. And maybe those curators eventually turn into bureaucrats.

Starting point is 00:10:45 And, you know, when that begins to happen is when the leadership of a company begins to erode and it loses its soul. And I think the thing about the founders is that they maintain those three things. An insurgent fashion, a deep love of the front line detail, the ground-level instincts of a business, an owner's mindset of responsibility. Man, I love the detail you put in answer, Chris. And so now I want to break down some of that because I had so many thoughts. I was taking notes while you're talking. And I obviously read a lot of what you're talking about now.

Starting point is 00:11:31 And I want to focus right now on frontline obsession and empowering the people in the front line because I, you know, that was the first role I had was a frontline sales professional. And I, as one of those, and, you know, I've since been promoted a few times, so I understand that every day that I feel like I got away from being a frontline contributor, if I didn't have a clear focus to go back and be with the people doing that job, to be with the customers, I got, that muscle atrophied. It went away. If I didn't, if I didn't, think about doing that. And one of the things I remember most about being a front line, just in this case, the profession of selling is when a company would have something like a president's club and they would make a really big deal about it. Huge celebration. They'd bring everybody at the company to a certain location. Usually it's like Florida or California in the wintertime. And they have this massive celebration and bring you up on stage if you won. And I remember my first year when I was only at the company for half the year, and I got to see it.

Starting point is 00:12:37 I wasn't eligible to win, but I saw all my friends and new, new colleagues win. All I said was, oh my goodness, I have got to win. You know, I want to be up on that stage

Starting point is 00:12:48 because it showed they shine this huge spotlight on the people on the front line, and that meant a lot to me. And so that was literally, that was more motivating to me than money. What was being,

Starting point is 00:13:02 was the fact that they were going to obsess over me as long as I, I did my job really well. And so I love that part of treating frontline sales professionals, customer service people, thinking about the customer themselves in a big way because I've also seen when people get away from that and they don't recognize that, it has a dramatic impact on a company in a negative way. you know, so many meetings and companies become ever more choreograph. And the five distortions of bureaucracy all begin to set in.

Starting point is 00:13:44 You know, there's distortion of how you spend your time. Well, one of my colleagues did a study and found in a large company that let him trace this. This is unbelievable to me that a big management meeting, a quarterly management meeting to set direction, the amount of time spent on the PowerPoint presentations and the preparation and the research was, get this, 300,000 hours, 300,000. And he wrote an article for Harvard about the 300,000-hour meeting. And, you know, that's more hours than, you know, than in many small companies for the entire company for the entire year. And, you know, when you begin to look at that, you realize that what was going on in those meetings was not individual customers. In fact, you probably could have sat in that meeting and not heard the name of a single customer.

Starting point is 00:14:38 And what you would see is data on averages. You'd see averages of segments and averages distorted and averaged with other averages. And that's how people were making decisions versus the early years of the founder. And so we've actually seen some companies try to reverse that trend by, for example, starting every meeting with at least three customer, actual customer stories or suggesting that the management begin to get back out in the field. Yes. You know, the renewal of Home Depot is, you know, a remarkable story because, you know, over a decade ago, Home Depot began to lose its customers. and it was because a CEO had come in from General Electric, who was at the top of GE and decided he wanted to grow the business by acquisition

Starting point is 00:15:32 and by starting a lot of new businesses, and they took the Home Depot Corps and decided to fund these things by cutting costs on the floor. And so the place they went, of course, were to the most experienced employees who were the ones that were giving all the advice about, nails and about what paint to buy and about how to erect a fence in your backyard. And they were the orange apron cult. And there was a large bonus pool for them that had been set up by the founders.

Starting point is 00:16:07 And the management didn't recognize the importance of these people, as you described, your salespeople and your people dealing with the customers at the front line. and fired most of them, replaced them with low-cost clerks, massively downsized the staffing quality in the stores. And there was a phrase that went around in Home Depot, quote, do it yourself, started to become finding yourself. And the customer accounts began dropping like a stone. The market value of Home Depot went down over 80%.

Starting point is 00:16:45 A new CEO, Frank Blake, was brought in. And the very first thing he did on the very first day was to get Arthur Blank, one of the two founders of Home Depot, on television with all their 100,000 plus employees, and say, you know, we've lost the sense of the founder's mentality. We're going to go back to the inverted organizational pyramid that he used to have where he had the front line at the top. They had discarded that. we're going to bring back the bonus pool for the R&J Prinkult. We're going to go back and rehire as many of those people as we can find. And we're going to exit a lot of these businesses that weren't making any money and go back to the core. And we're going to reinvigorate the original principles of helping customers in the business

Starting point is 00:17:40 and, you know, reward people and celebrate them as the here. if they upheld those principles. And we're also going to get the new management team to go out in the field and insist that they work at a store at least one day a week. And so he did all of that. And if you check out the Home Depot stock price since then, I think it's gone from something like 20 to 120. And, you know, this isn't a high-tech business that's been around for a while.

Starting point is 00:18:14 and that's an amazing renewal, and it's created well over $100 billion in value. And in corresponding with Frank Blake about his turnaround, he said it was. It was a return to these roots and to reempowering the front line and disassembling the bureaucracy. And even companies like Nike, which has maintained the founder's mentality so well around the world. They are nine Nike maxims, and in many countries, you know, take Australia, they would have a year-end ceremony and celebrate the employees who best exemplified each of those elements. And, you know, we find that really the great lasting businesses that keep their soul, they keep their energy, that stay attractive to young people, to millennials who are very aware of this topic. are those that continue to celebrate people at the front line. I'll just add one more thought.

Starting point is 00:19:19 You know, the company I spent most of my life with a lot of other colleagues in building, which is Bain & Company, got the award last year for the number one place to work in the United States for young people by the glass ceiling organization. And I think one of the reason is, I'll just give one practice, is because we do that. We used to do a survey of every single project team in the company worldwide every month with seven questions. Are we working on the right thing? Am I getting good feedback? Do I feel valued?

Starting point is 00:19:53 Et cetera. And then the teams would have to discuss the scores, and the scores were recorded. Then there was a call to do it every two weeks. And now, in many teams and offices, they're now even beginning to do this once a week. and, you know, it makes the people, the most junior analysts, feel as if they are listened to and as if they're important and as if they're getting feedback and that they can't be pushed to the back burner because if those team scores are bad, then that ripples all the way through the leadership and the management and it affects their promotability. So, you know, the great companies, the lasting companies, maintain useful exuberance by doing exactly these things that, you know, you were talking about. about in your life as a salesperson as opposed to letting all the power flow up into the bureaucracy. Well, in thinking of those people as what they are, and that is human beings and

Starting point is 00:20:50 people, not simply a number or a resource. And I'm a firm believer in that. And especially if you grow to a leadership role, I think it's imperative as a leader to truly get to know and understand the people that, and the way I'd like to, Eric Riteholm told me this probably a year ago, he flips that, that's his mentality too, when he has people who report to him,

Starting point is 00:21:16 and he flips that thing upside down, and meaning he reports to all of those people who technically report to them, to him, and to deeply understand who they are as human beings, as people, and never, ever look at them as a number. And so I have a question for you about when it comes to this, Chris.

Starting point is 00:21:36 So there are a lot of leaders listening and others who are in senior roles, and there are also individual contributors out there listening. I get emails from both. And when somebody is in, it's high up, and let's say they're in a big company, and you've worked with these types of companies, and they are told as a leader of a business unit or any type of business, they're told you have to go save millions of dollars. before next year.

Starting point is 00:22:05 You have to find a way to get it done. And a lot of times that means they have to cut people or lower cost. How do you deal with that? When you're working with a company and you're advising them and somebody tells you, hey, we have to cut cost here. We're just too bloated. What's your response to that message? You know, most companies, most large companies, are net job destroyers in

Starting point is 00:22:35 the United States. When you actually look at like the Kauffman Institute report, you find that net job creation is by younger companies, founder-led companies, smaller companies, and the really large companies, not all their divisions, obviously, on net are job destroyers. And so what you describe is certainly common, something we encounter with clients and something that is pervasive in the world, particularly among large companies. And, you know, I think that the key in doing effective cost reduction that ultimately results in eliminating people is to, number one, make sure that you somehow link the mission of reducing cost

Starting point is 00:23:29 to something that will lead to a brighter future. You know, it may be reducing costs so that you're going to invest in the next generation business, a version of that business. Or it may be reducing costs so that ultimately you can invest in training or do something. I mean, some of the savings has to go back into the business and the people and be a form of investment. Second, you know, I am constantly shocked by the size of a business. large corporate headquarters and by the enormous variation between corporate headquarters some of which I've seen with 5,000 people and headquarters such as AB Mbbb the biggest beer

Starting point is 00:24:17 company in the world has 150,000 people and yet their corporate center is only 225 people. You know Mars one of the biggest and most successful founder led over the years consumer products business has a very small corporate center, you know, with barely over 100 people versus others. And so I would train my, you know, guns on not on the front line like it happened at Home Depot, but on the bureaucracy. And, you know, what we find is that the bureaucracy and the bureaucracy and the departments over time gradually become many fiefdoms, and that resources get trapped in these staff departments that often have no contact with customers, and that each of them has their own, quote, strategy to become, quote, excellent, which very often, you know, is,

Starting point is 00:25:18 I've always thought the phrase world-class excellence was one of the vaguest and opiate terms for businesses because, you know, really what you want to be is excellent at a few very spiky important things to the customer and that that should flow through your whole business, not excellent at every single functional department and use. So for me, when I see cost reduction, the two or three rules of successful cost reduction are number one. Make sure people understand that some of it's going to be reinvested in their future. Number two, train your guns on the thinkers first, not on the doers, and on people in staff functions, not at the front line of the business who know the customers.

Starting point is 00:26:08 And frankly, number three, is companies accumulate non-core businesses like barnacles over time. You know, the renewal of Lego, which is probably right now thought of as one of the two or three greatest renewal stories in Europe. I mean, Lego is now the most valuable toy company in the world. And a little over 10 years ago, it was a year and a half away from bankruptcy, hemorrhaging cash at a very rapid rate. And it was partly in that situation because over three generations, the family went from realizing it was, of course, the number one toy in the world, as voted by the British Toy Association, where 71 Lego blocks exist on planet Earth, every single human. So they what a great business. And yet they began to take the Lego brand and say, no, we're not a toy company. Well, oh, you look like a good toy company. You've got an award of the best toy company of the century. Toy of the century. All your customers are obsessed with it.

Starting point is 00:27:09 And began going into theme parks and joint ventures in little theaters with Stephen Spielberg and plastic watches and clothes and video games and all the rest of it. All those were a disaster. They all lost money and the core began getting sucked of resources. So I think the third way you reduce cost is you eliminate non-core assets and non-core businesses, which is the first thing that the current CEO, Jorgandvig Nudstorpe, did at Lego, to turn the company around and go after complexity. So complexity is a silent killer of growth. And it starts with too many businesses and too many activities where people,

Starting point is 00:27:53 People can't say no. And it ultimately runs all the way down, even into the Lego parts. They found that 80% of Lego parts were only used in one set. Now, 70% of parts are reused across all the sets. And that saves a huge amount of money. So, you know, complexity reduction, focusing your guns on people who are not at the front line, and liberating resources so that there is a purpose that everyone can buy into, even if it's temporary pain.

Starting point is 00:28:21 there's long-term gain is the key. What you do not do is to say it's 5% cut across the board. What you do not do is go to the front line and take the most experienced expert salespeople and begin to replace them with clerks. And shrink to grow, I think, is a motto that should be at the center of cost reduction. another aspect of the owner's mindset is a bias for action meaning having a thought process of do we make decisions with speed are we quick to take on personal responsibility and risk to do the right thing and i think a lot of it also depends upon trust great book called the speed of trust by one of the covey's that i think when there is trust, you don't need to check with 38 different people to make a decision. You make a decision and you go, you're empowered by leaders to make those decisions.

Starting point is 00:29:27 And even bigger companies can move quickly if there is a bias for action and there's trust involved throughout the business. There's nothing more maddening. And I've talked with friends who have worked at places like this and they ultimately always leave. when they try to get something done and it's not really even that big of a deal and it takes a million approvals and they get so fed up with it that they eventually just go somewhere else and these are talented hardworking deep thinking creatives who are good for those businesses and they end up going somewhere else because there's not a bias for action and there's the speed of trust so to speak doesn't exist

Starting point is 00:30:08 I thought that was a great part of having an owner's mindset. Yeah, absolutely. I mean, in a way, the whole rise of private equity several decades ago and something Bain has been at the center of in a lot of different ways can be viewed as a reintroduction of an owner's mindset into companies that long ago lost that.

Starting point is 00:30:36 And I remember doing some work, that went into a number of funds we had access to and asking the question, at the end of the day, what were the best investment deals, the ones that were really transformational and made enormous difference to the company and got the growth rate up and reinvigorated it and ended up being enormous high return deal, but also creating an enormously great longer term company. And by an order of magnitude, the best deals were cases where the private equity firm had purchased a non-core business from a gigantic conglomerate that had become a bureaucracy, and where the people in that business were just discouraged. They didn't feel that management was being honest with them. They were always waiting for the next day.

Starting point is 00:31:29 and an opposite thing. I just came back from 10 years of living in the Netherlands and moved back to the United States of America. And one thing I remember doing there is studying one of the large conglomerates in Northern Europe. And they were once one of the great innovative companies. I can't say who it is. But they, and they had a number of the great innovations

Starting point is 00:31:54 they had been responsible for. But then after over about a 12 or 14, year period, there was no organic growth. The company had become very bureaucratized. The best people weren't going there. And young insurgent companies were out maneuvering them. So to make growth happen, they began taking corporate cash and buying founder-led companies across their businesses, rather than simplifying and saying what's wrong. And so they brought these founder-led companies in, quite a lot of them at very high multiples. And so I did some little bit of work on, well, what happened to them when they were purchased?

Starting point is 00:32:34 And we found that they caught the corporate disease, that the founders became discouraged, that they had a new product, they wanted to launch in India or something, and that they had to go through a choreography that would be, you know, like something from the Vatican and the Catholic Church to get an encyclical past where they had to say, well, is this consistent with our corporate brand? Well, how is this going to relate to our other... 11 businesses in India. Well, you know, and on and on and on.

Starting point is 00:33:04 And it just gradually castrated the founders in their team that it used to been used to living with an owner's mentality. And suddenly they were not owners and the bureaucrats were winning.

Starting point is 00:33:21 And most of those teams left and most of those companies had their growth rates that were way above their industry rate that's why they were purchased for growth, go the other way. So, yeah, I agree completely with what you're saying. And you see it in big companies that buy founder-led companies and discourage them. And you can also see it in the renewal of companies that are taken out of these situations

Starting point is 00:33:51 where they were owned by abusive parents, or at least neglectful parents, and given an ownership stake. And, you know, I mean, in the private equity firm, of course, the board is filled with owners. The company management usually has more owner's responsibility. And it's amazing how just those factors alone, you know, were created this whole private equity industry. Another piece of information I found interesting while preparing for our time together, Chris, was 85% of root causes of failure to remember. profitable are because of internal issues and a lot of people like to blame it on external problems or things going on in the world but but the research and the

Starting point is 00:34:39 work that you've done has found that that's not the case it's it's 85% of the time it's it's from inside your the business that that is the problem yeah and for large large companies it was 94% you know we found it that that breakdowns on the outside, 94% of the time in big companies were traceable to pre-existing breakdowns on the inside. And we characterized what those were. They were either complexity or they were, the customer experienced as balkanized. You know, we've all had these experiences of calling in with a problem with our phone or our cable TV or some product, some computer,

Starting point is 00:35:22 and been sent to a call center that seems like it was an individual. India or somewhere very distant. And then we're sometimes turned over to another one and then turned over to another one. And then suddenly we get on our computer a survey where we're supposed to grade the service. And yet there was not even one person that owned the customer experience. You know, and I've always been struck by the fact that I love sports and played a lot of sports. But, you know, the number one sports book of all time, even three decades later, is still the inner game of tennis. And, you know, there's an inner game of golf now.

Starting point is 00:36:02 And but people read it for all sports, not just for tennis or golf. And, you know, when Hussein Bolt, Hussein Bolt was interviewed before his last race in the Olympics on NBC, I remember they said, well, what makes a difference now? And he said being able to maintain my mental toughness through all the training and through the race is now the biggest thing in something that has such small margins of difference. And in businesses that are all just roughly in the same, we think of a consumer product company. They all sell to the same supermarkets. They are so similar in their generic strategies. And yet the really big differences today are less about where to play than about how they win. how you win is so much about the, you know, flexibility and the mental toughness and maintaining

Starting point is 00:36:55 these elements of the founder's mentality over, over time. So, yeah, it doesn't mean that companies should become totally internally focused, but it does mean that a lot of the deep roots, just like our own health and our own personal performance at our job or in sports or in anything, so often traces to something inside of our body. We're depressed or we have an injury or we're distracted or we're sick. And we found that to be true of companies also. And we found the best measure of health indicator. There's a lot of measures of health indicators of humans. We all go to doctor for a physical. But what's the physical? What's the internal health measure for a big company? And we found these three things of the

Starting point is 00:37:45 founder's mentality about did people believe the company was special and had an insurgency or was there just some other company? Were the people at the front line celebrated and energized and valued and did they feel valued and were they loyal in their minds or were they frustrated and felt neglected? And third of these dimensions of speed of action and simplicity in an owner's mindset. And I think those are almost the measures of internal health of companies. And when you begin to erode in those dimensions on the

Starting point is 00:38:21 inside is when all these breakdowns with customers experience and excess costs and failure to innovate and fighting the future instead of embracing it and having people turn into energy vampires in the company and suck energy out of it,

Starting point is 00:38:39 that's when all these things start to happen. Curious in your study, Chris, You briefly brought up sometimes when you make a call and get transferred around through support people located in India. When you, over the course of studying businesses who have outsourced certain jobs to save on cost, because obviously it costs much less to have somebody in a call center in India than it does in the United States, are the companies that you study that have done that, how would you advise somebody? if they're looking at potentially doing that to save from a cost perspective and they're going to outsource some of that type of work. I mean, I'm thinking for me of having a conversation with DirecTV recently and it was kind of went exactly how you just described as very frustrating for me.

Starting point is 00:39:31 What advice do you give the companies who are considering doing that and your experience? What has been the success level of ones who have done it? You know, I think it's not just about size. It's about how you set things up and what the people at the front line who are dealing with your problems perceive as their job. You know, if they have a screen with a timer and they're paid on productivity, so they serve 50 customers an hour, then their interest is in getting you off the phone and passing you on. But, you know, it's interesting. Amazon, despite its size last year.

Starting point is 00:40:10 was rated number one across all major businesses on the three different measures that are done in different places in the United States, like the University of Michigan's satisfaction survey, was actually rated at the top by customers. And I thought that one of the things that Amazon does many things with customers in terms of its data, and obviously in terms of the extent to which its delivery process comes on time with the products not broken and kind of how amazing that all is.

Starting point is 00:40:43 But the one thing that really strikes me of it is that when you have a problem, there is a person who communicates with you on email and stays with you until the problem is solved. And so the unit of focus is the customer. It's the individual customer and their problem, their integrated problem, as opposed to constantly handing you off like a hot potato to get your productivity numbers up. And then nobody owns the customer. And then when the customer gets cut off and needs help after talking to five people, it's not even clear where to go.

Starting point is 00:41:21 And you usually don't even go into a call center and get the same person by name. And you can end up talking to seven or eight different people over the course of your problem. And I think that companies that balkanize the customer experience, as opposed to having one central place of a person that owns your experience through all of it, is probably the biggest separator versus whether some of those people are in a distant location or, you know, possibly even in some cases, whether they're in some ways technical people who are, you know, who are outsourced. But, you know, I bet that over time we're going to see an increasing trend to companies bringing back the ownership of the customer experience and trying to have a single point of contact, at least for a given individual problem. You know, I mean, American Express has done this very well also. You know, I use the American Express travel service for my more complicated personal travel. obviously you use my own company for business travel. And it has been amazing because there's been one person who has stayed with me through the whole trip,

Starting point is 00:42:36 and if something goes wrong, I contact them. And they have a full record. And that's incredibly different than what you described with your TV situation. It's incredibly different than most of the telecom companies where you just hand it off like a hot potato. It's incredibly different than most, at least. large banks. And I think that probably is the epicenter, almost where each person feels responsible for a customer. It's like a mini-founder experience in a way. Yeah, the, not harboring on this too much, but I couldn't help but think of Stanley McChrystal when I read this

Starting point is 00:43:18 line. Or you might have said in a video, the great leaders do everything they can to reduce distance between themselves and the front line. And I was talking to Chris Fustle, who, who was basically the aide-de-camp, the chief of staff for General Stanley McChrystal. And they would oftentimes, McChrystal would go out on the front line with his soldiers in areas that were dangerous. And I found this to be really interesting

Starting point is 00:43:50 that he would put himself in potential danger areas because he understood how important it was to be with his guys on the front line and he needed to experience it to help make decisions because when people get removed and then they make decisions sometimes that can be a problem. And it really reminded me of it. And I thought that was quite interesting. Yeah. I guess my favorite military example is similar, maybe even more dramatic, the hero in World War II,

Starting point is 00:44:22 who was really involved in the liberation of a number of the northern European countries like the Netherlands. was General James Gavin. And he was played by Ryan O'Neill in the bridge too far. And they called him the Jumping General. Because whenever they entered a new theater with very great danger on the ground and jumped from planes and parachutes, he insisted on being the first person

Starting point is 00:44:50 ahead of all the other troops to jump out. And even now, a lot of his techniques are still being taught and revered in the war college. A friend of mine named, who's a CEO, been involved in five different turnarounds in Europe, Tech Gunning, as his name, was asked to stabilize TNT, the package delivery company that recently was sold to another founder company, Federal Express. And I loved what he did on his first days in the job. He said, I don't want to spend a lot of time.

Starting point is 00:45:27 in the corporate office and staff briefings. I want to take my first six weeks in the field. I'm going to visit every depot. I'm going to travel with the trucks and the delivery people. I'm going to spend time with the salespeople. And I'm also going to send an email to all 70,000 employees and say, send me what you think your view is of what's wrong and of what things we can go back to that we've lost or what things we should change.

Starting point is 00:45:54 And so the first email, he only got about a little bit over 100 responses. Well, he answered them all personally and sent it out again. And then he started getting hundreds of responses, and he still tried to answer them all and did answer them all personally. And I think that those kinds of things are just central to a business, whether it's an organization, whether it's General James Gavin, the Jumping General, or whether it's what Tex did at T&D. where so many people have big staff meetings and big corporate offices and look at numbers and averages and try to sort things out there. And, you know, that's just not the founder's mentality. And, you know, that just generally doesn't work.

Starting point is 00:46:41 Man, I love it. Chris, I normally would do this at the beginning, but I'm doing it at the end now. When somebody meets you for the first time and they say, hey, Chris, what do you do? How do you respond? I usually am pretty literal in my description of what I do in my job. You know, I say I was involved with most, not all, but most of my career, helping build a Bain and company as a partner.

Starting point is 00:47:11 I joined the company when there was one office reported to the founders, and maybe we had 100 employees, and now we have 10,000 employees in 55 offices. And so I might say my first thing that I've done is be involved in different. levels at bay in helping with a large team trying to build a company that I think is a really good one. And that now, as I've gotten older, I've evolved from doing as much direct client work to helping younger people do that. And the thing that gives me the greatest energy is helping younger people. and in my company or in businesses like the group endeavor of a thousand global entrepreneurs that I'm involved with or through writing my books, which now, you know, through five or six books with Harvard Press, you know, I think have an audience that helps fulfill that.

Starting point is 00:48:08 So that's basically what I say about, you know, what I do. I try to stay in touch with the young people. I try to stay open-minded and I try to find places where I can add value in the eyes of others. Absolutely love it. And as I mentioned, the founder's mentality, how to overcome the predictable crisis of growth. If you are in any type of leadership role or strive to be, I highly recommend people reading this book. It's been very cool for me, Chris, to be able to dive deeper and learn directly from you as, as, you know, that's why I love this podcast.

Starting point is 00:48:54 It gives me the opportunity to meet people who become literary heroes of mind because their work can impact me and others. And so I want to thank you, acknowledge you for, for doing this work and helping so many people. It's incredible. I do have one more question, though, and that is when I first reach out to you and your team to set this up. You initially saw the invite was from somebody who runs a podcast called The Learning Leader Show. When you first saw the phrase learning leader, what was the initial

Starting point is 00:49:29 thought that came to mind? The initial thought was that the podcast was academic and directed more at business schools. And then as I probed it more deeply, I began to realize that your mission was to bring ideas from the outside to people who had gone beyond the university but needed to continue their learning. You know, people, as they get into businesses, become narrower and narrower and spend less time learning, and their reading becomes much narrower and narrower. And you are trying to bring things from a much broader area of the world to people who, because they're in such busy jobs and such technical situations that makes it difficult for them to break out,

Starting point is 00:50:23 to make it easy for them to break out. You know, we're in a world where the amount of ideas is so enormous, and yet our jobs are increasingly complex, and the energy management of jobs and of our life is much more difficult. And so as I pursued what you're doing, I realize that what you're doing is trying to provide very valuable information from the outside to people that are busy and whose energy is almost tapped out. Wow, that's one of the most thoughtful answers I've ever received to that question. Thank you, Chris.

Starting point is 00:51:05 I appreciate it. And I thank you for being here. Where would you send my listeners to learn more about you online? our website founders mentality.com and to buy the book the founder's mentality which is probably the easiest way to do it except in bulk is through Amazon so I would do that and if any of your readers

Starting point is 00:51:29 have thoughts or want to write anything on the Amazon site that would be great there's a lot of reviews posted there a lot of comments from readers and so those are the two things go to the Amazon site and go to Founders Mentality.com,

Starting point is 00:51:46 which has all kinds of blogs and articles and self-diagnostics and even a lot of videos that we've done around this that is there for your listeners to use. And just to reinforce the book, once again, I think there are a ton of leadership books and business books out there,

Starting point is 00:52:04 but not all of them are necessarily grounded in operational reality. and it's really, for lack of a better word, it's really nice when a book is found in this type of reality that you can implement and execute on it. And so I recommend books. I'm a huge reader, and my audience knows I'm talking about them a lot, but this is one, if you want to get stuff done,

Starting point is 00:52:33 and it's based on operational reality, I think it's relevant for many people across all different industries. so I would encourage people to do that. And Chris, to you, I just like to say thank you again. And I want to absolutely continue this dialogue as we both progress on our leadership journeys. And I've loved having you. Great. Well, thanks, Ryan.

Starting point is 00:52:51 It's a great privilege and a lot of fun. Thank you. This episode of The Learning Leader Show is over, but we have plenty more to keep you locked in until next time. Head over to Learning Leadershow.com for more information and to request your favorite entrepreneur, CEO, world-class athlete, or anyone else that inspires you. You can also talk to Ryan directly by reaching out to him on Twitter at Ryan Hawk 12. Thanks again, and we'll see you next time on The Learning Leader Show.

The Learning Leader Show With Ryan Hawk - 157: Chris Zook - The Founders Mentality: A Bias For Action & Front Line Obsession

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