CHAPTER 10
In the Friction Zone
Learning to ride a motorcycle is a lot like learning to ride a bicycle. With both, you need a sense of balance and enough speed to stay upright as you travel down the road. But on a motorcycle, you must also learn to control the speed and power of a magnificent machine, something that happens largely in a place called the friction zone.
Susan Rzepka Orion, a writer and certified motorcycling instructor, points out that before you can make a motorcycle move smoothly, you have to “practice the fine art of clutch control” that happens in the friction zone: “the small wonder in the big world of motorcycling . . . where the clutch slips and the transmission grips, and partial power is transmitted to the rear wheel.”1 You find the friction zone on a motorcycle by using the clutch on the left-hand grip. But as Orion points out, “No one can show you its exact location. The friction zone is something you can’t see. You have to feel it.”2 The journey of leadership is often like this, especially when it comes to making big decisions.
I’ve found we’re in the heart of the friction zone when we’re compelled to make life-changing decisions that impact our destination and the quality of our journey. We have momentum and balance, but we see things changing around us and we don’t know whether to accelerate and go full throttle or to pull back and wait for things to engage and develop.
Decisions in the friction zone take different forms for different leaders. Is it time for a career change? Should I start a new company? Should I buy out a competitor? Should I sell the company I founded and nurtured to maturity? Should I retire? If so, what’s next?
I’ve faced all of those questions, but by far the biggest decision for me was whether to sell Mitchell Communications Group. The crucial time before, during, and immediately after the sale of my company taught me several key lessons about leading an organization, which I believe are applicable to anyone in the friction zone regardless of the type of decision you face.
Selling a company can be the ultimate achievement of a destination leader. For many entrepreneurs, it is the destination. It comes with plenty of benefits: financial rewards, freedom, the ability to work on a bigger stage, new challenges, and growth opportunities. But it’s also a major change with complex implications. No matter how hard you try to think through everything, you can’t anticipate it all.
I wasn’t one of those entrepreneurs who built a company with the goal of selling it. I just wanted to build a great company. But as we built a great company, opportunities came knocking. Even though at first I resisted the overtures, ultimately I felt obligated, to myself and our company, to see who wanted to buy us and what they had to offer. Plus I wasn’t sure how long they would keep coming. So I began to entertain thoughts of selling.
Should we shift into another gear or ride at our current pace? Should we continue to grow steadily as an independent midsize agency, or should we join a bigger organization and compete in a global environment? If we sell, who should we sell to? At what price? Under what conditions? When is the timing right to sell? How would we communicate it to our employees? To our clients?
Those were the questions that loomed in my friction zone. I knew I wanted to help the agency get to the next level in ways I didn’t think we could do on our own, but I didn’t want to do it just anywhere. Nothing was broken. Everything was working well. So the alternative had better be compelling. I met with leaders from several organizations that were interested in acquiring Mitchell Communications, but none felt like the right fit. Then one day I found myself in a corner office on the 16th floor of a building in downtown Manhattan talking to a nearly seven-foot-tall executive at a legendary Japanese mega-agency. Not exactly what I would have predicted, but there I was.
Tim Andree, an executive vice president with Dentsu, has helped lead the company’s efforts to successfully expand beyond its Japanese home, first in the United States and later around the world. We first met in Dentsu’s New York offices in 2012 to discuss his interest in buying Mitchell, and we sat down there again three years later to reflect on that pivotal time, as well as the challenges of leading in the friction zone.
“We live in such a dynamic environment,” Tim told me. “And how to respond to changes and really hit the right gears at the right time is hard. I always start off with a destination in mind, and I end up making wonderful progress, but it isn’t always on the exact path that I thought. There were many times I wasn’t sure where I was in the friction zone, times when I wasn’t sure I was going to catch the right gear.”
Tim grew up in Detroit as one of 12 children, and his height and basketball skills earned him college scholarship offers from nearly every major college in the country. He chose Notre Dame over North Carolina, Duke, Kentucky, UCLA, and Michigan. He figured college basketball was the first step toward a lengthy career in the NBA. He would win a few championships, make a bunch of money, buy a big house, marry a wonderful wife, and have a few chip-off-the-old-block children.
In 1983, the Chicago Bulls drafted Tim, but he never saw action in a regular season game.
“I have a wonderful wife and we have lots of children,” he said with a laugh, “but none of that other stuff worked out.”
Tim played professionally in Europe for a few years and then, at his agent’s advice, he went to Japan to play basketball and look for opportunities to use his degree in economics with a global company. He found a day job with Toyota, but initially he was only scheduled to work from 11 A.M. to 1 P.M.
“In other words,” he said, “to go to lunch with them and practice English.”
Tim started showing up at 7 A.M., looking for ways to prove he wasn’t a novelty hire. He quickly worked his way into the business and spent 14 years with Toyota. A few years and a few job changes after that, he made it back to the NBA—but this time he was in charge of the league’s global marketing operations.
“I had the full intention of becoming the next commissioner,” he said.
Five years later, when he realized he wasn’t the heir apparent deputy commissioner, Tim decided it was time to shift gears and found himself in the friction zone. Dentsu, then a 105-year-old marketing and advertising company in Japan, had tried several times to recruit him to help with their efforts to build a presence in the United States. As he took a fresh look at that opportunity, he knew the time was right to say yes. He joined Dentsu in 2006 and helped the company shift from a partnerships and joint venture strategy to a “growth through acquisitions” strategy that focused on building the Dentsu brand on the international stage. This was a bold move by the Dentsu board. The enterprising strategy was led by Dentsu’s 11th president, Tatsuyoshi Takashima, and, in the years that followed, by his successor, Tadashi Ishii.
Dentsu was billing $20 billion in 2006, with less than 5 percent of its revenue coming from outside of Japan. Fast-forward 10 years. Due to Dentsu’s vision and the leadership of all three men—Takashima, Ishii, and Tim—the company had made multiple acquisitions, Dentsu had more than doubled in size, and 54 percent of its revenues were from outside of Japan. The company now operates in 146 countries, has 47,000 employees, and several world-class agencies as part of the family.
In 2012, however, a few key pieces of the puzzle were still missing, and public relations was a key piece. Tim reached out to me with his interest in Mitchell Communications, and we scheduled a one-hour meeting that lasted two. We talked about how PR was evolving as an industry. We talked about our values and our leadership styles. We talked about our approach to growth. We talked about our beliefs. We talked about our families. We talked about basketball. We talked about motorcycles. In short, we talked about everything but the business aspects of a deal. It was a very different initial conversation from any I had had before.
It was different for Tim, too. The leaders of other agencies he had talked to about an acquisition were interested in discussing how they could “monetize their investment” or how they could “take risk capital off the table” or how they “always deliver” for their shareholders.
“I would look at those guys and say, ‘We’re not the shareholder,’ ” Tim said. “ ‘We’re looking to be partners with someone.’ People couldn’t get their head around that. But the human element is really where you end and begin. It comes down to chemistry.” Tim made it clear that he wanted Mitchell Communications to be the cornerstone upon which Dentsu would build their PR capability.
Getting the strategy right is crucial too, of course. Tim had a vision and a proposition for me I simply could not refuse. Not only did he want to buy my company, but he wanted me to join his executive team and lead the effort to acquire other public relations firms, building a global PR capability for Dentsu. That was something I hadn’t heard from anyone else, and frankly, it appealed to my entrepreneurial spirit. I had built the agency—with a lot of help, of course—and here was a chance for us to build again, but on a global stage. Every other major marketing communications network had added PR years ago and in fact had numerous PR firms in their holdings, all competing fiercely with one another. Tim’s vision was fresh and exciting. It offered a uniquely collaborative environment for us and anyone I could acquire to work with other Dentsu agencies, serving clients together.
When I left the meeting with Tim, I told him the same things I had told every other suitor: “Thank you. I’m flattered. The agency is still not for sale, but I’ll think about your offer.” In my heart, though, I knew this could be the one.
We continued talking over the next several months, and at Dentsu the potential acquisition of my company soon was referred to internally as “Project Harley.” At one point Tim asked me how I would build PR for Dentsu if I came. He asked me to put my thoughts down in writing for him. I decided that would be a good test, and he should see my strategy first.
I sat down on Memorial Day weekend to begin researching and writing in earnest, and within six weeks I had drafted an entire acquisitions plan for a global PR network concept, complete with prospects and growth goals over the next five years. It was a huge undertaking and a bit of a risk to show Tim the playbook. But I also believed it was the lynchpin. Without alignment on this part of the deal, there was no point in continuing the conversation. I felt I was in the friction zone for sure, feeling my way through uncertainty and taking some risks along the way. But I was hoping to find traction at just the right time.
I remember the email from Tim once he had read the plan; he had actually read it several times, he said. He loved it. He had shown it to other top executives in Dentsu, and they also loved it. In fact, they had said, “This is good. Very good.” Tim told me Mitchell was the company they wanted to buy, this was the deal they wanted to do, and he hoped I would join the team.
Traction. There it was. I knew it was time to accelerate into it. I was ready to move forward.
I knew Dentsu was the perfect fit for us, but it wasn’t only because the strategy and business aspects were right. Just as important, I believed in Tim as a leader and could see that our companies’ values aligned.
I remember when I first read Dentsu’s 10 guiding principles:
1. Initiate projects on your own instead of waiting for work to be assigned.
2. Take an active role in all your endeavors, not a passive one.
3. Search for large and complex challenges.
4. Welcome difficult assignments. Progress lies in accomplishing difficult work.
5. Once you begin a task, complete it. Never give up.
6. Lead and set an example for your fellow workers.
7. Set goals for yourself to ensure a constant sense of purpose.
8. Move with confidence. It gives your work force and substance.
9. At all times, challenge yourself to think creatively and find new solutions.
10. When confrontation is necessary, don’t shy away from it. Confrontation is often necessary to achieve progress.
So much of that matched up beautifully with our five values at Mitchell: trust, open communication, service, results, and commitment. Those values are timeless. I hope they will always be our values. We may live them out in different ways, because our society and our business change, but who we are should always be the same. And I loved that. While on the face of it we seemed so different, there was so much that was really the same between Mitchell and Dentsu.
So over the next several months, I found myself negotiating the details of the deal: the finances, my role moving forward, the timing of the transaction. Fortunately Michael Lasky and Brad Schwartzberg of the Davis & Gilbert law firm helped me understand the value of my firm and assess strategic alternatives and possible buyers during the process. David Wiener of Wiener and Company provided invaluable counsel and guidance throughout the process.
I also had to determine how to communicate with my team and our clients. Telling my executive committee was the first important step. I took them out one by one for a long visit over dinner or in some quiet setting to share the news, starting with Michael, who was a minority stockholder and whom I had kept apprised of all the conversations I’d been having.
Not surprisingly, they all reacted the same way: a bit in shock, not believing what they were hearing, and fearful of what it could mean. But after I painted the entire vision for them: how we were going to position Mitchell for the future, the potential for our people to work with international clients, the opportunity to acquire other agencies and build a new PR capability, the person Tim was and the company Dentsu was, we were all in agreement. The hair was standing on the back of our collective necks, and all five of us knew it was the chance of a lifetime, with a rare match of values that sealed the deal.
It was also incredibly rewarding to share with each of them as well as our leadership team some of the benefits of selling. In fact, right before the deal closed, I hosted a dinner for the leadership team at my home and shared how we planned to use KEEP (our profit-based bonus initiative for leaders) to ensure they personally benefited financially from the sale. Building the agency was a team effort, and my wealth-sharing philosophy had guided me up until this point to ensure our employees received some personal gain whenever the company did. I wanted to be sure our key leaders knew how much I appreciated their loyalty and service even more so now.
We moved forward as a team to tackle the rest of the communications and organizational planning, carefully and thoughtfully considering how to share the news with our clients, employees, and community at the right time to ensure we had their support. It was a heady time, filled with long hours, countless details, and plenty of anxiety and uncertainty. Consequently, it was most important for me to accelerate into this opportunity with confidence and determination that we were making the right decision, and to help others understand the wisdom and opportunities that were part of the deal.
All leaders face decisions that impact their life and the lives of everyone around them. And any major decision that changes the course of your career and life is filled with uncertainty and complexity.
The unpredictable changes that can come are such a key part of the friction zone that I’ll discuss those in greater detail in the next chapter. But there also are some important lessons you can learn as you enter the friction zone that will help you evaluate, make, and execute the biggest decisions of life.
When I reflect on what I learned from Tim and my experience selling Mitchell Communications, the following three key lessons emerged for finding and navigating the friction zone.
Know What Matters Most
As children, we learn to stand, then walk, then ride a bike, and pretty soon we think we have this balance thing down. We grow into adults, however, and we learn there’s much more to balance than staying on two feet or two wheels.
You hear a lot these days about work-life balance, and that’s important, but right now I’m talking specifically about the balance you need when facing a big decision. That’s a type of balance you can only find when you know what matters most to yourself in the context of the world around you, to your family, to your coworkers, to your clients. If you lead a public company, you would include shareholders. In my case, it included Tim and the Dentsu family. It’s all the stakeholders in your life.
Tim and I both faced big decisions. He was deciding whether to buy, and I was deciding whether to sell. Yet we were approaching our decisions from the same starting point of understanding what mattered most to us and being certain of the criteria we were using to make that decision.
He knew what he wanted in a company and its leader. He wanted a company that was growing and profitable, had a unique offering, was innovative, and had a proven track record with clients. He wanted a company that Dentsu would complement, so that Dentsu would become better and the company he bought would become better. And on the softer side of the ledger, he wanted to find a match with the chemistry and character of the leadership. He wanted to work with people he could trust to bring a shared vision to life.
I wanted Mitchell Communications to continue growing, but on an international scale as well as through acquisitions. I wanted the company to expand its influence in ways and in places that probably weren’t possible on its own. And I wanted to work with leaders who shared our values and our vision, who appreciated our unique culture and approach to business, and who were willing to take risks to make great things happen.
So it was both strategy and values; the combination of the two mattered most to both of us. That’s why our initial conversation—getting to know each other as individuals as well as leaders—and the clear alignment of our organizational values and shared vision for the future were so important to the decision. If either of those things had not been in place, I would not have shifted toward our new reality. I doubt Tim would have either.
Get Your Timing Right
A friend of mine, Scott Boyer, had a successful career in Big Pharma, but he felt compelled to do something disruptive in that industry. When he looked at data analyzing sales and projected sales for drugs, he saw that it always focused on the 10 to 15 wealthiest markets, while a lonely column at the end of the chart—ROW, or rest of world—got almost no attention. In other words, most of the people in the world had little to no access to lifesaving medications simply because they lived in poverty.
Scott talked with his wife about leaving his job to do something more philanthropic, something that would help provide underserved ROW markets with much-needed medications. But they decided the timing wasn’t right. They realized they needed to wait until their children had finished college and their personal finances were stronger. When that happened, Scott cofounded One World Pharmaceutical and the ROW Foundation. The for-profit feeds money to the nonprofit to help make treatment for epilepsy available to the 21 million people around the world who could benefit from it but don’t have access to it.3
When Scott was in the friction zone, he searched for what was important to him but he resisted the temptation to accelerate at the wrong time. As a destination leader, I can tell you that temptation has a strong pull. When I have an idea for attacking a problem, my first instinct is to go for it at full speed. But in leadership, as in motorcycling, you don’t always want to accelerate. To navigate the friction zone, we have to learn when to accelerate and when to back off.
Scott and I were talking about the importance of timing when he pointed me to a TED Talk by Idealab founder Bill Gross. My key takeaway from the talk: in a study of more than 200 start-ups, Gross found that timing was the number one factor impacting success or failure, even more important than the idea or the team. The timing of a start-up, or when a product or service was launched, accounted for 42 percent of the difference between success and failure.4
Think of it like a curve in the road. You have to navigate it well—look through the turn—to get to your destination. If you accelerate too early, you’ll lose control. Too late and you’ll lose momentum. You need to go into it at the right speed and accelerate at the right time as you come out of it.
By waiting, Scott not only got his kids through college and saved the money he needed for a start-up, but he also gained additional valuable experience and made connections with the partner who would help define their business and social enterprise model.
Timing was a critical variable in my decision to sell. Looking back, I sold at just the right time because our growth was very strong and our best years were still ahead. I believed we could thrive in a rapidly changing marketplace with the resources of a global partner.
Many entrepreneurs think they should sell when they are ready to retire, they want to move on, or their company is no longer doing as well on its own. Those factors are all negatives for buyers. They want the company that’s continuing to grow. They want the force behind the business to stay with the company post-sale, at least for a period of time.
My advice to entrepreneurs: start planning your exit strategy now, even if it’s years away. With a clear plan, you’ll have a better chance to get the timing right for you, your company, and the new owner if and when the day to sell ever comes.
Find the Traction
The biggest decision of my friction zone experience came when we sold Mitchell to Dentsu at the end of 2012, but Tim was tackling an even bigger one, navigating the $5 billion purchase of Aegis, the London-based media buying firm. This was the other piece of the Dentsu puzzle that was missing. While Tim had been working on it for some time, the deal was not completely finalized until March 2013.
In both cases, timing was critical, because timing is everything when you’re trying to find traction. Momentum matters: you must ride it when you have it and be opportunistic when you sense it coming. This is true for anything in life. You have to be ready to go with it when it happens for you, because you can’t predict when it will come or when it will go away.
I knew Mitchell had reached the point after 18 years where we needed to make a choice. We could leverage the momentum our rapid growth was giving us to join forces with a larger organization. Or we could settle into our niche and focus on growth we could generate or acquire on our own. The second option would likely take much more time, money, and personal risk to accomplish. It became clear that I had to act soon, if I was going to act, or the opportunity would pass us by.
Sustaining momentum in the friction zone, however, often requires agility and adaptability. Circumstances that impact the decision change, often without warning, and you can lose traction in a hurry. The U.S. Marines have a mantra that symbolizes flexibility, resourcefulness, and quick decision-making: “Improvise, Adapt and Overcome.”5 That mantra applies in the heat of a battle, but it also applies when you’re working through the biggest decisions of your career.
Another mantra that’s helpful in the friction zone is a Japanese phrase that Tim taught me: genchi genbutsu. It means “go and see.” Many times in his leadership experience, he followed his instincts to go and see for himself what was happening so he could move things forward or fix what wasn’t working.
“This is critical,” he said, “particularly at pivotal moments in acquisitions.”
In my experiences in the friction zone, there’s no substitute for genchi genbutsu. You need to get close enough to the situation to see clearly what’s going on so you aren’t making decisions based on assumptions, and as in Tim’s experiences with acquisitions, so you can make sure the right deals happen at the right time.
Genchi genbutsu is about taking action to find out for yourself what the situation is. Taiichi Ohno, the creator of Toyota’s production system, was known to take new engineering graduates to the production floor, draw a chalk circle around them, and tell them to stand in the circle and observe at the gemba (the place where work is done). If there’s a problem on the production floor, he reasoned, it must be understood by going to the production floor.
To get the information you need, sometimes you have to go to the front lines. You have to stay close to truth and reality. You can’t assume or rely totally on others for what you need to know yourself.
You can’t predict everything that’s coming. But if you have the right information, you can be agile enough to deal with change and be ready to ride the momentum when it comes your way. You can sense the point of acceleration where you find the traction and engage the clutch so you can seize the opportunities when they happen.
I’m sometimes asked if I second-guess my decision to sell Mitchell Communications, and that answer is easy: Never. I don’t second-guess anything about the deal.
For one thing, that’s just not who I am. What good would it do to second-guess a decision when you can’t do it over? This isn’t golf. There are no Mulligans. You learn from the journey and keep moving toward your destination. More important, I don’t second-guess this decision, because I know in my heart it was the right decision, for me and for Mitchell Communications.
Founders eventually must ask themselves, “What is this company beyond me, and how can I ensure its future by making it more about others?” That’s the question I faced in the friction zone. Most successful start-ups do well because they embrace a “founder’s culture,” but they live on only if they embrace a sustainable culture, a culture that’s created and lived out by all the people in the organization. It’s their culture, not just mine. I wanted to position Mitchell Communications to find its own sustainable culture so it could thrive long after I’m gone. Perhaps that’s the ultimate gift I could give to our employees, our clients, and our community: for Mitchell to grow and thrive no matter what happened to me.
“I’m sure Mitchell would have been fine just staying on its own,” Tim said, “but I’m convinced the agency has a wonderful future ahead of it as part of our organization. I think you stewarded it well, and together with Dentsu I think we can steward Mitchell and all the other agencies we acquire toward something really special. I think together we’ll reinvent an industry that has lost its way.”
We can do that with Dentsu, but we couldn’t have done it on our own. We would have had a future staying just like we were, but we would never have had the opportunity we gained by becoming part of a global company. So although there were risks in selling, the potential for good for so many was greater. That’s the thing about the friction zone: it can propel you toward a new destination, but only if you are willing to maneuver through the uncertainty until you find the traction.