Each Monday I post the next section of my 2001 book, which was originally called (by the publisher) Hoover’s Vision but which I have now retitled The Art of Enterprise. I have posted over half of it already; click on the “Monday” column to see all the prior sections. The entire book can be downloaded as a PDF for $10 at http://www.scribd.com/doc/25085990/The-Art-of-Enterprise-by-Gary-Hoover-January-2010
The Clear Vision
The English language is a powerful tool. It is used in business meetings worldwide as a common ground of communication. It has an enormous vocabulary of beautiful and appropriate words. Sometimes it seems that the only people who don’t want to (or know how to) use the English language are academics, lawyers, politicians — and business people. If you step into a meeting at a Fortune 500 company, you are likely to hear language like, “We are rightsizing and re-engineering to adjust to the shifting paradigm of our upscale consumer base emerging from our data warehouse looking for an IT solution.” It is no wonder that these companies often have no clue as to what to do, they can’t even talk right!
Take a look at the opposite end of the scale. One of the clearest visioned companies in the US is Southwest Airlines. Much has been written on the company and its unique style of doing business. But what impresses me most is the simplicity, the crystal clarity of their message. Since the company’s founding 30 years ago, they have held to a handful of key beliefs. These include flying one type of aircraft, the Boeing 737, so that all their crews are trained on the entire fleet and to reduce their investment in spare parts. Southwest has always operated efficiently and without frills – they land, they give the first people to arrive at the airport the first seats (all of which are classless), they throw peanuts at you instead of serving a meal, and they take off – all in less time than any other major airline. In the process, the company also believes in having fun. They have a unique culture and they are proud of it. Beginning from a Texas-only base, they have gone national, consistently delivering reliable and affordable transportation to millions of people.
These are simple ideas. They have not been hidden. If you go to Southwest’s website, read the company history Nuts! or listen to a speech by any Southwest executive, you will get this same simple message. I call this a “third-grade vision” – any third-grader could understand it. That also means that every flight attendant, every baggage handler, every pilot, every marketing executive – yes, even CEO Herb Kelleher – can understand it. And put it into practice in every decision the company makes.
One of the hidden values of a clear vision is that it confuses the enemy. People love complex theories and conspiracies. Simple stories seem less interesting, and many people find it hard to accept that the truth can be so straightforward. When the airline America West first started up, they said they were going to be another “no frills” carrier, and I said “Great, we need another airline like Southwest.” But I soon saw that they had several types of planes, they had first class and coach, and they were serving meals. They couldn’t even Xerox the concept accurately! Later, America West got its act more together, but they no longer try to clone Southwest. Some of the giant airlines tried to copy Southwest, but they thought the whole story was price, and missed the simple vision based on reliable, fun service. None succeeded.
So what has this clear vision done for Southwest? Many people still think of the company as a regional carrier. But Southwest has been the most consistently profitable company in the industry, making a profit every year for over 20 years. None of the other major airlines have done this. It has the lowest costs. At the same time – this is remarkable – it also is rated as not only the best airline to work for, but one of the best companies of any type to work for. Quite a trick to be so efficient and a great place to work at the same time! Last, but not least, Southwest has consistently had the fewest customer complaints, the fewest lost bags, and the fewest late departures. There are few companies which so perfectly embody the ideal enterprise.
What about the stockholders? A key measure of any company is market capitalization – the total value of all the shares of the company. This is how much cash it would take to buy the whole company. As of April 2001, the value of United Airlines’ parent company was $1.7 billion; Delta was worth $4.8 billion; and the most valuable of the three industry giants, American, was worth $5.2 billion. That means the three biggest passenger airlines on earth, combined, are valued by the investment world at $11.7 billion. Any guess what Southwest is worth? Would you believe $13.4 billion, more than the big three combined? And of course Southwest’s dominance of value was not always the case, as long-time Southwest stockholders will happily inform you.
I believe it is impossible to overvalue the contribution of a clear, simple vision. Anything you can do to streamline your vision, to simplify your story, is a step in the right direction. And critical to that clarity is plain-speaking.
Every industry and every profession has its jargon. We throw around acronyms like rice at a wedding. We have to go with TQM and ISO 9000, we put together an RFP for the CIO. Even the simplest of industries has enough jargon to fill several books. The travel agency industry has a simple task – selling you an airplane seat or a hotel room – and yet it can take months, even years, for a new person to learn all the industry acronyms and jargon. Most of us are not in rocket science or brain surgery. We are selling bricks or running car washes. We don’t have to invent a new word each week in order to get our jobs done.
Such jargon serves as a barrier to newcomers. But some of these language barriers are coming down. Twenty years ago, the doctor’s opinion was treated as gospel. Today, we look up the prescriptions in a book, we check out medical advice on the Web, and we are even encouraged by the insurance companies to get a second opinion. In the old days of computing, you would go down to the Cobol programmers who would talk a bunch of unintelligible language at you, then conclude by saying that either your project would take forever or it could not be done at all. Today computer power is available to anyone who wants to learn. The computer section in bookstores has expanded from ten titles to thousands. Many 18 year olds can produce sophisticated computer programs.
At one of my companies, a group of consultants approached me and wanted to teach our company about kaizen – the word for the Japanese belief in continuous improvement. No one is a bigger believer in this concept than I am. But why not call it continuous improvement? In rapidly growing companies like those I have built, a major share of your employees are always “recent hires.” Sometimes over half the organization are newcomers. If a growing company indoctrinates everyone in an entirely new language, the newcomers either have to go around asking what all these strange words mean, or just stay in the dark and feel stupid. A wall is built between the newcomers and the old-timers. That is no way to bond together the organization.
When we are scared or uncertain, when we think we have to impress someone, we often resort to unclarity. A spokeswoman for our local bus system is interviewed on TV and says, “We are a personnel vehicle intensive operation.” A NASA rocket blows up and the announcer professionally says, “We have an anomaly.” A college student dies when mis-diagnosed by student health services and the administration goes on TV and says it was “a scenario we hope never occurs.” Newly minted MBA’s speak of “A” financing rounds – I think they mean “first” – and “A” distribution channels.
I recently went looking for government data on how many people fly from one city to another. I looked on the Department of Transportation’s website, into which lots of time and energy had been invested. I remembered from my years in the travel business that the jargon for these statistics was “origins and destinations.” I tried every search tool on the site, I tried “origins,” “destinations,” and everything else I could think of. Only when I stumbled upon the idea of searching for “O&D” did I find what I was looking for. If finding this information was difficult for a student of the airlines like myself, how hard would it be for the uninitiated? And yet it is unlikely that reviewing their terminology is a priority of the DOT.
Try tape recording one of your enterprise’s meetings and play it back for any reasonably bright 6th grader. Then ask, “What did we talk about and what should we do?” If he says, “I couldn’t understand any of it,” then the chances are good that you and your people cannot think clearly about the issues.
The English language is beautiful and powerful. It is worth using well. Having lived a life in business, I know how hard it is to keep from using all the buzzwords. I am sure you can find some in this book. But it is worth a perpetual struggle to keep our words – and our mind – free of doublespeak and alphabet soup. Ask the investors in Southwest Airlines.