what consumes me, bud caddell

Rent the Runway today operates the largest dry cleaner in the country in a 160,000 square foot facility and has built software that manages the inventory, delivery, and fulfillment of 65,000 dresses and tens of thousands of accessories across its millions of members.

Source.

I hypothesize that the management overhead which makes corporations grow sub-linearly is due to the limited information processing capability of individual humans. People at the top do not have local on-the-ground information: how are individual products performing, what are customers’ complaints etc. And the rank-and-file folks on the ground do not have the relevant high-level information: how does what I’m doing translate to the value that the corporation as a whole seeks to maximize? In fact, the the flow of value and information is so complex that employees have pretty much given up on determining that relationship, and know of it only at a macro P&L-center level. […] An algorithm will have no such problems with acting on both global as well as fine-grained local information. In fact, I suspect that the more information it gets to act on, the better decisions it will make, making automatic corporations grow super-linearly.

This is what a Google Software Engineer thinks of the organization of today and the possibilities for tomorrow. We are in violent agreement.

Finally, at the end of the meeting, Donahoe came to a decision: “Alright,” he said, addressing Abraham and Palmer, “you guys have carte blanche to do this. Any resources you need, any money, any human capital, you’ve got it. The only thing that I ask is that you don’t tell anyone about what you’re doing.” […] Within moments, the two of them were at a laptop, scouring eBay’s internal site for offices around the world where they could work completely under the radar.

This is a fascinating story about how eBay struggled to innovate and eventually won out. Punctuated evolution requires innovation at the edges. Find yourself a multi-disciplinary squad, put them in a room together, give them implicit permission, shut the door, stand guard.

First of all, everything we do is in service of a single goal: transparency. We’ve discovered over time that most of our difficulties arise when a project becomes murky or goes dark. Design is a holistic practice and we can only truly design for the entire product when we can see across it with ease. In addition to making our own work easier, transparency also gives designers a chance to cross-collaborate on projects that they’re interested in or that impact the thing they’re working on. We frequently have designers on different teams identify overlapping work and get together all on their own without any prompting from myself or the other design managers. Transparency is magical in that way and can make or break a project or a growing team.

Cap Watkins, Senior Product Design Manager at Etsy.

Most entrepreneurs still think that just because their technology is superior it will inevitably be widely adopted in the marketplace. But consumers don’t work like that. Next time you come across an engineer aiming to commercialize a superior new technology, ask if his industry meets the criteria described above. If not, he’d do much better to focus on low-end disruption by encapsulating the technology in a product that is in some way simpler, more convenient – and seriously more affordable— than anything currently on the market. After all, technologies don’t dictate how they must be commercialized, managers do.

In an HBR piece, Juan Pablo Vazquez Sampere details four criteria of when high-end disruptive products are more likely to succeed. They are:

1. When the majority of consumers are dissatisfied with their current choices. (tends to occur most in highly regulated industries)
2. The industry is fragmented – and therefore no single player has majority control over who can enter and compete.
3. The new entrant is fully integrated from the beginning. They are focused on re-imagining the whole process, not just one component.
4. The new entrant uses a completely different distribution model than its competitors, and therefore bypasses where legacy players tend to have the most competitive power.

Tesla is the obvious poster boy for meeting all four criteria.

Three former executives said the old regime seized on the bad numbers to cast Hanson’s tech-focused ambitions in a dubious light. They said Markfield, in particular, felt that Hanson cared too much about developing AE’s web and mobile operations, and feared that expanding in outlets and internationally, while lucrative, might dilute the core brand. Markfield was also no fan of Hanson’s emphasis on personalization — for example, curating merchandise in stores based on the type of customers who shopped there. Indeed, it was a relatively new way of doing things, especially for someone who came of age in retail during the ’80s and ’90s and considered a mainline store as the most important way to communicate a brand. Markfield felt those stores were being neglected, these people said. […] “The sense was, ‘Oh, there’s this new fancy office in San Francisco, these fancy people have engineering backgrounds from Stanford, where does that leave me?’” said the second former manager. “People just felt threatened and unsure of it, definitely for the executives, because it was Robert bringing on this team of strong executives to fix and do things that we needed to do.”

Buzzfeed offers an engaging read into the cultural trials which eventually stopped American Eagle’s last CEO, Robert Hanson, dead in his tracks. Knowing the right thing to do and knowing the right way to do it are two completely different problems, and the latter is much harder (and even more dependent on context) than the first. Hindsight is 20/20, but I would suggest to any leader experiencing this sort of cultural friction to do the following:

1. Develop a Visionary Purpose with your leadership team that is informed by the realities of your customer, competitors, and technology at hand. Visionary Purposes sound like, “be Earth’s most customer-centric company” (Amazon), “accelerate the advent of sustainable transport” (Tesla), and “make the world more open and connected” (Facebook). Repeat this vision until you’re blue in the face.
2. Set realistic time horizons. In a public company, there’s no greater weapon to wield against a change agent than quarterly earnings. It took Steve Jobs three years after his return in 1997 before he had a measurable impact on Apple’s stock price, and that’s without having to worry about slow-to-turn retail stores. Lasting change is a 5-7 year project for any organization and any dips or leaps in the interim cannot themselves, alone, demonstrate momentum (or lack thereof).
3. Scale the edges. Find opportunities to innovate in a safe-to-fail environment and scale them as they succeed. In other words, don’t try to turn the biggest ship when you have the smallest rudder.
4. Propagandize. Every win, even the smallest, has to become a loud and unmissable signal of the change to come.
5. Grow a tribe. Before you even have a win, build a cult of the curious. As wins stack up, convert more followers. Your goal is to flip more dominos in your favor, every day.
6. Outlast your detractors. Remember, endurance is everything and that the spoils of transforming a public company can make you the stuff of legends.

Why is culture so important to a business? Here is a simple way to frame it. The stronger the culture, the less process a company needs. When the culture is strong, you can trust everyone to do the right thing. People can be independent and autonomous. They can be entrepreneurial. And if we have a company that is entrepreneurial in spirit, we will be able to take our next “(wo)man on the moon” leap. Ever notice how families or tribes don’t require much process? That is because there is such a strong trust and culture that it supersedes any process. In organizations (or even in a society) where culture is weak, you need an abundance of heavy, precise rules and processes.

From Brian Chesky, CEO of Airbnb.

You don’t create a culture. Culture happens. It’s the by-product of consistent behavior. If you encourage people to share, and you give them the freedom to share, then sharing will be built into your culture. If you reward trust then trust will be built into your culture. Artificial cultures are instant. They’re big bangs made of mission statements, declarations, and rules. They are obvious, ugly, and plastic. Artificial culture is paint. Real cultures are built over time. They’re the result of action, reaction, and truth. They are nuanced, beautiful, and authentic. Real culture is patina.

Jason Fried.

Don’t let the process become the goal. As we try to think about our own process at Percolate I want to make sure we don’t end up down this road. As a company grows it’s natural for people to desire more documentation, clarification, and general process, and all of those are good things. However, as you go down the road of designing process you always run the risk of losing sight of the real objectives, which for Percolate is about building amazing products that transform what it means to be a marketer.

Noah Brier shares some thinking on building his company, Percolate.

In most companies, creating process is a helluva lot easier than removing it. I’m a fan of dedicating roles to simplification; evaluating process from evidence and gutting what no longer provides impact to the firm’s desired outcomes.

As its name implies, Supercell is organized as a collection of small, independent teams called cells tasked with developing new games or building new deep features for existing games. Cells are given complete autonomy in terms of how they organize themselves, prioritize ideas, distribute work and determine what they ultimately produce. Describing himself as the “world’s least powerful CEO”, Ilkka encourages cells to exercise extreme independence and prides himself on having no creative control over them once they are constituted. The company as a whole is merely an aggregation of these cells; a Supercell.

How the fastest growing company ever does it.