Since taking over in 2006 from the outsider Knight first recruited for the job, Parker has overseen a more than doubling of Nike’s sales. To outward appearances, Knight and Parker are a study in contrasts. Knight is an MBA and still an irascible presence around Nike’s Beaverton, Ore., corporate campus. Parker is a soft-spoken shoe designer, known for a thoughtful if demanding management style. ... Parker was one of Nike’s earliest recruits—he joined a design outpost in New Hampshire in 1979—and has succeeded at every task assigned to him since. ... Parker’s meticulous approach to product development, known as “design thinking,” is all the rage, thanks to the acclaim of Apple’s products under its famed designer Jony Ive. Parker remains committed to his original craft: He still noodles on two limited-run sneaker lines with famed Nike designer Tinker Hatfield, one of them with Nike spokes-icon Michael Jordan and the other with Japanese stylemaker Hiroshi Fujiwara. ... Parker equates his managerial style with being an editor, with his process focused on helping subordinates hone their ideas. He even edits himself.
Athletes and the people who coach them may be unfamiliar with stoicism, but they are stoics. They endure pain or hardship without feeling or complaint. They control what they can control. They talk ad nauseam about controlling only what they can control. They’re on to Cincinnati. They stay in the moment, and take things one game at a time. And by doing that, they are voicing a philosophy—living a philosophy, training under a philosophy—without knowing of or understanding it. ... “Stoicism as a philosophy is really about the mental game,” Holiday said. “It’s not a set of ethics or principles. It’s a collection of spiritual exercises designed to help people through the difficulty of life. To focus on managing emotion; specifically, non-helpful emotion.” ... this was the exact kind of stuff they were exploring—not how to hit better, or pitch better, but how to sleep better and travel better and recover better and think better. That made the connection between the book and the sports world clearer. ... “Stoicism is the distinction between what you can control and what you can’t,” Holiday said.
1. The Hollow Alliance: The trans-Atlantic partnership has been the world’s most important alliance for nearly seventy years, but it’s now weaker, and less relevant, than at any point in decades. It no longer plays a decisive role in addressing any of Europe’s top priorities. Russia’s intervention in Ukraine and the conflict in Syria will expose US-European divisions. As US and European paths diverge, there will be no more international fireman—and conflicts particularly in the Middle East will be left to rage.
2. Closed Europe: In 2016, divisions in Europe will reach a critical point as a core conflict emerges between Open Europe and Closed Europe—and a combination of inequality, refugees, terrorism, and grassroots political pressures pose an unprecedented challenge to the principles on which the new Europe was founded. Europe’s open borders will face particular pressure. The risk of Brexit is underestimated. Europe’s economics will hold together in 2016, but its broader meaning and its social fabric will not.
3. The China Footprint: Never has a country at China’s modest level of economic and political development produced such a powerful global footprint. China is the only country of scale today with a global economic strategy. The recognition in 2016 that China is both the most important and most uncertain driver of a series of global outcomes will increasingly unnerve other international players who aren’t ready for it, don’t understand or agree with Chinese priorities, and won’t know how to respond to it.
4. ISIS and “Friends”: ISIS is the world’s most powerful terrorist organization, it has attracted followers and imitators from Nigeria to the Philippines, and the international response to its rise is inadequate, misdirected, and at cross purposes. For 2016, this problem will prove unfixable, and ISIS (and other terrorist organizations) will take advantage of that. The most vulnerable states will remain those with explicit reasons for ISIS to target them (France, Russia, Turkey, Saudi Arabia, and the United States), and those with the largest numbers of unintegrated Sunni Muslims (Iraq, Lebanon, Jordan, Egypt, and across Europe).
5. Saudi Arabia: The Saudi Kingdom faces a growing risk of destabilizing discord within the royal family this year, and its increasingly isolated status will lead it to act more aggressively across the Middle East this year. The threat of intra-royal family strife is on the rise, and a scenario of open conflict, unimaginable prior to King Salman’s January 2015 ascension, has now become entirely realistic. The key source of external Saudi anxiety is Iran, soon to be free of sanctions.
6. The rise of technologists: A variety of highly influential non-state actors from the world of technology are entering the realm of politics with unprecedented assertiveness. These newly politically ambitious technologists are numerous and diverse, with profiles ranging from Silicon Valley corporations to hacker groups and retired tech philanthropists. The political rise of these actors will generate pushback from governments and citizens, generating both policy and market volatility.
7. Unpredictable Leaders: An unusually wide constellation of leaders known for their erratic behavior will make international politics exceptionally volatile this year. Russia’s Vladimir Putin and Turkey’s Recep Tayyip Erdogan are leaders of an unruly pack that includes Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman and – to a lesser but important extent – Ukraine’s Petro Poroshenko. These unpredictable leaders make our list for 2016 because their interventions overlap and conflict. One powerful, erratic leader spells trouble; four spell volatility with major international implications.
8. Brazil: President Dilma Rousseff is fighting for her political survival, and the country’s political and economic crisis is set to worsen in 2016. Contrary to hopes among pundits and many market players, the battle over Rousseff’s impeachment is unlikely to end the current political stalemate. Should the president survive, her government won’t gain the political boost necessary to move on the economic reforms needed to tackle the country’s growing fiscal deficit. If Rousseff is ousted, an administration led by Vice President Michel Temer won’t fare much better.
9. Not enough elections: Emerging markets underwent a historic cycle of national elections in 2014-2015, but this year there are relatively few opportunities for EM voters to make themselves heard at the ballot box. As slower growth and stagnating living standards stoke popular discontent, governance and stability will suffer. Historically, markets have been less volatile in non-election years, but this time will be different. By raising popular expectations, the massive income growth that most EMs enjoyed over the past 10 years has created conditions for a rude awakening.
10. Turkey: After a decisive victory for his AK party in late-2015, President Erdogan will now push to replace the country’s parliamentary system with a presidential one. He’s unlikely to reach his goal in 2016, but his aggressive electioneering will further damage an already battered Turkish business and investment climate. On the security front, there is little prospect of an imminent end to PKK violence, and unrelenting US pressure on Ankara to clamp down on the Islamic State will produce only modest results while making Turkey more vulnerable to new attacks by ISIS.
* Red Herrings: US voters aren't going to elect a president who will close the country to Muslims. China’s economy isn’t headed for a hard landing, and its politics will remain stable. Continued strong leadership from Japan's Shinzo Abe, India's Narendra Modi, and especially China's Xi Jinping will keep Asia's three most important players focused on economic reform and longer-term strategy, reducing the risk of conflict in Asia’s geopolitics.
Every airline has its horror stories, of course—air travel is full of opportunities for customer disenchantment. But United has proved an industry leader: On all major performance metrics—delays, cancellations, mishandled bags, and bumped passengers—United has, since 2012, been reliably the worst or near worst among its competitors. In 2012, according to the U.S. Department of Transportation, United was responsible for 43 percent of all consumer complaints filed against U.S. airlines. It finished last among North American nondiscount airlines in the 2015 J.D. Power & Associates customer satisfaction survey. ... It’s been five years since United Airlines and Continental Airlines combined to form what was at the time the world’s largest carrier, and the merger hasn’t gone well. In 2012 and early 2014, when American Airlines Group, Delta Air Lines, and Southwest Airlines reported large, and in some cases, record profits, “the new United” lost money. ... Then there was the coffee, an issue that, while hardly central to its business, symbolized United’s inability to get things right. On Nov. 19 the airline announced it was changing the coffee it serves on its planes and in its lounges from a brand called Fresh Brew to the Italian premium roaster Illy. It was welcome news to customers and to the flight crews used to fielding complaints. It was also a tacit admission that the choice of coffee after the merger, a decision that consumed thousands of man-hours, took nearly a year, and involved everyone from Smisek to the airline’s head chef to the flight attendants, hadn’t worked out.
It’s a story that has become a part of business folklore in China. In 1985, Zhang Ruimin, the young general manager of the loss-making Qingdao Refrigerator Plant, decided it was time to turn things around. He got his factory workers to smash 76 defective refrigerators with sledgehammers. To drive the point home—that there would be no tolerance for low quality—he delivered the first blow himself. ... This moment marked a significant turning point in the history of Qingdao Refrigerator Plant (now known as Haier), so much so that the sledgehammer is now housed in the company’s in-house corporate museum. Three decades later, Haier is the world’s largest white goods manufacturer and boasts cutting edge innovation. ... None of this would have been possible without CEO Zhang Ruimin at the helm. He led the company through several path-breaking business model changes, which helped the company build a strong brand, grow both organically and through acquisitions, globalize and evolve a business model where the company “gets close to the customer”. The beauty of it is that he forced the company to change even before competition or technology made it imperative that it did so. ... Zhang is now leading the company through yet another transformation. He is, in essence, ‘breaking up’ the company and throwing rigid organizational structures and processes out of the window. The enterprise will, in effect, become an investment platform and the departments and divisions will be like entrepreneurial teams, which he calls “micro-enterprises”.
Words have power, especially in meetings. A new study from MIT’s Sloan School of Management finds that saying “yeah”, “give”, “start” and even “meeting” can boost a person’s persuasive powers among co-workers. … Statisticians Cynthia Rudin and Been Kim studied 95 meetings for the vocabulary used in proposals that were accepted by the group. They concluded that the most persuasive words are those that build consensus. … “Yeah” signals agreement with a previous idea, the authors posit. Using the word “start” in sentences like “I think we should start with the basics” is useful for building early alliances early; group participants want to appear interested in being productive. The word “give” indicates some benefit to the group.
In the current era of sports, where athletes are often jumping from team to team for the highest paycheck, Coach Popovich and his organization have created a climate in which their best player, Tim Duncan, and the other stars of the team, consistently take below-market value to stay there and continue the winning tradition. | GP: When I’m interviewing a kid to draft I’m looking for specific things. Over the course of sitting in the gym and talking, having lunch, watching him at free agent camp, this is what I’m after and not necessarily in this order. ... Having a sense of humor is huge to me and to our staff because I think if people can’t be self-deprecating or laugh at themselves or enjoy a funny situation, they have a hard time giving themselves to the group. ... Being able to enjoy someone else’s success is a huge thing. ... At some point he’ll start to think he’s not playing enough minutes, or his parents are going to wonder why he’s not playing, or his agent’s going to call too much. I don’t need that stuff. I’ve got more important things to do. I’ll find somebody else, even if they have less ability, as long as they don’t have that character trait. ... Work ethic is obvious to all of us. ... We also look at how someone reacts to their childhood. ... I go to bed every night and I don’t worry about anybody on my team. I don’t come to work in the morning and say, “Ah, jeez, I’m going to have to clean this mess up.” It doesn’t happen. ... We spend a good deal of time discussing politics, race, food and wine, international events, and other things just to impart the notion that a life of satisfaction cannot be based on sports alone. ... You can’t just get your satisfaction out of teaching somebody how to shoot or how to box out on a rebound. That’s not very important in the big picture of things.
That now-infamous overhaul, under then-CEO and former Apple retail guru Ron Johnson, sought to reposition Penney as a flashier retailer with fancier merchandise. But it backfired: Customers fled, sales tumbled by almost a third, and Penney was crippled financially. Three years ago the board brought back Mike Ullman, the CEO it had unceremoniously chased out in favor of Johnson, to stop the U.S.S. Penney from sinking. And last summer he handed the reins to Ellison—an executive the opposite of flashy. ... It’s fitting that Ellison, a lifelong musician, plays electric bass, an instrument that rarely gets a flashy solo but without which no band can click. He made his reputation in retail at Home Depot, helping engineer that chain’s turnaround by focusing on unsexy but primordial things like the supply chain and the integration of stores and e-commerce. He’s a data devotee who grounds every decision in information—including that seemingly intuitive shoe move. ... The trees look nice, but the forest is daunting. Penney’s sales, an estimated $12.6 billion for the just-completed year, are still down 37% from their 2006 peak. Its nascent recovery, part of its fourth turnaround effort since 2000, hasn’t swayed Wall Street—its stock trades close to a 35-year low. In the long term, the problem isn’t just that Penney has been dysfunctional; it’s also that Penney is a department store, a practitioner of a business model under siege.
Our data-saturated age enables us to examine our work habits and office quirks with a scrutiny that our cubicle-bound forebears could only dream of. Today, on corporate campuses and within university laboratories, psychologists, sociologists and statisticians are devoting themselves to studying everything from team composition to email patterns in order to figure out how to make employees into faster, better and more productive versions of themselves. ... Five years ago, Google — one of the most public proselytizers of how studying workers can transform productivity — became focused on building the perfect team. In the last decade, the tech giant has spent untold millions of dollars measuring nearly every aspect of its employees’ lives. Google’s People Operations department has scrutinized everything from how frequently particular people eat together (the most productive employees tend to build larger networks by rotating dining companions) to which traits the best managers share (unsurprisingly, good communication and avoiding micromanaging is critical; more shocking, this was news to many Google managers). ... No matter how researchers arranged the data, though, it was almost impossible to find patterns — or any evidence that the composition of a team made any difference. ... kept coming across research by psychologists and sociologists that focused on what are known as ‘‘group norms.’ ... Norms can be unspoken or openly acknowledged, but their influence is often profound. Team members may behave in certain ways as individuals — they may chafe against authority or prefer working independently — but when they gather, the group’s norms typically override individual proclivities and encourage deference to the team. ... noticed two behaviors that all the good teams generally shared. First, on the good teams, members spoke in roughly the same proportion, a phenomenon the researchers referred to as ‘‘equality in distribution of conversational turn-taking.’’ ... Second, the good teams all had high ‘‘average social sensitivity’’ — a fancy way of saying they were skilled at intuiting how others felt based on their tone of voice, their expressions and other nonverbal cues. ... to be fully present at work, to feel ‘‘psychologically safe,’’ we must know that we can be free enough, sometimes, to share the things that scare us without fear of recriminations.
Should we make decisions based on intuition and emotion, or should we make decisions more rationally, with data, analytics, and numbers? The best process for making decisions under pressure is to use the data and numbers to inform our intuition. In addition, leaders must recognize and avoid falling prey to a number of mind tricks and biases. Power dynamics can also lead to poor decisions, and leaders do best to pursue an inquiry-based—rather than advocacy-based—approach. ... When making decisions under pressure, there are four tensions. Any decision in an organization generally has an ethical issue, a strategic issue, a financial issue, and a legal issue. Sometimes, there is tension among those issues. What makes perfect sense strategically might not make sense legally, or what makes the best sense financially might not make sense ethically. Part of the decision-making process is having the ability to recognize and manage the fundamental tensions that exist in most of the decisions we face. ... The way to do that is by answering three questions. First, how do I motivate and encourage the people and the organization to be aligned with what we are trying to achieve? Second, operationally, when we are under threat, how do I make sure that the business will be able to continue during these threatening circumstances? Third, how do I communicate the decision that I am about to make?
How the massive diesel fraud incinerated VW’s reputation—and will hobble the company for years to come. ... “Hoax,” of course, is a layman’s word. But plenty of legal terms also arguably apply, including “consumer fraud” and “false advertising.” They are fueling an explosion of litigation. That and the horrific reputational damage are subjecting Volkswagen to one of the severest challenges in its nearly 80-year history. ... The U.S. Department of Justice and the EPA have filed a civil suit that could theoretically subject VW to up to $45 billion in fines (though, in fairness, no one expects penalties quite that draconian). The DOJ and the EPA are also pursuing a criminal inquiry, as are prosecutors in Germany, France, Italy, Sweden, and South Korea. All 50 state attorneys general in the U.S. are also on the warpath, armed with state laws that, nominally at least, are every bit as crushing as the federal law. ... All of that comes on top of more than 500 class actions filed on behalf of owners and lessors of Volkswagen diesel cars ... VW’s misbehavior did not come out of nowhere. The company has a history of scandals and episodes in which it skirted the law. Each time—till now—it has escaped without dire consequences. ... VW is driven by a ruthless, overweening culture. Under Ferdinand Piëch and his successors, the company was run like an empire, with overwhelming control vested in a few hands, marked by a high-octane mix of ambition and arrogance—and micromanagement—all set against a volatile backdrop of epic family power plays, liaisons, and blood feuds. It’s a culture that mandated success at all costs.
Amazon’s CEO has driven his company to all-consuming growth (and even, believe it or not, profits). Today, though, as he deepens his involvement in his media and space ventures, Bezos is becoming a power beyond Amazon. It has forced him to become an even better leader. ... More has gone right for Bezos lately than perhaps at any other time during his two-decade run in the public eye. His company is expanding internationally and spreading its hydra-headed product and service offerings in unexpected new directions. Bezos, too, is evolving. Always a fierce competitor and stern taskmaster, he has begun to show another side. With the Post, he’s taken a seat at the civic-leadership table. And with his various projects Bezos is also becoming known as a visionary on topics beyond dreaming up new ways to gut the profit margins of Amazon’s many foes. ... Bezos is preternaturally consistent. He still preaches customer focus and long-term thinking. Yet of necessity, as Amazon has become massive—and as he has indulged his eclectic and time-consuming pursuits—he has become the sort of leader who empowers others.
New Dave is doing everything he can to keep himself under control. Because these days, Chang is reaching for something bigger: He wants to turn his boundary-pushing restaurants into a global culinary brand. As Momofuku continues to move beyond its New York origins, it will further spread a distinctive aesthetic that has already seeped into the American food scene in ways that diners might not even realize. That tiny, undecorated, no-reservation spot that just opened near you, serving fancy versions of lowbrow dishes made with top-quality ingredients and high-end technique? You can probably thank Chang. Over the past decade, he has helped transform food culture—and especially a certain kind of gritty, back-of-the-house chef sensibility—into a genuine social phenomenon. ... Chang’s empire had started modestly. Built with a $100,000 loan from his father and a family friend, along with $27,000 of his own savings, Momofuku Noodle Bar, which opened in 2004, was a tiny East Village space that eventually earned a big reputation for its umami-rich takes on Asian cuisine. Chang—then a 26-year-old graduate of New York’s French Culinary Institute who’d worked at Tom Colicchio’s Craft and spent a year studying Japanese food in Tokyo—was an irresistible character, mixing serious food skills with a screw-you irreverent charm, blending the elite culinary ambition of such chefs as Wylie Dufresne with the sodium-soaked pleasures of high-American junk food.
They delved deeply into Catmull’s rules for embracing the messiness that often accompanies great creative output, sending subtle signals, taking smart risks, experimenting to stay ahead of uncertainty, counteracting fear, and taking charge in a new environment—as Catmull did when he became the president of Disney Animation Studios. ... The fundamental tension is that people want clear leadership, but what we’re doing is inherently messy. We know, intellectually, that if we want to do something new, there will be some unpredictable problems. But if it gets too messy, it actually does fall apart. And adhering to the pure, original plan falls apart, too, because it doesn’t represent reality. So you are always in this balance between clear leadership and chaos; in fact that’s where you’re supposed to be. Rather than thinking, “OK, my job is to prevent or avoid all the messes,” I just try to say, “well, let’s make sure it doesn’t get too messy.” ... Most of our people have learned that it isn’t helpful to ask for absolute clarity. They know absolute clarity is damaging because it means that we aren’t responding to problems and that we will stop short of excellence. They also don’t want chaos; if it gets too messy, they can’t do their jobs. If we pull the plug on a film that isn’t working, it causes a great deal of angst and pain. But it also sends a major signal to the organization—that we’re not going to let something bad out. And they really value that. The rule is, we can’t produce a crappy film.
This year, Amazon became the fastest company ever to reach $100 billion in annual sales. Also this year, Amazon Web Services is reaching $10 billion in annual sales … doing so at a pace even faster than Amazon achieved that milestone. ... What’s going on here? Both were planted as tiny seeds and both have grown organically without significant acquisitions into meaningful and large businesses, quickly. Superficially, the two could hardly be more different. One serves consumers and the other serves enterprises. One is famous for brown boxes and the other for APIs. Is it only a coincidence that two such dissimilar offerings grew so quickly under one roof? Luck plays an outsized role in every endeavor, and I can assure you we’ve had a bountiful supply. But beyond that, there is a connection between these two businesses. Under the surface, the two are not so different after all. They share a distinctive organizational culture that cares deeply about and acts with conviction on a small number of principles. I’m talking about customer obsession rather than competitor obsession, eagerness to invent and pioneer, willingness to fail, the patience to think long-term, and the taking of professional pride in operational excellence. Through that lens, AWS and Amazon retail are very similar indeed. ... A word about corporate cultures: for better or for worse, they are enduring, stable, hard to change. They can be a source of advantage or disadvantage. You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it – not creating it. It is created slowly over time by the people and by events – by the stories of past success and failure that become a deep part of the company lore. If it’s a distinctive culture, it will fit certain people like a custom-made glove. The reason cultures are so stable in time is because people self-select. Someone energized by competitive zeal may select and be happy in one culture, while someone who loves to pioneer and invent may choose another. The world, thankfully, is full of many high-performing, highly distinctive corporate cultures. We never claim that our approach is the right one – just that it’s ours – and over the last two decades, we’ve collected a large group of like-minded people. Folks who find our approach energizing and meaningful. ... We want to be a large company that’s also an invention machine.
With a trial about to begin, lurid and alarming details of the billionaire’s condition and the scheming around him continue to emerge. Many questions will arise in the courtroom—and control of CBS and Viacom could ultimately hang in the balance. ... Redstone is a man who, for decades, dominated those around him. Now diminished, by some accounts a wraith, he is not expected even to be in the courtroom at a trial that centers on what condition he’s in. He will be questioned by each side for 15 minutes at home (the videotaped deposition will be shown only to the judge). Even that small amount of testimony might be too much for him. ... What’s beyond dispute is that this fight has sent shock waves through Redstone’s vast empire. It was this tawdry case—and not a planned corporate succession or steps taken by either board—that forced his belated departure as chairman of the two companies in February, despite his repeated vows that he’d never step down. (He also claimed he’d never die.) It has focused attention on the business woes at Viacom, where profits are faltering, the creative and digital strategies seem suspect, and the stock has dropped 39% in the past year. And it has prompted CBS chief Leslie Moonves to start quietly maneuvering to get out from under the Redstone family’s thumb altogether, according to a Reuters report. ... This account is based on interviews with dozens of people, including Herzer, current and former high-ranking executives of Viacom and CBS, people close to Redstone and his family, witnesses to events at his mansion, and lawyers in the case, as well as hundreds of pages of court records and documents. ... In the end, Redstone’s corporate affairs fell into disarray because he stubbornly refused to put his house in order—scoffing at succession plans, appointing pliant boards, and running his $40 billion enterprise like a family grocery store. ... Christine Peters, a Hollywood producer and onetime Redstone flame, recalls sitting down for dinner at a restaurant in Hawaii with her daughters and the mogul, then about 80, when his steak arrived overdone. Redstone summoned the chef to their table, stuck his fork in the meat, and flung it at him. “Why are you so mean to people?” she recalls asking him. “I don’t care,” Redstone replied. “I’m going to hell anyway.”
I could go on about the innovations at Domino’s, but Doyle’s most important lessons are about the mindset required for organizations to do big things in tough fields. Two of the great ills of executive life are what he calls, borrowing from behavioral economics, “omission bias” and “loss aversion.” Omission bias is the tendency to worry more about doing something than not doing something, because everyone sees the results of a move gone bad, and few see the costs of moves not made. Loss aversion describes the tendency to play not to lose rather than play to win. “The pain of loss is double the pleasure of winning,” he argues, so the natural inclination is to be cautious, even in situations that demand creativity. ... Leaders who want to shake things up have to be comfortable with the idea that “failure is an option,” Doyle concludes. In a world of hyper-competition and nonstop disruption, playing it safe is the riskiest course of all. That’s a recipe for reinvention that makes for good pizza and big change.
Costco acts more like a cheerful cult than a hard-driving business. Its executives are proud of the fact that the company promotes almost exclusively from within. Even CEO Craig Jelinek, 62, plainspoken and without affectation, once collected shopping carts at a Costco predecessor, and 98% of the company’s store managers have risen through the ranks. Its top executives have been working together for 30 years, more or less, which makes them family as much as colleagues. It also means there are a lot of gray heads now at those budget meetings. ... And therein lies the concern. At that month’s meetings, there were warm and wistful send-offs for six of those gray heads, all senior vice presidents, now retiring. And even though they would be replaced by younger Costco lifers, the succession raises a question: As the company approaches its 35th anniversary, will the replacements keep Costco as Costco? ... It is the question. Lots of companies brag about their culture. But few are as proud of it or as dependent upon it as Costco is. Morgan Stanley retail analyst Simeon Gutman calls it a “super-culture,” which he describes as, “If we continue to serve and delight our customers, they’ll want to keep coming back.
That first year, the National Bank of Washington was swallowed up by Pacific National Bank of Seattle, which in 1981 was bought by Los Angeles-based First Interstate Bancorp, which in 1996 was bought by San Francisco-based Wells Fargo, which in 1999—as the consolidation frenzy was reaching its peak—merged with Norwest, a Minneapolis-based bank, in a $34 billion deal. ... Wells Fargo, which was founded in 1852 as a stagecoach express to carry valuable goods to and from the gold mines in the West, had a storied brand, so the new, combined company kept that name. But if Norwest’s name didn’t survive, its corporate culture did. ... In Kovacevich’s lingo, bank branches were “stores,” and bankers were “salespeople” whose job was to “cross-sell,” which meant getting “customers”—not “clients,” but “customers”—to buy as many products as possible. ... Achieving sales goals wasn’t easy. ... Wells Fargo’s own analysis found that between 2011 and 2015 its employees had opened more than 1.5 million deposit accounts and more than 565,000 credit-card accounts that may not have been authorized. Some customers were charged fees on accounts they didn’t know they had, and some customers had collection agencies calling them due to unpaid fees on accounts they didn’t know existed. Gaming was so widespread that it had even spawned related terms, such as “pinning,” which meant assigning customers personal-identification numbers, or PINs, without their knowledge in order to impersonate them on Wells Fargo computers and enroll them in various products without their knowledge. ... The quotas for the bankers at Guitron’s branch totaled 12,000 Daily Solutions each year, including almost 3,000 new checking accounts. Without fraud, the math didn’t work.
There are three basic conditions if you want to work for Jack Stack, and they go for everybody from senior executives down to the people who clean his company's bathrooms. The first is you have to learn how to read and understand the company's financials, the second is you really have to believe there is no "I" in "team," and the third is you have to get into the habit of asking, "What could go wrong, and what are we going to do when it does?" ... Over the years, SRC has evolved into a highly entrepreneurial miniconglomerate that has launched more than 60 companies in industries ranging from banking to medical devices to furniture. It has also developed an unusual culture--a humane, Midwestern blend of quantitative management, radical transparency and practical paranoia--that has made it the flagship of what's known as the open-book-management movement.