NOTES - CHAPTER ONE
NOT JUST A COMPANY, A CAUSE: STRAEGY AS ADVOCACY
1. Harvard Business School has published a case study on Arkadi Kuhlmann and his colleagues, their strategic formula, and their relationship with the bank’s Dutch parent; see “ING Direct,” Case 9-804-167, revised May 19, 2004; see also “Would You Like a Mortgage with Your Mocha?” by Scott Kirsner, Fast Company (March 2003); “ING Chief Bucks Convention” by Maureen Milford, Wilmington News Journal, May 30, 2004; and “Bare Bones, Plump Profits” by Amey Stone, BusinessWeek, March 14, 2005.
2. For an overview of the legislation and its impact on rank-and-file consumers, see “Sweeping New Bankruptcy Law to Make Life Harder for Debtors” by Michael Schroeder and Suein Hwang, Wall Street Journal, April 6, 2005. For a taste of Kuhlmann’s full-throated opposition, see “ING Head: Bankruptcy Bill ‘Dead Wrong’” by Ted Griffith, Wilmington News Journal, March 5, 2005.
3. Leading the Revolution by Gary Hamel (Harvard Business School Press, 2000). Again, we want to distinguish between the book’s rhetorical excesses and its enduring substance. Hamel’s insights about the emptiness of strategy as mimicry and the power of strategic originality have shaped our perspectives on competition.
4. It’s impossible to write about the power of purpose in business without paying tribute to Built to Last: Successful Habits of Visionary Companies by James C. Collins and Jerry I. Porras (Harper Business, 1994). What was remarkable to us during our research was seeing so vividly, in companies from GSD&M to DPR Construction, the impact of the book’s ideas on how organizations compete.
5. No one explains the ideas GSD&M stands for better than the agency’s cofounder and president. Still, a few articles are worth noting: “Greetings from Idea City” by Gina Imperato, Fast Company (October-November 1997); “GSD&M’s Excellent Ad Venture” by Amy Schatz, Austin American-Statesman, August 26, 2001; and “Ad Libbing” by Marc Gunther, Fortune (October 29, 2001), which is a fascinating account of how the agency, known for its edgy language and humor, dealt with the aftermath of September 11.
6. How does a $10,000 investment become $10.2 million? See “The 30 Best Stocks” by John Birger et al., Money (Fall 2002). For Herb Kelleher’s entertaining assessment of Southwest’s growth and his performance as a leader, see “The Chairman of the Board Looks Back” by Herb Kelleher as told to Katrina Booker, Fortune (May 28, 2001).
7. Our discussion of Southwest’s Eight Freedoms is based on interviews with Libby Sartain and her former colleague Sherry Phelps (until recently director of employment for the airline). For a more detailed description of the “internal branding” process at Southwest and Yahoo, see HR from the Heart: Inspiring Stories and Strategies for Building the People Side of Great Business by Libby Sartain with Martha I. Finney (American Management Association, 2003).
8. Herb Kelleher recounts the saga in his Fortune article. For a concise history of Muse Air, see The Handbook of Texas Online (www.tsha.utexas.edu/handbook/online).
9. Hardball: Are You Playing to Play or Playing to Win? by George Stalk and Rob Lachenauer (Harvard Business School Press, 2004).
10. Our discussion of HBO’s early days and strategic innovations draws extensively on Polly LaBarre’s in-depth profile of Chris Albrecht. See “Hit Man,” Fast Company (September 2002). There is no shortage of articles dissecting HBO’s far-reaching impact on the culture. Two of the best include Tad Friend’s New Yorker essays on the network, “The Next Big Bet” (May 14, 2001) and “You Can’t Say That” (November 19, 2001). Variety offers an exhaustive survey of HBO’s programming in its August 25, 2003, special report “Showman of the Year: Chris Albrecht.” In the New York Times, Bernard Weinraub chronicled the HBO effect in television (“HBO: The Tough Act TV Tries to Follow,” September 25,2004), while John Horn of the Los Angeles Times examined its growing impact on films (“HBO Emerges as a Mecca for Maverick Filmmakers,” September 19, 2004). Kurt Andersen dissected the premature Schadenfreude directed at the network in “I Want My HBO,” New York (August 1–8, 2005).
* Because ING Direct USA is a wholly-owned subsidiary of ING Group, it reports financials on a pretax basis. Thus, these profit figures reflect pretax results.
* Obviously, mortgages are a form of lending, not savings. But, as Kuhlmann and his colleagues are quick to point out, building equity in their homes is the most important way that Americans invest in their financial future—so it’s a natural fit with the company’s pro-saving strategy.
* The Muse Air saga ended badly for everyone. Lamar Muse never could get the better of his former colleagues, and Southwest wound up buying his company four years after it got off the ground. Southwest renamed the airline TranStar and operated it as an independent subsidiary. But TranStar found itself in brutal fare wars with Texas Air and its take-no-prisoners boss Frank Lorenzo, who would eventually become the most hated man in the airline business. TranStar ceased operations in 1987.
* Spence is serious about the pursuit of a higher calling. In 2004 a dismayed “Reverend Roy” responded to the election victory of fellow Texan George W. Bush by embarking on a road trip. He visited 112 churches trying to understand the religious divide that became such a big part of the presidential campaign. The result is The Amazing Faith of Texas (www.amazingfaithoftx.com), a book of photojournalism that highlights five values common to most religions.
* Thanks to DVD sales and syndication rights, original programming is the gift that keeps on giving. Industry analysts estimate that HBO’s Band of Brothers DVD generated sales of $186 million, while the Sex and the City DVDs pulled in $250 million and The Sopranos DVDs topped $300 million. A&E bought rights to The Sopranos for a reported $162.5 million for 65 episodes. That’s $2.5 million per episode—a record for a drama sold into syndication.
* Commentators call it the “HBO effect”—in an industry of copycats, it was only natural for other networks to mimic HBO. Pay-cable rival Showtime is openly borrowing from HBO’s playbook with such edgy series as The L Word (Sex and the City for the lesbian set) and highbrow movies ( The Lion in Winter with Glenn Close and Patrick Stewart). FX is making claims to being the “HBO of basic cable” with programs like The Shield , The Thief , and Nip/Tuck, and the 2005 breakout hit Desperate Housewives on ABC is unfailingly billed as an heir to Sex and the City .
