Bob Pew [Robert C. Pew II, former
president and CEO of Steelcase, who
had been chairman of the board of
directors for 25 years until he assumed
his chairman emeritus role, in 1999]
used to say to me, “The only way you
have trust is if you have integrity.
People won’t follow you if they think
you don’t have integrity.” Initially,
I thought he meant that you just have
to be good. But he meant more than that.
If you’re a new executive at Steelcase,
you spend three days with me and we
talk, like you and I are talking, about
the ethos of the company. We spend
a half a day on integrity. We role-play
decision making. I’m sensing, today,
that there’s a return of significance.
People want a reason for working.
I have read somewhere that many companies today fail after ten years, and the
average track record is four and one-half
years. And here Steelcase is, 100.
Right.
So now we have the kind of emotional and
ethical foundation that’s at the core of your
enterprise. But then the hard times come,
and things shift. The industrial system that
you and Steelcase were part of was based
on the mechanical system, the machine—
the well-oiled machine, as we used to call
the modern corporation. And now it’s an
interconnected, flowing...
Network.
A networked entity that’s a very different
animal and requires a very different set
of muscles. Where are you now in that
transition, and where are you heading?
Our exercise in ethos helped us think
about what it means to create a competitive company when you have to cut
back on the labor force. Will you take
great pride in improving profitability
at the expense of people? That’s like
saving yourself from the fire, but
leaving everyone else behind. Or are
you going to wish that you sacrificed
yourself to help others? What should
we do? Some say you sacrifice yourself—but how smart is that?
And here we are, with 14,000 fewer
people [down from 25,000]. How did
we deal with this? It was the most difficult thing I faced. I would go home
at night knowing that we had to make
tough business decisions, second-guessing myself. Because you’ve got
to appreciate how difficult it is to have
a discussion with somebody who’s
done nothing wrong, who’s hearing
that he’s going to lose his job.
I found one of Richard Feynmann’s
books—he was a physicist and an
acclaimed genius, and I needed a genius
just about then. I started reading this
book for distraction. It transformed
me. Feynmann, a product of the 1940s,
‘50s, and ‘60s, observed things about
what we later came to understand as
“complex-systems” issues—complexity
and fitness that, on the surface, had
nothing to do with this Grand Rapids
company and its people in West Michigan. But I sensed that they were the
same issues. I mean, the underlying
law is that things fight for survival.
But, in reality, what I read turned out
to be a counterpoint to the way some
think about business. It goes something
like this: If you look at a business—let’s
say the Pony Express—you invest in
it and it grows. But just as it gets successful, somebody invents the telegraph. And then the telegraph system
thinks it’s perfect, but here comes the
telephone. So the core question is,
when they get to the height of their
success, what keeps companies from
transforming themselves so they can
get to their next phase of high performance? The virtues that make a
business successful can eventually
sink it. This is true in nature, in economic systems, in business-model
design. If you hang on to the pony at the
heart of your original message-delivery
system, you’ll, by default, choose to die.
And it hit me. For us, the issue is
piecework. Would I choose to protect
it and let the company die? I can’t do
that. That system was why the company was so successful for a long time.
Then there came a time when the old
industrial models couldn’t compete
anymore. Choosing to die was not an
option for me. The year was 2000. And
we had just started making progress,
because I could see that the facets that
made the company great at one time
were the old virtues that held us back.
In your mind, as the CEO, what has to
happen in order to be able to make that
switch into the new mode?
Andy Grove called it “the paranoia of
survival.” I think people who are long-lived as CEOs obsess about how they
have to make their companies more
fit. Don’t read that as “lowering costs.”
We simply have to be better and better
and better. And once you train yourself
to think this way, you find infinite
opportunities. In 2000, we were a four-billion-dollar company. We were in
great shape. But it didn’t feel right.
How did we take it apart, put it back
together, and also remain fit? It’s a lot
harder than it sounds. It took a decade.
Ten years later—after what we’ve been
through economically over the past three
years—are your meetings about upward
trajectory, in terms of thinking and hoping
and planning for a new kind of recovery?
I see unlimited opportunities to alter
the models for success. I’m convinced
that this is one of the greatest times to
be in business, because if we master
