Rethink Marketing Podcast: Changing the Corporate Business Model to Suck Less
Joseph Jaffe believes the traditional corporate business model is broken and questions whether it can be fixed in his new book, Built to Suck. As Jaffe says, “With success comes suckage. The key to success is to suck less.”
Jaffe reports that 51 percent of the Fortune 500 companies over the last three years have had declining revenues. He said troubled corporations routinely make headlines about failed strategies or no strategies at all.
“The premise of Built to Suck, as the subhead suggests, is the inevitable demise of the corporation and how to save it with a question mark, because this isn’t a fairy tale. There is no happy ending. There isn’t necessarily a happy ending because I’m not sure the corporations can be saved. I’m not sure that they can save themselves,” Jaffe said. “Even giving them the keys to the kingdom, they still might not be able to get out of their own way, but the idea behind it is that corporations today are too big. They’re too political. They’re too siloed. They’re too dysfunctional. They’re too risk-averse. They’re essentially slowing down when the world is speeding up.
Can corporations be saved? Can they reinvent themselves and stay relevant?
Nathan: If corporations are getting too big to turn the ship around, at what point can they pivot? Is there a way to reinvent themselves?
Joseph: There aren’t many real successful examples of reinvention or transformation. I do talk about IBM, which I call the greatest Houdini act or the greatest transformation of our time in the sense that this is a company that went from big blue to big data, had went from main frames to AI.
I mean, that is an incredible transformation if you think about it structurally and strategically, going from completely durable to nondurable. It’s a company that continues to change and evolve, but in the book, I actually talk about what I call the four horsemen of the corporate apocalypse.
The first one is size, which we’ve discussed. The reason why I called the book Built to Suck is based on a quote, which is, “Let’s see how big we get before we suck,” which many people have said it. I heard it the first time from founder of an ad agency that I worked for.
The second is age. The reality is that a hundred years of history that companies generally talk about proudly is actually a liability nowadays, not an asset, because 100 years plus of history presents all sorts of trouble and problems with respect to legacy and incumbency and resistance to change and bad habits and baggage. I actually say that to me the stay of execution is at the millennial mark, so companies that are born after 1980 at least have a stay of execution.
The third is being a public company. As I talked about, this is probably why Elon Musk had a nervous breakdown or an apparent nervous breakdown because visionaries don’t like to be told what to do by bean counters and by many people because they have vision. I mean, this is a man who wants to take us to the next frontier in space. Also being a public company leads to this chronic disease called short-term-itis. When you are hostaged to these quarterly earnings and cannot get out of that short term planning, I know we’re going to talk about long term planning, it becomes very, very hard to break out of this vicious cycle.
Then the fourth is culture. The culture within these corporations is sickly at the moment in terms of how they attract and retain the best and the brightest in terms of politics, but also in terms of behavior, things like embracing failure or pivoting or thinking and acting like a startup or having a purpose. It’s a bit of a perfect storm when it comes to unpacking and dissecting the corporation. I’m not sure if we then repack it or assemble it, that it’s going to make sense. If anything, that’s just going to look like a bit of a Frankenstein.
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Will today’s big corporations — Amazon, Facebook, Netflix — also one day fail?
Nathan: I’m wondering about today’s big corporations, the Amazon, Google, Facebook, Netflix. 10 years from now, will they be going through this sort of challenge, or in 20 years from now, will they still be going through this sort of challenge?
Joseph: The answer is if they don’t suck today, they will suck one day.
I’ll give you two examples actually to prove it to you. First, Facebook already sucks. I think that’s not even debatable in terms of a lot of the challenges that they have faced and are finding themselves facing, from fake news and specifically what happened with the last election to privacy concerns. There’s just a number of missteps that the company continues to make. The reality that Facebook is just yesterday’s MySpace in the sense that young people are not on Facebook. If they are, they are increasingly spending less time there.
Then you’ve got Amazon on the other hand. Now, the thing about Amazon is that it was about two weeks before the book went to print. I saw a quote from Jeff Bezos. I could have kissed the guy. How crazy this whole conversation is this is after HQ2 was awarded to Virginia and of course New York, Long Island city. Now we know that they’ve pulled out of New York.
That just shows you the volatility and how Amazon maybe is not as strong as we thought that they were, but Bezos called an all hands meeting, and he said to his staff, “One day, Amazon will fail. One day, Amazon will go bankrupt. Your job is to delay that for as long as possible.”
That’s why I said I could just give the guy a bear hug, because if he can say that to Amazon or about Amazon, you tell me any company that is future proof or future protected or won’t go through the same, if not worse pains. Then of course, as I said, we look at what’s going on with Bezos lately, everything from personal matters specifically relating to his divorce, to this kind of mutiny, the state mutiny in a sense, and you think about what happens if he leaves the company. What happens to the company without Bezos at the helm? Suddenly, you realize that as I said, if it can happen to Amazon, it surely can happen to any company.
What is the difference between long-term planning and long-term thinking?
Nathan: You mentioned the short-term planning-itis, or whatever that malady was. Just by chance, I heard you on the BeanCast podcast and you were talking about strategy. It was something I wrote down: long-term thinking versus long-term planning. How does this tie back to why corporations might be failing?
Joseph: Long-term thinking, you have to think big. You have to think bold, the concept of the BHAG, the Big Hairy Audacious Goal. Companies have got to think about moonshot. They’ve got to think about blue ocean strategy. They’ve got to think about a north star, especially from a transformation standpoint, especially when faced with all this disruption and disintermediation and volatility.
There’s no debate about long-term thinking, but the long-term planning part is where companies are tripping up, five year plans, three year plans, upfront spending, strategic planning in September for the next 15 months when we don’t even know what the hell is going to happen in the next 15 days.
I mean, living in the US right now, it’s just a whirlwind. I’m just relieved when there isn’t breaking news, which is when my television is switched off. There is so much volatility, and what companies really need to be able to do now is continue to sail towards or use the nautical reference that North Star, the big thinking and the long-term thinking, but they need to be able to course correct and pivot at a moment’s notice.
One of the things that I actually did as part of writing this book is I created a canvas. I call it the survival planning canvas. There’s also a startup survival planning canvas.
As opposed to a business plan, this is an ability for a company to actually get everything they need to come up with a survival plan and ultimately a growth plan. It includes exercises and processes that are designed to walk the plank and then discover new worlds. In other words, put yourself out of business and then do a hard reset or reboot.
I call it sometimes treasure treasure map or or magic wand, some of the exercises, but it really comes down to if you could do it all over again, how would you do it? If you had no long-term deals, no 10 year deals with Salesforce or SAP, how would you do it?
If you are running the show, if you had a blank check, all of these exercises are so powerful because when you see a new … Just think about JetBlue. JetBlue could do it right because they didn’t have trade unions at that time or these long-term pension plans. They didn’t have what Sears has. They were able to just say it wasn’t just a structural thing. It was more about if we could start an airline, how would we do it? How would we feed people? How would we entertain people? How would we see people? How could we create a value exchange based on humanity in a sense?
That’s why you see a fresh, clean brand that can break through the clutter, because they get to just start again with a clean slate or a blank canvas. That’s exactly what companies have to be able to do. If they don’t, then we encourage … We actually through the HMS Beagle, but also, you’ll see it in the book, we encourage that canvas to be re-thought and revisited every three months. That to me is how the planning has to work, quarterly planning in order to realize long-term thinking.
Why is culture so important in preventing corporate suckage?
Nathan: You mentioned in the book and in your writings one of the key where it’s a problem within corporations is with the middle management. Can you talk about more, expand on that a little bit for us?
Joseph: Sure. I get asked a bunch of questions a lot of times often, like my most asked questions, and I kind of answered them all in the book, but one of them is the study of how do we sell this through to senior management?
The answer is that’s just one part of the answer actually because that’s the top down. What you also need is the bottom up. What you also need to do is be able to sell from the bottom up in terms of engaging the rock face and the young talent in the organization. Then there’s an outside in which is being able to tap into independent objective thought leaders, subject matter experts.
That’s why building a bridge with the startup community, Madison Avenue meets Mountain View, is so important, not just in terms of ideas and inspiration, but also sometimes bringing in that unbiased opinion, but the fourth is inside out. That’s the hardest sell.
That is what I call the rot of middle management. That’s the cultural imperative and why it is the hardest to achieve and why most companies are failing because there is almost mutiny from the core, the rotten core. It’s not to knock the middle manager, but the middle manager isn’t young enough to have abundant choice, and no mortgages and no kids and et cetera, et cetera.
They’re also not senior enough and tenured enough that they can count down the days for their a gold Rolex or their pension plan to kick in, if you will, and so they’re stuck in the middle. Until we figure out how to engage them … to expect them to unlearn and then learn new skills, they’re set in their ways.
They’re a huge part of the organization, and it’s because of this group that I think many companies are finding that ideas that come from the top down or even from the bottom up never actually see the light of day.
CEOs can mandate all they want, but if they can’t inspire change from inside, it’s just going to fall on deaf ears.