and open about the mindset they value, follow, and wish to instill or drive within their organizations.
I think the impulse to do so formally through a founders’ letter comes from a worry that what made their organization special so far is suddenly vulnerable to outside forces. An IPO, after all, is a transformative event. Other than a merger, I can think of no bigger “natural” threat to the values and culture of an organization. As we saw with Apple in Chapter 1, things can change dramatically when new decision-makers—read “shareholders”—become a de facto part of the leadership of the company. Indeed, those shareholders traditionally have very different priorities and desires that can be at odds with or even hostile to the most cherished aims or cold-blooded strategies of the founders or the management of an organization.
Articulating a mindset in such a public and definitive way is part cannon shot, part personally written wedding vow. It says “Back off!” to those who would challenge the core beliefs of the organization or try to change them. And it says “Let’s go!” to those eager to jump on board.
And while a founders’ letter is written to prospective investors, that cannon shot/wedding vow is aimed as much at people inside the company as outside. In fact, founders like Page and Brin intended the message to hit home not only with the 800 or so employees of Google in 2004, or the 53,000 in 2015, but also the employees of Google who are not even born yet. Page and Brin articulated the Google mindset in such a formal and provocative way because it showed their commitment to those principles forever.
A clearly articulated mindset is characteristic of organizations that understand the critical importance of culture. They do this because, as Google Chairman Eric Schmidt and senior executive Jonathan Rosenberg put it, “culture and success go hand in hand.”2
But the genesis of a culture is the mindset that the founders and leaders bring to the organization. The culture is built, in other words, around the way the organization intends to act and operate, which in turn shapes the organization’s strategy, operating model, and business practices, and drives the decisions that get made.
Nimble, focused, and feisty companies like Google don’t become that way by chance. In this chapter, we’re going to focus on the three mindsets that NFF companies have in common. Specifically, they believe that:
1. Fast is better than big,
2. Possibility is more important than profitability, and
3. Being hungry and “outrospective” is critical.
MINDSET #1: FAST IS BETTER THAN BIG
Companies that are nimble are strikingly different from traditional companies. They believe that being agile, flexible, and flat is essential for success in today’s dynamic world.
In contrast, most organizations in operation today retain the mindset that size, efficiency, and momentum are the formula for long-term competitive advantage. Chances are you work for or lead such an organization. We looked at this archaic belief a bit in chapter one with the Blockbuster story, but there are a thousand more lumbering Blockbusters for every nimble rival—although that’s changing as more dinosaurs find themselves stuck in tar pits.
Companies that believe big is better than fast have organized themselves to maximize efficiency and scale to deliver standardized products and processes to mass markets. This formula for success has largely shaped the world we grew up in. I remember seeing McDonald’s signs change over the years. In the early ’70s, they proudly announced that 5 million people had been served. Today, it’s billions upon billions. And each of those customers has eaten the same food across restaurants that look identical, all over the world. Henry Ford, the father of mass industrialization, was incredibly innovative in so many ways, but his defining difference came from grasping the power of being big in a world of millions of consumers longing for the same product. He built his factories to produce that product cheaply and efficiently—and was so focused on that mindset that he refused to alter his design or even the color of his automobile to meet variations in taste.
How do companies like McDonald’s, Ford, and Blockbuster deliver their products to a mass market effectively? First of all, they learn how to break down the work of the organization into the smallest specific tasks that are so simple that errors and variations have been almost eliminated, then they give individuals those tasks, which they call jobs, and get them to do their jobs in the same fashion, over and over again. They also need a hierarchy in place to assure those tasks are being done correctly. Supervisors oversee workers doing the same task. Silos form around tasks that are similar. Managers oversee workers who are collectively doing a variety of tasks. As the number of different jobs increases, the layers of management expand and grow. The flow of information between those silos and layers is strictly controlled, and everyone must do exactly what he or she is supposed to do for the system to function efficiently. When that happens, scale pays off—literally. Margins do not need to be high in order to accrue tremendous profit in such a system.
Is the work engaging? Probably not, or at least not until you reach a level in the hierarchy that gives you a different kind of challenge—managing people instead of processes or overseeing processes that are more complex and strategic. Does the work require creativity, innovation, or passion? Again, not much until you get to higher levels. Creative impulses on the shop floor could throw a wrench into the works and bring the efficient machine to a screeching halt. On the other hand, in these big-is-better companies there is a lot of creativity needed in the marketing department. It’s necessary, after all, to artfully convince consumers that the same product they can get anywhere—one that is not very different from a product they can get from a competitor—actually is meaningful and desirable enough to buy. Why else would you drink Pepsi and not Coke, drive a Chevy and not a Ford, or fill your tank with one particular brand of gasoline over another? The subtle differences between these products must be branded as loudly and brashly as possible.
Naturally, companies that believe big is better than fast have a bias for unbridled growth. What’s better than a store, gas station, or dealership in every city? Answer: a store, gas station, or dealership on every corner. All growth is good because it leverages efficiencies of process, resources, production, delivery, marketing, etc. Revenues and profits grow incrementally at scale as a result.
In a VUCA world, however, the dynamics of markets, competition, capital, employees, and technology have radically changed the rules of the game. As we discussed in chapter one, a company built to make the same product over and over again will not be able to meet diverse needs, or adapt quickly to changes in the market, or respond with agility to the disruptive innovations of new competitors, or engage younger generations of employees and customers who have different priorities and values. Meanwhile, capital and consumers will be drawn quickly to upstart companies that design better processes or fulfill different needs or bring new technologies to bear. Blockbuster, meet Netflix.
Does it sound strange to hear that Google—the behemoth of the internet—prizes being fast over being big? In fact, Google has gone to great lengths to design a work environment that enables agility and fluidity in all its processes and decisions, and actively encourages informal collaboration over formal organization. Most pointedly, it is fanatical in its resistance to the natural and insidious takeover of the company’s culture by conventional rules of management (which are the default mode for responding to almost any confusion, complexity, challenge, or need, as Netflix noted) and the growth of hierarchical chains of command. Why? Because it believes those forces are responsible for slowing down big organizations and making them more cumbersome, inflexible, and unresponsive while killing innovation, passion, and engagement. These are not ideological or ethical arguments to Google but practical
