EXCERPT

ONE

CORPORATE ANTHROPOLOGY

I wear power ties, I tell power lies, I take power naps,
I run victory laps. I’m a totally ongoing bigfoot slam dunk rainmaker
with a proactive outreach. A raging workaholic; a working rageaholic.
Out of rehab, and in denial. I’ve got a personal trainer,
a personal shopper, a personal assistant, and a personal agenda.
You can’t shut me up, you can’t dumb me down. ’Cause I’m tireless,
and I’m wireless, I’m an alpha male on beta blockers.

—George Carlin, Life Is Worth Losing

For thousands of years, groups of people have looked to a single strongman for leadership. Families had patriarchs. Tribes had chieftains. Villages had lords. Nations had kings, prime ministers, presidents. Over time, this ancient model deﬁned by one powerful ﬁgure dominating the rest of the group has been applied to practically every sphere where groups of individuals work together. Cities have mayors. Armies have generals. Teams have quarterbacks. Nuclear families have fathers. And corporations have CEOs. In the 1940s, we came up with a catchall description for this ubiquitous archetype. We dubbed these strongmen Alpha males, a term we borrowed from studies of the animal world.

For all of prehistory, human societies were egalitarian, collaborative communities of hunters and gatherers. The typically male role of hunter wasn’t valued any more or any less than the typically female role of gatherer. Both provided sustenance for the tribe. In fact, considering that females were the source of life itself, societies revered matriarchs as much as they did patriarchs. It wasn’t until the development of agriculture and the necessity of being able to plow for crops that physically stronger males began to dominate. The adoption of agriculture also meant that tribes became rooted, rather than nomadic. In turn, ﬁxed locations led to greater population density and heightened competition— competition, I might add, that led to hierarchical rather than collaborative group dynamics.

When society morphed from the Agricultural Age to the Industrial Age, the leadership paradigm failed to evolve along with it. In fact, during the Industrial Age, the Alpha model became even more ingrained. Although working on an assembly line did not require physical strength, labor became ﬁrmly divided along gender lines. Men worked outside the home; women worked inside the home. If circumstances obliged females to seek outside employment, they did so in roles that mirrored their by-now- customary roles: cook, maid, laundress, seamstress. For most of the Industrial Age, in fact, the only professions that welcomed females were those requiring the role of nurturer: teacher and nurse.

In the 1980s, when women began to collapse gender barriers and occasionally assume an exalted professional status, they were dubbed Alpha females. This very minor tweaking of the name made sense, considering that the behaviors and attitudes of many Alpha women were indistinguishable from men heading up similar groups. Many of these women had decided that the only way they could succeed professionally was by becoming exactly like men. They surrendered most vestiges of their femininity. They desexualized themselves. They wore tailored shirts and even female neckties that both mimicked and parodied a traditional male wardrobe. Books from that 1980s era had titles like Games Mother Never Taught You: Corporate Gamesmanship for Women, which counseled women enter- ing the workplace to avoid any and all so- called subservient positions. Among other things, women were advised never to take notes, as their colleagues might then perceive them as secretarial. (Today, I’m constantly reminding young women of the power inherent in minutes-taking. The way I see it, aggregating the sum of organizational data is about as far as you can get from subservience!)

Again, women who rose to top positions in the 1980s and 1990s felt almost as though they had to out- Alpha the Alpha male. They not only had to be aggressive and tough but they also had to be twice as aggressive and tough as all the men out there. Think of empire- builders Martha Stewart or Linda Wachner, the CEO of apparel giant Warnaco. Wachner rose from working as a department store buyer to leading a leveraged buyout of the global company she would eventually lead. She soon quadrupled the size of Warnaco’s business, which owned numerous high- end brands including Calvin Klein jeans, Ralph Lauren Chaps, Speedo swimwear, and Olga bras.

Like numerous Alpha men before her, Wachner was ultimately brought down by her own hard- charging management style. She was, the word went, too abrasive, too critical, too autocratic. She drove away key management talent. She didn’t heed the advice and counsel of subordinates. Most unforgivable to stakeholders, under her governance Warnaco began hemorrhaging money, and ultimately ﬁled for bankruptcy protection in 2001. That same year, Warnaco ﬁred Wachner without severance pay.

Author Sarah Dunant was once quoted as saying, “[The] Alpha female, like [the] alpha male, depends on such a state of innate superiority that she’s probably not aware of her status. While she would be eﬀortlessly talented and capable, she would need a reduced capacity for empathy, because otherwise it would derail her. . . . I envisage the mind of Mary Warnock, the body of Kate Moss and the humanity of Leni Riefenstahl.”

“[The] Alpha female is pretty exceptional,” agrees UK Guardian columnist Polly Toynbee. “There are not a lot of people trying to be like her, whereas there are a lot of men behaving in the same way, clambering over each other to reach the top of the tree. Those women who do get to the top are mavericks, hybrids and deny that they are like other women. Women do not like the Alpha female very much, nor do they want to be like her. Women want to be liked, which holds them back,” Toynbee concludes, adding that English Prime Minister Margaret Thatcher was the only female leader in history whose cabinet lacked even a single female.

Whether male or female, an Alpha is an Alpha, right?

So why did the Alpha model of business leadership and its hierarchical organizational structure last as long and spread as wide as it did? Because it worked, that’s why. The risk- taking, competitive, self- assured boss was lauded for his or her decisiveness, certainty, and willingness to go it alone. Was he or she disagreeable? Occasionally. Callous and insensitive? Sometimes. Close- minded and obstinate? Often. But those negative traits were condoned, accepted, and even admired as part of what it took to reach the top dog slot and lead the group to success. Moreover, an Alpha leadership style worked best with a carefully structured pyramid of support beneath it. There needed to be a clear hierarchy, or chain of command, usually divided up into functional branches, in which people knew their roles, carried out orders from above, and in turn gave orders to those below them. For the next generation of leaders, there was only one clearly marked path of ascension or leadership to follow, and only one sharply deﬁned set of skills for them to possess: the path that led to the CEO job, as well as to the huge, glassed- in corner oﬃce.

No doubt about it: this historical, hierarchical Alpha paradigm had a heralded, unprece dented run. For thousands of years, it was the model for nearly every group of human beings, from the Ro- man Empire to 1950s America, from Patton’s Third Army to Jack Welch’s General Electric to Tom Brady’s New En gland Patriots. It was the traditional way to lead a company, structure an organization, and run a family. But everything comes to an end.

The generations that came of age in the 1970s and 1980s saw themselves as rebels. They were ahistorical and anti-establishment. The civil rights, women’s rights, and gay rights movements all had their origins in the youth-based counterculture that ﬂowered during those two decades. The irony was that gender roles and the Alpha paradigm were as ﬁrmly entrenched in these “revolutionaries” as they were for previous generations. What was revolutionary, however, was how this generation grew up to raise their own children. Those young people, who have grown up to become today’s knowledge workers, weren’t necessarily forced into strict gender roles, and growing up, they also learned that every member of the team had a valuable role to play. In short, most were taught to be true to themselves and to work well with others.

Eventually, when they graduated from college, these young people found themselves entering a new kind of economy: the Information Age. In the Industrial Age, work was algorithmic and incremental. Experience mattered more than anything else. This made it a natural ﬁ t for the hierarchical Alpha structure and leadership paradigm. By contrast, work in the Information Age is heuristic— it stimulates inquiry, oftentimes by trial and error—and ﬂuid. Creativity matters more than experience, since, let’s face it, today memory can be digitized. The sheer ubiquity of information and instantaneous communication has given a generation that feels entitled to speaking its mind the ability and the means to call out opinions twenty-four hours a day, seven days a week. Information technology has also led to the globalization of economies and cultures. Today’s businesses no longer exist in a closed system. No one leader can have all the answers, nor can any stand-alone leader ignore the power of today’s new 24/7 information ﬂow. This combination of information and communications technology has brought down more despots than all the smart bombs built over the course of the Industrial Age. Hierarchical organizations, in which decision-making is centralized in one person, or within a small, elite group of people, are becoming as obsolete in today’s world as political autocracies.

Which is another way of saying that the future belongs to the Betas, not the Alphas, and to organizations and leaders who communicate, collaborate, and curate.

Information is now so valuable and so widespread that trying to keep it under control isn’t only counterproductive, it’s also bound to fail. Today’s organizations and leaders must have as open a dialogue as possible, not just internally, with employees, but also externally, to the public, and in some cases, the world.

As everyone knows, information technology has made the world vastly more complex than it used to be, and it continues to do so in leaps and bounds. It is impossible for one person, no matter how brilliant or dynamic he or she is, to master all the knowledge a company needs to compete. In the Information Age, success requires leaders who are willing and able to collaborate with employees, directors, customers, and competitors.

Which is where Beta comes in.

Beta leaders and employees are fully networked into their communities. They inﬂuence rather than intimidate. They play to their strengths and seek help from others to compensate for what ever skills they lack. Rather than aspiring to omnipotence and acting as though they’re the masters of all they survey, Beta leaders focus on what I call motivated skills, for example, the things they know they do exceptionally well. And instead of exploiting their peers’ weaknesses in order to attain and hold on to power, they encourage their fellow executives to play to their own strengths so that the entire team and organization can succeed.

For a leader, this requires the ability to curate—to listen and to guide— rather than command. Th e ideas, products, and eﬀorts of all the organization’s constituents must be woven together into a cohesive narrative. And those individuals who work in Beta organizations must be encouraged to pursue their own areas of interest and expertise, rather than forcing themselves to follow a culturally pre approved development path.

Which is where the Beta leader steps in. He or she understands that every individual in the organization is a contributor; the closer everyone in the organization comes to achieving his or her singular potential, the more successful the business will be. Beta leaders encourage their employees to acquire new skills, but rather than responding to a company mandate, employees themselves set out to expand their skill sets. In the Beta organization, individual development is all about self-actualization, as opposed to self-promotion.

Now, self- actualization doesn’t mean slinging a backpack over your shoulder and spending six months beachcombing the sands of Costa Rica. It’s more accurately deﬁned as self- awareness. Beta companies generally encourage employees to bring to their roles an intellectual and emotional understanding of their strengths and their weaknesses, their goals and their motivations. And among the qualities that make up successful Beta leaders is a willingness to help employees reach a high level of awareness via self- directed learning—which is one reason why the 360 reviews (performance-appraisal data collected from all around an employee) and feedback sessions in many corporate oﬃces seldom have any teeth. (I’m a long-standing believer in self-directed learning, with an encouraging assist from the top.) Leaders need to give their people the proper tools, techniques, and feedback. At the same time, organizations cannot be wholeheartedly responsible for their employees’ development; employees have to play their parts, too.

For example, if an executive says to an employee, You are unbelievably good at doing X, but less adept at doing Y, and I’d like to help you develop your skills at Y with the following techniques and protocols, well, to me that’s a conversation that’s actually liable to bear fruit. Another executive might tell an employee, You’re a really incredible VP of Marketing, but you lack equally great ﬁnancial modeling skills. To that end, we recommend that you consider pursuing an executive MBA. Oh, and one more thing? We’re not going to push you toward doing that, but we will support you every step of the way, and make a long- term commitment not just to your continuing education, but to your role in this company as well. Which is why among the characteristics that deﬁne Beta leaders and organizations is the ability to imbue employees with processes designed to make them better than they are, and that help them play to their strengths and shore up their weaknesses.

Whether they’re executives or directors, today’s most successful Beta leaders apply the same principles to their organizations’ development as they do to their own, and their employees’, development. Just as Alphas build hierarchical organizations, Beta leaders create horizontal organizations that mirror their own approach to collaboration and teamwork. Beta companies are communities, not armies. They are made up of shifting, project- or process- based teams instead of rigid functional silos. On one project someone might take on a leadership role, while on the next that person will be just another team member. Instead of following individualistic, ego-driven tactics designed to meet quarterly numbers and boost short- term revenue (and compensation), Beta executives and directors pursue strategies that beneﬁt the entire community through growth and long- term proﬁtability. The successful corporate leadership of today evolves the company toward its own kind of self-actualization; of becoming the best at what it does best.

Example: What does a company like Apple do best? The short answer would be “What ever it wants,” but in 2001, when Apple decided to expand its brand into retail, few industry observers predicted the experiment would work. Today, there are 326 Apple stores across the United States, Europe, and Asia, which in 2010 accounted for roughly $3 billion in sales. As The Wall Street Journal points out, “More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney’s four biggest theme parks last year.” As the world’s most valuable company, one many experts believe may someday become the world’s ﬁrst $1 trillion business, Apple holds an enormous share of the fast-growing smartphone market (especially across emerging markets) and a near- monopoly on music downloads. The company produces the default MP3 music player for all ages in the iPod, and has a 54 percent market share in the tablet market. Sure, the company sells desktop and laptop computers, but what Apple is really selling is style, simplicity, beauty, high-tech design, and treasurelike packaging, while inspiring in its customers a reverence more typically associated with religion. (When I recently visited the standing- room- only ﬂagship Apple store in Midtown Manhattan, it looked and felt like an international day care, while only half a block away, FAO Schwarz, the world-famous toy store, was nearly empty.)

Facebook is another enormously successful company that is sticking to what it does best: being the world’s best, most inﬂuential targeted advertising platform. The numbers speak for themselves. More than one in thirteen people on earth today have a Facebook account. Facebook users spend over 700 billion minutes every month on the site. Every twenty- four hours those users install 20 million apps, and every month some 250 million people engage with the site from outside Facebook’s oﬃcial Web site, meaning, via mobile phones and tablets. Half of all individuals under the age of thirty-ﬁve rely on Facebook as their exclusive source of news gathering. And as any casual user probably already suspects, Facebook has become the largest photo-sharing album on earth. But in the face of its IPO, has Facebook announced plans to expand its services into providing content, or creating its own proprietary games? No. At least for now, Facebook will continue playing to its unparalleled strengths by bringing people together and further buttressing its position as the most powerful advertising platform in the world.

Finally, Amazon .com may have evolved into a digital version of a Greek agora by discounting everything from kids’ toys to rug shampoo to beauty products to lawn mowers to digital cameras, but most consumers still associate the online retailer with books and reading. Strangely enough, founder, president, and CEO Jeﬀ Bezos was a computer science major in college with little interest in books and authors. But in 1994, during the ﬁrst iteration of dot-com mania, Bezos studied the top- 20 mail order businesses and wondered, Which of these industries could the Internet handle more eﬃciently, proﬁtably, and on a much larger scale? Bezos chose books. The rest is history, as Amazon began sharply underselling the prices set by publishers and bricks-and-mortar bookshops. In 2007, reversing the marketing strategy known as the “razor and blades business model,” whereby a company sells an inexpensive platform, then charges customers high maintenance fees (think of the prices of shaving razors, or how much it costs to replace the ink in your printer), Amazon began manufacturing the world’s ﬁrst- ever e-book reader, the Kindle, and began selling electronic versions of books and magazines at a loss to ensure it became the dominant player in the e-book category.

Bezos and his team recognized a few things that traditional publishers were slow to acknowledge. The ﬁrst was that in an impatient, impulsive Information Age, customers expected instant gratiﬁcation. (Amazon whizzes e-books to an e-reader in seconds.) Second, Amazon realized that books were beyond the price range of many consumers. Yet in discounted, electronic, ten-dollar versions, readers could be tempted to take risks on new authors and unknown titles when they weren’t willing to take on writers or books that were retailing for three times that amount. Finally, synchronous with a wobbling global economy and a growing focus on environmental issues, many consumers were doing away with extraneous clutter— and that included old books. Today, ﬁve or so years after Amazon’s entry into digital publishing, the company’s e-book sales make up roughly two-thirds of the total e-book sales in the United States. Not least, Amazon had created a new distribution model for writers who are today able to bypass traditional routes—the literary agent and the publisher—and publish their books via “backdoor” methods.

Amazon hasn’t stopped there. In 2011, the company launched its own publishing platform, setting the company up to compete directly with traditional New York publishers. Led by a former publishing executive, Amazon has already signed up several high-proﬁle writers, helping them develop content while oﬀ ering the company’s own in-house marketing and delivery system. It also rolled out “Amazon Singles”— original articles that range in length from ﬁ ve thousand to thirty thousand words that the company sells for anywhere from $0.99 to $2.99, and that can earn Singles authors including Stephen King, Lee Child, Amy Tan, and Ann Patchett a roughly 70 percent royalty rate. Th e Singles program has been so successful that Amazon can almost be credited with inventing a new genre that straddles a universe in between a very short book and a stretched-out piece of journalism.

Assertive Alpha-style leadership isn’t extinct. There’s a bit of the autocrat and control freak inside every successful entrepreneur. Ego and assertiveness are no doubt necessary for someone to be able to buck the odds and successfully bring his or her idée ﬁxe to fruition. And in times of crisis, existing companies typically ﬁnd there’s no replacement for the speed and clarity that come from having a single decision- maker at the helm.

The terrorist attacks of 9/11 caused most businesses to recalibrate their priorities, and ﬁnd ways to slice money from their operating budgets. I was working in private equity at the time. In the days after 9/11, I remember that our entire team took a serious, big-picture view of all our businesses. We asked ourselves the tough questions: How can we preserve jobs, conserve our energies and resources, and evolve in the weeks, months, and years ahead? In the end, rather than telling our top people in every company division to chop 20 percent of their operating bud gets, which is how many Alpha companies responded in the months after 9/11, our approach was inclusive. There were no top- down mandates or across-the-board eliminations. Instead, we formed a committee to ﬁgure out the best possible solutions, and asked everyone in the organization for his or her input. During the 2008 economic downturn, one Beta company I know of encouraged all hands to step up and take responsibility and ownership of the company—and ended up eliminating not jobs, and not employees, but of all things, snacks. You read that right. The team asked itself: Would you rather have peanuts 24/7 or jobs? In the end, the company did away with the cookies, popcorn, and tubs of Cup- a-Soup that had previously been available at all hours to all employees. Instead of ﬁ ring people, or decimating division bud gets, the powers- that- be replaced the commissary with vending machines. Company employees were so relieved to hold on to their jobs that I doubt they missed the free 24/7 peanuts and pretzels.

September 11, 2001, also gave Jimmy Dunne, the CEO of investment banking ﬁrm Sandler O’Neill & Partners, an opportunity to reset his company’s priorities. Sandler O’Neill’s oﬃces were on the 104th ﬂoor of the World Trade Center, and when the planes crashed, of the eighty-three company employees at work that day, sixty-six died. According to Fortune magazine, Sandler ultimately lost 40 percent of its employees, including “a third of its partners, all its bond traders, its entire syndicate desk and almost all its equity desk.” The next day, CEO Dunne put on his sharpest Brooks Brothers suit and addressed his employees. He, the ﬁrm, and the nation were in the midst of an unimaginable national tragedy, he told them. He understood if any of his employees wanted to go home, change jobs, or even change careers. Ultimately, most of his people stayed put, relieved to be able to funnel their fear, anger, and grief into productivity. Six days later, when the ﬁnancial markets reopened, Sandler O’Neill had reopened its doors in a small Midtown oﬃce. By the end of the year, the ﬁrm was once again proﬁtable.

On 9/11, countless Beta leaders came forward to take control of the crisis. JetBlue, the discount airline, was founded in 2000 by Brazilian-born entrepreneur, David Neeleman. Neeleman’s mission was to restore not only quality but also humanity to an industry where cramped seating and high prices were the norm, and where customers typically came last. JetBlue’s culture put a premium on fun, passion, integrity, informality, and outstanding service. Passengers making phone reservations were more likely to ﬁnd themselves talking to a stay-at-home mom in Salt Lake City than to be put on hold by a tightly scripted sales associate. From the beginning, Neeleman also made it clear that every JetBlue employee was a “crew member,” from the pilots to the vice- presidents to the men and women who tossed your suitcase onto the luggage carousel. No matter who you were, JetBlue expected you to roll up your sleeves, grab a vacuum cleaner and a trash can, and help clean the airplane in preparation for the next ﬂight out.

JetBlue was one of our portfolio companies back in the days when I was working in private equity. Then 9/11 happened. That day, all ﬂights were grounded. I lost count of the number of people who told me they would never board an airplane again. Many experts went on record as saying that the airline industry would never recover.

In the wake of 9/11, one of the very ﬁrst calls we received was from JetBlue. Could I help the airliner ﬁnd a new, permanent Head of Security? The next morning, Neeleman appeared on NBC’s Today Show to reasssure the American public that his airline had just bought a new ﬂeet of planes equipped with armored cockpit doors with titanium locks. JetBlue had also installed cabin camera surveillance systems that permitted the pilot and the cabin crew to see what was happening on the plane at all times.

In Neeleman’s Today Show appearance was a near- perfect example of a leader of a Beta company taking charge during a time of national upheaval. (Calling someone a “Beta” in no way suggests that he or she is not a leader—in fact, as we’ll see, nothing could be further from the truth.) Over the next few weeks, as the airline industry continued its ﬁnancial slide, JetBlue’s pilots union voluntarily oﬀered to take a pay cut as a demonstration both of company loyalty and admiration for how Neeleman was steering them through catastrophe. JetBlue recovered and, then as now, has extraordinarily high popularity and customer satisfaction ratings.

Only six years later, Neeleman stepped up again, this time during a PR disaster of JetBlue’s own creation. It was Valentine’s Day, 2007. An ice storm had caused numerous tarmac delays at New York’s JFK Airport. Most airlines canceled all incoming and outgoing ﬂights and told passengers to go home and reschedule their travel plans. JetBlue opted to stick things out. Big mistake. Thanks in part to a breakdown in the airline’s communications system, hundreds of passengers found themselves stranded on JetBlue’s planes for six hours or more. Over a seventy-two-hour period, nearly a thousand JetBlue ﬂights were canceled. Tempers raged to the point where police had to be called in. At which point, CEO Neeleman came forward to acknowledge, and apologize for, his company’s miscalculations. A week later, JetBlue went so far as to roll out a customer bill of rights that guaranteed its passengers free or reduced-fare ﬂights and cash incentives if they ever found themselves stranded on a tarmac again. The oﬀer was retroactive to Valentine’s Day. It’s worth noting that later that same year, airline passengers again ranked JetBlue number one in customer satisfaction in areas ranging from on- time performance to in-ﬂight service.