9. leading and managing HEROes

Here’s what we learned from Scott Cook, the founder of Intuit: fail as frequently as possible. But learn from it.

Intuit is an incredible company in a boring category. Revenues at Intuit went up every year between 2005 and 2009, recession or not. And this is a company that makes solutions for accounting and taxes, chores that most individuals and small businesses think about as little as possible. Even though the consumer software business has been in the dumper for years, with prices dropping and competition commoditizing the products that companies and people do buy, Intuit is thriving. The reason: a culture that encourages, nurtures, and supports HEROes.

This business of leading and managing HEROes is tricky. Innovators create disruption. Their ideas can be uncomfortable and threaten others. A lot of them will fail. So a HERO-powered business has to do three things. One, it has to encourage that innovation through leadership, as part of a strategy that everyone at the company understands. Two, HEROes need to be able to test these innovations rapidly, kill what’s not working, and scale up the rest. And three, the company needs to encourage HEROes to collaborate across organizational boundaries, because the best ideas almost always cross those boundaries.

When it comes to leading, Intuit’s management is holding up its end of the HERO Compact. According to Scott Cook, “Our job is to solve the most important problems in our customers’ lives. Our guiding rationale, our mission and belief, is to change people’s lives profoundly.” This statement doesn’t talk about tax or accounting products (Intuit has them) or about software (Intuit sells it)—it talks about people. Those people are generally individuals, families, or small businesses like hair salons and consulting groups. This statement also doesn’t talk about business models. This means that if somebody at Intuit comes up with a service rather than a product, or a cloud-based system that delivers value through the Web, those ideas will get a fair shake.

We talked about some of Intuit’s innovations that came from this attitude in chapter 4. These days, many of them are connected with tapping empowered customers for help with support or marketing. For example, TurboTax’s help feature now calls up an online community, rather than static help content; you’ll see what others are saying about, say, depreciation. This has both decreased support costs and increased customer satisfaction. The small-business marketing group has innovated with its hyperlocal “Love a Local Business” feature,¹ which encourages customers to point out other businesses in their local community that are delivering great service. Intuit has volunteer “Insider” panels of tens of thousands that provide feedback on several of its products. It’s clear, as you review the way the company runs, that innovative ideas for serving empowered customers are the way Intuit does business, and the innovation can come from anywhere in the company.

What’s the result of all this innovation? Many successes, and a lot of failures, too. Scott Cook loves failures, so long as they’re useful failures. “We have a high tolerance for experiments,” he explains. “One of the biggest things I have learned in business is the importance of fast, cheap experiments and high velocity. If you want systemic innovation, make it fast and cheap for people to try things, and painless to fail. Experiments: most of them will fail.” What’s the penalty for failing at Intuit? “The consequence is learning and admiration for the learning.”

This is not lip service. Intuit changes something on its TurboTax Web site every week, then analyzes the results. As Scott puts it, “This allowed lots of different people in marketing to try things which were not restricted by the orifice of management.” Its QuickBooks product for small-business accounting now gets updates every month; the company reviews the usage and makes changes accordingly. Change, experimentation, and improvement are baked into the culture.

You might think all this experimentation would create chaos. And it does sometimes. But Intuit manages the chaos with systems that help the most promising innovations to bubble up. “Brainstorm” is an internal system at Intuit where any employee can enter an idea; other workers can not only vote, but comment and make their own suggestions. Exciting ideas get collaborators and move quickly through the process.

Take its new ViewMyPaycheck service. If you work for a big company, your paycheck probably goes through ADP or Paychex, and you can see your pay stubs online. Some HERO in the Tucson office proposed a similar system for Intuit’s small-business payroll service.

Since small businesses generate only a few paychecks each month, this might seem like a minor idea.

Except that in aggregate, 14 million people get their paychecks every month from Intuit’s payroll service. By creating a Web site they can all go to, Intuit created a channel to 14 million consumers. Marketers in the other consumer divisions, like TurboTax and Quicken, were delighted.

Intuit has figured it out. Fail frequently. And generate your ideas in a place where all the departments can see them.

the tension between chaos and management

Did it make you uncomfortable to read about all the experiments and failures at Intuit? It should. It’s not so easy to create a culture that tolerates experimentation this way. Companies are set up so that people are responsible for departments, for goals, for generating revenue, keeping costs under control, and taking credit. An atmosphere of wild experimentation seems counterproductive. What if it damages your brand? What if it cannibalizes a revenue stream? What if it wastes money, upsets the sales commissions, gives competitors an opening? It’s a whole lot easier to keep doing things the way you’ve always done them.

Clayton Christensen describes this challenge in his book The Innovator’s Dilemma.² As he points out, the problem is that somebody, probably at a start-up, is already pioneering the innovations you find so threatening. They are reducing costs, reaching out to empowered customers, or just coming up with new ideas. The market, as a whole, tolerates a lot of failures punctuated by the occasional breakthrough success. Most companies don’t, so they get out-innovated.

HERO-powered businesses will find these new solutions. If you compete with them, they will leave you behind. You have to find a way to manage the chaos of HEROes innovating all around your company. That’s what this chapter is about. We understand how uncomfortable this is, so we’ll show you how to build systems to boost innovations that support, rather than torpedo, corporate strategy.

There are two sides to getting HEROes to deliver actual results for your company. First you’ll have to lead them. Then you’ll have to manage them.

leadership that generates HEROes and serves strategic goals

Look at how Scott Cook and Intuit have created an innovative environment. But leadership that tolerates experiments and innovation does not mean abandoning corporate strategy. At Intuit, that strategy remains around delivering financial solutions to small businesses and consumers. Innovations intended to serve huge companies, give away value for free, or take Intuit into the entertainment business wouldn’t fit that strategy. HEROes with ideas like these probably wouldn’t find support for their innovations within Intuit, regardless of how inexpensive or exciting their ideas were.

At Intuit, HEROes are serving current strategy. What about when you’re changing strategy? Then you need HEROes and their innovations even more.

Take the example of Vail Resorts, a company that operates multiple properties, including five major ski resorts. The company used to place ads in long-lead publications like Ski magazine and hope that people seeing those ads in August or September might book a December or January ski vacation. But those ads had become less and less effective because skiers were shifting increasingly to booking vacations just a few weeks or days in advance. The company needed the flexibility to create pitches based on current conditions—snowfalls, competitors’ promotions, local events. Long-lead magazines can’t do that.

As a result, Vail Resorts’ CEO Rob Katz decided to change his marketing completely.³ The advertising focus shifted to short-lead media, like newspapers and online sites. The other focus was the social technologies of the groundswell, where many of the ski customers were getting their information. “We needed to be a leader in [the social] space, rather than battle the trend of where our customers are going,” he says.

Rob hired Mike Slone, a veteran of the interactive development house Razorfish, to head up social engagement in the new marketing strategy. Mike manages a team of five in Vail Resorts’ corporate headquarters who respond to tweets, blogs, and other social inquiries. And Mike’s team also works to involve other staff, including the heads of online marketing at each of the company’s five mountain resorts and other staff who create content for social sharing. “We see social becoming part of everyone’s job here,” says Mike. Vail Resorts is amplifying its fan activity, just like Microsoft and the NHL in chapter 6.

Crucial in examples like Vail Resorts and Intuit are the signals from the top. In the case of Vail, CEO Rob Katz demonstrates that he really supports all the social activity by tweeting himself, as @rickysridge. When a customer named Bob Lefsetz tweeted about a problem signing up for a meal pass, Rob made sure he got what he was looking for. (This turned out to be very smart, since Bob Lefsetz was a guy with almost thirteen thousand Twitter followers and a popular blog in the music industry; his followers and blog readers got to read about how great Vail is⁴—instead of another “United Breaks Guitars”–style rant.)

Before we leave the topic of leadership, there’s one more leader we’d like to cite: Barry Judge, the CMO of Best Buy. As you saw in chapter 1, Best Buy encourages customer-facing employees to be HEROes. In addition to Twelpforce, Best Buy continues to innovate in surprising ways. Barry posts commercials on his blog before they go on TV—and has in some cases changed or pulled them based on blog comments. The company opened up the API (application programming interface) for its Web site, enabling other sites to take feeds of product specs and prices and make new interfaces for them—and also to feed traffic to the Best Buy site. These are HERO-driven innovations that the company encouraged.

But what’s most fascinating is Barry’s attitude. When it comes to new ideas, “we’re almost always in a half-baked mode,” he says. “Half-baked ideas allow people [both internally and externally] to give you feedback.” Barry recognizes that marketers must always be learning. As he puts it, “If you are not curious, you won’t last long in marketing. I used to be, perceptually, the smartest guy in the room. It takes some time to realize that makes you the dumbest thing in the room. You have to have some personal failures to help see that.”

What do Scott Cook, Rob Katz, and Barry Judge have in common? They live up to their part of the HERO Compact. They articulate a clear strategy so people know what the goal is. They encourage people to do lots of experiments, failures, and half-baked stuff to surface the best ideas. They recognize that what works often comes from some unexpected direction, so they’re open to all sorts of innovation. And by rewarding that innovation, they encourage more of it.

Fine, we hear you saying. Innovation is great. It’s just that this level of chaos isn’t tolerable at my company. But in fact, these companies aren’t chaotic—they’re encouraging innovation in a systematic, efficient way. That’s where governance comes in—there has to be a way to channel all this activity productively. That’s what Manish Mehta learned at Dell.

CASE STUDY

Dell governs the chaos with a council

Dell has embraced social technologies more than any other company in the world, with over a hundred different programs scattered around the world. Manish Mehta, Dell’s vice president of social media and community, has the job of making sense of this cacophony. Manish showed us the results on a map, with colored dots representing social initiatives in the United States, Latin America, Europe, China, India, and worldwide. There is a dot for Dell’s use of Twitter to drive $7 million of computer sales in the United States. There’s the Brazilian Facebook community. Add several different flavors of IdeaStorm, Dell’s program to get customers suggesting and voting on new product ideas. Plus, there are internal projects, like the employee wiki they use in India. Manish’s world map looks like it has the chicken pox.

Dell got to this spot with leadership from the company founder. In 2006, even before he had returned to the CEO role, Michael Dell had encouraged the use of social applications to reconnect the company with its customers. It worked. But now it was time to take all this activity and make it work in a concerted way.

Manish’s job is to assemble a profitable, measurable global social media and community strategy from the one hundred colored dots. This is a job that takes not heavy-handed management, but persuasion. His efforts need to cut across the boundaries of Dell’s geographies and departments, to cut through the politics and share the best practices.

Manish’s first move was to charter a new Social Media and Community Governance Council, with the intention of bringing coherence to social technology efforts and maximizing benefits across the company. This diverse group of a dozen managers includes representatives from each business unit, even those far from consumer markets, and each major region as well as from IT, legal, employee communications, HR, and marketing. Each is a direct report to the head of one of Dell’s departments or units. Manish leads the council in weekly ninety-minute meetings and sets its agenda. (While Manish reports to the CMO, this is by far the least important element of his councils—since councils are cross-functional, the people who manage them can be in IT, marketing, product management, PR, HR, or many other parts of the organization, depending on where the center of activity is.)

First and foremost, the council governs the social technology investments and policies for customers and for employees. This means constructing and ratifying the social strategy, the employee appropriate-use policies, the funding model, and the business metrics. It means turning a hundred separate initiatives into a strategy for harnessing empowered customers and employees to Dell’s advantage. The group talks about metrics, vendors, challenges, and successes in an attempt to standardize, scale up, and measure the effectiveness of similar efforts in different departments.

Second, this group taps into the employee groundswell to find and share best practices from across the organization. It could be using Twitter in the United Kingdom to sell computers at the Dell outlet, a practice pioneered by the U.S. regional team. Or it could be sharing an internal use of social media.

To maximize the opportunity of finding and sharing best practices, Manish has implemented a “hub-and-spoke” model for his council. Each of his council members has her own subcouncil made up of key members of her organization. For example, the consumer business subcouncil has representatives from sales, marketing, product development, and customer service. In this way, the council extends its reach and multiplies the chances that it will hear about a good idea and be able to help shape and spread it across the company.

HERO projects start small. Then they get bigger. Then they spread and become strategic. In a company the size of Dell, it makes sense to manage them in cross-functional councils. The objective is not to squash the ideas. The objective is to generate more of them, harness them in a more organized way, and turn them from small successes into powerful drivers of strategy.

why cross-organizational councils make sense

Companies as diverse as Kodak, Cisco, Intel, and Procter & Gamble also use cross-organizational councils to set strategy, define policy, and determine funding to empower employee HEROes.

Notice what these councils are not. They are not in charge of all the social applications in the company. They are not responsible for innovation. They are not intended to hem in, shut down, manage, or combine HERO efforts. HERO projects spring up from everywhere because only the individuals most closely in touch with empowered customers and problems can see what’s needed and act quickly to meet those needs.

And councils are not just for social technology efforts. The principle of cross-organizational councils is also the right way to tackle the business opportunities presented by mobile, video, or cloud computing applications. Any company big enough to have several applications of this type can benefit from coordinating them, sharing resources, and sharing best practices.

All these technologies spring from workers’ personal experience as technology consumers. Everyone feels they can master them. Often, having gotten started, they find themselves a little daunted with technical, organizational, or content creation issues. This is where councils can help.

As part of the HERO Compact, managers should resist the urge to combine similar initiatives under one roof. HERO projects like internal employee social networks and customer social networks share common challenges, but need to be run by very different groups. Training video isn’t the same as marketing video. A company like Procter & Gamble might have ten different mobile applications, including some for marketing, some for customer service, and some for supermarket managers. Rather than force-fit these applications into some central organization that will become a bottleneck, it’s far better to give HEROes (and their bosses) the opportunity to share with others across the organization. (It also makes sense to give them online tools for sharing, as we’ll describe in the next chapter.)

So, if you’re going to start a council for HEROes or managers involved in similar projects, how should you go about it? We recommend five principles.

the importance of systems

This chapter and chapter 8 describe what senior managers need to know to manage the chaos of a HERO-powered business. We’ve described the metrics and management systems, such as councils, that take HERO-led innovation and turn it into a scalable, companywide, collaborative activity.

But management systems aren’t the only systems at work here. Innovation and collaboration systems, based on software but rooted in culture, can make all the difference in uniting and supporting the HEROes in your organization. That’s the topic of chapter 10.