The Great Innovators

Lessons from Airline Entrepreneur David Neeleman: Staff Your Weaknesses

November 8, 2021 By Nagesh Belludi Leave a Comment

Airline serial entrepreneur David Neeleman has Attention Deficit Hyperactivity Disorder (ADHD.) School was torture. He couldn’t focus, and he procrastinated constantly.

“I felt like I should be out doing things, moving things along, but here I was, stuck studying statistics, which I knew had no application to my life,” Neeleman once said. “I knew I had to have an education, but at the first opportunity to start a business, I just blew out of college.”

Despite his own struggles, Neeleman went on to build a stellar business career in the airline industry. He started Morris Air, WestJet, JetBlue Airways, Azul Brazilian Airlines, and Breeze Airways. He’s even led the revival of TAP Air Portugal.

Through it all, Neeleman made the best of his strengths—original thinking, high energy, and the ability to draw the best out in people.

Far from lamenting his ADHD, David Neeleman celebrated it

Early on, Neeleman realized that he must manage his ADHD carefully. Throughout his career, he got help with his weaknesses.

People with ADHD tend to possess rare talents and gifts. They can be extraordinarily creative and original. They display ingenuity, and they encourage that trait in others. They can improvise well under pressure.

However, ADHD confers disadvantages too. People with ADHD are likely to be incredibly forgetful, disorganized, impulsive, and hyperactive. They drag their feet and miss deadlines. Their performance can be inconsistent. They can drift away mentally unless, oddly enough, they’re under stress or handling multiple inputs.

Sadly, modern society (including parents, schools, workplaces, and career counselors) tends to linger upon the negative symptoms and encourages people with ADHD to learn to cope with them. Strengths are more likely to go unnoticed.

Idea for Impact: Don’t let your weaknesses stop you from reaching your life goals.

In your work-life and outside, seek environments that allow you to bring more of your strengths to play. But don’t ignore your weaknesses (or the downsides of your strengths.)

Staff your weaknesses. Identify two or three key job activities that you don’t do well. Determine how you can delegate those responsibilities to others or seek help. This way, your weaknesses don’t become the Achilles heel that can hamper the strengths that make you effective.

How Jeff Bezos is Like Sam Walton

November 1, 2021 By Nagesh Belludi Leave a Comment

Walmart founder Sam Walton’s brilliant autobiography, Made in America (my summary,) was published a few weeks before his death in 1992. The penultimate page reads,

Could a Wal-Mart-type story still occur in this day and age? My answer is of course it could happen again. Somewhere out there right now there’s someone—probably hundreds of thousands of someones—with good enough ideas to go all the way. It will be done again—over and over, providing that someone wants it badly enough to do what it takes to get there. It’s all a matter of attitude and the capacity to constantly study and question the management of the business.

Jeff Bezos started Amazon just two years later. After eight years on Wall Street, Bezos dreamt up Amazon during a drive from New York to Seattle in 1994. His wife (now ex-wife) MacKenzie drove, and Jeff “tapped out a business plan on his computer along the way.”

Amazon began as a loss-making book e-tailer at the dawn of the commercial Internet and as the dot-com poster child in the late ’90s. It has since evolved into one of the world’s most valuable companies. Amazon has come a long way from its genesis as the curse of bricks-and-mortar booksellers and has diversified broadly into just about every adjacent business it could get its hands on.

Bezos’s and Amazon’s dominant leadership values echo those of Sam Walton and Wal-Mart: frugality, a bias for action, long-term focus, motivating staff to think like owners, and customer obsession.

The Everything Store (2013,) Brad Stone’s excellent chronicle of the rise of Amazon notes, “In his autobiography, Walmart’s founder expounds on the principles of discount retailing and discusses his core values of frugality and a bias for action—a willingness to try a lot of things and make many mistakes. Bezos included both in Amazon’s corporate values.” On an earnings call, Bezos famously declared, “there are two kinds of retailers: there are those folks who work to figure how to charge more, and there are companies that work to figure how to charge less, and we are going to be in the second, full-stop.”

All along, Bezos has made big bet-decisions that hurt it in the short term but created value in the long term. Amazon’s market capitalization has rocketed up from $4.55 billion in 2001 to $1.08 trillion before the Coronavirus/COVID-19 infected the stock markets. Amazon’s secret, in Bezos’s words, is,

We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors, because it’s safer. So if you want to capture the truth about Amazon, that is why we are different.

Amazon has not been consistently profitable over the years, and that is a deliberate upshot of how Bezos approaches business. Amazon cycles through periods of substantial investments that beget future revenue growth (with low profits) and periods of increasing profits as its investments ebb.

Bezos has maneuvered Wall Street into believing that he is just getting started—his “Day 1” philosophy has become something of a legend. “A big piece of the story we tell ourselves about who we are is that we are willing to invent … and very importantly, we are willing to be misunderstood for long periods of time,” Bezos asserted at Amazon’s 2011 annual shareholders meeting.

Not all of Bezos’s bets have succeeded. However, investors have come to acknowledge that his long-term initiatives will produce rich results several years down the road. Little wonder, then, that Amazon’s stock has defied short-termism by continually progressing upward even during quarters of little or no earnings.

Postscript: Bezos has been, until recently, the world’s wealthiest person since about 2018. Walton was the richest man from 1985 until his death in 1992. His inheritors, the Walton family, are collectively more affluent than Bezos!

Seek a Fresh Pair of Eyes

October 14, 2021 By Nagesh Belludi Leave a Comment

When was the last time your team stopped to ask, “Why”?

“Why are we doing this?”

“Why are we doing it that way?”

You can ask this important question about everything—in your business or life!

We humans are creatures of habit—unquestioned and unexamined. Unless you intentionally ask “why,” you’ll just do things the same way because that the default mode for how you’ve always done it, or that’s how somebody showed you.

Once you’re set in your habits, keep scrutinizing them.

The best improvement ideas often come from people who aren’t stuck in the established ways.

Encourage new hires and interns to challenge the “that’s just how things are done around here” mentality when they disagree with it. Until they’ve been housetrained, they’re the ones with the freshest perspective.

Ask them to make a note of everything that they see and doesn’t make sense. After a few weeks, when they’ve become familiar with the organization and its workflow, have them reassess their initial opinions, reflect, and report their observations. Invite them to spend time on the internet looking for how these things are done at other companies and provide suggestions for improvement.

Idea for Impact: Sometimes people are too close to things to see the truth. To get a new perspective on the status quo, seek a fresh pair of eyes.

How to Bring Your Ideas to Life

October 4, 2021 By Nagesh Belludi Leave a Comment

No matter how good an idea is, it’ll probably need some work before it can evolve into a helpful innovation. I’ve previously drawn attention to this aspect of the creative process in my 3M Post-it Note case study.

Another notable example of what transforms ideas into innovation is the “discovery” of penicillin and its curative effect on infectious diseases.

The Scottish bacteriologist Sir Alexander Fleming discovered penicillin. More specifically, Fleming found that a specific mold produced penicillin. This substance was previously known to inhibit the growth of bacteria.

In 1928, Fleming was working on cultures of Staphylococcus, a bacterium that induces blood poisoning. Upon returning from a vacation, he saw a discarded Petri dish that he had left behind without sterilizing. It had a zone around an invading fungus where his bacterium culture didn’t grow. A mold spore from another lab in Fleming’s building had unexpectedly fallen on one of his cultures. The spore had spread over the Petri dish while Fleming was away. Instead of throwing the dirty Petri dish away, he isolated the mold and identified it as Penicillium chrysogenum, which kills bacteria by inhibiting new cell walls.

Fleming suggested his discovery might be used as an antiseptic in wounds. He published an account of this work in 1929. However, he couldn’t find a way of extracting enough penicillin needed to be curative enough without it becoming ineffective.

In itself, Fleming’s discovery was thus not a substantial leap in terms of penicillin’s use as a pharmaceutical. After Fleming’s discovery, penicillin proved unstable and difficult to produce in pure form for almost a decade. It took two Oxford University scientists, Sir Howard Walter Florey and Dr. Ernst Boris Chain, to realize its full potential only in the 1940s. They showed how to prepare penicillin in usable form and demonstrated that it could be favorably applied to the treatment of disease.

From the time when its medical application was established, penicillin has saved millions of lives by stopping the growth of the bacteria responsible for poisoning the blood and causing many once-fatal diseases. Fleming, Florey, and Chain shared the 1945 Nobel Prize for Medicine to recognize their complementary achievements.

Idea for Impact: Often, there’s a divergence between an idea and its tangible application that the original creator can’t bridge by himself. The creator will have to expose the concept to others who can evaluate and trial the discovery in new contexts.

In other words, the creative process doesn’t end with an idea or a prototype. A happy accident often undergoes multiple iterations and reinterpretations that can throw light on the concept’s new applications.

Rules Are Made to Be Broken // Summary of Francesca Gino’s ‘Rebel Talent’

August 9, 2021 By Nagesh Belludi Leave a Comment

Rebels have a bad rep. When you think of them, you imagine trouble. However, all rebels really do is take the habits that could hold the rest of us back and break them.

Instead of leaning toward the comfortable and the familiar, rebels ask questions and look at problems from unexpected perspectives. They aren’t afraid to question assumptions, stick their necks out, make themselves vulnerable in front of others, or experiment and fail.

Harvard social scientist Francesca Gino’s Rebel Talent: Why it Pays to Break the Rules in Work and in Life (2018) aims to explain the merits of breaking the rules and showing how to see challenges from new perspectives.

When we challenge ourselves to move beyond what we know and can do well, we rebel against the comfortable cocoon of the status quo, improving ourselves and positioning ourselves to contribute more to our partners, coworkers, and organizations.

The anecdotes and case studies that Gino pulls together to illuminate her “rebel talent” narrative are hardly convincing. In fact, they’re no more than examples of creative—perhaps unconventional—thinking. To take a prominent example Gino cites in the book, Captain Sully Sullenberger (of the US Airways Flight 1549 incident) did nothing rebellious. With 40 years of flying experience and situational awareness, he made lightning-quick decisions to land in the Hudson and not return to a nearby airport.

Recommendation: Read the introduction of Francesca Gino’s Rebel Talent, and skim the rest. The book’s introduction has a few useful concepts that merit an article, but the book lacks the rigor and utility to be expected from a Harvard Business School professor. The key takeaways (codified as the “eight principles of rebel leadership”) are relatively clear-cut: be curious and open-minded, never be satisfied, embrace discomfort, think unconventionally, and break established norms.

‘Follow Your Passion’ is Really Bad Career Advice

May 17, 2021 By Nagesh Belludi Leave a Comment

One of Our Greatest Literary Stylists Was a Full-time Business Executive

Wallace Stevens, one of the 20th century’s most celebrated poets, was a full-time insurance executive for The Hartford Accident and Indemnity Company. The son of a wealthy lawyer, Stevens attended Harvard, where he became recognized on campus as a prolific and multitalented writer. He moved to New York City to become a poet. His father was a lover of literature but was also prudent. He disapproved of Stevens’ literary aspirations and directed his son to cease writing and study the law.

Stevens eventually caved to his family’s pressure and went to New York University Law School. He practiced law at several New York firms for more than a decade before becoming an insurance lawyer and executive.

Stevens wrote most of his poetry on his daily two-mile walks to and from work: “I write best when I can concentrate, and do that best while walking.” He would take slips of paper in his pockets and jot down words. His secretary would type them up for him.

Despite the job demands, Stevens produced a fantastic body of imaginative work in his spare time. He won the Pulitzer Prize for poetry in 1955 for Collected Poems (1954.)

A Paycheck Comes First

Artists of all kinds have kept their jobs their entire lives. Among just the writers,

T. S. Eliot did some of his best work while employed at Lloyds Bank in London.
Two-time Poet Laureate Ted Kooser was also an insurance executive for much of his career. He would get up early, write poems for an hour and a half, and then go to work.
Pulitzer winner A. R. Ammons was a sales executive at his father-in-law’s scientific glass firm.
Richard Eberhart, another Pulitzer winner, worked at the Butcher Polish Company, his wife’s family’s floor wax business.
Poet Laureate James Dickey started his career at an advertising agency to “make some bucks.” A copywriter, he worked on the Coca-Cola and Lay’s Potato Chips accounts. He famously said, “I was selling my soul to the devil all day… and trying to buy it back at night.”
William Carlos Williams was a doctor in New Jersey practicing pediatrics and general medicine.
Novelist Henry Darger was a custodian at a Chicago hospital.
Harvey Pekar was a VA Hospital clerk in Cleveland. He held this job even after becoming famous. Until he retired in 2001, he declined all promotions.
Jules Verne was an agent de change (a broker) on the Paris Bourse. He woke up early each morning to write before going for the day’s work.
Novelist Jodi Picoult worked at an ad agency and a financial analyst, a textbook editor, and an eighth-grade teacher. She wrote her first novel when she was pregnant with her first daughter.

Disregard the Inspirational Mumbo Jumbo

Each of these authors had ambitions to be a writer but didn’t think they could earn a living at it initially. They started working as a means to an end. At the same time, they plodded away at writing, honing their craft, trying to appeal to readers, and refusing to stop trying because of their ambition and passion.

The boilerplate career advice “Do what you love and the money will follow” is aspirational but hardly practicable. Plenty of people are passionate about their craft, but few people can turn those passions into an actual paycheck.

Many people want to “do what they love” and specialize in, say, 17th-century Metaphysical poetry, get disheartened when there aren’t a lot of job positions available in that field, let alone that narrow area of expertise.

Pursue a passion but as a hobby. Work at it, and until you can find people who’ll like your work well enough to pay you for what you love to do, get a day job that’s acceptable and pays reasonably well. A steady professional income will take the pressure off. You’ll still be pursuing what you love, and, hopefully, someday, you can make a full career of it.

For now, though, let the money follow, if only from a different source.

Idea for Impact: Cultivate a Passion, But Don’t Expect to Make it a Career Right Away

To follow a passion, go get a day job. Think of it as your side gig. Then make time to cultivate your passions. When you’re good at something that people are likely to want, the money will come.

Despite the well-meaning counsel to follow your passion, the truth is, it’s easier to pursue your passion and achieve your dreams if you can afford to work free. Until then, seek the peace of mind that comes from being able to pay your bills and attaining financial stability.

Tweets, Egos, and Double-Crosses: Summary of Nick Bilton’s ‘Hatching Twitter’

April 26, 2021 By Nagesh Belludi Leave a Comment

I spent the weekend reading New York Times technology writer Nick Bilton’s captivating Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal (2013.) This tome exposes the dark side of Twitter’s tense founding and the relationships amongst the company’s four founders, Evan Williams (@Ev,) Jack Dorsey (@Jack,) Biz Stone (@Biz,) and Noah Glass (@Noah.)

Personal ambitions unleashed a barrage of backstabbing

This motley crew of four San Francisco transplants chanced upon one another when trying to make it in Silicon Valley and became close friends. They started Twitter in 2006 as a side project at Odeo, an ailing podcasting business bankrolled by Evan Williams. With an appealing—albeit frenzied—startup idealism and naïvete, they forged ahead with the notion of a platform that offered everybody an equal voice in 140 characters.

However, when Twitter began to gain traction as a status-sharing service, tensions quickly emerged between the co-founders. The four founders came to blows over just what Twitter was supposed to be and for the right to be recognized as having conceived it.

Lesson #1 from Twitter’s founding: Never mix business and friendship

The Twitter team’s infighting almost tore the microblogging company apart on more than one occasion in its early days. There was even acrimony over who got to sit by First Lady Michelle Obama at a Time 100 Most Influential People soiree.

Noah Glass, the “forgotten founder,” championed it initially and conceived Twitter’s name. Awkwardly, he was booted out before the startup even incorporated. He was left empty-handed from the contraption he had built and fought for when it was still an idea.

Biz Stone, the tactician and go-between, threatened to quit out of disgust with the infighting.

Hatching Twitter is particularly sympathetic to Evan Williams. He bankrolled Twitter as a fork of Odeo. He pivoted Twitter as a means for talking about what is happening in the world. Williams goaded it to prominence simultaneously as he tried in vain to keep Dorsey’s egotism in check.

Lesson #2 from Twitter’s Founding: Self-sabotage can undermine your hard work

For Jack Dorsey, Twitter was always about telling other people what you were doing and making them feel less alone. Williams chose Dorsey as CEO when Twitter formally became its own company. However, their relationship quickly soured. Dorsey failed to address Twitter’s early technical flaws, even as he took plenty of time to pursue hobbies outside of work. Twitter’s venture investors and Williams ultimately overthrew Dorsey.

Dorsey got bitter and launched another startup called Square (it’s now a thriving digital payments company.) Exploiting the public confusion about his role as Twitter’s chairman (albeit without a vote on the board,) Dorsey went on a media blitz to promote himself as Twitter’s sole inventor and the platform’s real brain.

Author Bilton makes Twitter’s founders seem so inept that one marvels at how the company got anywhere. But even as Dorsey and Williams squabbled, Twitter’s users set in motion a cultural phenomenon through retweets, @replies, and #hashtags. These three precepts gave Twitter its unique depth, scope, and versatility.

Later on, Williams got the boot in a coup d’etat orchestrated by a guileful Dorsey. He returned as Twitter’s executive chairman alongside a new chief executive. Dick Costolo, a former professional comic, made Twitter a revenue-earning business and steered it to an IPO.

Lesson #3 from Twitter’s Founding: Distribute credit—There’s plenty to go around

Interpersonal conflicts are the black ice of startups. Individual styles and priorities that are at odds with other founders can cause much drama in entrepreneurship. At the startup companies that I’ve been involved in, rifts have often forced co-founders to press mediators into their service and learn how to embrace conflict and establish boundaries.

When things are going well at any startup, everyone’s too busy to have much to disagree about. When the startup hits the skids, disputes pop up even where you’d least expect them. Some 65% of startups are suspected of failing because of interpersonal tensions within the founding team.

Hatching Twitter excels in shining a light not just on the founders’ conflicting personalities but how their individual dispositions affected what Twitter became:

Jack had the germ of the idea, of people sharing their status … Without Noah’s vision of a service that could connect people who felt alone, and a name that people would remember, Twitter would never exist. It was Ev who insisted on making Twitter about ‘what’s happening ..’. and without Biz’s ethical stance … Twitter would be a very different company.

Hatching Twitter, The Company That Almost Wasn’t

Recommendation: Quick-read Nick Bilton’s Hatching Twitter (2013.) It’s a fast-paced, entertaining back-story to how Twitter was founded and the drama caused by its founders’ personality conflicts and all the alliances and ousters and betrayals.

Nick Bilton tells an exciting saga of rivalries turning to fallings-out, hubris unfolding. As great wealth is built and lost, Facebook’s Mark Zuckerberg notes, “[Twitter is] such as mess—it’s as if they drove a clown car into a gold mine and fell in.” Bilton is gossipy, and his narrative tends to theatrical—an undeniable fodder for an inevitable Hollywood adaptation.

Creativity—It Takes a Village: A Case Study of the 3M Post-it Note

April 15, 2021 By Nagesh Belludi Leave a Comment

Creativity isn’t always about sudden insights that work perfectly. No matter how good an idea is, it’ll probably need some work before it can mature into a helpful innovation.

The invention of 3M Post-it (or the sticky note) is a particularly illuminating case in point that innovation requires actionable and differentiated insight. Cross-functional collaboration can help ensure creative involvement throughout the development process.

A Glue That Doesn’t Stick: A Solution Without a Problem

In the winter of 1974, a 3M adhesives engineer named Spencer Silver gave an internal presentation about a pressure-sensitive adhesive compound he had invented in 1968. The glue was weak, and Silver and his colleagues could not imagine a good use for it. The glue could barely hold two pieces of paper together. Silver could stick the glue and reapply it to surfaces without leaving behind any residue.

In Silver’s audience was Arthur Fry, an engineer at 3M’s paper products division. Months later, on a frigid Sunday morning, Fry called to mind Silver’s glue in an unlikely context.

Fry sang in his church’s choir and used to put little paper pieces in his hymnal to bookmark the songs he was supposed to sing. The little paper pieces of bookmark would often fall out, forcing Fry to thumb frantically through the book looking for the correct page. (This is one of those common hassles that we often assume we’re forced to live with.)

In a flash of lightning, Fry recalled the weak glue he’d heard at Silver’s presentation. Fry realized that the glue could be applied to paper to create a reusable bookmark. The adhesive bond was strong enough to stick to the page but weak enough to peel off without leaving a trace.

The sticky note was thus born as a bookmark called Press’n Peel. Initially, It was sold in stores in four cities in 1977 and did poorly. When 3M offered free samples to office workers in Boise, Idaho, some customers started using them as self-attaching notes. It was only then that Post-it notes started to become popular. They were first introduced across America in 1980 and Canada and Europe in 1981.

Ideas Intermingle and Evolve: Creativity Needs Collaboration

In all, it took twelve years after the initial discovery of the “glue that doesn’t stick” before 3M made Post-it available commercially. The Post-it continues to be one of the most widely used office products in the world.

This case study of the Post-it is a persuasive reminder that there’s a divergence between an idea and its tangible application that the creator cannot bridge by himself. The creator will have to expose the concept to diverse people who can evaluate, use, and trial the product.

In other words, the creative process does not end with an idea or a prototype. A happy accident often undergoes multiple iterations and reinterpretations that can throw light on the concept’s new applications. In the above example, Art Fry was able to see Spencer Silver’s invention from a different perspective and conceive of a novel use that its creator, Silver, could not. And all this happened in 3M’s fertile atmosphere that many companies aspire to create to help ideas intermingle and creativity flourish.

Idea for Impact: Creativity Is About Generating New Possibilities

Creativity is a mental and social process involving the generation of new ideas and concepts—and new associations that connect the ideas with existing problems.

Excellent new ideas don’t emerge from within a single person or function but at the intersection of processes or people that may have never met before.

Tylenol Made a Hero of Johnson & Johnson: A Timeless Crisis Management Case Study

March 11, 2021 By Nagesh Belludi Leave a Comment

Crisis needn’t strike a company solely because of its own neglect or disaster. Sometimes, situations emerge where the company can’t be blamed—but the company realizes quickly that it’ll get much blame if it fumbles the ball in its crisis-response.

Ever since cyanide-laced Extra-Strength Tylenol killed seven people in Chicago in 1982, corporate boards and business school students have studied the response of Johnson & Johnson (J&J,) Tylenol’s manufacturer, to learn how to handle crises. The culprits are still unknown almost 40 years later.

Successful Crisis Management: Full Responsibility, Proactive Stance

In 1982, Tylenol commanded 35 percent of the over-the-counter analgesic market in America. This over-the-counter painkiller was the drugmaker’s best-selling product, and it represented nearly 17 percent of J&J’s profits. When seven people died from consuming the tainted drug, Time magazine wrote of the tragedy’s victims,

Twelve-year-old Mary Kellerman of Elk Grove Village took Extra-Strength Tylenol to ward off a cold that had been dogging her. Mary Reiner, 27… had recently given birth to her fourth child. Paula Prince, 35, a United Airlines stewardess, was found dead in her Chicago apartment, an open bottle of Extra-Strength Tylenol nearby in the bathroom. Says Dr. Kim [the chief of critical care at Northwest Community Hospital]: “The victims never had a chance. Death was certain within minutes.”

A panic ensued about how widespread the contamination may be. Moreover, Americans started to question the safety of over-the-counter medications.

Advertising guru Jerry Della Femina declared Tylenol dead:

I don’t think they can ever sell another product under that name. There may be an advertising person who thinks he can solve this, and if they find him, I want to hire him because then I want him to turn our water cooler into a wine cooler.

The ‘Grand-Daddy’ of Good Crisis Response

J&J acted quickly, with complete candidness about what had happened, and immediately sought to remove any source of danger based on the worst-case scenario. Within hours of learning of the deaths, J&J installed toll-free numbers for consumers to get information, sent alerts to healthcare providers nationwide, and stopped advertising the product. J&J recalled 31 million bottles of Tylenol capsules from store shelves and offered replacement products free of charge in the safer tablet form. J&J did not wait for evidence to see whether the contamination might be more widespread.
J&J’s leadership was in the lead and seemed in full control throughout the crisis. James Burke, J&J’s chairman, was widely admired for his leadership to pull Tylenol capsules off the market and his forthrightness in dealing with the media. (The Tylenol crisis led the news every night on every station for six weeks.)
J&J placed consumers first. J&J spent more than $100 million for the recall and relaunch of Tylenol. The stock had been trading near a 52-week high just before the tragedy, dropped for a time, but recovered to its highs only two months later.
J&J accepted responsibility. Burke could have described the disaster in many different ways: as an assault on the company, as a problem somewhere in the process of getting Tylenol from J&J factories to retail stores, or as the acts of a crazed criminal.
J&J sought to ensure that measures were taken to prevent as far as possible a recurrence of the problem. J&J introduced tamper-proof packaging (supported by an expanded media campaign) that would make it much more difficult for a similar incident to occur in the future.
J&J presented itself prepared to handle the short-term damage in the name of consumer safety. That, more than anything else, established a basis for trust with their customers. Within a year of the disaster, J&J’s share of the analgesic market, which had fallen to 7 percent from 37 percent following the poisoning, had climbed back to 30 percent.

Business Principles Should Hold True in Good Times and Bad

When the second outbreak of poisoning occurred four years after the first, Burke went on national television to declare that J&J would only offer Tylenol in caplets, which could not be pulled apart and resealed without consumers knowing about it.

Burke received the Presidential Medal of Freedom in 2000. He was named one of history’s ten most outstanding CEOs by Fortune magazine in 2003. In Lasting Leadership: What You Can Learn from the Top 25 Business People of Our Times (2004,) Burke emphasized,

J&J credo has always stated that the company is responsible first to its customers, then to its employees, the community and the stockholders, in that order. The credo is all about the consumer. [When those seven deaths occurred,] the credo made it very clear at that point exactly what we were all about. It gave me the ammunition I needed to persuade shareholders and others to spend the $100 million on the recall. The credo helped sell it.

Trust has been an operative word in my life. It embodies almost everything you can strive for that will help you to succeed. You tell me any human relationship that works without trust, whether it is a marriage or a friendship or a social interaction; in the long run, the same thing is true about business.

Idea for Impact: A Crisis Makes a Leader

The first few days after any disaster or crisis can be a make-or-break time for a company’s and its leaders’ reputation. The urgency experienced during a crisis often gives leaders the go-ahead to enact change faster than ever before.

Admittedly, the Tylenol case study is more clear-cut than most crises because, from the get-go, it is clearly evident that criminals, not Johnson & Johnson, were responsible for the poisoning and the withdrawal of Tylenol from stores was comparatively easier to execute.

General Electric Blame Must Be Shared: Summary of Ex-CEO Jeff Immelt’s ‘Hot Seat’

March 4, 2021 By Nagesh Belludi Leave a Comment

Leadership is tough. Some things work out, and some don’t. Other things end up epic failures. But no company gets anywhere without trying.

In the fullness of time, when the company does well, as suggested by its stock price, such leadership attributes as optimism and foresight are heralded as brilliant. But when things go wrong, these very attributes are the first to get the blame.

“More complete telling of the truth”

Hot Seat: What I Learned Leading a Great American Company (2021) is former General Electric CEO Jeff Immelt’s response to the allegations that his ineffectiveness led to the collapse of the once-mighty company. It’s an engaging book that must be studied after Wall Street Journal reporters Thomas Gryta and Ted Mann’s worthwhile postmortem, Lights Out: Pride, Delusion, and the Fall of General Electric (2020; my summary.)

My legacy was, at best, controversial. GE won in the marketplace but not in the stock market. I made thousands of decisions impacting millions of people, often in the midst of blinding uncertainty and second-guessed by countless critics. I was proud of my team and what we’d accomplished, but as CEO, I’d been about as brilliant as I was lucky, by which I mean: too often I was neither.

Confluence of bad luck, bad timing, leadership mistakes

I’ve previously written a dissertation on what happened at General Electric (GE.) Immelt had a tough act to follow. Under the previous CEO, the exceptional Jack Welch, GE got spoiled by greed and got away with a lack of transparency.

Over the years Jack Welch had collected a group of idol worshippers and sycophants around and outside the company who fostered an unrealistic view of GE and of Jack himself.

Immelt was saddled with Welch’s doomed legacy, but Immelt failed to right-track it in his 16 years at the helm.

Early in his tenure as CEO, Immelt realized the scope of a potential disaster in GE Capital but couldn’t break its bad habits swiftly. In fact, Immelt went about pivoting the company around slow-growth industrial products. Still, as he did so, his strategy entailed relying on GE Capital to deliver easy profits. It was a hard addiction to break, and Immelt couldn’t discard GE Capital easily.

In the short term, GE Capital was our strategy. We had no other engines of growth. We had to keep our heads down and weather the scrutiny. … We would let the rest of GE Capital grow so that we could keep earnings on a steady path, while the industrial businesses could catch up.

On top, Immelt overpaid for acquisitions, most prominently for the French power generating equipment company Alstom. At the same time, his bet on fossil-fuel-based power equipment was spectacularly mistimed because market conditions deteriorated quickly.

In the final years, Immelt’s misfortunes, even in such previously thriving businesses as healthcare and transportation, piled on. When Immelt called Jack Welch after stepping down, Welch told him supportively, “We both know you never caught a break.”

Jeff Immelt Admits He Let Everybody Down.

Immelt’s Hot Seat is a fascinating account of what it takes to lead a significant global business in times of rapid change.

Immelt owns up his many mistakes with a certain self-awareness. He rebukes a few people while acknowledging he should have been more accountable for everything that happened under his watch. But Hot Seat is primarily a then-in-time rationale of his significant decisions.

Interestingly enough, Immelt doesn’t offer insightful misgivings for the lack of transparency in GE’s financial statements, his outsized compensation, and the mischaracterization of insurance charges and pension liabilities.

Be advised, though, there’re so many details in Hot Seat that are unknowable without a first-rate knowledge of GE’s people and business model, starting with the Welch era.

“Every job looks easy (until you’re the one doing it)”

Read Hot Seat: What I Learned Leading a Great American Company (2021.) General Electric’s fall is a complicated story. It deserves to be heard from insiders such as Immelt as it does from journalists and stockholders.

Hot Seat should leave you with a fair-minded assessment of General Electric, Jack Welch, Jeff Immelt, financial engineering, the conglomerate business model, and Wall Street-oriented capitalism itself. These, sadly, many people don’t understand or know completely.

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