Today’s work culture is fast-paced. Companies rise and fall like dominoes in a chaotic and dynamic business environment. The concept of a big, old company that has been stable for decades is a slowly fading concept. Not many young companies today have what it takes to convert a company into a stable and strong one that has been around for generations.
The Infinite Game (2019) by Simon Sinek shows that there are more attributes to the growth of a company, its strength, and its stability than finances, stock, share prices, and investors.
Today’s leaders need to look to the future and make plans that are ahead of their time. They need to inculcate the habit of long-term thinking and planning and enable their employees to dream into the future that will help them form strong bonds within teams and realize the long-term vision of the company.
The Infinite Mindset
To create an infinite mindset within a company, one has to first understand what it actually means. Let us consider a game of football. There is a definite start and stop time. There are rules surrounding the game such as how goals are made. How the winner is decided is also defined and fixed. Football is therefore a finite game.
Business on the other hand is an infinite game. Apart from the legalities that they need to follow, what players do within those rules is not specified and neither is the start and stop times. Moreover, there is no specified manner in which the winner is decided.
In an infinite game, the idea is to simply stay in the game for as long as one can. This requires planning different than that of a finite game. It requires an infinite mindset that will enable organizations to think beyond winning into creating an organization that focuses on lasting and on staying on top of the game long-term.
If we look at Microsoft, Bill Gates wanted to “empower every person and every organization on the planet to achieve more.” While this goal showed an infinite mindset, in the early 2000s, CEO Steve Ballmer applied a finite mindset and focussed on winning more market share. They tried to focus on beating Apple with products such as Zune, to compete with Apple’s iPod. While Apple became famous for innovation and creating new markets, Microsoft’s short-term goals led to a tunnel vision. Due to this they lost focus and were not able to make their mark as a company that innovates.
The Five Keys To Infinite Mindset
There are five important keys to creating an infinite mind-set. They are –
- Having a just cause
- Ensuring trusting teams
- Understanding worthy rivals
- Preparing for existential flexibility
- Showing the courage to lead
Victorinox played the infinite game. Their Swiss Army Knives were a popular product and accounted for almost 95% of the sales of the company. However, after 9/11, the knives were banned from airline cabin luggage. This caused the sales to plummet.
In spite of the downfall of sales, CEO Carl Elsener understood that business has its ups and downs. Instead of thinking about the short-term downfall, the company boldly branched out into new markets. They ventured into fragrances, watches, and travel gear, with the Swiss Army Knives accounting for only 35 percent of the sales. This change was a success.
The company showed that though ups and downs are inevitable, companies have to focus on ‘thinking in generations’ like Victorinox did.
Having A Just Cause
A ‘Just Cause’ is an inspiration for the employees of the company to focus on the future. It defines the goals for employees and represents the benefit a business aims at. It is bold, inclusive, and idealistic, and is resilient in the face of change. Many companies mistake a ‘Just Cause’ for a mission to aim at the highest and the best position, in other words, a ‘moon shot’.
The GPS making company Garmin’s mission statement is, “We will be the global leader in every market we serve and our products will be sought after for their compelling design, superior quality, and best value.” While it seems like a valuable mission statement, talking about becoming a great company, it gives customers importance as an afterthought.
Since 2007, the company has been on a decline, and now has a third of the value it had in 2007. This happened because they refused to focus on the needs of their customers. While smartphone companies started offering GPS tracking services, Garmin chose to focus its efforts on making their own products, rather than venture into the smartphone market.
Capitalism: Then And Now
When we talk about ‘Just Cause’, one needs to keep in mind the concept and guiding principles of capitalism. Who is more important for the company, the customers, or the shareholders?
Adam Smith’s The Wealth Of Nations written in the mid 18th century put the interests of the consumer over those of the shareholders. Paving the foundation of capitalism for the next 200 years, the book stated the obvious principles of business – customers are the primary focus of any company.
In the Mid-20th century, Milton Friedman, a Nobel-Prize winning economist, wrote a highly influential article that moved the focus from customer to shareholder. The article stated that for any free-market enterprise, the primary focus is to make money, and that money belongs to the shareholders of the enterprise.
The shift of focus was seen more strongly in the 1980s and 1990s, when business plans centered around profit-making, focussing on short-term earnings. The primary focus of business plans revolved around making shareholders happy. And thus, it was not stability, longevity, and quality of service that decided the success of a company, but Wall Street’s numbers that became more important. Therefore, companies focused on boosting their ROI by cutting costs, layoffs, and cutting R&D budgets.
In the past few decades, however, capitalism has become imbalanced. Stock market investing is at a 20 year low. With the shift in focus from customer to shareholder, the CEO’s and owners are enjoying a 950% earning increase vis. a vis. a mere 11% earnings increase for the average employee. These numbers signify a dangerous trend implying catastrophic market crashes in the future. It seems that Adam Smith had the right idea back then.
Employees Before Earnings
If organizations have to focus on longevity and creating an infinite mindset, they have to focus on the will of the people (employees and customers) who are supporting the company. This has, since Friedman’s shareholder-centric capitalism, become virtually impossible. Companies have put so much into making their shareholder happy, that it will take massive changes to go back to Adam Smith’s idea of capitalism.
Companies need to put their faith back into their employees. This can be done with a strong ‘Just Cause’ of drawing employees into the company’s vision for the future. A company has to respect its employees along with their customers, an endeavor that can be highly rewarding for companies.
The will of the people of a company can be measured by their morale, and by how inspired and committed they are to the ‘Just Cause’ of the company. Let us look at the examples of Apple and The Container Store.
Apple made the bold move of giving its retail store employees the same benefits of health care and retirement as their corporate employees enjoyed. This move saw their employee retention rates skyrocket to 90%, while the average industry rate was at 20-30%. This enabled Apple to reduce recruitments costs and see motivated, loyal employees, delivering better services.
Similarly, The Container Store, after the 2008 recession, needed to find a way to reduce costs. Instead of lay-offs, the company employed an infinite mindset and announced a temporary salary freeze. In a time of people losing jobs, the employees of the company understood the decision and worked hard to find ways to reduce costs for the company.
Creating a Culture of Trust
Companies that focus on profits alone end up having an uninspiring ‘Just Cause’. This can lead to distrust amongst employees along with unethical business practices taking root, thereby reducing business longevity. Without trust, companies see an increase in poor performance and accidents.
The CEO of Ford Alan Mulally saw a distrusting culture in the company when he came on-board in 2006. The previous CEO was known to berate and fire employees who got him the bad news. Therefore it became the norm to bring only good news to the CEO.
Mulally knew he had to change the culture of the company and started encouraging employees to bring him all types of news – good and bad – to weekly meetings. He soon broke through the trend when an employee chose to trust him and share problems at the meeting. Mulally applauded the employee’s initiative.
Without a culture of trust, where the company is aligned with profits rather than its people, unethical business practices take root. In Wells Fargo, an investigation showed that more than 3 million fake bank accounts were created between 2011 and 2016. This had happened because CEO John Stumpf had created a high-pressure sales culture that was untrustworthy. Employees resorted to unethical practices out of the fear of getting fired.
Understanding Worthy Rivals And Preparing For Existential Flex
An infinite mindset encourages worthy rivalry. This essentially means, competing with opponents who (due to their superior skills) businesses are forced to improve their own skill levels and techniques.
Alan Mulally saw that Ford had spent fifteen years losing twenty-five percent of the market share. He was presented with a plan that was a finite-minded one. It involved cutting costs and increasing sales promotions. Mulally decided not to chase market share. Instead, he encouraged his senior management to drive cars made by Lexus and Toyota, to study and understand why these cars were preferred.
Also when the 2008 recession hit, he chose not to put other competitors in the market out of business. Though Ford was financially stable, he knew that out-competing his rivals meant putting vendors and suppliers (who Ford relied on too) out of business. He chose to support his vendors by supporting his rivals.
Learning from rivals goes beyond understanding their tips and tricks. At times, business leaders should perform an Existential Flex – a self-prescribed change or even a self-disruption – something that is extremely difficult for a finite minded company to do.
Steve Jobs, in 1979, saw Xerox’s graphical user interface (GUI) technology. He immediately changed plans and incorporated GUI in his computers. This introduced the point and click the mouse. It also gave users a desktop icon for folders, making it easier for his customers to use his products – without knowing any computer language. He stuck to his ‘Just Cause’ of making computers an empowering tool for as many people as possible, despite warnings that the drastic change could be detrimental. Four years after that, the first Macintosh was released. It took Microsoft four years after that to release Windows 2.0 with a GUI.
Bold And Courageous Decisions
A strong ‘Just Cause’ goes beyond just one leader or profits. This very ‘Just Cause’ guides a leader towards the specific purpose the just cause pursues. It takes courage to lead a company towards an infinite mind-set.
When a leader shows courage, it shows his commitment to the cause thereby setting an example for the employees. At times, this can prove to be a challenge because most CEO’s are promoted from COO (Chief Operating Officer) and CFO (Chief Financial Officer) designations. The day-to-day operations these executives are involved in are finite-minded. They are not prepared to step into the responsibilities of the CEO designation.
They need to understand that a CEO actually works in the capacity of a Chief Visionary Officer who is the guiding voice and guardian of the ‘Just Cause’. In action, this responsibility helps in alignment with the company’s ‘Just Cause’. For example, the long-running pharmacy and drugstore chain CVS Caremark decided to stop selling cigarettes in their stores despite a loss of cost predictions of about $2 million. This was done to align the company practices with their ‘Just Cause’ of helping people to better health. On the day the announcement was made, the stocks of the company dropped by 1%. However, after a year and a half, the price doubled to a record high. This happened because after they stopped selling cigarettes, the sales of nicotine patches and gum shot up. They even approached by health-focused vendors who had avoided them earlier. This led to a 70%increase in stockholder earnings-per-share over the next three years.
Conclusion
The infinite mindset completes a full circle. It begins with a ‘Just Cause’ and endures through creating trusting teams, being inspired by worthy rivals, preparing for the Existential Flex backed by bold and courageous decision-making. It takes companies through a process that helps them to stay in the game and succeed in the long run.