REFLECT AFTER SUCCESS

Usually when something doesn’t work, we spend time figuring out what happened. But avoiding failure is not success. And success does not automatically mean repeated success. In fact, succeeding is usually more complex and mysterious than failing, as it involves a system of successful interactions, whereas failure usually involves one or a few things going wrong.

Losers in a competition often take a break to enter a period of soul searching. Ideally, success should also trigger reflection and soul searching, as this is the best time to reverse-engineer why something worked so it can be replicated.

At the BCG Henderson Institute, we ring a bell after any major success. The bell signals the need not only to celebrate but also to pause and reflect, to codify what went right (see figure 7-4). The team then meets to explore everything that led to the moment of success and capture this in our recipe book (simple, evolvable scripts) for important routines, such as how we research and develop a new idea. A similar policy could be adopted in any business as a starting point for codifying new scripts.

IDENTIFY THE ESSENCE

Once we have made time to reflect after success, a key action is to identify the essence of why something worked. For example, in the late 1990s, Adidas explored the idea of personalizing footwear. The team harnessed imagination effectively: they rethought the experience of buying a shoe, tried this out, rethought, and did further pilots. Then, they drilled down to identify the essence of what was successful in these tests. They discovered that consumers were more concerned about customized fit than customized design, something they hadn’t expected. This was the starting point for writing a new organizational script, which Adidas eventually enacted to transform thousands of stores.⁶

Another example of extracting essential principles of success comes from educator Maria Montessori. Early in the twentieth century, she turned her ideas about education from one-off successes into a script that others could follow. As director of a school in Rome, she noticed one child who was having difficulty learning how to sew. She tried a few things out and discovered that the girl, while she struggled with sewing, enjoyed weaving pieces of paper together.⁷ Montessori focused on the task the student enjoyed. Later, the girl picked up sewing. This was an imaginative success for Montessori. But it became more than a one-off success because she mined such encounters for essential principles (see figure 7-5).

From this small success, she drew a key insight: “We should really find the way to teach the child how, before making her execute a task … by means of repeated exercises not in the work itself but in that which prepares for it.”⁸ This became the principle of a “prepared environment” in the overall script: the Montessori Method. This method made the difference between one school in Rome shaped by reimagination and a scalable script, now followed by around twenty thousand schools around the world—the most widespread method in education.⁹

To take another example, when Ingram examined Anderson’s successful hamburger stand, he noticed that one essential element was the cleanliness. They enshrined this in the White Castle System, communicated to employees on posters in every outlet (see figure 7-6).

This element of the script also shaped their communications with customers, in castle-shaped booklets, emphasizing that the food is “protected constantly by modern electrical refrigeration, served in spotlessly clean castles” (see figure 7-7).

To others in the mass-market food industry of that day, focusing on cleanliness would not have seemed obvious or essential. Customers didn’t expect it; most cooks and owners probably saw their role as just serving the food, perhaps chatting with patrons. The clarity, confidence, and independence of mind to highlight and focus on this laid the groundwork for a successful corporate script that would transform the entire industry.

To distinguish the essential from the incidental, we should focus on elements that are:

• Critical to success
• Nonobvious
• Difficult; that is, which require an explicit script
• Differentiated from similar things in the world
• Generative; that is, if you get this one thing right, many other good things will likely follow

CLARIFY THE PURPOSE

In order to frame the specifics of who does what, you must first specify your purpose. A purpose is a kind of goal—a description of what you hope to bring about. It is the goal for the overall effort. To describe the purpose, identify the intersection of your:

• Aspirations: the exciting possibility you have envisaged with your mental model
• Capabilities: what is possible given the resources you might access now and in the future
• Context: the jobs to be done within the broader system of which you are a part

A key function of a purpose is to stop people blindly pursuing some tactical part of the script while losing sight of the intention of the whole. In his 2016 letter to shareholders, Amazon CEO Jeff Bezos wrote that leaders must “resist proxies,” meaning “the process is not the thing.”¹⁰ A proxy is an intermediate goal, like “reduce maintenance costs” in an industrial equipment company, on which you can end up focusing a lot effort, but which is not the overall goal. The danger with proxies is that you end up skewing the collective effort, if from your perspective, for example, it becomes irrelevant whether customers hire your equipment or whether you have any inventory.*

Elements of Corporate Scripts

What are the different elements that you can put into a corporate or institution-building script? The elements are different kinds of guidance to shape people’s mental models and actions (communicated via manuals, presentations, training sessions, implicit instructions built into design, marketing materials, personal discussions, and so on) that result in the creation of a new reality.

We can picture the possible elements for a script as parts of a house. At the top is a purpose. This overall goal connects a business to the social system it is embedded in by delineating some useful contribution to individual or collective flourishing, orienting the entire business and serving as an aspiration for future growth. For example, a reimagined bank could have as a purpose to help us be happier and wiser about money across all the ways money impacts our lives.

Under the purpose is strategy, which is everything it takes to win competitively, in pursuit of the purpose, and goals and metrics, which specify targets within the strategy and enable us to assess progress.

Under this are a range of possible elements we can add into scripts that specify how this purpose will be achieved in detail:

• Principles: Key pieces of guidance that can be applied in many situations. For example, “customer-facing staff in the hotel should use their discretion when they can see a way to solve a guest’s problem.”
• Rules: Descriptions of specific behaviors to enact or avoid. For example, “clean the restaurant every two hours.”
• Protocols: Codes of conduct comprising principles and rules. The term “protocol” comes from diplomacy; for example: “the following twenty-five rules and six principles should be followed in order to orchestrate a state dinner.” In business, we might have protocols for running an investor call, engaging a new customer, conducting a recruiting interview, and so on.
• Processes: Series of actions intended to produce particular results or kinds of results. For example: the sequence of steps for cooking a beef patty, assembling a car, analyzing customer metrics, or testing a new drug.
• Role descriptions: Priorities and responsibilities of personal roles. For example, “this reimagined real estate company depends on estate agents with the skills to handle the following responsibilities: emotional engagement with the client, design advice, and help with financial planning.”

Within each of these ways of giving guidance lie critical details vital to success. For example, the exact length of time to cook a burger, the ideal temperature of a store during shopping hours, the minimum inventory levels for a factory, the need for all toys to be intercompatible, or the threshold for the efficacy of a drug.

Finally, one important aspect of the script is its evolvability. This is the capacity for the script to adapt in response to change and surprise. We will explore the theme of evolvability later in the chapter.

FOCUS SCRIPT ON ACTION

When articulating elements of the script that will guide people to shape the new reality, it is tempting to focus on description, explanation, or justification. But whether you are communicating it through a corporate manual, onboarding training, or personal communication, every piece of the script should be oriented around prompting and guiding action.

To see what makes a good script, imagine three different sports coaches, each trying to train beginner athletes to jump over a vaulting horse.

1. The first coach tells students to “optimize your velocity and angle of attack relative to the height of the object.” (He continues with a lecture about mass and momentum.)
2. The second coach says simply, “Empty your mind.”
3. The third coach tells students to “lean against the edge of your chair and push the weight of your body up and down with your arms and remember this sensation as you run up to the vaulting horse.”

Which coach is likely to be the most effective? The first is technically correct, but his instructions were too complicated to guide action in real time. This often happens in corporate scriptwriting. In one BCG project, we worked on an operational assessment of a pharmaceutical company. The company had hundreds of pages of procedures and protocols for managing safety—in theory, the script for how the machine of the company should run in enormous detail. But no one understood it because it was too much for anyone to even read.

The second coach’s recipe is indeed simple—“empty your mind”—but useless for instructing people who are not already trained athletes. The business equivalent might be a vice president asking their CEO, “How should I scale up this program to a thousand stores across Latin America?” and getting the answer, “Just go for it. Be bold. Believe in yourself.”

The third coach’s recipe is what we should be aiming for. She figured out the essential actions that mattered most—the muscle movements really are the key to vaulting—and described it in a way that anyone could follow.

A great example of memorable, action-oriented code is Apple’s rules for store employees: Approach, Probe, Present, Listen, End:

• Approach customers with a personalized warm welcome.
• Probe politely to understand all the customer’s needs.
• Present a solution for the customer to take home today.
• Listen for and resolve any issues or concerns.
• End with a fond farewell and an invitation to return.

This beautifully simple code is written to be comprehended and used. Within Apple stores, it is called the “credo,” and employees meet daily to discuss one of the five steps and share examples with the team.¹¹

Complex sets of rules don’t transmit information effectively, and people do not understand or use them. When scriptwriting, we should think like a sports coach at half-time: we have a few minutes of others’ attention to use words and diagrams to guide observation, thought, and behavior.

DEPLOY REALISTS

In articulating a script, one valuable move is to involve people who can think pragmatically about how something might work and what could go wrong. Investor Bill Janeway emphasizes the value of grounded imagination: “I think of imagination as constructive and productive when it is grounded in a multidimensional appreciation of where we are and therefore from where we’re beginning.”¹²

People who think of themselves as imaginative and those who think of themselves as realists don’t usually work well together. But one way to think about realists is that they are people with a particular bent to their imagination: because of their awareness of the complexity of reality, their counterfactual thinking focuses on the challenges of implementation. Imagination is a calibrated departure from the current mental model of reality: too realistic and there is no innovation; too unrealistic and it becomes an impractical fantasy. The ideal calibration varies according to the maturity of the mental model. Deploying realists too early can suppress idea development. Deploying them at the point of codifying a corporate script can be productive. In the Adidas example of personalized footwear, such a person’s mind might jump to:

• The difficulty of working with retail partners around the world, given differing expectations about who will pay for the new equipment
• The challenge of fitting customization into Adidas’s existing departments; thus the need to rethink Adidas’s structure as part of codifying this program
• The difficulty of doing customized manufacturing in Adidas’s existing factories

Involving minds focused on the trickiness of current reality will help articulate a script for thought and action that will effectively reshape reality.

ALLOW DISCRETION

One way to enhance evolvability is to allow for individual discretion. Institutional scripts always have the potential to turn people into (unintelligent) robots: when they interpret the code as “follow these instructions and do not think.” Instead, a corporate code should make room for and draw on the imaginations of the people enacting it.

As we noted in the previous chapter, online retail company Zappos does this effectively. The script that drives the company is called “Holocracy” and involves largely autonomous teams that function like startups.¹³ Employees can join or leave teams at will, and teams and individuals can write new corporate script. As founder Tony Hsieh said to us, “If an employee wants to start up a circle to set up a cupcake bakery, that would be great. The only demand is that this bakery abides by our purpose to deliver the very best customer service, customer experience, and company culture.”¹⁴

This level of discretion is balanced by an additional key piece of corporate script: the Triangle of Accountability, which codifies criteria by which each team must guide itself. (See figure 7-8.)

Another example of creating room for discretion is the Four Seasons hotel chain. When building the global corporate machine in the 1980s, founder Isadore Sharp faced a challenge of corporate scriptwriting: how to identify the essence of his early hotels and build on it to create a global chain based around core, shared mental models. Sharp believed that frontline employees were key to the hotel experience. He wanted to invest enough in training and supporting frontline staff to justify trusting them to improvise or bend rules to solve customer problems. Sharp wrote a credo articulating this: “It took most of the first half of the 1980s to clear out all the obstacles that stood in the way of improving service: to part ways with every executive who believed my ‘kooky’ credo should be confined to the PR department, to part ways with every executive whose actions contradicted policy.”¹⁵

Sharp’s policy, a key piece of the corporate script, now underpins the operations of over a hundred hotels worldwide. One employee noted how the principles shaped the reality: “I have countless stories about how this philosophy played out. A bartender once sent me to a corner bar to pick up a six-pack of Rolling Rock even though it wasn’t on our beer menu. I knew a doorman who jumped in a cab to return a lost teddy bear to a kid at the airport. People spoke of the Room Service waiter who borrowed blueberries from another hotel at 3 a.m. because we ran out.”¹⁶

You should include enough room for discretion in your institutional recipe so the imaginations of the people involved aren’t underutilized.

EVOLVE EXISTING SCRIPTS

Another challenge is not just to evolve the script you are newly writing but other preexisting scripts to which it relates. When you are transforming a company or designing a new department around a new product, a new script often runs up against established ones.

Media entrepreneur John Battelle has an example of this challenge from the perspective of an outsider. Battelle had thought of a new business model, and he wanted to partner with a large company. He approached the company, and even though it saw the merit in his idea, the company was unable to transform its existing protocols to do anything about it:

We approached the company with our business idea: we wanted to get access to some of their discarded product. We said: “We want to give you a piece of our equity for the rights to this stuff you are discarding. You don’t have to do anything for it. In fact, our venture will probably help increase your customer base. It is free for you. How could you say no to this?”

So of course, they took the meetings, they got excited. But then they threw it over to their legal department, and the CFO’s office, because legal has to approve any deals. That’s where it hit the rocks. They did not know how to do it, within their protocols. They even admitted this to us in the room. They said: “This is a great idea. But we don’t know how to do a deal where we own a minority stake in a company. Give us something we’re used to doing.”¹⁷

The company was unable to make room within its established script—its existing operating system—for an imaginative, valuable new effort.

In another example, White Castle has recently begun to experiment with using AI-driven robots in its kitchens, a move that has the potential to disrupt its existing corporate script.

This effort is currently at the formative stages of imagination: collective imagination and experimentation. But it could become the basis for envisaging a wholly new script for White Castle, part of which (written in actual computer code) is run on robot arms in the kitchens, with the human scripts (written into training programs and key principles) guiding employees around customer engagement. Anderson and Ingram’s White Castle System from 1921 would have to evolve, merging with new, AI-augmented scripts, leading, once everything becomes familiar and habitual, to a “new ordinary.”

An established script is the operating system, the software, on which the company runs. This software must be updatable. As well as imagining new script, we should be ready to evolve the old.

ERASE SCRIPTS

One ongoing and often neglected task in any corporate system is to trim rules and protocols to contain complexity within a tractable range.¹⁸ For example, Netflix has a rule to eliminate unnecessary rules: “As we grow, minimize rules.”¹⁹ CEO Reed Hastings and chief talent officer Patty McCord codified their approach in a slide deck on best practices for Human Resources, which Facebook COO Sheryl Sandberg has called “one of the most important documents ever to come out of Silicon Valley.”²⁰ A key principle it emphasizes is to “eliminate distracting complexity (barnacles)” and “value simplicity.” The document discusses “rule creep”: “ ‘Bad’ processes tend to creep in—preventing errors just sounds so good. We try to get rid of rules where we can, to reinforce the point.”²¹

Trader Joe’s also has an effective script erasure process: keeping its total number of products stable by removing the old as it introduces the new. In this way, there are never so many products that workers don’t know enough about each one to be able to discuss it with customers.

Erasing script comes from seeing the whole. Even if a particular rule might be justified by some local need, we should never forget to weigh this against the need for the company script as a whole to function—to remain understandable and evolvable.