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When You're Tempted to Say No, Instead Say “Yes, We Can!”: Then Figure Out How

Schematic illustration of the six counter-conventional mindsets for Chapter 2.

 

For more than four decades, the widely accepted wisdom in the world of business has been that the most successful companies are those that pursue opportunities for which the necessary competencies are already in hand. Tom Peters and Bob Waterman, in their classic 1982 book In Search of Excellence, argued that businesses should “stick to their knitting,” staying true to the business they know, rather than diversifying beyond what they're good at.1

Similarly, strategy gurus C. K. Prahalad and Gary Hamel built their academic careers on the back of their classic 1990 article that argued that what good companies should do is clarify their core competencies and then build upon and enhance them.2 Honda's core competencies in engines and power trains, for example, have provided the underlying basis for business units that manufacture products as diverse as motorcycles, automobiles, lawn mowers, and more. 3M's core competencies in coatings, substrates, and adhesives have enabled it to develop an ever‐expanding product line that combines these competencies in various ways.

Makes good sense, right? Further support for this view comes from the waves of spin‐offs and divestments that inevitably follow periods during which some businesses have strayed from their knitting and built highly diverse conglomerates, as they're called. General Electric, which had diversified from its late nineteenth‐century roots in Thomas Edison's invention of the electric light bulb, became the most valuable company in the world by the 1990s. GE was operating an assortment of mostly unrelated businesses that included home appliances, jet engines, electrical power systems, home and automobile financing, among many others.

Alas, a severe and persistent downturn in GE's financial performance led it to sell off numerous businesses, including its finance business, the legacy light‐bulb business, oil and gas services, home appliances, and aircraft leasing. In 2021, GE announced that it would go further and break its remaining operations into three separate companies. “When conglomerates break apart into more focused companies,” Knowledge at Wharton reports, “those offspring tend to post higher returns and have better operational performance because they devote all their attention and resources to a single core competence.”3

Many entrepreneurs beg to differ: Whether it gets its start in a garage, at a kitchen table, or deep inside an established business, the entrepreneurial journey is a highly uncertain one, and there's often a surprise along the path. Perhaps a customer asks for something other than what the business has been offering to date. Perhaps the entrepreneur spots an opportunity that appears more attractive than the one currently being pursued. Or perhaps the entrepreneur whiffs the scent of change in the air and detects a potentially existential threat to her business.

Indeed, at a 2008 roundtable meeting of founders of the early‐stage companies backed by the storied venture capital firm Kleiner, Perkins, Caufield and Byers, KPCB partner Randy Komisar posed a question: “Which companies had abandoned their original business plans for a Plan B or beyond?” Two‐thirds of the hands went up. Remarkably, perhaps, on average these founders had done three restarts each! The premise on which they had pitched for and won KPCB's capital had not panned out.4

“For many entrepreneurs, sticking to their knitting simply isn't part of their mindset. It's a rule they simply don't accept.”

Thus, for many entrepreneurs, sticking to their knitting simply isn't part of their mindset. It's a rule they simply don't accept. Instead, their mantra is, “Yes, we can!” What about competencies, Peters and Waterman might ask? “We'll find them,” they reply. Straying from one's knitting, and moving outside one's current set of core competencies? “Yes, we can!” If the current path looks like it's not going to take them where they want to go, it's time to set out on a new path, they figure. Competencies and the conventional rules be damned.

What's ahead in Chapter 2: In this chapter, we'll first examine the case study of Jeff Bezos's historic and counter‐conventional decision at Amazon to build a hardware product that would become the Kindle. That was definitely not a project for which his company had the competencies in hand. But a decade later, Amazon was selling a whopping 40 percent of all new books in the United States and two thirds of all e‐books.5 We'll then join Brazilian entrepreneur Arnold Correia on a journey that saw him completely reinvent his business three times and take his company, Atmo Digital, into a leadership position in Brazil's out‐of‐home media industry.

In both these examples, we'll see how the customer—indeed, in Amazon's case, obsession with the customer—played a central role, not only in the decision to stray from their prior knitting but in the approaches these entrepreneurs developed to reach their goals.

But straying from one's knitting doesn't always pan out, of course. Sadly, we'll also learn some sobering lessons from MOVE Guides, a VC‐backed start‐up in London. Brynne Kennedy's efforts to transform the business from one that provided software‐enabled support for the lump‐sum moves of junior employees making international corporate relocations into white‐glove tailored support for relocating senior executives did not end well. Was it a lack of competencies that led to this failure? Or was it something else? We'll see.

We'll then close the chapter by examining the lessons that these case studies deliver, and we'll address some tangible steps you can take now to make “Yes, we can!” a centerpiece of your entrepreneurial mindset. Read on!

The Reshaping of Amazon6

It was January 2004. Steve Kessel had risen through the ranks at Amazon to become VP of its worldwide media retailing business, comprising books, music, and video. Amazon founder and CEO Jeff Bezos asked Kessel to step out of that role, in which he was responsible for a whopping 77 percent of Amazon's global revenue,7 and step into a newly created role, reporting directly to Bezos.

Bezos had decided that Amazon was standing at an important crossroads and it was time to act. Apple had launched the iPod in 2001, which was selling like hotcakes. But Steve Jobs wanted to sell the music, too. In April 2003, Apple had introduced the iTunes store. After selling more than a million downloads on its first day, it went on to sell more than 7.5 million tunes by July 2003.8 Time magazine had named the iTunes store the Coolest Invention of 2003. Sales of Amazon's music CDs were slumping in favor of digital downloads, one tune at a time. “Would books be next?” Bezos wondered.

Kessel's Challenge

Bezos didn't specify what was to be done. That would be Kessel's job to figure out, working hand‐in hand with Bezos. But Bezos did make two critical who (Kessel would take the lead) and how decisions. The effort would be run by an entirely new and autonomous organization separate from the existing retail business, despite the fact that the digital media to be sold would presumably be sourced from the same set of publishers that Amazon's current book, music, and video business relied on.

Bill Carr, whom Kessel appointed to run the business side of the new effort alongside an engineering lead, recalls Bezos's logic. “Jeff felt that if we tried to manage digital media as a part of the physical media business, it would never be a priority. The bigger business carried the company after all, and it would always get the most attention.”9 Bezos was adamant. “If you are running both businesses, you will never go after the digital opportunity with tenacity.”10

“Yes, We Can!”

It quickly became apparent that the core competencies on which Amazon's retail business had been built were of little value in building a digital business. Amazon was mainly an aggregator and distributor of books and music and video discs—all small, lightweight, inexpensive to ship, and unlikely to be damaged in shipment—with the largest assortment found anywhere. It had built a network of highly efficient distribution centres strategically located to integrate with the inbound and outbound logistics of FedEx, UPS, and the United States Postal Service and their counterparts overseas.

“Kessel and Bezos saw that Amazon's competitive advantage in the distribution business—its vast selection, low prices, and quick delivery—simply would not apply in a new digital business.”

As a result, its cost structure was far lower than those of its principal competitors, traditional bricks‐and‐mortar bookstores and retailers of music CDs and video DVDs. Thus Amazon could profitably sell books, music, and videos at far lower prices. Its competitive positioning vis‐à‐vis the bricks‐and‐mortar competitors appeared unassailable. But Kessel and Bezos saw that Amazon's competitive advantage in the distribution business—its vast selection, low prices, and quick delivery—simply would not apply in a new digital business in which there was nothing physical to warehouse or ship!

To Bezos, that meant that Amazon would have to venture into one end or the other of the value chain, just as Apple was doing with its iTunes and iPod. Content creation or content consumption: which would it be? But Amazon had developed no competencies in either arena. Though no one at Amazon knew anything whatsoever about building hardware, Bezos and Kessel decided that the place to start was at the consumption end of the chain: they would create a better e‐reader.

To those who wondered how Amazon could pull off such a brazen move, Kessel reminded his colleagues that typical companies that wanted to grow would consider their existing capabilities and ask, “What can we do next with our skill set?”11 Amazon's approach, however, as embodied in the first of its core leadership principles, was to start with the customer and “work backwards” and to “obsess over customers.”12 If Amazon's future customers wanted digital delivery, that's what Amazon would provide. If the company lacked the requisite skills, it would have to build or acquire them. There was no other way. What about the rule that one's company should build on its existing core competencies? Easy. Break it!

But How?

To Kessel, building or acquiring new competencies meant one thing: hiring the right team. In September 2004, he hired Gregg Zehr, a long‐time hardware industry veteran who had been VP of hardware engineering at Palm Computing and Apple. The hardware talent pool in Silicon Valley was much deeper than that in Seattle, so Zehr set up the hardware operation there, calling it Lab126 (the 1 and the 26 stood for the letters A and Z). The name, a subtle reminder of Bezos's vision to offer any book ever published, from A to Z, was intended to aid Zehr in attracting the best and brightest engineering talent in Silicon Valley. Carr recalls what drove the decision. “We needed talent, and Silicon Valley was where the talent was.”13 Hardware leadership, done.

Building a hardware device was only part of the challenge Kessel faced, of course. He hired other leaders to develop the necessary product and cloud software teams and before long there was a 150‐person team of engineers and product managers on board. Additionally, Amazon identified a small 10‐person company, Mobipocket, in France that had built software for reading books on PCs and mobile devices. Amazon acquired the company and its team and made them responsible for developing the software for what would soon be the Kindle e‐reader.

Creating the Kindle

Bezos set for the team an audacious goal: “improving on an invention that had withstood the test of time, over 500 years, without much change: the book.”14 It was Bezos's view that the customer experience demanded that the e‐reader would “get out of the way” so the reader could connect directly with the content. Earlier in his days with Apple, Zehr had worked with a global design firm, Pentagram. Kessel knew that getting the product design right would permit the kind of user experience that Bezos wanted. Pentagram was hired.

Pentagram's designers began studying the actual physics of reading. How do people hold a book? How do they turn the pages? The design team themselves read books on other e‐readers from Sony and others and on personal digital assistants (PDAs). “We were pushing for the subconscious qualities that made it feel like you are reading a book,” recalled Tom Hobbs, one of Pentagram's designers.15

The team wanted to remove every bit of complexity possible and make the device inconspicuous. Bezos shared their view but wanted the device to have a keyboard so users could search for book titles and make annotations if they wished. Bezos also insisted upon wireless connectivity. “Here's my scenario,” he told the Pentagram team. “I'm going to the airport. I need a book to read. I want to enter it into the device and download it right there from my car.”16

“But you can't do that,” Hobbs replied, having been unable to figure out how the economics of a wireless connection would work and be paid for. “I'll decide what I can do,” replied Bezos. “I'll figure this out and it is not going to be a business model you understand. You are the designers; I want you to design this and I'll think about the business model.”17

E‐books, Too

Bezos's goal was to have 100,000 titles available at launch, including at least 90 percent of the New York Times bestsellers. But by 2006 the publishers had only digitized 20,000 titles and most were unhappy with e‐books' progress. Their digital sales remained infinitesimal. Another Amazon newcomer, Jeff Steele, a former Microsoft product manager, was charged, alongside another Amazon veteran, with getting US publishers on board. “I described my job as dragging publishers kicking and screaming into the 21st century,” he recalled.18

Amazon, an increasingly important retailer of physical books, had clout and was not afraid to use it. Randy Miller was responsible for publisher relations in Europe. Miller ranked all the European publishers by their Amazon sales and profit margins. He and his team then persuaded the lagging vendors to give Amazon what it wanted, brazenly using a threat of decreased promotions on the Amazon site.

“I did everything I could to screw with their performance,” Miller noted.19 He raised some books' pricing to list price. He took others out of Amazon's recommendation engine. He promoted competing titles. Amazon was finally learning the ruthless, age‐old and brutally effective tricks of the retail trade that Walmart and others had raised to a fine art. Amazon was going to get what it wanted from the publishers—more titles digitized, and better terms, too—one way or another. Thanks to Miller's team's effort in Europe and Steele's progress in North America, the publishers slowly began to come around.

“Amazon was finally learning the ruthless, age-old and brutally effective tricks of the retail trade that Walmart and others had raised to a fine art.”

The Kindle Launch and Relaunch

Kessel had carefully studied the launches of other new consumer electronic products, including the iPod. He placed an order for 25,000 units with Kindle's Asian suppliers. On November 19, 2007, the Kindle launched. In five‐and‐a‐half hours, the Kindle was sold out! Unfortunately, due to the many delays in getting the hardware right and getting publishers on board, it turned out that one supplier had discontinued a key component in the wireless module. It was nearly a year before Amazon was able to get Kindle back in stock. On October 24, 2008, US TV star Oprah Winfrey devoted an entire episode of her show to Kindle's relaunch, with Bezos on the set. “It's absolutely my new most favorite thing in the world,” she crowed.20 Sales took off.

The Aftermath of “Yes, We Can!”

At the original 2007 Kindle launch, Bezos had dropped a bombshell on the publishing industry. “New York Times bestsellers and new releases are only nine dollars and ninety‐nine cents.”21 There was immediate confusion among the publishers, who'd not been told how Amazon was planning to price their e‐books. Was it temporary? Permanent? Only for bestsellers?

The new low price for top e‐books eventually and relentlessly began tilting the playing field toward digital. It put pressure on physical booksellers, threatened independent bookstores, and gave Amazon increased power in both the physical and digital book markets. That market power led over time to further concessions that were passed on to Amazon consumers in lower prices and cheaper shipping, hence more market share and even more leverage over the publishers. From Amazon's point of view, it was a virtuous circle; for the publishers, not so much.

Why was the Kindle successful? Russ Grandinetti, who has run content for Kindle for many years, puts it simply. “I think the reason Kindle succeeded while others failed is that we were obsessive, not about trying to build the sexiest gadget in the world, but rather about building something that actually fulfilled what people wanted.”22 Amazon had integrated its bookstore into the device, bringing the reading of e‐books into the mainstream.

Whose insight was that? Bezos's! Says Grandinetti, quoting technology expert Alan Kay: “The best way to predict the future is to invent it.”23 If you don't have the competencies, hire them. What about the conventional rules? Who cares! “Yes, we can!” indeed!

Arnold Correia Said, “Yes, We Can!” Time After Time24

It was a sunny October morning in São Paulo in 2004, and SubWay Link founder and CEO Arnold Correia was facing a dilemma. He'd uncovered an opportunity to dramatically change the nature of his company's event production and management business. Change came easy to Correia, as he'd already reinvented the business once before, so change was not the issue. But neither he nor his team knew anything about satellite transmission technology, which would be crucial if he proceeded.

“Change came easy to Correia, as he'd already reinvented the business once before, so change was not the issue.”

The First “Yes, We Can!”

Ten years earlier, Correia had decided that producing lavish Sunday parties for Brazilian teenagers—domingueiras, as they were called—and managing a local rock band wasn't going to meet his career aspirations. He decided to redirect the event management skills he had developed toward the corporate market. He placed a small ad and a few days later he heard back from McDonald's, which was expanding rapidly throughout Brazil. McDonald's needed production services for an upcoming event. In a fast‐food market that had grown rapidly in Brazil in recent years, the company needed to motivate and train its growing workforce.

Correia decided to take an unusual approach. “I put together a quote for a standard display and sound system, but if I won the contract, I planned to upgrade the size of the monitors and the quality of the speakers. I really wanted to impress them with an element of surprise to make a lasting impression in hopes of working with them in the future.”25

The strategy worked. McDonald's was happy, as the event exceeded its expectations. Correia won lots of follow‐on work for McDonald's thereafter, including board meetings, sales strategy conferences, motivational conferences, and more. Word spread. Soon Correia and his small team were producing events for some of the largest and fastest growing companies in Brazil.

In 1995, the first Walmart store opened in Brazil. Correia won a job for a promotional event, but the video production company Walmart had hired did not show up, so Correia was asked if he could do it. “Sure, we can!” replied Correia with his usual confidence, though Correia had neither shot nor edited a video in his life. “I frantically called all of my friends to help me find someone who could record video. Forty minutes later I found someone who could help, but in the strangest place. I had to pick him up at the cemetery, as it was the Day of the Dead, a Christian holiday in Brazil, which commemorated the faithful departed.”26 With video capabilities on board, Correia's company became a one‐stop‐shop provider for event production and for producing the corporate video as well.

The Second “Yes, We Can!”

Nearly a decade later and unbeknownst to Correia, in mid‐2004 he was nominated for an entrepreneurship competition whose purpose was to choose the best young entrepreneurs in “the new Brazil.” But Correia did not win. “It really bothered me. I wanted to know why we lost, so I asked one of the judges to tell me why we didn't win. It was the most valuable advice I have ever received.” She was forthright. “The business you are in is not right for you; your ambition and drive is bigger than your industry. Your company, as it is now, is not scalable.”27

Disappointed, but not deterred, Correia next traveled to the United States to see how retailers like his Brazilian clients were innovating elsewhere. He discovered that Walmart used a corporate TV network to motivate, inform and train employees at its US stores. Even better, Correia learned that the network had not been built in‐house. Walmart had contracted the service with an external supplier.

Corporate TV, as Walmart was using it, consisted of generating video content and broadcasting it, typically in real time, to multiple locations. Included were sales strategy updates, weekly motivational speeches to the sales staff, results announcements, training, and more.

Correia saw the opportunity as a game changer for his company. His idea was to start with one far‐flung retail chain, perhaps Walmart or home appliance retailer Magazine Luiza. Each had more than 200 stores scattered around Brazil, and both were growing fast, as Brazil's economic boom continued to gather momentum. Instead of revenues depending on one‐off events and video production, corporate TV could generate recurring monthly revenue. No longer would he have to wonder where the next project would come from. And it would leverage some of his company's existing capabilities and customer connections.

“But he identified three obstacles.”

But he identified three obstacles. First, Brazil's Internet infrastructure was certainly not ready for streaming video. Satellite transmission would be the only way. Securing satellite bandwidth meant winning regulatory approval from the Brazilian government, which would involve extensive costs and an unknown period of time to obtain. Second, logistics. SubWay Link would have to install satellite and electronic equipment in remote locations all over Brazil. To date, his company had only done events in São Paulo. Third, funding. Roberto Bocchi, Correia’s trusted number two since his domingueiras days, estimated the investment required at least 12 million reais, about US$4 million. SubWay Link had only 1 million reais cash on its balance sheet.

Correia was determined. He and his team prepared a business plan to show to his client Luiza Helena, CEO at the home appliance retail chain Magazine Luiza, whom he had already served in events and video production. “I have an idea how to grow my business,” he told Luiza, “and I would welcome your advice.”

Shrewdly, he titled the business plan “Corporate TV Proposal for Walmart Brazil.” His goal wasn't to sell the project to Walmart, however, but to Magazine Luiza. “Why not Magazine Luiza?” Helena said upon seeing the proposal, grasping the idea's potential at once.

Overcoming the Obstacles

In early 2005, Correia put the majority of his US$1 million in savings back into the business; he also pledged his home and his business as collateral for equipment financing to the consternation of his wife, Bárbara. Not entirely happy with this turn of events, Bárbara, who had been an engineer with a leading Brazilian TV station, recommended a specialist, Herbe Zambrone, who could provide her husband with some sorely needed expertise.

Bárbara's broadcasting industry contacts resolved the technology challenges, too. Correia convinced a satellite owner she knew, who had spare capacity, to let SubWay Link use its license at the outset, thereby avoiding a lengthy delay. Soon thereafter, Zambrone learned that in Franca, a small inland city, there was no wait for licenses. Correia set up his broadcast hub there and SubWay Link soon won a license of its own.

The logistics were more difficult, but Correia promoted Thales Morales, a long‐time staffer in video production, to lead the logistics effort. Thanks to Morales and his team, the Luiza operation was up and running, with 180 stores installed, by the agreed 60‐day deadline. Later, Helena herself said of SubWay Link: “We have lots of things in common, like boldness and innovation. We are proud to have the first corporate TV system in Brazil. I appreciate SubWay Link's ability to go further and to win the challenge to constantly outperform expectations.”28 Not long thereafter, Walmart‐Brazil came on board, too.

The Third “Yes, We Can!”

In late 2009, after narrowly scraping through the global financial crisis, Correia was only partially happy with his new Corporate TV business. “The clients were very satisfied with the services we provided. But I was worried that we were still on the cost side of their businesses.” The financial crisis had taught Correia that, “In difficult times, costs always get cut.” He wondered if he could change his model again. “I want to be part of the revenue for my customers.”29

“The financial crisis had taught Correia that, “In difficult times, costs always get cut.” He wondered if he couldn't change his model again.”

Observing what was happening elsewhere, Correia again saw something he could adapt to Brazil: Digital Out‐Of‐Home Television. DOOH‐TV consisted of providing infrastructure and content to be broadcast inside a client's premises, but targeting their customers, rather than their employees, as his current Corporate TV offering did.

In the United States, Walmart's provider sold DOOH‐TV time to advertisers, including Walmart's own suppliers, plus credit‐card issuers, mobile‐phone operators, and others. Walmart was granted some of the time for its own advertising and received a commission on all media sales. Clearly, the service offered some synergy with corporate TV and would take advantage of some of the company's current assets and capabilities, unlike some of Correia's earlier moves. But three challenges were immediately apparent:

  • Market: Would Brazilian retailers welcome such a service? Would advertisers buy?
  • Production: SubWay Link had always produced specialized content, and never for broadcast to ordinary consumers. Lots of content would be required to fill each day. Licensing third‐party content would probably be required.
  • Financing: SubWay Link's balance sheet remained precarious, with little cash on hand, though the company had returned to positive cash flow.

Realizing that his likely customers for DOOH‐TV were already his clients in Corporate TV and that DOOH‐TV would pay their bills and perhaps increase their sales, Correia proceeded full speed ahead. Walmart signed on. By 2012, Walmart‐Brazil's revenue share from DOOH‐TV contributed some 11 percent of its full‐year profit!

In 2013, Correia changed the name of his company to Atmo Digital to better represent what the business had become. By 2017, Atmo Digital had become one of Brazil's largest out‐of‐home media companies with more than 18,000 screens in more than 1,000 locations. “Yes, we can!” had transformed Correia's company, not once, but three times!

MOVE Guides Strays and Stumbles30

I'd like to be able to tell you that straying from one's knitting and finding or acquiring new competencies is easy to do and guaranteed to succeed. Of course, I cannot. And it is not. Most new products fail.31

MOVE Guides founder Brynne Kennedy had personally experienced the relocation difficulties that arose for those pursuing careers in international companies. Her journey had taken her from her native United States to Hong Kong, Delhi, back to Hong Kong, then Singapore. In 2010 she stepped off the career treadmill to pursue an MBA in London, with the idea of starting a business that would address the hassles with which she'd become so intimately familiar. In 2012 the business got started.

Choosing a Path

By early 2014, Kennedy had raised nearly $2 million of seed capital, written a series of short guides (MOVE Guides) for several cities around the world, and built a website. The idea was to use software to take the hassle—hassle for those who moved, and hassle for the corporate HR professionals who supported them—out of international moves. Which are the best (or cheapest) moving companies? How do I open a bank account? What about taxes? And much more.

For the person moving, there were three elements to the proposition:

  1. Web‐based content to aid in discovering what one needed to know about a new location
  2. Vetting and connecting movers with trusted suppliers and contracting for their service
  3. A web‐based checklist for the move

Most multinational companies had HR professionals tasked with supporting such moves. Senior executives received expensive, tailored, white‐glove managed moves from HR and from the relocation management companies (RMCs) to whom everything was outsourced. But the more numerous moves of junior employees were handled differently. HR would give the employee a lump‐sum payment, and the employees would have to manage things on their own. Not only were the relocating employees not entirely happy with the hassle that they were required to self‐manage, but the HR people felt guilty about the lack of care that lump‐sum moves entailed. And lump‐sum moves meant that the employees were not able to hit the ground running in their new jobs while they handled the myriad of tasks that international moves always required.

After conducting considerable research, Kennedy and her team decided to focus on the lump‐sum moves segment, as that was where the greatest pain‐point seemed to lie. “It had become clear that lump‐sum moves were a problem for everyone,” explained Kennedy.32 Some RMCs serviced this market segment as a favor to their managed‐moves clients, but they did not like doing so, as typical fees were only $500 per move.

By August 2014, Kennedy had won several pilots with high‐profile clients and had converted two such clients into paying customers. The employees were consistently delighted with the support they received from MOVE Guides. And the HR professionals were happy that their employees were happy. Kennedy and her team began to realize how unhappy many companies were with the services of the RMCs. “They really liked our technology platform but wanted a full‐service product that serviced all types of moves, not just lump‐sum moves,” recalled Kennedy's co‐founder, Steve Black.33

“The unit economics were not panning out in the lump-sum segment. A pivot seemed called for.”

Their customers' requests for moving up to the managed‐moves segment fell on welcome ears, as the unit economics were not panning out in the lump‐sum segment. A pivot seemed called for. “We initially forecasted £800 in average revenue per move from supplier commissions,” Black reported to Kennedy, “and we figured we'd turn profitable in our 12th month in business.” But the average revenue per move was running less than one‐third of projections. Relocated employees were couch‐surfing with friends, often moving only what the airlines would let them take along as baggage, and pocketing as much of the lump sum payment as they could! MOVE Guides was burning cash and burning it fast.

“Yes, We Can!”

Kennedy and Black conferred with their team. “Like everything else we've done so far, we could figure this out,” said Kennedy. Black chimed in with what it would take to make the move:

We would need more cash to staff up the services side of the business, similar to a concierge‐type support for those relocating. We'd also need a much more sophisticated back‐office and CRM system for our MOVE Advocates to offer a more white‐glove service. But think of the value‐add we could offer as a software and services company. I've run some numbers, and taking on managed moves will enable us to grow our bookings and top‐line revenue much faster, though the manpower to provide white‐glove service to the managed moves segment means that our losses would also likely grow.34

VP of Engineering Steve Giles was reticent. “But guys, we haven't even figured out how to make the lump‐sum product run well. And, we don't even know what this managed move product is supposed to do!” Giles agreed that, while managed moves looked attractive, such a change would be challenging. “Taking on managed moves is a different beast,” he argued. “From a technology standpoint lump‐sum moves are easy. It's software and we just manage the platform. But managed moves is platform plus services.”35 Did MOVE Guides have the necessary competencies to operate a white glove services business? We'll soon see.

Kennedy next reached out to her lead venture capital investor, who saw taking on the managed moves business as an opportunity. It would provide crucial short‐term revenue, he argued, and it would be easier to cross‐sell lump‐sum move solutions once managed moves were being done. “We were getting ready to raise a Series A round,” recalled Kennedy. “In the venture capital world if you don't get Series A funding from the VC firms that gave you seed capital, it's like a big scarlet letter. So, I knew we needed to work hard to keep them happy.”36 With her investors and most of her team on board with the decision to take on managed moves, and with managed moves comprising a much larger market than lump‐sum in value terms, Kennedy and Black said, “Go!”

Things Unravel

Steve Giles and his team of engineers went into high gear to keep up with a dramatically increased workload. “Resourcing was only half the problem. The other half was actually figuring out what we were trying to build,” recalled Giles. “We needed a minimum viable product, which we could then innovate on top of. But instead we slid into a reactive mode, with the sales team promising a lot to clients and then my team having to sprint to deliver solutions that individual customers wanted.”37

MOVE Guides also needed to ramp up the number of MOVE Advocates to service managed moves. This added cost, and complexity, too. By mid‐2015, despite adding 30 new clients, the company was rapidly burning through cash, “And gross profit had slipped below 50% from 70+% at the beginning of the year,” fumed Kennedy.38

“By mid-2015, despite adding 30 new clients, the company was rapidly burning through cash.”

By mid‐2016, things clearly weren't working. “Sales started taking longer than expected to close, but I couldn't pin down if it was because we didn't have the right salespeople, or if it was the product.”39 Kennedy set out to raise capital once more. Everywhere she went, she heard concerns about the business model and scalability. “Everyone loved the category, strategy, vision and product. But their challenges really came down to the fact that they believed our business model and MOVE Advocate service model weren't scalable. The VCs would come in and sit down with a MOVE Advocate, and then tell us they had concerns.” She went to her board and told them they needed to take this feedback seriously. “I've had 25 meetings with the top 25 VC funds in the world, and they're all saying the same thing.”40

Game Over

In 2017, with MOVE Guides burning more than $1 million per month in cash, the board pulled the plug. Straying from the company's original lump‐sum‐moves knitting was simply not working out. Expenses were cut to the bone. New management came in. Yet another strategy was put in place, which involved selling the managed moves business and refocusing on software. Another software firm working in the relocation software arena and a technology shop were acquired. Early investors were washed out, and the company was rebranded as Topia. Will Topia survive where MOVE Guides could not? Time will tell.

Lessons Learned for Times When You Yearn to Say, “Yes, We Can!”

Saying “Yes, we can!” transformed Amazon from a still emerging e‐commerce retailer into a technology‐driven behemoth that would go on to bring the world Amazon Web Services, Alexa, and more. Saying “Yes, we can!” transformed SubWay Link three times into a leading role in Brazil's out‐of‐home media industry. But saying “Yes, we can!” to an ill‐advised expansion into a business in which it lacked both competencies and a viable business model cost MOVE Guides its survival as a stand‐alone entity. Whether you're an entrepreneur or an employee in somebody else's business that's trying to be counter‐conventional, what are the lessons that these case studies provide?

On the importance of customer insight and understanding in “Yes, we can!” moves: Amazon's hiring of Pentagram to help it “understand the physics of reading” together with Jeff Bezos's insistence that the device provide instant access to practically any book—anywhere, anytime—were central to its ability to develop an e‐reader that consumers would flock to in droves. More fundamentally, Amazon's culture of obsessing over the customer and working backwards from what the customer wants and needs has given us innovation after innovation—think Amazon Prime—that has set Amazon apart from virtually all its competitors.

Arnold Correia's mantra of “under promise and over deliver” helped his young company get a foot in the door with large corporate clients and keep it there. Giving great customer service is something that's easy to say, but exceedingly difficult for many companies to do. Do it well, and your customers will stick around.

Contrast these customer‐first strengths with MOVE Guides' lack of understanding of its first target user, the lump‐sum mover. Could Kennedy and Black have discovered up front that lump‐sum movers don't typically spend much of the lump sum, preferring to pocket as much of the cash as they can? Probably! Did they? No.

“Could Kennedy and Black have discovered up front that lump-sum movers don' typically spend much of the lump sum?”

On the importance of viable business models: Note also how the MOVE Guides' founders appeared to have been blinded by what on its surface appeared to be a large managed moves market. Entrepreneurs love large markets, of course. So do corporates. But there is much more to a viable business than a large market, which some prospective customers are asking you to serve.41

Thus, among the most crucial elements to understand in a “Yes, we can!” move is whether the unit economics and the business model itself actually stack up.42 For MOVE Guides, unfortunately, the unit economics in the lump‐sum moves segment didn't pan out, because those who moved preferred to keep most of the lump‐sum payment rather than spend it; and trying to replace tailored white‐glove managed moves service with subscription software sold via a SaaS model was arguably never going to work.

Jeff Bezos, on the other hand, saw that digitally bringing an entire library of books to the Kindle at a moment's notice would vastly increase its revenue and profit potential. Not only was that what the customer wanted, he foresaw, but it would dramatically improve the business model for Kindle.

On accessing new competencies: At heart of the “Yes, we can!” statement is a follow‐on question, often unstated. “Holy cow! How on earth will we do that?” It's an implicit acknowledgment that one is about to stray from one's past knitting, with new competencies, capabilities, networks, or something else required. As we've seen in this chapter, there are three ways to acquire them. Hire them. Acquire them, via an M&A transaction, as Amazon did with the Mobipocket acquisition. Or beg or borrow them, as you'll read more about in Chapter 6. Let's explore each of these approaches.

Hiring people with new competencies you will soon require is always a challenge. In part, that's because one who lacks those competencies is probably not a good judge of others who might—or might not—possess them! How does one with an idea for a new digital venture, but who lacks digital competencies, for example, assess candidates who might bring the digital competencies required. Not easily!

Amazon's solution to the hiring challenge, an interviewing and selection process dubbed “Bar‐Raiser,” had already been developed.43 Its purpose was to minimize the variability inherent in most ad‐hoc hiring processes and avoid the urgency bias that could result in substandard hires or leadership hires who were unlikely to operate within Amazon's leadership principles. As I write more than 17 years later, Amazon's Gregg Zehr remains president of Lab126. Not only can new core competencies be acquired and developed, in spite of the conventional rules to the contrary, they might even stick around for the long term!

Another solution to the hiring challenge is to reach out to one's network and find trusted referrals. That's how SubWay Link's Arnold Correia found Herbe Zambrone to bring in‐house the competencies it required to get into Corporate TV.

Accessing new competencies via the merger and acquisition route provides another source of new competencies. When Amazon acquired the 10‐person French company Mobipocket for the e‐reading software competencies it lacked, it brought on the entire team and handed over to them full responsibility to further develop the necessary software, for which Mobipocket already had a strong start. Gutsy? Perhaps. But it worked. This practice is now sufficiently common that it has a name of its own, “acquihire.”44

The third way to access new competencies is to “beg, borrow, or steal” them, as we saw when SubWay Link leased spare satellite capacity on an existing satellite, rather than having to get a government license for its own capacity. You'll learn much more about borrowing the competencies or other assets you might need in Chapter 6. This approach is typically highly capital‐efficient, and a good way to get started in an uncertain venture. Many entrepreneurs' mindsets think and act this way; many corporate routines don't, given their assumption that to get into something new, they must “invest.” But why invest, if you can beg or borrow?

On organizing the business to take full advantage of the “Yes, we can!” opportunity at hand: Jeff Bezos, arguably, is among the most opportunity‐focused entrepreneurs the world has seen. Books sold on the Internet, then e‐readers and e‐books, then “everything,” now space travel and more. But Bezos is very much down to earth in how he organizes the pursuit of such opportunities large or small. Virtually anything new at Amazon is pursued by what's known as a “two pizza team.” That's a team small enough to be fed for lunch by two pizzas.45 Small autonomous teams, given full‐time responsibility to develop the opportunity, with agreed metrics so that progress can be measured.

Bezos's second key organizing principle, as we saw in the Kindle project, is that the responsibility for something new is not embedded within the existing organizational structure. It's managed by an entirely separate organization. In Bezos's view, that was the only way to get single‐minded attention focused on something that was dramatically new. We'll see this principle put to work by Nestlé in Chapter 4.

“As the saying goes, if you've got a hammer, every problem looks like a nail.”

On choosing investors for “Yes, we can!” projects: As we saw with MOVE Guides, alongside additional competencies sometimes additional capital is required to pursue a new opportunity. I've learned over the years that different investors like to invest in different kinds of deals. As the saying goes, if you've got a hammer, every problem looks like a nail. Once you've brought a certain kind of investor into your company, it's likely to see things that look like its kind of “nails.”

Had MOVE Guides not chosen investors who liked to invest in enterprise software and SaaS companies, the company's strategy might have developed differently in its early years. Perhaps its early struggles in getting enough revenue out of lump‐sum moves might have encouraged it to pivot and move into a marketplace business, an Airbnb for international moves, in some sense. That's something that Kennedy and Black had considered earlier but rejected. Once enterprise and SaaS investors were on board, that kind of strategy was probably off the table.

The MOVE Guides experience is one reason that I encourage entrepreneurs to bring on talent for the competencies required as early as possible, but to take on investment as late as possible. Once investors are on board, you may be locked into a path that may turn out to be the wrong one. Better to bootstrap the business in its early days and get funding from customers' revenue, until traction is proven. Once a proven path has been discovered, that's a better time to add fuel.46

On recovering when “Yes, we can!” fails to work out: We've seen that a “Yes, we can!” mindset does not always lead to success. So, what should you do if your new business or project is not panning out? You'll need to make sure you understand why it's not working, for which you'll need sound metrics in place to help. But in four words, sometimes you must “fail fast and move on!” That's not what MOVE Guides did. It burned investors' cash for years in what, we now know, was a fruitless journey to make the managed‐moves business work.

How to Add “Yes, We Can!” to Your Entrepreneurial Mindset

As the case studies in this chapter demonstrate, saying “Yes, we can!” to something that's entirely new often comes down to getting the right new people “on the bus,” as author Jim Collins calls it.47 In Collins's view, first you get the right people on the bus. Then you let them figure out where to drive it. That's exactly what Jeff Bezos did to create the Kindle. People first, product and strategy later. So what should you do now in order to prepare yourself for a “Yes, we can!” moment?

First you'll need to muster up your self‐confidence, some bravery, even audacity, perhaps. Some call it seeing the cup as half‐full, rather than half‐empty. If you're an entrepreneur already on your journey, you probably have some of these attributes already. If you're an innovator within an established business, you probably have them, too. But that's not sufficient for putting yourself in position to say “Yes, we can!” when the opportunity arises.

As the case studies in this chapter demonstrate, the best way to identify the people you'll want on your bus is through your network. That includes your professional network; your school or alumni network; your social media network on LinkedIn and others; your friends and family; even your spouse, as we saw with Arnold Correia. The subject of how to build your network is more than we can take on here in a few paragraphs, so I suggest you read one or more books like these:48

  • Superconnector, by Scott Gerber and Ryan Paugh
  • Never Eat Alone, by Keith Ferrazi and Tahl Raz
  • Giftology, by John Ruhlin
  • The 7 Habits of Highly Effective People, by Stephen Covey
  • Networking Is Not Working, by Derek Coburn
  • Give and Take, by Adam Grant
  • How to Win Friends and Influence People, by Dale Carnegie

Any of these titles should get you on your way to building and maintaining a network that can help you source the talent, the skills, the capabilities you'll need when your “Yes, we can!” moment arrives and you muster up the courage to be counter‐conventional and break the rules. Maybe you won't even need a trip to the nearest cemetery to meet them!

Your growing network will not only help you identify and assess talent you may require. It will also keep you abreast of what's going on in the market you serve and the industry in which you play. That's how the Amazon team knew of Mobipocket in far‐away France. Build your network and thrive!

Closing Thoughts

I don't intend to say in this chapter that sticking to your knitting or building upon and enhancing your competencies is something to be avoided, of course. If your competencies will take you where you want to go, as they have for companies like Honda and 3M, that's great news. But as you've seen in this chapter, a “Yes, we can!” mindset is a potentially powerful way to transform your company, whether a big one where you work or a business of your own, and set it onto a growth path to the moon, if all goes well, despite the conventional advice that you should stick to your knitting. Thus, a few questions for you: Can you learn to say “Yes, we can!” at opportune moments? Can you take steps to make sure that the right people, the customer insights, the right unit economics, and a viable business model can be put into place to give you a fighting chance for success? Can you break the “stick to your knitting” rule and succeed? Yes, you can!

Notes

  1. 1. Tom Peters and Robert Waterman, In Search of Excellence: Lessons from America's Best‐Run Companies (New York: Harper Business, 1982).
  2. 2. C. K. Prahalad and Gary Hamel, “The Core Competence of the Corporation,” Harvard Business Review 68, no. 3 (1990): 79–91.
  3. 3. “The Breakup of GE and J&J: The End of the Conglomerate?” Knowledge at Wharton, November 16, 2021, https://knowledge.wharton.upenn.edu/article/the-breakup-of-ge-and-jj-the-end-of-the-conglomerate/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2021-11-16.
  4. 4. John Mullins and Randy Komisar, Getting to Plan B (Boston: Harvard Business Press, 2009).
  5. 5. Casey Newton, “The Everything Book: Reading in the Age of Amazon,” The Verge, December 17, 2014, https://www.theverge.com/2014/12/17/7396525/amazon-kindle-design-lab-audible-hachette.
  6. 6. This section is largely sourced from Colin Bryar and Bill Carr, Working Backwards: Insights, Stories, and Secrets from Inside Amazon (New York: St. Martin's Press, 2021); and Brad Stone, The Everything Store (New York: Little, Brown, 2013).
  7. 7. Bryar and Carr, Working Backwards, p. 162.
  8. 8. Jane Black, “Where ‘Think Different’ Is Taking Apple,” BusinessWeek Online, August 5, 2003, http://www.businessweek.com/technology/content/aug2003/tc2003085_3215_tc112.htm. Retrieved from the Factiva Database.
  9. 9. Bryar and Carr, Working Backwards, p. 168.
  10. 10. Stone, The Everything Store, p. 234.
  11. 11. For more on Amazon's core leadership principles, see Bryar and Carr, Working Backwards, pp. 14–16.
  12. 12. Ibid., p. 14.
  13. 13. Ibid., p. 180.
  14. 14. Ibid., p. 182.
  15. 15. Stone, The Everything Store, p. 237.
  16. 16. Ibid., p. 238.
  17. 17. Ibid., p. 239.
  18. 18. Ibid., p. 247.
  19. 19. Ibid., p. 245.
  20. 20. Rick Munarriz, “Oprah Saves Amazon,” Motley Fool, October 27, 2008, https://www.fool.com/investing/general/2008/10/27/oprah-saves-amazon.aspx.
  21. 21. Stone, The Everything Store, p. 255.
  22. 22. Ibid., p. 253.
  23. 23. Newton, “The Everything Book.”
  24. 24. The information in this section is sourced largely from Alessandro Ananias, Brian Forde, and John Mullins, “SubWay Link (A)” and “SubWay Link (B),” London Business School, 2013.
  25. 25. Ananias, Forde, and Mullins, “SubWay Link (A),” p. 3.
  26. 26. Ibid., p. 4.
  27. 27. Ibid., p 5.
  28. 28. Ananias, Forde, and Mullins, “SubWay Link (B),” p. 2.
  29. 29. Ibid., p. 4.
  30. 30. This section is largely sourced from Tiffany Putimahtama and John Mullins, “MOVE Guides (A),” “MOVE Guides (B),” and “MOVE Guides (C),” London Business School, 2019.
  31. 31. Abbie Griffin and Albert L. Page, “An Interim Report on Measuring Product Development Success and Failure,” Journal of Product Innovation Management 10, no. 4 (September 1993): 291–308.
  32. 32. Putimahtama and Mullins, “MOVE Guides (B),” p. 2.
  33. 33. Ibid., p. 4.
  34. 34. Ibid., p. 5.
  35. 35. Ibid.
  36. 36. Putimahtama and Mullins, “MOVE Guides (C),” p. 1.
  37. 37. Ibid., p. 3.
  38. 38. Ibid., p. 4.
  39. 39. Ibid.
  40. 40. Ibid., p. 5.
  41. 41. For a useful framework for rigorously assessing opportunities, see John Mullins, The New Business Road Test, 5th ed. (London: FT Publishing, 2017).
  42. 42. For more on business models and how to assess them, see John Mullins and Randy Komisar, Getting to Plan B (Boston: Harvard Business Press, 2009).
  43. 43. For more on Amazon's “Bar Raiser” hiring practices, see Bryar and Carr, Working Backwards, pp. 34–51.
  44. 44. https://dictionary.cambridge.org/us/dictionary/english/acquihire.
  45. 45. For more on Amazon's two‐pizza teams, see Bryar and Carr, Working Backwards, pp. 65–67.
  46. 46. For more on how to get customers—rather than investors—to fund your business, see John Mullins, The Customer‐Funded Business (Hoboken, NJ: Wiley, 2014).
  47. 47. Jim Collins, Good to Great (New York: Harper Business, 2001), Chapter 3.
  48. 48. Recommended by John Hall, “7 Books to Help You Improve Your Business Networking and Build Real Relationships,” Forbes, December 17, 2017, https://www.forbes.com/sites/johnhall/2017/12/17/7-books-to-help-you-improve-your-business-networking-and-build-real-relationships/?sh=303887dd68ae.
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