Tag Archives: Culture

No Rules Rules by Reed Hastings


  1. Reed Hastings recounts Netflix’s origin story as well as some of the cultural aspects that have made them the dominant media company of the past decade

Key Takeaways

  1. If you want to build a culture of freedom and responsibility, the first step is to increase your talent density (hire great people, pay them top dollar, cull the mediocre), increase candor, and then remove unnecessary policies and rules (vacation, expense reports, dress codes, treat people as if they were responsible adults with good judgment…)
  2. Removing mediocre performers has a surprisingly large impact on the culture, output, and happiness of everyone who remains, boosting already high performers even higher
  3. Give feedback often start with employees giving the leader ship feedback get rid of jerks understand that you’re trying to leave people feeling optimistic and positive not be down because of your brutal honesty
  4. Netflix’s travel and expense policy can be summarized in five words: act in Netflix’s interest
  5. You are replacing rules and policies with leadership great people and common sense. For example the unlimited vacation policy must be followed up by the manager talking about what makes sense for the team so that you don’t hurt the company or your colleagues don’t take vacation in certain times we can only have one person out from our team at any given time etc.
  6. For freedom and responsibility to really work there has to be repercussions that are known. For example at Netflix if you’re caught abusing the travel and expense policy you’re immediately fired no one strike you’re just out
  7. Speed in every facet of decision making has tremendous second order effects
  8. Big salaries, not big bonuses, are beat for innovation since people’s minds aren’t preoccupied with their target KPI or whatever metric their bonus is reliant upon. Bonuses and incentives are great for more mechanical and routine work but not so great for the creative. Pay top of salary estimates
  9. Shining sunlight on mistakes, especially made by leaders, builds trust, encouraged others to take risks, and enhances velocity. if you have proven you’re confident and effective admitting your mistakes builds trust and likability whereas ineffective people shining a light on their mistakes only further a Rhodes peoples trust him
  10. Don’t seek to please your boss but seek to do what is best for the company
  11. Only a CEO who is not busy can truly do their job. You need to decentralize decision making as much as possible which enhances peoples accountability and excitement at work and allows the CEO freedom to think and beat the company
  12. Adequate performance receives a generous severance package
  13. The keeper test is important to build talent density. If someone on your team just told you they were leaving for another company would you fight for them? If not probably best to give them a generous severance package
  14. Only say things about people that you’d be comfortable saying to their face
  15. Lead with context, not control
  16. Netflix’s north star is to be a company that is adaptable and flexible. They almost always pay more if that means getting additional flexibility
  17. Pyramid and the tree – most organizations are structured like a pyramid but if innovation and creativity are your competitive advantage the structure like a tree is more effective. The boss is like the roots that helps keep the organization grounded and he is at the bottom setting the context rather than at the time controlling everything

What I got out of it

  1. Freedom + Responsibility + Talent Density; candor, trust, shining spotlight on mistakes, do what’s best for the company and not for your boss, adaptability/flexibility > plans

A Pattern Language by Christopher Alexander, Murray Silverstein, and Sara Ishikawa


  1. A Pattern Language is the second in a series of books which describe an entirely new attitude to architecture and planning. The books are intended to provide a complete working alternative to our present ideas about architecture, building, and planning – an alternative which will, we hope, gradually replace current ideas and practices

Key Takeaways

  1. Overview
    1. The elements of this language are entities called patterns. Each pattern describes a problem which occurs over and over again in our environment, and then describes the core of the solution to that problem, in such a way that you can use this solution a million times over, without ever doing it the same way twice.
    2. In the patterns marked with two “**”, we believe that we have succeeded in stating a true invariant…the pattern describes a deep and inescapable property of a well-formed environment
    3. We believe that this language which is printed here is something more than a manual, or a teacher, or a version of a possible pattern language. Many of the patterns here are archetypal – so deep, so deeply rooted in the nature of things, that it seems likely that they will be a part of human nature, and human action, as much in five hundred years, as they are today. We doubt very much whether anyone could construct a valid pattern language, in his own mind, which did not include the pattern Arcades (119) for example, or the pattern Alcoves (179)
    4. A pattern language has the structure of a network. This is explained fully in The Timeless Way of Building. However, when we use the network of a language, we always use it as a sequence, going through the patterns, moving always from the larger patterns to the smaller, always from the ones which create structures, to the ones which then embellish those structures, and then to those which embellish the embellishments…Since the language is in truth a network, there is no one sequence which perfectly captures it. But the sequence which follows, captures the broad sweep of the full network; in doing so, it follows a line, dips down, dips up again, and follows an irregular course, a little like a needle following tapestry
    5. Finally, a note of caution. This language, like English, can be a medium for prose, or a medium for poetry. The difference between prose and poetry is not that different languages are used, but that the same language is used, differently. In an ordinary English sentence, each word has one meaning, and the sentence too, has one simple meaning. In a poem, the meaning is far more dense. Each word carries several meanings; and the sentence as a whole carries an enormous density of interlocking meanings, which together illuminate the whole. The same is true for pattern languages. It is possible to make buildings by stringing together patterns, in a rather loose way. A building made like this is, an assembly of patterns. It is not dense. It is not profound. But it is also possible to put patterns together in such a way that many many patterns overlap in the same physical space: the building is very dense; it has many meanings captured in a small space; and through this density, it becomes profound…All 253 patterns together form a language
    6. At the core is the idea people should design their homes, streets, and communities. This idea comes from the observation most of the wonderful places of the world were not made by architects, but by the people.
    7. Every building, every room, every garden is better, when all the patterns which it needs are compressed as far as it is possible for them to be. The building will be cheaper; and the meanings in it will be denser. It is essential, then once you have learned to use the language, that you pay attention to the possibility of compressing the many patterns which you put together, in the smallest possible space. You may think of this process of compressing patterns, as a way to make the cheapest possible building which has the necessary patterns in it. It is, also, the only way of using a pattern language to make buildings which are poems.
      1. Like information theory, the more “surprise” in the shortest message delivers the most information. 
  2. There are 253 total patterns, moving from the macro (towns) to the micro (individual rooms). The invariant patterns [and the patterns which stood out the most to me] are included below
    1. Independent Regions – small and autonomous regions that are independent spheres of culture
    2. City Country Fingers – green, public land that sit between houses, neighborhoods, industries, etc…
    3. Mosaic of Subcultures – homogenous character of modern cities kills all variety of life styles and arrests the growth of individual character
    4. Scattered Work – artificial separation of houses and work creates intolerable rifts in people’s inner lives
    5. Local Transport Areas – cars kill all social life in a city so make personal, local transportation effective
    6. Identifiable neighborhood – people need an identifiable spatial unit to belong to
    7. Network of learning – creative, active individuals can only grow up in a society which emphasizes learning instead of teaching
    8. 4-story limit – high buildings make people crazy
    9. 9% parking – when the area devoted to parking is too great, it destroys the land. The physical environment creates the potential for all social communion, including even communion with the self
    10. Men and Women – separation of sexes distorts reality and perpetuates and solidifies the distortions. Make certain each piece of the environment is made with a blend of both men’s and women’s instincts. Keep the balance of masculine and feminine in mind for every project at every scale (yin/yang)
    11. Activity Nodes – community facilities scattered individually through the city do nothing for the life of the city, they must have the critical mass to attract people 
    12. Promenade – people need a  place to go see other people and to be seen
    13. Household Mix – no one stage in the life cycle is self-sufficient. People need support and confirmation from people who have reached a different stage in the life cycle, as the same time that they also need support from people who are at the same stage as they are themselves
      1. Galilean Relativity
    14. Old People Everywhere – old people need old people, but they also need the young, and the young people need contact with the old. The very young keep the old engaged and the old teach the young
    15. Work Community – if you spend eight hours of your day at work, and 8 at home, there is no reason why your workplace should be any less of a community than your home
    16. University as a marketplace – concentrated, cloistered universities with closed administration policies and rigid procedures which dictate who may teach a course, kill opportunities for learning
    17. Market of many shops – not one massive grocery store but a series of different shops with a variety of foods and goods 
    18. Housing in between – wherever there is a sharp separation between residential and nonresidential parts of town, the nonresidential areas will quickly turn to slums…Slums happen when these rhythms break down
    19. Looped local roads – nobody wants fast through traffic going by their homes
    20. Green streets – local roads need only a few stones for the wheels of the car and most of it can still be green
    21. Network of paths and cars – cars are dangerous to pedestrians; yet activities occur just where cars and pedestrians meet
    22. Main gateway – any part of town will be emphasized if people have to cross a gateway to enter the boundary
    23. Quiet backs – people need to be able to pause and refresh themselves with quiet in a moral natural environment
    24. Accessible green – people need green open places to go to; when they are close they use them. But if the greens are more than 3 minutes away, the distance overwhelms the need
    25. Small public squares – too large and they will feel deserted
    26. Holy Ground – holy grounds are gateways and generally hard to reach, helping to separate normal life from the sacred
    27. Common land – without common land, no social system can survive
    28. Connected play – if children don’t play enough with other children during the first 5 years of life, there is a great chance that they will not have normal social lives moving forward
    29. Grave sites – no people who turn their backs to death can be alive. The presence of the dead among the living will be a daily fact in any society which encourages its people to live
    30. Local sports – the human body does not wear out with use, but when it is not used
    31. The Family – the nuclear family is not by itself a viable form – several generations and cousins/aunts/uncles/close friends are needed in a single or loosely knit multiple household. The kitchen is the most vital realm
    32. House for a small family – the relationships between children and adults is most critical. Must have 3 distinct areas – a couple’s realm, a children’s realm, a common area to connect them both. Each room is “owned” by the appropriate persons – a child may enter the adults room but they have to respect that they do not rule this area
    33. Self-governing workshop and offices – no one enjoys his work if he is a cog in a machine. Buddhist function of work is 3-fold: chance to utilize and develop his faculties, enable him to overcome ego-centeredness by joining with others in a common task, and to bring forth the goods and services needed for a becoming existence. Some studies have shown that the single best predictor of a long life is the extent to which he is satisfied with his job
    34. Master and apprentices – the fundamental learning solution is one in which a person learns by helping someone who really knows what he is doing. Enmesh work and learning and organize work around a tradition of master and apprentices so that they can work and meet together 
    35. Individually owned shops – no massive conglomerates
    36. Street cafe – place to relax and watch people
    37. Site repair – buildings must be built on the worst land, not the best (so that the best land is left to look at and cultivate)
    38. South facing outdoors – best light and atmosphere
    39. Positive outdoor space – purposefully designed and not simply what is left over after the building is constructed. Like yin and yang, indoor and outdoor space must always get their shape together
    40. Entrance transition – buildings with a graceful transition between the street and the inside are more tranquil than those without 
    41. Arcades – covered walkways at the edge of buildings play a vital role in the way that people interact with buildings
    42. Intimacy Gradient – sequence which corresponds to their degree of privateness (front is for public, back only for family and closest friends)
    43. Indoor sunlight – right rooms facing south to make entire house sunny and cheerful
    44. Common areas at the heart – constant informal contact among its members is crucial for survival 
    45. Couple’s realm – the presence of children in a family often destroys the closeness and the special privacy which a man and wife need together. Make a special part of the house distinct from the common areas solely for the couple
    46. Sleeping to the east – wake up with morning light
    47. Farmhouse kitchen – make the kitchen bigger than usual and big enough to include the family room space, with enough chairs for everyone to sit, and bright and comfortable
    48. A room of one’s own – no one can be close to others, without also having frequent opportunities to be alone
    49. Sequence of sitting spaces – put in places to sit all over the building
    50. Communal eating – without communal eating, no human group can hold together
    51. Small meeting rooms – larger meetings leads to people getting less out of them
    52. Home Workshop – as the decentralization of work becomes more and more effective, the workshop in the home grows and grows in importance
    53. Light on two sides of every room – when they have a choice, people will always gravitate to those rooms which have light on two sides, and leave the rooms which are lit only from one side unused and empty
    54. Outdoor room – enough enclosure around it that it takes on the feeling of a room even though it is open to the sky 
    55. Connection to the earth – make the boundary between building and nature ambiguous
    56. Greenhouse – build a greenhouse as part of your home or office so that it is both a room of the house and part of the garden
    57. Garden – somewhere quiet and safe to sit and be with nature as well as a place to grow your vegetables and plants
    58. Alcoves – no homogeneous room, of homogeneous height, can serve a group of people well. To give a group a chance to be together, as a group, a room must also give them the chance to be alone, in one’s and two’s in the same place
    59. Window place – create a place to sit and be next to windows
    60. Fire – there is no substitute for fire, the need for fire is almost as fundamental as the need for water
    61. Eating atmosphere – heavy table in the center to seat everyone, with a light over it and enclose the space with walls or contrasting darkness
    62. Workspace enclosure – people cannot work effectively if their workspace is too enclosed or too exposed. A good workspace strikes the balance
    63. Thick walls – thin walls make homes feel impersonal and dead
    64. Open shelves and built in seats
    65. Secret place – a place to keep important things that almost nobody knows about
    66. Structure follows social spaces – not the other way around
    67. Root foundations – the best foundations of all are the kinds of foundations which a tree has – where the entire structure of the tree simply continues below ground level, and creates a system entirely integral with the ground, in tension and compression
    68. Radiant heat – this pattern is biologically precise formulation of the intuition that sunlight and a hot blazing fire are the best kinds of heat
    69. Different chairs – people are different sizes, they sit in different ways so furnish with a variety of different chairs
    70. Pools of light – uniform illumination serves no useful purpose whatsoever. In fact, it destroys the social nature of space and makes people feel disoriented and unbounded
    71. Things from your life – decor and the conception of interior design have spread so widely that very often people forget their instinct for the things they really want to keep around them – family pictures, remembrances, collections, old adventures
  3. Other
    1. We do not believe that these large patterns, which give so much structure to a town or to a neighborhood, can be created by a centralized authority, or by laws, or by master plans. We believe instead that they emerge gradually and organically, almost of their own accord, if every act of building, large or small, takes on the responsibility for gradually shaping its small corner of the world to make these larger patterns appear there
      1. Conscious or intuitive understanding of complexity, self-organizing criticality, emergence 
    2. Schools are designed on the assumption that there is a secret to know everything in life; the quality of life depends on knowing that secret; that secrets can be known only in orderly successions; and that only teachers can properly reveal these secrets. An individual with a schooled mind conceives of the world as a pyramid of classified packages accessible only to those who carry the proper tags. New educational institutions would break apart this pyramid. Their purpose must be to facilitate access for the learner: to allow him to look into the windows of the control room or the parliament, if he cannot get in the door. Moreover, such new institutions should be channels to which the learner would have access without credentials or pedigree – public spaces in which peers and elders outside his immediate
    3. Have to fix the position of individual buildings, according to the nature of the site, the trees, and the sun, this is one of the most important moments in the language

What I got out of it

  1. The playbook for creating perfect environments – from entire towns down to individual rooms. Master key to tapping into people’s subconscious and making them feel calm, secure, and abundance – allowing them to go all-in. Like most great books, the ideas and lessons apply far broader than simply the realm it is immediately describing. Many are time invariant and universal, tapping into deeply held and genetically programmed human universals, as Donald Brown would call them

Gridiron Genius: A Master Class in Building Teams and Winning at the Highest Level by Michael Lombardi


  1. Lombardi has been tutored by some of the best and he shares his leadership and culture learnings in this book

Key Takeaways

  1. Amazing Preparation
    1. The Patriots worked on a unique goal line solution for months, the entire off-season and preseason, implementing and perfecting Bill’s ingeniously simple goal-line solution. They didn’t see it all season until the Super Bowl when something “just did not look right.” Instead of calling a time-out, an eerily calm Belichick just stared straight ahead, a predator stalking his prey. Suddenly, he burst into action, becoming the aggressor. Shouting into his headset, Belichick commanded: “Just play the goal line.”…I’ve studied the NFL’s smartest men my whole career, and it’s never anything less than breathtaking when you realize they are operating on a different level than their peers. Believing they had speed and horizontal space on their side, Seattle stacked two receivers on the right. At the snap, though, Butler, a cornerback skilled in man coverage – as opposed to the safety who ordinarily would have been in that spot – expertly read the play. He exploded toward wideout Lockette, beating him to the ball, and securing the most critical interception in Super Bowl history, not to mention yet another Lombardi Trophy for Belichick and the Patriots. 
    2. The only sign we have in the locker room is a quote from The Art of War: “Every battle is own before it is fought.” – Bill Belichick 
  2. Culture
    1. The problem is never how to get new, innovative thoughts into your mind. But how to get old ones out. – Dee Hock
    2. If copycatting were a useful shortcut to success, there would be Lagasse-style restaurants in every city and San Francisco 49er clones in every football stadium
    3. It’s not the strength of the individual players; it’s the strength of how they function together. – Bill Belichick 
  3. Qualities of Great Leaders
    1. Command of the room
    2. Command of the message
    3. Command of self
    4. Command of opportunity 
    5. Command of the process 
  4. Card Players vs. Football Players
    1. In practice, John Thornton would glance at the card for his alignment and path, then reenact whatever the card told him to do. Playing off the card, he was incredible and virtually impossible to block. So incredible, in fact, that we activated him off the practice squad. Big mistake. Once the game was live and the chess pieces started moving, Thornton had to think for himself. And when he was forced to rely on instincts and awareness of the scheme, he was far from the force we had hoped for. It was as if he were moving in slow motion, the easiest guy to block on the field. He lasted five games before we released him. But it was worth it, I suppose, because we learned something important about our own biases: card players and football players are two different things.
  5. Hologram in the Head
    1. A big part of Walsh’s genius was his uncanny ability to spot a quarterback in a crowd. Even from a distance and after only a few throws, he could sense immediately if a quarterback could run his offense. Guys like Walsh and Belichick are unusual this way: they can visualize how skill sets fit in their schemes in a way that both maximizes those abilities and fuels the system. Walsh was secretive about that particular gift of his; he never shared what he saw. So he seemed like a railbird at the track who could discern the best horses just by studying their gait around the paddock. It might have been footwork, a kinetically clean throwing motion, the way a quarterback carried himself in the pocket, or, more likely, some mystical balance of several Q qualities floating around in his head – but whatever it was, Walsh knew it when he saw it
    2. When they break the huddle, Belichick “take a Kodak” – a quick mental picture of the Ravens’ formation – to try to predict what they will run. 
  6. What Would Belichick Do?
    1. Take charge and get to work
    2. Belichick never allows himself to get bored, which means he never cuts a corner or underestimates an opponent
    3. When one team has success, another wants to duplicate its path to good fortune. It’s what I call the “Texas snake problem.” Texas is home to two species – the Texas coral snake and the Mexican milk snake – which look very much alike. The Texas coral snake is almost black-mamba-level-dangerous; its venom can kill. The Mexican milk snake can’t hurt you; it’s an impostor. It thrives only as long as it can dupe predators into thinking it is dangerous. Teams try to get away with this kind of lazy copycatting all the time. They try to succeed by hiring a coach who has all the same markings and temperaments as Belichick or Walsh without really understanding what makes both men killers: drive, decision making, and realistic optimism. But mimicking success rarely earns success. Even in New England. Every once in a while a Patriots coach will watch tape on the treadmill because Belichick does or tailor his clothes with a pair of scissors. But when that’s as deep as the imitation goes, the players and the rest of the staff see right through it. A guy like that is inevitably a short-timer. What wouldn’t Belichick do? Fake it.
    4. Simple and powerful ideas
      1. Culture comes first
      2. Press every edge all the time, because any edge may matter anytime
      3. Systems over stars
      4. Leadership is a long-term proposition
      5. You’re never done getting better
  7. Other
    1. The world gets out of the way for people who know where they are going
    2. Practice execution becomes game reality – Bill Belichick
    3. Luck is the residue of design
    4. While the rest of the sports world was still catching its breath the day after the Patriots’ dramatic 28-24 win over the Seahawks in Super Bowl XLIX, Belichick already had the next year on his mind
    5. The secret of all victory lies in the organization of the nonobvious – Marcus Aurelius
    6. Bill Walsh’s 17 commandments
      1. Exhibit a ferocious and intelligently applied work ethic directed at continual improvement
      2. Demonstrate respect for each person in the organization
      3. Be deeply committed to learning and teaching
      4. Be fair
      5. Demonstrate character
      6. Honor the direct connection between details and improvement; relentlessly seek the latter
      7. Show self-control, especially under pressure
      8. Demonstrate and prize loyalty
      9. Use positive language and have a positive attitude
      10. Take pride in my effort as an entity separate from the result of that effort
      11. Be willing to go the extra distance for the organization
      12. Deal appropriately with victory and defeat, adulation and humiliation
      13. Promote internal communication that is both open and substantive
      14. Seek poise in myself and those I lead
      15. Put the team’s welfare and priorities ahead of my own
      16. Maintain an ongoing level of concentration and focus that is abnormally high
      17. Make sacrifice and commitment the organization’s trademark

What I got out of it

  1. Even if you’re not into football, there’s a lot to learn from Lombardi and his experience with some of the all-time great NFL coaches. Some real life examples of ideas we talk about often – hologram in the head, impostor vs. the real thing, culture, leadership, preparation…

The Wit and Wisdom of Lee Kuan Yew


  1. A collection of quotes from LKY on a whole host of subjects

Key Takeaways

  1. Lee’s pragmatism and unwillingness to be influenced by external pressures characterized his leadership style: “I was never a prisoner of any theory. What guided me were reason and reality. The acid test I applied to every theory or scheme was, would it work?”
  2. Between Japan and Europe, we must make Singapore the best place to bunker and repair ships, either in drydock or on water. Once we have established ourselves as the ship repairing and shipbuilding centre, we will remain so for a very long time. For once supremacy has been established, whether it is an airport, a harbour, or a dockyard, it is very difficult for any other place to dislodge us. For others have to compete against an established centre with superior facilities, higher skills and expertise, and long-standing established customers.
  3. Hard-headed industrialists and bankers of developed countries never take unnecessary risks. They look round the world for places where there is political stability and industrial peace before they invest. In Singapore they find such a place. Hence the massive inflow of capital, machinery, technological know-how and banking expertise.
    1. Deep fluency in being able to see from other’s perspectives
  4. We can build up this team spirit, this esprit de corps, where every individual gives of his best for the team, for the nation, to achieve its maximum. And the team, the nation, in turn, takes care of the individual, fairly and equitably. The art of government is the art of building up team spirit.
  5. A society to be successful must maintain a balance between nurturing excellence and encouraging the average to improve. There must be both cooperation and competition between people in the same society. The Singapore cooperation and competition have improved standards of life for all.
  6. Singapore has survived and prospered by making ourselves relevant to the world. In the last century, we traded in spices; this century, in tin and rubber. After independence in 1965, we moved into simple manufacturing. Now, we are in wafer fabs, pharmaceuticals and Asian currency units. As the world economy changed, so did we.
  7. We have made home ownership the cornerstone of Singapore’s public housing policy – the vast majority of the population own, not rent, their homes. Ownership is critical because we were an immigrant community with no common history. Our peoples came from many different parts of Asia. Home ownership helped to quickly forge a sense of rootedness in Singapore. It is the foundation upon which nationhood was forged. The pride people have in their homes prevents our estates from turning into slums, which is the fate for public housing in other countries.
  8. It is not the individual performance that counts. Of this, I’m quite certain. You can have a great leader, you know. If the herd hasn’t got it in it, you can’t make the grade. The herd must have the capacity, the stamina, sufficient social cohesiveness to survive.
  9. One of the by-products of a migrant community is that it produces a population of triers. Whatever else they may lack, the offsprings of migrants are prepared to try anything to improve themselves. Having left tradition, their history, their past behind, they have only the future to go in quest of.
  10. An island city-state in Southeast Asia could not be ordinary if it was to survive. We had to make extraordinary efforts to become a tightly knit, rugged and adaptable people who could do things better and cheaper than our neighbours, because they wanted to bypass us and render obsolete our role as the entrepôt and middleman for the trade of the region. We had to be different.
    1. Check out Howard Bloom for more on this
  11. Our way forward is to upgrade our levels of education, skills, knowledge and technology. Life-long learning is a must for everyone in this knowledge economy with rapidly changing technology.
  12. Even in the sixties, when the government had to grapple with grave problems of unemployment, lack of housing, health and education, I pushed for the planting of trees and shrubs. I have always believed that a blighted urban jungle of concrete destroys the human spirit. We need the greenery of nature to lift up our spirits. So in 1967, I launched the Garden City programme to green up the whole island and try to make it into a garden.
  13. As a nation, we must have other goals. Economic growth is not the end itself. After the success of the economy, you want to translate it into high standards of living, high quality of life, with recreation, the arts, spiritual fulfilment, and intellectual fulfilment. So, we are also spending considerable sums for the arts, which will create a more gracious society.
  14. Politics is about human beings and their lives. It is an art, not a science. It is the art of the possible. In Singapore, it means what is possible, given a hard-working people, with a realistic understanding of our narrow economic base and the need for social discipline and high performance, to keep ahead of other developing countries with low wages and more natural resources.
  15. If democratic socialists are to make a contribution to the course of events, they must cease to think in terms of abstractions. They must give meaning to socialist ideals in pragmatic and realistic policies to produce changes for the better in the daily lives of their peoples.
  16. If you want to be popular, do not try to be popular all the time. Popular government does not mean that you do popular things all the time. We do not want to be unpopular or to do unpopular things. But when they are necessary, they will be done.
  17. How do you think today’s Singapore came about? Because everyone knows if I say that we are going in a certain direction and that we’re going to achieve this objective, if you set out to block me, I will take a bulldozer and clear the obstruction. I leave nobody in any doubt that is where we are going and that any obstruction will be cleared. So there were very few obstructions. So we got the highway cleared and travelled to our destination.
  18. When you put up an idea which I know is wrong and believe profoundly to be wrong and will do us harm, I must crush it. I don’t crush you, I crush your idea. I mean, if I’m wrong then my ideas deserve to be crushed. Maybe ‘crush’ is a harsh word, but this is a harsh world. It is a contest of whose idea is right because if it is wrong, we are going to do harm to many people.
  19. The weakness of democracy is that the assumption that all men are equal and capable of equal contribution to the common good is flawed.
  20. Contrary to what American political commentators say, I do not believe that democracy necessarily leads to development. I believe that what a country needs to develop is discipline more than democracy. The exuberance of democracy leads to undisciplined and disorderly conditions which are inimical to development. The ultimate test of the value of a political system is whether it helps that society to establish conditions which improve the standard of living for the majority of its people plus enabling the maximum of personal freedoms compatible with the freedoms of others in society.
  21. The very fact that we are not challenged is a pretty strong mandate.
  22. There is no easy way to win power or stay in power. If the PAP does not renew itself regularly with fresh blood from the younger generation, stay honest and clean, upgrade the economy and improve the education and skills of our people, to have economic growth and bring a better life to people, it will soon begin to lose seats and eventually be defeated and ousted. So the PAP accepts the realities that the world is changing and we have to adapt ourselves to this different world. We are not stuck in any policy, theory or ideology.
  23. The system that we inherited from the British was lopsided. Too much emphasis was laid on the examination and the paper qualification. We were, therefore, rearing a whole generation of softies, who are clever; who wore spectacles but who were weak from want of enough exercise, enough sunshine, and with not enough guts in them. That was all right for a British colony, because the officers came from England [and] had the necessary brawn and toughness. It was they who gave the orders and our people just executed them. That is not good enough. We have to give our own people the orders. And you have to throw up a whole generation capable of that leadership, conscious of its responsibilities, jealous of its rights, not allowing anyone to bully it and push it around, prepared to stand up and fight and die. That kind of a generation will endure till the end of time.
  24. One of the reasons why Singapore thrived was because so many of the merchants, both British and non-British, when they gave their word, they kept to it, and the government when it gave its undertaking, invariably honoured it.
  25. Great leaders mirror the qualities of the nations they lead.
  26. We have continually to draw out younger leaders to fulfil the roles played by the traditional community leaders. Those with the higher social conscience must come forward to give of their time to get things done for the community. This is one of the strengths of Singaporean society, the absence of class divisions. It grew from our immigrant history. All started at or near the bottom. The successful immigrants have a tradition of helping the less successful.
  27. Good governance includes the pursuit of national interest regardless of theories or ideologies. Good government is pragmatic government.
  28. No army, however brave, can win when its generals are weak.
  29. Singapore’s progress, its verve, its vitality is assured because the administrative machine works. There is no grit. You don’t have to grease somebody to crank up the machine. We must keep it that way. To ensure this, I am thinking of an amendment to the law. The innovation is: if any official is found with wealth which cannot be explained and there is uncorroborative evidence of corruption, his whole property can be sequestered.
  30. Singaporean teachers feel unhappy at the higher salaries paid to native English teachers. Well, this cannot be avoided. We have to pay them what will bring them to Singapore – the market rate in the UK plus an extra to attract them to Singapore. I frequently meet expat bankers, executives of multinationals, indeed occasionally expat officers working for the Singapore government on contract, who are paid more than I am. I have learned not to let it disturb me. 
  31. It would be stupid for us not to recognise that language and culture is a stronger force that motivates human beings than political or ideological ideals.
  32. I learnt as a student that a word has three meanings: what the speaker intends it to mean; what the mass of people understand it to mean; what I understand it to mean.
  33. I paid a heavy price for not having learned Mandarin when young. To this day I meet my teacher/friend once a week to keep my Mandarin alive. Every day I spend 20 minutes listening to Mandarin lessons on tape and 15 minutes reading ZaoBao, or Chinese newspapers online. These keep up my passive vocabulary.
  34. Every time I think of people whom I have met and known as friends in school or in college, I think of those who became too de-culturalised too quickly. I had a friend who was a Sikh. He threw his past away: he shaved his beard; he threw away his turban; he had a haircut. No harm at all. But something happened to him and in next to no time, he was doing foolish things. He lost his anchorage. You know, it gets very difficult for a ship without an anchor in a harbour when it gets stormy. I want you therefore, to have your anchorage. But slowly, we must begin to learn to have the same basic points of anchorage. It may take a hundred years.
  35. Whatever our race or religion, it is what we produce that entitles us to what we get, not our race or religion. Developing the economy, increasing productivity, increasing returns, these make sense only when fair play and fair shares make it worth everyone’s while to put in his share of effort for group survival and group prosperity.
  36. A US-style constitution failed [in the Philippines] long before Marcos declared martial law. It was re-adopted in 1987 by President Aquino. The system worked in America because of a super-abundance of resources and riches in a vast underpopulated continent. I do not believe that Korea, Taiwan, Hong Kong or Singapore could have succeeded as they have done if they had to work under such a constitution, where gridlock on every major issue is a way of life. And you will notice that since the Vietnam War and the Great Society some 28 years ago, the US system has not functioned even for the United States. 
  37. If the US tries to thwart China’s growth, China will surely want to return the compliment when it can do so. 
  38. Japan’s best investment is in the younger generation of potential leaders of China. The more Chinese students there are in Japan, especially the children of central and provincial leaders, the better the prospects for long-term understanding and cooperation between the two countries.
  39. Americans are not criticising Singapore because they are concerned about democracy and human rights enjoyed by three million Singaporeans. Whether Singapore succeeds as a multiracial community in Southeast Asia or fails makes little difference to the future of America. Their real interest is what Freedom House has stated, that Singapore sets the wrong example for China, showing China that it can maintain social discipline and order with high economic growth but without becoming a full-fledged American-style democracy. This is the reason why the American media always attacks Singapore.
  40. From time to time in the history of human civilisations, more civilised, more cultivated societies, with higher standards of living, have been overrun and subjugated by barbaric and less advanced groups. So the Roman Empire fell. And so successive Chinese and Indian civilisations were conquered by virile warrior races, who were socially and culturally of a cruder order, and less sophisticated in their social organisations. We must be on our toes all the time. We must never allow this to happen to Singapore through our growing self-indulgent and soft.
  41. Our basic approach is never to allow fears and tensions to grow and mount in intensity. Early preventive action can forestall an ugly build-up. So whether it is a communist conspiracy to create pressure points for mass action, or growing interracial or inter-religious frictions and tension, they have to be defused early.
  42. The communists failed because it was a propaganda based on the barricade, and you get men running to the barricades only if they are really hungry, really desperate. Then, they are prepared to take up the stone, throw it into the glass window, turn the car over and burn it. When they are not desperate, when they are reasonably fed, reasonably clothed, I won’t say contented, but not altogether frustrated and dissatisfied, then argument and reason become operative factors.
    1. Mao Zedong said: “A single spark can light a prairie fire.” LEE: A prairie fire will only start if there’s a dry spell.
  43. Communism, like so many other things, is best met when one knows it and gets immune to it. I believe the policy of complete isolation from communist thought, tactics, thinking, policy, is a dangerous thing. One day the windows will come open and like the South Sea islanders, when they first meet the tuberculosis bacilli, we will all perish. It is better to let these things come in gradual doses, containable, enough to generate a counter toxin in our wholesome society.
  44. The difficulty arises from America’s expressed desire to make China more democratic. China resents and resists this as an interference in its domestic matters. Outside powers cannot re-fashion China into their own image. Let us not forget that even China’s conquerors like the Mongols in the 13th and 14th centuries, and the Manchus in the 17th to 19th centuries, could not change Chinese culture. Instead China changed them and they were absorbed and assimilated. The language and culture of its conquerors could not overcome Chinese language and culture.
  45. Fortunately, we never attempted to subsidise rice or other staple foodstuffs. Those governments which have done so face grave problems, as more and more of their revenue goes into feeding more and more mouths at subsidised prices, generating overpopulation, under-education, low economic growth, massive unemployment and resulting social unrest. And this is what has happened because elected governments in several new countries have baulked at taking unpopular decisions.
  46. While the western MNCs have the know-how, the Asian conglomerates have the know-who as they are conveniently plugged into the social, cultural, political and business networks in the region.
  47. Like Nehru, I had been influenced by the ideas of the British Fabian Society. But I soon realised that before distributing the pie I had first to bake it. So I departed from welfarism because it sapped a people’s self-reliance and their desire to excel and succeed. I also abandoned the model of industrialisation through import substitution. When most of the Third World was deeply suspicious of exploitation by western MNCs, Singapore invited them in. They helped us grow, brought in technology and know-how, and raised productivity levels faster than any alternative strategy could.
    1. See How Asia Works
  48. Every citizen already feels he has a stake, a sense of proprietorship, in the stability and progress of Singapore. Every citizen can expect to get his commensurate shares of the prosperity to which he has contributed.
  49. For over 30 years we have aimed for an egalitarian society. If we want to have successful entrepreneurs, Singaporeans have to accept a greater income disparity between the successful and the not so successful.
  50. Knowledge and technology once disseminated, cannot be put back into the bottle and corked up.
  51. We cannot predict which of our younger managers, engineers and professionals will have the entrepreneurial flair. It has to be by trial and error, tossing them into the deep end of the pool.
  52. Corporations that get their ideas from only one culture will lose out on innovations.
  53. Japanese people have been excellent in perfecting technologies. The standard example was the way they improved on the Chinese abacus which has seven beads, two above, five below, rounded and noisy. The Japanese reduced the seven beads to five, one above, four below, with sharp edges, silent and fast. So too Japanese chopsticks. The pointed ends make it easier to manage small rounded morsels like peanuts that are difficult to handle with the Chinese chopsticks. This ability to improve on present technology is worth preserving and maintaining. But improving on what others have invented is not enough. You have to be like the Americans and invent products that others have not thought of, that will be desired and bought by billions across the world.
  54. No nation has ever become the major power without a clear lead in technology, both civilian and military. From the Roman legions, to the naval powers of Portugal, Spain and Great Britain, to Germany in World War I and the US post-World War II, great power status was achieved by those nations that were able to harness their technological advantage for holistic development of their civilian and military capabilities.
  55. In the earlier stages of our labour movement, the trade union often became a place of refuge for the inefficient, the slack, the lazy and the anti-social. As has happened elsewhere, these are the first to join the union to seek protection against the natural desire of any employer to be rid of bad workers. […] I am not asking our trade union leaders, in an open democratic society, to take on the role of management. But I do urge them, with the help of these new laws, to stop giving cover to those who do not pull their weight. We must avoid slipping into a situation where trade unionism is the practice of protecting the weakest and the slowest worker and, with everybody being paid the same wage, nobody will have the slightest incentive to work harder than the weakest and the slowest.
  56. We are mindful of the dangers of high welfare and unemployment benefits, watching the consequences of this compassionate policy on the job-seeking habits of the unemployed. Visiting the major cities of the industrial countries, I am struck by this curious phenomena of high unemployment and yet a shortage of waiters, cab drivers, nurses and garbage collectors. Some jobs are not worth doing, as a result of welfare benefits. Whatever principles may be applicable in highly developed industrial countries, for a resource-poor country like Singapore, hard work, and high performance amply rewarded, is the best way to attract capital and technology into the country to generate wealth.
  57. When people get equal handouts, whether or not they work harder or better, everybody then works less hard. The country must go down. It is when people are encouraged to excel by being able to keep a large part of the extra reward earned by their extra efforts that the society as a whole becomes wealthier and everyone thrives and prospers.
  58. I believe that life is a process of continuous change and a constant struggle to make that change one for the better.
  59. Even in the capitalist West where they have tried throwing money at problems, what is the end result? You go down New York, Broadway. You will see the beggars, people on the streets. Worse than in the 1950s and in the early ’60s before the Great Society programmes. Why? Why did it get worse after compassion moved a President, motivated with a great vision of a society which was wealthy and cared for, could look after everybody – the blacks, the minorities, the dispossessed, the disadvantaged. There is more unhappiness and more hardship today and more beggars, more muggers. Why is that? Have we not learnt? Where are the beggars in Singapore? Show me. I take pride in that. Has anybody died of starvation? Anybody without a home left to die in the streets and have to be collected as dead corpses? Because we came to the realistic conclusion that the human being is motivated by instincts that go deep down into the basic genes of life. And the first basic instinct is to protect yourself, and stronger than that, to protect your offspring so that there is the next generation. You kill that link, you have killed off mankind.
  60. East Asians are highly competitive peoples training themselves to win life’s marathons.
  61. My experience in governing Singapore, especially the difficult early years from 1959 to 1969, convinced me that we would not have surmounted our difficulties and setbacks if a large part of the population of Singapore were not imbued with Confucian values. The people had a group cohesion and a pragmatic approach to government and to the problems in society. Confucianist traditions have made Chinese Singaporeans revere scholarship and academic excellence, and also respect officials when they are chosen on the basis of their scholarship.
  62. They accepted that the interests of society were above that of the individual. They did not believe in the unlimited individualism of the Americans…One fundamental difference between American and Oriental culture is the individual’s position in society. In American culture an individual’s interest is primary. This makes American society more aggressively competitive, with a sharper edge and higher performance. In Singapore, the interests of the society take precedence over that of the individual. Nevertheless Singapore has to be competitive in the market for jobs, goods and services. On the other hand the government helps lower income groups to meet their needs for housing, health services and education so that their children will have more of an equal chance to rise through education.
  63. The first principle of any civilisation is orderly living and the rearing of the young.
  64. There is one aspect of this process of change or modernisation which we must avoid at all costs – that is the break up of the three-generation family. The three-generation family is a rarity now in Western Europe and in America. Yet it is still common in Japan, South Korea, Taiwan and Hong Kong, despite their industrialisation and modernisation. It is a question of family structure, of social framework, of filial ties and bonds, which hold family units together. Our strong family structure has been a great strength for continuity in bringing up our next generation. The family has transmitted social values, more by osmosis than by formal instruction. We must preserve this precious family structure if our society is to regenerate itself without loss of cultural vigour, compassion and wisdom. There is another compelling reason why we must preserve the three-generation family: simply, that we do not have the land to build the flats needed if we break up the three-generation family.
  65. That we have the will, the ability and the discipline with which to acquire higher knowledge and new skills, there is little doubt. The question is whether the next generation will have the same drive to keep well out in front fighting against the complacency which greater comfort and ease bring in their train.
  66. If I have to choose one profession in which you give the most for the least it is probably teaching – if you take it seriously. You have to have the temperament for it to coax, to stimulate, to cajole, to discipline a young mind into good habits. You must have an aptitude.
  67. We have given every student, regardless of language, race or religion, equal opportunities for education and employment. Hundreds get scholarships every year, over 150 to go to universities abroad. All are judged and rewarded according to their performance, not their fathers’ wealth or status. Economic progress has resulted from this and made life better for all. This has checked communist subversion and recruitment, especially of good cadres.
  68. Performance in examinations depends upon two factors: nature and nurture – nature being the natural intelligence of the child, nurture being the training and education. Or to use computer language, it depends on hardware and software, the hardware is the size or capacity of the computer, and the software is the teaching or educational programme. What weightings are allotted to hardware as against software, or nature against nurture, is a matter of deep controversy between the experts, the psychologists and doctors. The fact is, individuals are born with different capacities. What we must set out to do, therefore, is to help students achieve the maximum potential of whatever nature has endowed them with. In other words, to nurture them, to give them the software, to encourage, support and help them to achieve their fullest.
    1. I had never thought of nature/nurture through this analogy and find it intriguing
  69. If we want high morale, we must have high standards. If we want high standards, the law must be enforced fairly and firmly. There will be no squatters or beggars sleeping on our pavements doing their ablutions in our drains. People will be housed and cared for. Hawkers will not clog up the main streets. There will be thorough and proper cleansing every day of the year. Laws will have to be passed to help rid us of the malpractices that have crept into our workforce. Only a year before last, malingering and shirking and sabotage to create overtime and treble pay for public holidays was a way of life. Discipline and efficiency must be re-established.
  70. It is Asian values that have enabled Singapore to contain its drug problem. To protect the community we have passed laws which entitle police, drug enforcement or immigration officers to have the urine of any person who behaves in a suspicious way tested for drugs. If the result is positive, treatment is compulsory. Such a law in the United States will be unconstitutional, because it will be an invasion of privacy of the individual.
  71. Rest on laurels? I wish I could do that. No, you rest when you’re dead.
  72. I always tried to be correct, not politically correct.
  73. At the end of the day, what I cherish most are the human relationships. With the unfailing support of my wife and partner I have lived my life to the fullest. It is the friendships I made and the close family ties I nurtured that have provided me with that sense of satisfaction at a life well lived, and have made me what I am.

What I got out of it

  1. Amazing lessons from one of our generation’s great leaders and nation builders. Do what works, be pragmatic, honor incentives and human nature, have conviction

The Early Days of WL Gore and Associates by Bob Gore

  1. Bob Gore, son of founder Bill Gore, recounts the early days at WL Gore and what has made the company sustainable and successful
Key Takeaways
  1. Bill Gore was very enthusiastic and did not have a lot of patience for bureaucracy. He was an entrepreneur from a young age and loved to improvise, move quickly and always emphasized product development. He always was experimenting and he got the family involved by trying out new products or materials with them. He was always looking for the practical potential in new materials.
  2. Always believed in the idea of “value pricing” – price products for what they are worth, not what they cost to manufacture
  3. From DuPont he learned and enjoyed the task force approach and the fact that a group of people can come together without titles without a formal hierarchical position.
    1. People just just get the job done as well as working harder and more enthusiastically then when they were in their usual 9-to-5 jobs. This eventually led to the lattice business structure as opposed to the typical pyramid structure. He became wary of corporate structures and believed that standard accounting tended to make bad business decisions
  4. Another chemist at DuPont had a machine shop and Bill was jealous of that. He was not able to just go ahead and make what he needed to make and use it but had to fill in a request for shop work and would be processed according to its place in the queue. That kind of obstacle destroys momentum and destroys enthusiasm which is why Bill set up a shop in his own basement so that he could experiment and follow his passion
  5. My advice to the man who contemplated an individual enterprise is to carefully consider if he has a dream of compelling importance and to follow his dream
  6. Mother served as moral support and encouragement. Never complaining and keeping everyone happy
  7. The emphasis was always on building our own machinery rather than purchasing it
  8. The large order that forced us into a new facility finally came in the summer of 1960. It was for an application that was totally unforeseen and was never to be duplicated
  9. Our staff is unusual in that each member knows he is closely identified with the success of the enterprise. It is the realization of this that is unusual. This realization has been brought about by a carefully considered program Carried out by the officers, managers, and supervisors. Important in this program is the profit sharing policy established by the Board of Directors. In this plan a sum is appropriated by the Board from profits and distributed amongst all employers in proportion to their gross pay for the period. Neither the period nor the sum is specified in the plan, but the principle of rewards in proportion to contribution has been established. Profit sharing by employees amounted to about 5% of gross pay over the past fiscal year. Our pay scales are minimum and all employees look to profit sharing as an important source of future income. Your management believes that the success of our business rests inescapably on the competence, diligence and loyalty of our people. This is the resource that sets both the limitations and potentials of the enterprise.
  10. Hosted open houses to show visitors their new buildings and products
  11. Action was prized. Gores attitude is to encourage any idea that could be tried relatively quickly and inexpensively which did not have a downside
  12. There was considerable informality and this lead to enhanced communication. We tried hard to fit the organization around an individuals capabilities and needs rather than remake the individual to a predetermined slot in a predetermined organizational concept.
  13. 5-year service anniversary pins have been handed out since the early days
  14. Every associate learned to exercise extreme control over intellectual property and pricing. Manufacturing operations were off limits to visitors and pricing was a very serious area where Bill exercised personal control insofar as he was able. He developed a value pricing model where he would price products for what they were worth in the marketplace not what they cost to manufacture
  15. An early vision of Bill’s was that the enterprise would last far beyond his life. He set up a trust which he transferred a significant portion of his shares so that there would be no ruinous estate taxes upon his and his wife’s death
  16. Established a big office in Flagstaff, AZ, far away from customers, source of raw materials and eastern support. However, it was along the Route 66 and a railroad went through it, making LA just an overnight trip away. They didn’t like LA because of the environment – too much traffic, high taxes, and people continually switched jobs. They sensed there was no permanence and little loyalty of the workforce to a company or a community
  17. There was fear of unionization at one point but after a head of a union took a tour through the plant, he determined that they would not have any trouble with unionization. It was the cleanliness, the good order, the pictures of people’s kids on the machines – the whole atmosphere showed the community and loyalty fostered at Gore. Culture is not all written in words, nor is it all spoken in words, but it is also expressed by our facilities, by a walk through the plant.
  18. Troubles with counterparties often stem from a lack of alignment, enthusiasm, and trust
  19. The biggest benefit of thinking in leaps and not incrementally is that it’ll throw off tons of other ideas that you otherwise never would have had
  20. In the immediate aftermath of our founding back in 1958 our sales organization has been established as a collection of independent third-party sales companies who represented us, each with an exclusive sales territory. The use of independent sales companies have been a financial necessity in the early start up days. This was away for Gore to be sure it’s flow of cash was in balance at all times since we paid the independent sales representatives only one there was income from the sales they had made. To keep their cash flow and balance the sales representative Natalie took the opposite point of view. They only wanted to concentrate on producing near term sales to earn near term commissions. They were reluctant to finance long-term, time consuming, and risky sales development efforts in hopes of earning sales commissions I would pay off only far in the future. Unfortunately, many of our products requires long term efforts and this had to be us and so over a period of years, we replaced independent sales representative companies with full time Gore people
  21. Gore dreamed of an enterprise with great opportunity for all who would join in it, a virile organization that would foster self-fulfillment and which would multiply the capabilities of the individuals comprising it beyond their mere sum
  22. Bill Gore was more interested in the organizational and philosophical portions of the company and his son, Bob, was more product oriented
What I got out of it
  1. Passion, hard work, genuine interest, caring, and a win-win mindset has helped make Gore a durable and successful company
More links and info on Gore:

Built From Scratch: How a Couple of Regular Guys Grew the Home Depot From Nothing to $30 Billion by Bernie Marcus and Arthur Blank

  1. The history and philosophy of The Home Depot from the founders themselves
Key Takeaways
  1. Goal of this book is to share what is learnable and shareable for their next generation of leadership as well as for other entrepreneurs
  2. Have to formalize and deeply instill the company‘s values from every level of the company from the bottom up to the top in order to stand a chance
  3. Early Days
    1. Marcus and Blank met while working at a hardware store called Handy Dan’s, based in Los Angeles. Ken Langone learned about the business and after talking to Blank and seeing how great of an operator he was and seeing how cheaply it traded, he started buying every share he possibly could. This worked out really well for him and he learned how good of an operator Blank and Marcus were and how great their business model for a future concept, The Home Depot, truly was. He would become a co-founder of The Home Depot in the future
    2. Pat Farrah operated a store in Canada and eventually beat Blank and Marcus to the punch by starting his own hardware megastore. However, he had no systems or financial plans in place and eventually he partnered with them in order to save his company and they started The Home Depot together
    3. Although they were desperate for cash in the beginning, they turned away several prominent investors because they didn’t believe they shared their values or would be good partners (Ross Perot)
    4. If a founder saw somebody leaving the store empty-handed they would pursue them to their car asked them what they were searching for and if they didn’t carry it they would say that they actually did and it were simply out of stock. Later, they would go buy the product the customer was searching for and hand deliver it to the their home and then start carrying that piece of merchandise in their stores
    5. Build in margin for error by having more capital then you think you’ll need and invest and resources before you need them so that you’re not scrambling and always try to hire someone who is over experienced for their initial position so that they aren’t always in fifth gear, have excess capacity and balance, can always take on new projects and tasks, and more
  4. Business model:
    1. From the beginning they focused on price, selection and customer service. They’d buy direct from distributors so they could charge customers less and they’d have more selection and count on increased volume to make up for it. Nobody understood this concept for a long time
      1. Excellent customer service
      2. Taking care of our people
      3. Building strong relationships
      4. Respect for all people
      5. Entrepreneurial spirit
      6. Doing the right thing
      7. Giving back
      8. Creating shareholder value
    2. Management principles: we are not that smart, we know we’re not that smart, and therefore have to be deeply involved and listen attentively
    3. 14 management principles
      1. The invisible fence – being decentralized allows us to be close to the customers and access the best knowledge in the field
      2. The 3 Bundles – non-negotiables, the entrepreneurial bundle, complete autonomy to make own decisions
      3. Hire people who are overqualified with a view toward growth in the future
      4. Have a financial conscience
      5. One-man shows don’t cut it with us – teach others as much as possible
      6. How would you like your eggs? – communication is vital and must let company know the logic behind our actions
      7. Bernie’s Test – eye contact, if the associates in new stores recognize him they have to first look him in the eye and this is vital for good customer service
      8. Gonna go ’round in circles – 360 feedback
      9. Establish ties that bind, and strengthen them – communication, trust, trips/events to build trust amongst senior ranks
      10. Shut up and show them what you want – sometimes best method of teaching is by doing and leading by example
      11. Kill bureaucracy
      12. Hire the best
      13. The inverted pyramid – the associates at the stores are the most important (after customers)
      14. Respect for the individual – top leaders have to be on the same page
    4. In every situation, aim to always surround yourself with people who are better and smarter than you are
    5. There is nothing like applying yourself fully
    6. They wanted the cash registers near the front so people walking in could see all the action and all orders went through the big front doors so people could see the big items leaving and that contractors paid the same price as customers. They wanted it to look like a warehouse and not a retail store. They wanted people to be amazed by the inventory and filled the store with empty boxes so it looked like they had even more than they really did. Nobody understood the one stop shopping idea at first and they were short on customers the first several months
    7. They put the lumber at the back of the stores so that customers had to hunt for it and stumble across all the accessories that they didn’t know they needed
    8. Pricing is one of the hardest yet most important aspects of any business
    9. Management lives what they preached. The tone was set at the top and carried through to every employee. They all had a great understanding of the culture and had real ownership over their individual stores
    10. Common sense was an overriding factor in their values
    11. The key is not to make a sale. The key is to cultivate the customer. They would rather show them how to fix the broken sink for $1 than sell them a new sink for $200
    12. During their opening an expansion into Florida they took a popular local magazine and highlighted everything that they carried. They also showed that they discounted all those items at 20% and had even more selection at even better prices
    13. The Home Depot has an inverted management structure. They have so many more sales associates than any other position and these are the people who interact with the customers every day, and because of this they have an intimate knowledge of customer needs and pain points so they responsibility and decisions down to them as much as possible.
    14. The single biggest reason for their success is how they treat their associates who in turn can do whatever they think is right to take care of their customers. Treat employees right, treat customers right and you’ll have all the business you need.
    15. Because they hire the best of it in the industry, they tend to pay higher than average wage and on top of that they give all salaried people the opportunity to become owners of the company through equity which they can buy at a 15% discount to the public. And, on top of that, they’re given more room to grow, to be entrepreneurial and are treated better there than anywhere else. So, why would they ever leave? Most don’t. Turnover at The Home Depot after one year is very low which is extraordinary for the home improvement business. If people make it for a year, they tend to stay because they can really see themselves building a career there.
    16. It is all about trust. With the right knowledge and shared values you can trust the lowest, newest person to make decisions to help care for the customer and this creates more customer loyalty and a better experience that could ever be dictated from one person at the top
    17. The future CFO was digging through the trash to see what they were throwing out and determined that much of it could simply be discounted and put on the shop floor because of some configuration but this turned a lot of trash and wasted money into new assets
    18. At the beginning their people were working too hard but not too smart so they created a new dictate that no employee was allowed to work past midnight and no more than 55 hours per week. If you’re not smart about it, a motivated team can fly right into the sun and having a more balanced life will, in the long term, give you better results than burning your people out
    19. It took a lot of focus and effort to establish the culture and make sure that new hires who came from competitors with different cultures understood how the Home Depot is run, how to care for customers, how to make it look like a warehouse and not a retail shop, and much more
    20. Good associates can come from anywhere and one successful outreach they had was with senior citizens. Nobody else would hire them but when the Home Depot did these people were so ecstatic that they would teach the new hires and work harder than almost anybody else
    21. The Home Depot gave out badges to people who got excellent customer service reviews so that they could place them on their aprons for all to see.
    22. As they grew and matured they had to change from a rowdy group of gunslingers who drank a lot into a more refined family-oriented culture where everyone felt comfortable
    23. Any senior-level person who was hired had to work in the store in order to get a feel for the products the customers the customer service and more even lawyers had to do this
    24. You have to look beyond the financials and metrics and to the person. You have to treat people as they’d want to be treated
    25. Sam Walton was a friendly competitor and convinced Blank and Marcus to switch from occasional fire sales to everyday low pricing. This was a tough change for managers to stomach because the spike after sales was an adrenaline rush but the consistency and trust established with everyday low prices brought a better mix of sales and more stable sales
    26. Essence of keeping the company great is it’s nonstop reinvention. If you’re in constant motion (in the right direction) nobody can catch you. Cannot stay still for any length of time
    27. The Home Depot build good relationships with their suppliers and not paying them in 30 days or even 15 days as usual but it five days and sometimes even overnight
    28. They are very weary of acquisitions but they did acquire the Home Depot of Canada and in order to bring everybody onto the same page, they did an exchange program where the Canadians went to some American stores for several months and vice versa
    29. Another key was understanding the vendors, what they wanted and what motivated them
    30. Store walks keep people deeply fluent on the business and visits are required – not only of senior executives but for board members as well
    31. Created a direct line to the highest ranking people for serious customer complaints under the fake name of Ben Hill. This allowed the senior executives to keep their finger on the pulse and the store managers know that they’d have to deal with them directly if a customer called and complained to this number
    32. Only become your best self with competition and if they didn’t have any direct external competitors in a region, they’d find a way to make a competitor internally. They sometime release ads just to rally the troops
    33. Uncertainty is a huge portion of many failures and is a breakdown of internal communications
    34. Bureaucracy is not questioning stupid things and just taking them for granted. People become scared to make decisions because they’re afraid to make mistakes so they start calling meetings and putting off decisions and actions for as long as they can
    35. Whatever you give to the community, you’ll get back ten fold
    36. There were many copycat Home Depots but none of them truly understood the culture, customer focus, and employee focus that Blank and Marcus had so were never truly able to compete. Can copy nearly everything except for culture. Execution above everything else
  1. An excellent book with a ton of operational, business, and philosophical gems. You get a great feel for how deeply the founders care about their people and their customers and that formula has led to a culture which seems impossible to steal and duplicate

Kiewit: An Uncommon Story by Jeffrey Rodengen

  1. Kiewit Brothers Company was established in 1884 by Peter Kiewit and his brother Andrew but the main growth phase was under Peter Kiewit Jr. Growing from its roots of basic commercial building construction, after 125+ years it is now also in the transportation, mining, water resources, power, oil and gas, underground, electrical, and marine market segments, routinely completing projects for its clients, some in excess of a billion dollars, on budget and ahead of schedule. It is one of the most highly regarded contracting companies in the world because it remains faithful to the corporate goal set in 1946 by the late Peter Kiewit: To be the Best Contracting Organization on the Earth.
Key Takeaways
  1. Intro & Overview
    1. A system of broad-based employee ownership began under the leadership of the founder’s son, also named Peter. Kiewit is now owned by more than 2,000 employee-shareholders and has become a model for employee ownership. This has made the employees treat the firm as their own and has created significant security and wealth for these employee-owners
    2. “Peter Kiewit didn’t just build buildings – he built confidence and integrity. He built leadership. I’m convinced that Kiewit leadership benefited from a superior corporate ethic and a unique mentoring culture.” – Warren Buffett
    3. At Kiewit, you not only have to excel in a wide range of areas of construction and engineering, but you also have to identify, mentor, and prepare your own replacement, your successor.
    4. “The engineering and construction business has an enormous graveyard of competitors that never made the grade. If you set out to replicate the Kiewit Company, you could put as much capital into the business as it has. You could move into corporate quarters that rival Kiewit’s. You could even buy all its equipment and replicate its organizational structure. But, you would not be able to build a culture like Kiewit’s. That culture is the result of the vision of an extraordinary man, carried on and moved forward by extraordinary people. You could canvass the world, recruiting the top picks from Stanford, Harvard, you name it, and you would never replicate the magic and success that is the culture of the Kiewit Company. I am so very proud to be its neighbor.” – Warren Buffett
  2. Building a Foundation: 1884 – 1914
    1. “There is no progress without risk. You can’t hope to develop your maximum potential without taking some risks.” – Peter Kiewit
    2. Peter’s father, Peter, founded the company but it was the son who moved it forward. He didn’t care if the company was the biggest, but he wanted it to be the best. His legacy of hard work, moral integrity, employee ownership, safety, training, and quality endures today.
    3. Early years were difficult as there was much competition in Omaha. When the owner of a large project ran out of money, Kiewit was creative and moved the family into one half of the building, getting free rent and allowing the owner to save enough money to finish the project
    4. At 6, Peter got his first paper route along with his teenage brother, Ralph. Their mother, Anna, would wake them up at 3am to give them breakfast before their route started
    5. The father would include the whole family on the plans and discuss the construction business with them. He would walk his children through what he was doing and why. He was a great teacher to his children. Peter’s mother taught him hard work and resilience. Peter was often worried that if not cautious, companies could allow themselves to get fat, lazy and complacent, and lose out.
  3. Becoming a Leader: 1915-1930
    1. “Although Peter rose to unbelievable heights, he never lost the sense of being a working man. Instead, he reached out to all who would join him and gave them the capacity to help others.” – Rev. Matthew Creighton
    2. Peter created a cost-monitoring system that allowed the company to gage its weekly performance on each job. Peter asked the foremen to regularly submit a record of their actual costs. He then compared the actual costs to the original estimates, allowing him to gage the company’s profits accurately.
    3. “Pete had a fantastic capacity to organize the details. He was far better than I was. If he saw something wrong, he took care of it right away, whether a foreman wasn’t performing up to standard or some other change.” – Ralph Kiewit
    4. When Peter made up his mind he was tough. He would sledgehammer his way through the opposition
    5. Peter eventually acquired 25% of the business and created a new company called Peter Kiewit Sons’, Co. in 1931
  4. Surviving the Depression: 1931-1938
    1. “A business dominated by one man, who makes all the decisions, who is reluctant to deputize responsibility lest his assistants make mistakes, lacks the elements of a permanent organization because it denies men the chance to grow and be ready for the larger responsibilities, which eventually someone must assume.” – Peter Kiewit
      1. Peter’s phlebitis was in fact helpful to him and the company long-term as it forced him to hand over responsibility to other men
    2. “I’d like to remind you that the foundation of our company’s growth and expansion started in the early 1930’s when contracting opportunities in all types of work were minimal compared to what they are today. Intelligent, hard-hitting, no-nonsense policies and efforts separated us from our competitors then – and will in the future if we follow them enthusiastically.” – Peter Kiewit
      1. In 1931, the Great Depression was in full swing. Although many companies were cutting back on their workforce, Peter added to his employee base and took on new types of projects. Diving into highway work ensured the company’s survival during the Great Depression and propelled it forward
    3. “From the beginning I realized I was working for a man with great integrity, competitive drive, rare business and financial talent, and a gift for organizing and inspiring men.” – Homer Scott
    4. Early on Peter sold stock to valuable employees as a means for each worker to have a stake in the company’s success, with the understanding that they would sell their stock back should they leave the company. “One of the reasons our results are better than our competitors is that all of our stock is owned by employees – people who are actively engaged in our business. Each one is, in fact, a part owner of our company and is, in a sense, working for himself. Certainly this should, and I believe it does, provide a definite incentive to our employees and a corresponding benefit to the company.
    5. When it came to making bids for business, Peter told Armstrong, “I never want you to do anything but walk in the front door, plunk down your bid, and, if you aren’t the low bidder, walk out. Never employ that there might be something in it for someone if you get the bid. All of our street and roadwork will be on a hard-money basis, period.”
    6. “As I see it, personal success is being the best you can be. Often, the key to realizing your full potential is the willingness, and the courage, to take a calculated risk. I don’t mean a reckless, impulsive risk, but one in which the prize for success is high and the penalty for failure is not catastrophic. Even failure often contributes to your growth. Improvement is seldom made without reaching beyond your abilities and trying to do something you have never done before. Sometimes the effort fails, but it is the reaching, the striving, the divine discontent that generates greater strength and knowledge.” – Peter Kiewit
    7. In 1935, the company did not realize a profit. It did, however expand its equipment holdings, and, as Peter said, “More important, we hired, trained, and developed a number of able people – many of whom became valuable employees, officers of the company, and major shareholders.”
  5. Enlisting in the War Effort: 1939-1945
    1. Peter did not like yes-men, he wanted his men’s ideas
    2. Had great leadership abilities and temperament. During the Fort Lewis project, he told his men, “Just remember, a big job is no more than a lot of little jobs put together.” Peter, more than anyone, rolled up his sleeves and took action. He became familiar with everything that was going on, evaluating the performance of each supervisor, setting up incentive programs, recognizing outstanding performance, and patterning the rest of the operations after those who were getting the job done. He weeded out poor performers; he changed the entire feel of the job. Everyone knew what was expected of him. PKS earned a reliable reputation from the US government and received numerous contracts after the Fort Lewis project
    3. Reflecting on his desire to maintain a low profile, Peter quoted his father, by saying “When you harvest wheat, the tallest stalks – those that stick up their heads – are the ones that get the scythe.”
    4. As a leader, Peter stood behind his men when he believed they were right. Even when it was the US government he stood up against
    5. Peter had read about the building of a similar dock which needed very deep piling in a magazine. Using the article for reference, Peter hired several people who had worked on the previous dock. Dale Clark commented, “That was typical of Pete. He had the ability to prepare and to hire people who could prepare.”
    6. Peter lost 75 pounds from his heaviest and would later tell workers, “Good health is your most valuable asset, because without good health, little else has any significant meaning.”
  6. Branching Out in Peacetime: 1946-1956
    1. As the pressure of the war effort tapered off, Peter recognized that the company would be entering a period where, once again, highway and commercial building work would dominate its business. Another key trend was the growth and development of the western states and the western states needed water
    2. Key Kiewit philosophy:
      1. We improve as we learn
      2. How to secure work at the right price
      3. How to build work at the lowest cost
      4. How to staff our work with the right people
    3. Peter divorced his wife, Mary, of 28 years and 2 years later married Evelyn
    4. Peter always sought to make a point through action rather than words. He was always looking for a way to improve the company’s operations, a reflection of the personal pride he took in PKS’ work and his desire to train young engineers by example
    5. In all operations, safety has always played a crucial rule. Peter’s motto was “Think Safety,” and he became a leader in the industry for safety performance
    6. The PKS annual meeting began in 1944 and its purpose was to review the previous year’s operations, determine the causes for the satisfactory and unsatisfactory results, and improve the ability to estimate and build work
    7. It has always been our policy to fill vacancies by advancing qualified employees whenever possible. I’m happy to say that the number of occasions when we have had to bring people in from the outside for a particular job is negligible, and this should occur even less frequently in the future because of the fact that we are making headway in developing more and better employees.
  7. Growing at Home and Abroad: 1957 – 1979
    1. “I believe that a company cannot stand still for long – either it goes ahead or slides back.” – Peter Kiewit
    2. A key driver of the company’s growth during this period was the development of the Interstate Highway System
    3. Bob Wilson was named President in 1969 after Peter had led the company for nearly 40 years but, as Director Lee Rowe joked, “Bob had to arm wrestle Peter for the job each morning for the first several years.”
    4. On his death bed, Peter told his third wife, “I never dreamed that I would be able to accomplish so much in my life for myself and for others.”
    5. A plan put in place before Peter’s death called for PKS to be purchased and solely owned by employees
    6. Peter had an uncanny ability to listen to those who had problems and at the end of the discussion to put his finger directly on the solution
  8. Transitions in Leadership: 1979 – Present
    1. “Before you can go on to a position of greater responsibility, someone must be trained to do your job, unless the job you are doing is not an essential one. If any of you fellows wants to admit that your job is not essential, you do not need to do anything about trying to see that anyone else is trained for your job.” – Peter Kiewit
    2. Peter looked two successors ahead. He appointed Bob Wilson to immediately succeed him but his foresight in training Walter Scott Jr., 11 years Bob’s junior, came to bear when Wilson experienced heart issues and died soon after Peter
    3. Walter Scott made several major acquisitions, the biggest being Continental Group in a deal for $3.5b. At the time it was the largest public company to be taken private
    4. Scott always understood that if he picked talented people and gave them room to run, they would make the company successful
    5. In order to maintain liquidity for repurchasing stock from retiring or otherwise departing employees, Scott created two tracking stocks. Kiewit Diversified eventually spun off and became Level 3 Communications and Stinson remained head of the construction, mining and materials business
    6. Design-build was another area that Stinson built up. Prior to 1990 it made up less than 1% of the company’s business but after that, at times, has accounted for half of Kiewit revenues
    7. The power market also became a major portion of Kiewit’s focus during Stinson’s service
    8. The Board knows what the questions are and oftentimes know the answers and certainly don’t need to spend a lot of time on operational issues, which some boards do. This board has a good balance between reflecting on results and expectations. There’s a good amount of time spent on “how are we doing ” and on “what’s the backlog?” as well as the kind of projects we are working on, where we are making investments in new fields, and how to create future opportunities
    9. Board member Mogens Bay depicted Kiewit’s employee loyalty during the company’s 2003 Annual Meeting. He noted that Caterpillar provided the same construction equipment to every competitor as it did Kiewit, and there was no advantage from an equipment standpoint. The advantage that Bay found in Kiewit, however, was present in the employees’ collective experience, their passion for their work, and the company’s culture of employee ownership.
    10. Kiewit has long been recognized as without equal in their focus on the training and development of people throughout the organization
    11. In 2000, Bruce Grewcock decided to try to separate Kiewit from the competition through quality, adopting the motto “Right the First Time”
    12. Peter continually admonished his employees to train and mentor a successor. Taking that principle to heart has been a key to ensuring that the company always has employees ready to take up the mantle of leadership
  9. Investing in New Ventures
    1. The 1980s saw a period of diversification for Kiewit as it made significant investments in ventures outside its core business including MAPCO, CalEnergy, Continental Can, Level 3, Metropolitan Fiber Systems – eventually leading to a reorganization into Kiewit Construction Group and Kiewit Diversified
    2. The difficulty with acquisitions is that every company has its own history, its own traditions, and its own unique culture. A healthy corporate culture can be a magic intangible that makes the difference between a winner and a loser but it is hard to instill that in another company
    3. Kiewit invested in, grew and spun off several major companies in this time
  10. Building Places to Live, Work, and Play
    1. Kiewit diversified geographically as well as their construction focus – doing residence halls, hotels, offices and business parks
    2. Kiewit’s core competencies were fixed-price, low-cost and well-planned operations
  11. Expanding and Restoring the Transportation Infrastructure
    1. From the ’80s to the 2000s, transportation was the largest portion of Kiewit’s business – more than $37b in contract revenue
    2. Design build grew from less than 1% of business prior to 1990 to as much as half of Kiewit’s revenues by the 2000s. Clients were increasingly interested in having a single point of responsibility for all aspects of project delivery
    3. Titles are left at the door and we all do what it takes to get the job done
    4. Kiewit has constructed more lane miles of interstate, highways and bridges than any other contractor and the company’s capabilities are reinforced by the largest privately owned fleet of construction equipment in North America, which allows it to mobilize resources rapidly for any size project
  12. Clear and Abundant Water
    1. “The number one principle I follow is to treat people with respect. The second is to work closely with them to emphasize their strengths and to support them where they need training or support.” – Richard Geary
    2. Kiewit has built some of the most significant earth, rock-fill and roller compacted dams in the country, as well as reservoirs, transmission through pipelines and tunnels and numerous water and wastewater treatment facilities
  13. Meeting Society’s Needs for Energy
    1. Kiewit has grown their energy business drastically over the decades, focusing on geothermal, hydro, nuclear, coal, waste-to-energy, coal, gas and more.
  14. Developing Our Natural Resources
    1. Reclamation efforts have taken a front seat after a mine has run its course
  15. The Formula for Success
    1. “The “four legs of the table,” if you will, are the way we’re owned, the way we’re organized, the way we focus on the basics, and the way we focus on people.” – Ken Stinson
    2. The test of a strong cultural statement is its longevity. The imperative to be the best contractor on earth has survived virtually unchanged for more than six decades and is deeply embedded in the corporate culture
    3. Stock ownership is limited to active employees and they must sell it back to the company when they leave or retire. The basic book value formula for determining the year-end stock price has not changed since the late 1940s. Individuals purchasing stock do so at the formula price; there are no stock options or discount programs. When stock is sold back to the company, it is sold at the then-current formula price. For a stock program like Kiewit’s to be successful, annual growth in the stock value must be consistently better than other investments. Since the inception of the employee-ownership program, the company has not experienced a losing year. The average annual total return on Kiewit stock has significantly outperformed the S&P 500 for a long period of time.
    4. The company strives to ensure that each employee’s stock ownership is in line with his or her level of responsibility and performance and typically have 3-5 years of Kiewit experience before they are first offered the opportunity to purchase stock
    5. At the time of Peter’s death in 1979, there were 808 employee-owners. The wisdom of his belief in the importance of employee ownership to the success and survival of the company was validated upon his death. There were no issues of ownership transition. The owners were the employees, and Peter’s ownership interests were purchased by the company. There were no issues of leadership succession. The leaders were in place, were major stock holders, and had been groomed for their position.
    6. While district managers basically function as if they were running their own construction company, Kiewit’s approach to decentralization provides for certain business functions to be centralized at corporate headquarters in Omaha. These include tax, finance, legal, insurance, and other vital support functions
    7. Competition between districts is fierce. Each district manager begins the New Year with the resolve to “sit at the head table” at the next annual meeting. Because Kiewit is not dependent on any one single market, it has allowed districts to survive downturns without having to lay off personnel or accept unprofitable work. Another important advantage of a decentralized strategy is the ability for two or more districts to form an internal joint venture. Often, the best joint venture partner for large complex jobs is another Kiewit district. The districts share in the job results based on their level of participation
    8. Essentials of successful contracting: getting work at the right price, building work at the lowest cost, taking care of our assets
    9. Another significant element of Kiewit’s culture has been a focus on the basics, often referred to as “the fundamentals.” Like striving to be the best contractor on earth, the fundamentals are easy to understand but difficult to execute well. “The one interesting thing about the fundamentals for most businesses is that they’re not a secret. What Sam Walton did with Wal-Mart and what Peter did with our company is so basic that to the untrained eye, it appears anyone could have done it. What made them different is that they understood the importance of execution of the fundamentals – and the importance of having talented and motivated people.
    10. Taking care of assets was originally intended to mean conserving working capital and taking proper care of construction equipment. Peter would later expand that meaning, citing a contractor’s reputation as a valuable asset. However, through the years, he gave the greatest emphasis to people and their talents as the company’s most valuable asset.
    11. Kiewit is also admired for its organized and methodical care of construction equipment. The company has the largest privately owned construction fleet in North America. Its 17,000 units have a replacement value in excess of $2b
    12. Kiewit has long prided itself on the way it focuses on people. This has led to employee loyalty unusual for the construction industry, with employees often staying with the company for decades-long careers. Among the many ways the focus on people is expressed is in its safety program and its comprehensive training and development programs. “I don’t care if you’re a laborer or a general foreman, if you see something wrong with a task you’re doing, or you have a question, you stop. You’re not going to get terminated. You’re not going to get reprimanded. If it’s a safety concern, stop.”
    13. All Kiewit managers willingly accept training their people, both on and off projects, as one of their most important responsibilities. All managers are expected to mentor new employees and employees receive constant feedback and coaching
    14. Kiewit has never formally published a list of core values but the most commonly voiced are: integrity, broad-based employee ownership, caring for employees, development and mentoring of employees, quality, and continuous improvement
    15. From the beginning, Peter insisted that the company be known for its integrity and ethical business practices – a company with whom owners, suppliers, employees, subcontractors, and others would be proud to do business
    16. Kiewit’s framework for quality management focuses efforts on self-performed work, subcontractor work, supplier controls, and fostering owner involvement. Kiewit crews are trained to build work to the project requirements and meet or exceed the owner’s expectations, perform work right the first time, and monitor performance against requirements to ensure quality is always improving. Striving for excellence in quality has produced an additional benefit that probably should have been anticipated. The planning, organization, and management controls it takes to ensure quality at every step has helped instill quality into other aspects of our business. The disciplines involved in striving for quality has made us better contractors and a better company.
    17. The focus on continuous improvement can be summed up by Peter’s phrase: “pleased, but not satisfied.” Continuous improvement also requires learning from mistakes and as a company, they’re tolerant. “We’re quite tolerant of mistakes, and we’re very tolerant of people who make mistakes. Just don’t go out and make the same mistakes all the time.”
    18. In the post-World War II era, Kiewit has clearly been the most successful company in its industry. Its unparalleled record of sustained success is rooted in employee ownership, a decentralized organization, an unrelenting emphasis on the basics, and a strong corporate culture based on developing and valuing people. It’s a formula for success widely admired but difficult to replicate.
What I got out of it
  1. Broad-based employee ownership, followed by giving away ownership of decisions and responsibilities to those who bear them and best know (typically those on the ground, not in the offices), focus on training and treating employees right, continuous improvement, and, above all else, integrity. Finding and training your own successor also stood out

Legacy by James Kerr

  1. The author describes some of the history of the New Zealand All Blacks and some of their habits, rituals and cultural traits that have lead to their incredible success
Key Takeaways
  1. The First 15: Lessons in Leadership
    1. Sweep the sheds – never be too big to do the small things
    2. Go for the gap – when you’re on top of your game, change your game
    3. Play with purpose – ask why, take nothing for granted and make no assumptions
    4. Pass the ball – leaders create leaders
    5. Create a learning environment – leaders are teachers
    6. No dickheads – follow the spearhead
    7. Embrace expectations – aim for the highest cloud
    8. Train to win – practice under pressure
    9. Keep a blue head – control your attention
    10. Know thyself – Only by knowing yourself can you become a great leader
    11. Sacrifice – find something you would die for and give your life to it
    12. Invent a language – the most cohesive teams have their own jargon
    13. Ritualize to actualize – rituals help reinforce and align key beliefs
    14. Be a good ancestor – plant trees you’ll never see, think longer-term than anybody else
    15. Write your legacy – this is your time
  2. When an opposing team faces the New Zealand All Blacks doing the haka, they know they are facing more than 15 individuals but a culture and identity and one of the most cohesive group working towards a collective purpose they have ever encountered
  3. The challenge is to always improve. Always get better. Even when you are the best. Especially when you are the best
  4. The team cleans up after themselves when they travel as it reinforces self discipline, humility and the fact that they take care of themselves, they don’t rely on anybody else.
  5. Character triumphs over talent. Winning takes talent. To repeat it takes character.
  6. Focus on getting the culture right and the results will take care of themselves
  7. A key competitive advantage of the All Blacks is to manage their culture by attaching the players’ meaning to a higher purpose
  8. Humility allows one to ask difficult questions such as “how can we do this better?” And reach results which might be uncomfortable
  9. Leaders create leaders by passing on ownership and responsibility
  10. Leaders must be prepared to change even when, and maybe especially when, they are at the pinnacle of their game. The goal of the leader is to know when one needs to reinvent oneself
  11. Leaders must enable mastery through the culture and environments they create
  12. The “non essential critical” are the dozens of small things which seem inconsequential but collectively can make all the difference
  13. True focus is saying no to everything except to what will help you achieve your main goal
  14. Leaders are teachers. Your legacy is what you teach others
  15. The first step in learning is silence. The second step is listening
  16. Constant repetition of affirmation is important to reach any goal. The story you tell yourself about your life eventually becomes your life
  17. If you expect the best, more often than not you seem to get it
  18. Train to win. Practice under pressure and practice more than you ever play. The competition should seem easy in some ways compared to how you practice. No matter what you do, it’s either reps or mileage. There are no shortcuts and nobody can ever do it for you
  19. Knowing how to act under pressure is key. It is the result of a long term mental training program. Many want to be successful but few are truly willing to put in the work
  20. Being aware of how you feel when you’re in flow and confident and when you’re tight and nervous can help you switch out of pressure and into flow
  21. Better people make better All Blacks – someone who is a genuinely good person has a better chance at becoming great than someone who isn’t
  22. Know thyself is wisdom as old as written human history. Development of authentic self is the essence of a great leader
  23. Champions do more than seems necessary to most people
  24. Language is an incredibly important part of a great culture as it helps to sufficiently and explicitly align people’s culture with that of the organization. Shrewd leaders create a unique language as cultural shorthand expressed via mottos, mantras, phrases and metaphors. Proper use of language becomes pure oxygen to a team and aids in communication of the vision and cultural norms
  25. The ability to draw a metaphor is a mark of genius as it exhibits an ability to draw connections that are often overlooked or ignored
  26. A society grows great when people plant trees whose shade they will never see. Be a great ancestor
  27. Leave the jersey (or company, team, organization) in a better place than when you arrived
  28. Service is the rent you pay while here on earth
  29. “Be more concerned with your character that your reputation for your character is who you truly are while your reputation is merely what others think you are.” –  John wooden
  30. The best example a great leader can set is the way he lives his own life
  31. Let someone else praise your virtues
  32. The ability of the person is reflected in the questions they ask
  33. Look for a leader who can bring people together
What I got out of it
  1. Some great, universal principles into how to achieve a great culture leading to sustainable and outsized performance

Plain Talk: Lessons From a Business Maverick by Ken Iverson

  1. Ken Iverson took over Nucor when he was 39 and compounded the business  at incredible rates for decades. On top of it, he did it in the steel industry which is not known for its attractive returns. Iverson lays out his management principles which center around employee trust and loyalty, decentralization, honesty, limited hierarchy and bureaucracy and aligning the employees and manager’s interest through partnership.
Key Takeaways
  1. “We have little tolerance for politics, the pettiness, the fixation on rank and status, or the insensitivity to employees’ needs that people in most big companies endure as a matter of course.”
  2. “Today’s leader must maintain sensitivity to the views of everyone who has a stake in the company and realize that each one can make a special contribution to meeting the company’s goals.”
  3. “Good leaders must be good followers. Leaders and followers share certain characteristics such as listening, collaborating and working out competitive issues with peers.”
  4. “Specialized management is an enemy of hope and good management. I think what we need, if anything, is deep generalists.”
  5. “What we did was push aside the notion that managers and employees have inherently separate interests. We’ve joined with our employees to pursue a goal we can all believe in: long-term survival”
  6. “Equality, freedom and mutual respect promote motivation, initiative and continuous improvement.”
  7. “Every manager should be something of a psychologist…I’ve found that, as employees, many people want first and foremost to be appreciated for who they are. They want to be acknowledge as unique individuals – each with immense and unrealized potential. All too often, though, their managers cast them as drones.”
  8. “Don’t fall into the trap of ruling out failure. Risk, by definition, carries the possibility of failure. See that possibility. Study it, but never, ever hide from it.”
  9. “You have to realize that your fears and ambitions are the lenses through which you view and assess risks, and that the image those lenses convey may not always be true.”
  10. Central tenets
    1. Choosing the right people and earning their loyalty and trust
    2. Reallocating manager’s time
    3. Letting employees guide their own development (cross-trained to do multiple jobs)
    4. Providing information to employees (share everything)
    5. Letting employees invest in technology
    6. Active listening
    7. As little hierarchy/bureaucracy as possible
    8. Weighing mergers and acquisitions from employees’ perspective
    9. Shaping the work environment is the manager’s primary job
  11. Iverson took over Nucor at age 39 as he was the only one who ran a profitable segment
  12. Whole company shared in the pain during tough times with senior executives taking an even bigger pay cut than the employees
  13. Run company for investors, not speculators
  14. Every single decision made with long-term view – simple but not easy
  15. Never laid anyone off – employee loyalty is of utmost importance (pair with The Loyalty Effect)
    1. “When is laying people off the practical and sensible thing to do? Can we expect employees to be loyal and motivated if we lay them off at every dip of the economy, while we go on padding our own pockets?”
  16. No job descriptions at Nucor – employees can define their jobs in their own way in order to be the most productive possible
  17. Each division is run as its own enterprise – trust your instincts, decentralized, responsibility and accountability for everyone
  18. Try to keep business small (less than 400-500( as management loses touch with employees as it gets larger
    1. Iverson talked to every manager every day
    2. Fan of formal surveys – anonymous and forces manager to think how the current situation truly is
    3. Policy for managers to meet with every employee at least once through the year
  19. Delegation without information is suicide
    1. Delegating gets people to buy in and most likely to a much better job than if the manager was hovering over their shoulder
    2. Streamline information – too much is as bad as too little
    3. Find early warning signals
    4. Differentiate between objective and subjective info – cause and effect
  20. Centralized and decentralized operations are better in certain situations. Uniformity and consistency leads to centralized; innovative and flexible needs more of a decentralized approach. Either way be decisive
  21. Healthy tension in sr. executive meetings is usually a good things – shows people care, have thought about issues, brings up issues early before they have a chance to bubble over
    1. Know that their motives are healthy, objective and coming from a good place
  22. Great management is situational. Hard to take a great manager in a certain business/industry and expect that same result in a completely different situation
  23. Corporate culture sets the tone for interactions between all stakeholders
    1. Nucor removed hierarchy and was very egalitarian. Sustained employee motivation
    2. Eliminates noise to focus on essential – senior management not worried about perks, corner offices and other distractions
    3. Only 4 layers of management at Nucor lead to short lines of communication
  24. People often don’t need answers, simply to be heard
  25. Share all information with employees
  26. Show how much they truly cared and valued their employees by hand delivering birthday cards and had all employees names in the annual report
  27. Pure equality brings out pure effort
  28. People jump on the chance to shape own lives and take responsibility
  29. Nucor’s biggest competitive advantage is its culture and it always will be (has to be consistent)
  30. The work place shapes people’s state of mind – both physical and cultural
  31. Give employees the freedom to innovate – they are the engine of progress
  32. Compensation incentives are vital. Give employees a stake in the company! Partnership aligns values and brings out everyone’s best effort and productivity
    1. Try to make profit sharing timely and immediate
  33. Helping employee’s families is a huge win-win (college bills, medical bills, etc.)
  34. Small is beautiful – can operate on the fringe, innovate and slowly take market share from bigger players
    1. Are able to learn all aspects of the business when small
  35. It’s not easy to change people
  36. No shortcut from big and bureaucratic to small and nimble
  37. Be careful not to criticize failure as this stifles good risks and innovation
  38. Experimenting and failure is necessary before success
  39. Be conscious that senior management tends to be more risk averse, comfortable and complacent
  40. Ethics – look for options that are equitable, right and practical
  41. Peter Principle – people will rise to the level of their incompetence
  42. Simplicity is integral to Nucor’s success
    1. Honesty leads to stability and credibility
    2. No hierarchy or bureaucracy
  43. MBAs tend to lack communication skills, how to relate to and lead people
What I got out of it
  1. Awesome principles and amazing read. Iverson has put The Loyalty Effect into action at Nucor

The Loyalty Effect by Frederick Reichheld

  1. Reichheld lays out a very convincing argument for why creating an ecosystem which attracts and rewards loyal customers, employees and investors is the ultimate moat for any organization
Key Takeaways
  1. Loyalty Based Management is essential to create a value-add, profitable, sustainable company and it requires loyal customers, employees and investors.
    1. Loyalty leaders follow two basic precepts – nurture a clear sense of company mission based on value rather than profit; use the power of partnership to align, motivate and manage the members of the business system
    2. A company’s top goal should be to create as much value as possible, never profit. Profit is solely a downstream effect of creating enormous value
    3. Loyalty Based Management is a slow, steady, never ending process.
    4. Loyalty, in every case, must be earned. It is never given
    5. Loyalty is a character trait – can’t be created, only reinforced
    6. Loyalty leader examples – Leo Burnett, Chick-fil-A, State Farm, Lexus, Maryland National Bank, USAA, John Deere, Nike (attracting right investors), American Express
  2. 8 central tenets to Loyalty Based Management
    1. Building a superior customer value proposition
    2. Finding the right customers
    3. Earning customer loyalty
    4. Finding the right employees
    5. Earning employee loyalty
    6. Gaining cost advantage through superior productivity
    7. Finding the right investors
    8. Earning investor loyalty
  3. There are many “hot” management trends but loyalty leaders tend to ignore these and stick to a variation of the Golden Rule
  4. Employee/customer retention
    1. Employee/customer retention is a key gauge of company health. Even a seemingly insignificant increase in retention can have an exponential impact on profitability
      1. Relative retention is a better predictor of profits than market share, scale, cost position or other moats
      2. Defection is often the most powerful hidden force for low profitability
      3. It is much more expensive to serve a new customer than an old one
  5. Hiring well is crucial. Once you get the right people on board, you have to make sure to continually educate, train, inspire and incentivize employees to make creating value for loyal customers their top goal.
    1. Incentives should get employees to want to learn themselves, improve over time and teach others.
    2. Learning leads to value creation which leads to loyalty and back to learning. It is a virtuous cycle and the entire ecosystem must be designed around customer loyalty
    3. Partnership is the best way to align employees goals with company’s – letting employees share in the profits will unlock all their potential, creativity and hard work and put it towards value creation. Sharing value creates value
    4. Try to hire from within to inspire more junior employees
    5. Creating a loyal ecosystem boosts employee morale and energy
    6. Longer employee tenure has supernormal benefits as they become better with their job over time, get to know customers more intimately, can teach the younger generation, make fewer mistakes, volume increases, profit per customer up, referral rates increase, time savings up, motivation/pride in a job well done increase. On top of it, all these effects compound over time
  6. Today’s corporate focus on short-term results almost always works against Loyalty Based Management. Many loyalty leaders often ignore short term results, instead invest for the future wellbeing of their customers and employees which will eventually benefits investors
  7. Measurement
    1. Stresses the importance of having hard numbers which can be measured over time in order to realize the enormous benefits loyalty produces. Break customers down into different classes, view actual defection rates over average
    2. Measurement tough but at the heart of vision/strategy and it helps make the obscure more concrete
    3. Ultimate form of customer satisfaction is repurchase loyalty
    4. Deciding what to measure and how to link incentives is a primary role of management
    5. Most important metric is Net Present Value of current customers (discounted stream of profit net of acquisition investment)
    6. Most companies would not argue against loyalty but few truly understand how valuable it is and therefore under invest in it
    7. Revenue per employee is an important metric to keep track of. The goal should be to lower cost as a percentage of revenue, not lower overall
      1. Cost improvements must eventually make their way to the customer
    8. What percentage of a customer’s wallet (wallet share) you have is a great metric to track overtime
  8. Loyal customers give companies the benefit of the doubt and tolerate occasional mistakes
    1. Some customers are inherently more loyal. Aim for these groups and take into account customer’s age, income, profession, where they live, affinity groups, education, etc.
    2. Carefully choose the sales channel to attract the right (not necessarily the most) customers
    3. Avoid certain customers as they cause headaches and are more expensive in the long run. Price discounts, coupons and other promotions tend to attract these types of customers
  9. “We are all preaching an unspoken sermon with our lives.” What do you want yours to be?
  10. Top draw for attracting the right people is to have character and integrity coming from the top
    1. “Talented people work hardest when they’re proudest of what they do, when their jobs are interesting and meaningful, and when they and their team members are recognized for their contributions and share in the benefits.”
  11. Productivity = pace of creation
    1. Growth of productivity vital and a company improves it through employee education, training, and employment / compensation policies
    2. Goal of automation should be to empower, not displace employees
    3. It is counterintuitive but paying up for the best employees reduces costs in the long run (see benefits of employee tenure above)
    4. In Loyalty Based Management, compensation mirrors productivity – bigger pie is created and it removes unproductive employees
  12. Importance of loyal investors
    1. Many loyalty leaders are private and those that are public have big insider ownership (from 15-50%)
    2. Management has dozens of ways of measuring the value they deliver to investors but few, if any, ways to measure the flow of value from investors to the company
    3. Short-term investors who do not share the businesses’ values impart a high cost on the company
    4. 4 principal ways to attract right investors – educate current investors, shift investor mix to institutions that avoid investment churn, attract the right kind of core owner, go private
    5. Don’t cater to Wall St. and short-term earnings estimates, do things which will help the company long-term even if painful today
  13. True mission of a business is to create value, not profit
    1. Continuous employee learning/training is core to adapting and continuing to add value
    2. Studying failure is vital – must track and dissect when you are healthy or else it is already too late
    3. Must teach people who are aligned and want to learn (importance of hiring right employees)
    4. Success is getting the right customers and keeping them
  14. Reward loyal customers with additional discounts and other perks
  15. Crucial Questions
    1. Why are people defecting?
    2. Why doesn’t the present system deliver better value?
    3. Is the company bringing in the right customers and employees?
    4. Has management built a genuine partnership for creating and sharing value?
    5. Does this partnership align individual and organizational interests?
  16. Do what you say you’ll do, live up to commitments and try to exceed them as often as possible
What I got out of it
  1. Seems to me like setting up an organization, culture and incentives that rewards loyal customers, employees and investors is the only way to run a sustainable, long-term, value-add, win-win company. Highly recommend!
Two great articles on loyalty. One from Bain discussing customer churn and another from Forbes discussing how some customers are more important to keep than others