Embracing Failure: Unlocking Success in Business

1. !!! WARNING !!! • Most lecture slides paint a “super-clear” picture of the world • They suggest that following the frameworks will lead to success and $ • The reality is: • Organizations fail • CEO’s make a lot of money • Both wouldn’t happen if anyone could follow the frameworks

2. What do our customers say? • They want a pedagogical approach that makes the possibility of failure an integral part of the equation • This is because: • Orgs fail • Managing orgs is super-lucrative • Most people want to be led by “secure” frameworks • These frameworks, while popular with students, always fail • That’s why it’s lonely at the top

3. Google “Tim Cook WaPo Interview” • We don’t have divisions. We’ve elected not to do what business school, and I think every other larger company, does: They break down their company into smaller divisions. They give each division a P&L, and each division does their own marketing and communications and operations. • We always re-challenge ourselves on this question. But we keep coming back to what the customer wants from us is a user experience that is seamless. They want to start working on whatever they’re working on from their iPhone. And then they want to go to the Mac, and they want it to be absolutely seamless. The only way to assure that is to do things once. • That means the top of the company must work together incredibly well. Think about if you were the CEO of a company with a lot of divisions — I’m going to exaggerate a little bit — it would almost be like you’re a holding company CEO. That is the model for most companies. But that’s not what customers want from us. You can’t have a weak link. You can’t have people who don’t get along. It has to be people who have great respect for one another and who work as a team.

4. Charlie Munger • It seems like the higher mathematics with more false precision should help you in business decisions, but it doesn’t. They teach that in business schools because, well, they’ve got to do something (2009 annual meeting) • All fun business problems are complex and paradoxical. The only way to solve them is by developing mental models or mindsets that yield roughly correct answers instead of precisely wrong ones.” (USC graduation) • I really think the world… that’s the way it should be taught. Harvard Business School once taught it much that way—and they stopped. And I’d like to make a case study as to why they stopped. [Laughter] I think I can successfully guess. It’s that the course of history of business trampled on the territory of barons of other disciplines like the baron of marketing, the baron of finance, the baron of whatever. • IBM is an interesting case. There’s just one after another that are just utterly fascinating. I don’t think they’re properly taught at all because nobody wants to do the full sweep. (2011 annual meeting)

5. Lloyd Blankfein CEO Goldman Sachs I think it’s very important to teach people to change minds when facts change. A quantitative thing is very helpful. I was a social studies major, but you need to be numerate. How do you think like a business person so that when you go in deep you understand? Communication is more important than any individual discipline

6. Google (Jon Rosenberg) I would say that there’s two things. I think that people don’t realize that, fundamentally, we’re focused on learning animals or generalists as opposed to specialists. The main reason is that when you’re in a dynamic industry where the conditions are changing so fast, then things like experience and the way you’ve done a role before isn’t nearly as important as your ability to think. So generalists, not specialists, is a mantra that we have internally that we try to stick pretty closely to. Specialists tend to bring an inherent bias to a problem, and they often feel threatened by new solutions.

7. Linda Hudson, CEO BAE • Business school graduates that come to work here come with a great theoretical knowledge about business. • I find new business school graduates come in here thinking that, first of all, they’re going to run the company overnight. Many of them are convinced they’ve never made a mistake. • They’re not accustomed to encountering the kinds of road blocks or disappointments that often come with the way decisions get made in a corporate environment, and they have almost no people skills. • So I think an important part of teaching business ought to be focused more on realistic expectations and the people-skill part of business, dealing with failure, learning from adverse experiences, navigating the corporate environment

8. Richard Anderson, CEO of DeltaExecuting in a Complex Organization • What would you like to see business schools teach more? • We measure, study, quantify, analyze every single piece of our business. Business schools in the United States have done a phenomenal job of creating that capability. But then you’ve got to be able to take all that data – and transform it into change in the organization. You’ve got to execute, and that human factor part is important. I know it’s intangible and it’s not like finance where 2 plus 2 is 4. I don’t know that it can be taught, but it can be studied.

9. Anne Mulcahy, Former CEO Xerox • For anybody who’s into comfort and structure, it gets harder and harder to feel satisfied in the company. • It’s almost like you have to embrace a lot of ambiguity and be adaptable • and not get into the rigidness or expectation-setting that I think there used to be 10 years ago, when you could kind of plot it out and define where you were going to go. • I think it’s a lot more fluid right now. It has to be. The people who really do the best are those who actually sense it, enjoy it almost, that lack of definition around their roles and what they can contribute.

10. Anne Mulcahy -- continued • The other piece is the importance of talent development. Not everybody is created equal. • I think sometimes companies get confused with egalitarian processes that they think are the fairest, and that is not what companies need. • Companies need to be very selective about identifying talent and investing in those leaders of the future. __________

11. Meridee Moore, CEO Watershed Hedge Fund • We give people a two-hour test. We try to simulate a real office experience by giving them an investment idea and the raw material, the annual report, some documents, and then we tell them where the securities prices are. • Often, analysts go right to the financials and forget to think about the company’s business model. “What does the company do? How do they make money? Who are their customers? What do they make? How do they produce it?” That throws some people off.

12. Former Student Feedback I think many of the critiques of this class will be harsh, mostly because students in general are trained to treat each class as a discipline to be mastered. Venky introduced relativism and uncertainty to education. This is incredibly valuable, but uncomfortable to deal with. His 'rip off the band-aid' approach to this could have been tempered and explained slightly better to help students make the transition.

13. Robin Domeniconi, Chief brand officer Elle Group • What are the qualities you’re looking for? • Confident. A quick study. You don’t necessarily need to know the business we’re in, as long as you understand what you’re bringing to the business. • But, more importantly, you listen for the questions they ask you. I get as much from the questions you’re going to ask me. • Some of the good questions are: “What’s working for you right now? And what’s not working for you? If you bring me into this company to do this, what is it that you want me to accomplish, short term and long term?” •  I would say that I can tell within the first five minutes whether they’re going to fit into this environment. 

14. Susan Docherty, Head of Sales and Marketing GM • “Can you describe a decision that you made, or a situation that you were involved in that was a failure?” • And I don’t need to know how they got to the failure. But I need to know what they did about it.

15. Will Wright • I would first of all talk about the value of failure, because I think everybody’s leaving school kind of with a mind-set that, “Oh, I’m going out and I have to succeed. You have to succeed.” • And if they hit a failure it has the potential to, you know, de-motivate them, and push them in a bad direction. But, if they can embrace and celebrate their failure, it kind of gives them a totally different outlook on what they are doing.

16. CEO, Stupid Fun Club

17. Culture of Zappos, Online RetailerCEO Tony Hsieh • In July 2009, Amazon realized it couldn’t compete with Zappos, so it bought Zappos for $800M. • Honestly, there was a lot of resistance to the core values rolling out, including from me. But within a couple of months, it just made such a huge difference. It gave everyone a common language, and just created a lot more alignment in terms of how everyone in the company was thinking. If I could do it all over again, I would roll out our core values from Day 1. • Well, some of them are behavioral questions. One of our values is, “Create fun and a little weirdness.” So one of our interview questions is, literally, on a scale of 1 to 10, how weird are you?

18. Tachi Yamada CEO Bill and Melinda Gates Foundation • Intelligence is often more displayed in what I would call complex abstract thinking, and there's nothing more complex and abstract than human relationships. • And if they can work their way through a human relationship problem intelligently, my guess is that they're very smart people. • Not that they can't add and subtract six-figure numbers multiplied by whatever, but that they can take a complex problem, break it down into its pieces and figure out the best way forward.

19. Suppliers Customers employees Buy Raw Material Make Product Sell Product Competitors Lenders

20. Two Choices • Wait passively for Michigan faculty to tell you things, and do only the things they tell you and no more • Use the richness of the Michigan environment in a self-directed manner to discover more about things and yourself

21. Future Classes • ROSS • SAC 306 - New Media Practices IThis course is an intensive, 15-week introduction to time-based new media processes and practices. With an emphasis on individual and team-based activities, students engage with an array of materials, hardware and software to produce short projects for a variety of potential platforms that include single-channel presentation, web- based programming, portable media, installation and live audio/visual performance. Using 2D animation as a starting point we consider a number of current strategies to produce media (both lens-based and non lens-based), how it has evolved, and how contemporary new media interface with current cinematic and artistic practices.