If organizations want to attract and retain the most talented people, there’s something more powerful than compensation.
What talented people most want is to feel special, according to Roger L. Martin in his book A New Way to Think, published this week. Martin, a former dean of Toronto’s Rotman School of Management, cites the example of Green Bay Packers superstar quarterback Aaron Rodgers, who negotiated shortening his contract with the team because felt like he was being treated just like any other player.
Martin suggests three rules for making star employees feel special:
- Never dismiss their ideas.
- Never block their development.
- Never pass up a chance to praise them.
Eric Yuan, the billionaire founder and CEO of Zoom, shows what happens when you don’t take this approach. While working on Webex, he proposed rewriting the platform to work better on smartphones but was rebuffed. So he left his high-salary job to create a service that relegated Webex to also-ran status.
Martin’s advice for handling talent is one of 14 areas in his new book in which he outlines approaches that fall outside of conventional ways of thinking. Some are less radical than others, and one is almost inaccessibly wonky for non-financial-experts. But many of the 14 are lucid expressions of how to approach common organizational and management problems from a top business thinker.
Some of the best parts of A New Way to Think provide guidelines for tackling corporate strategy. You might think that to come up with the right strategy for an organization, you should focus on the things you know to be true. But that often results in great ideas getting rejected prematurely.
A better approach for crafting strategy is instead to focus on what would have to be true for a given approach to succeed, according to Martin. He proposes coming up with a range of “strategic possibilities” and defining the conditions necessary to make them succeed—rather than just shooting them down based on data or assumptions from existing operations. For example, “‘Customers will never accept differential pricing’ becomes the condition ‘This possibility requires that customers accept differential pricing,’” Martin explains. (p. 61)
Martin cites the example of Procter & Gamble’s quest in the 1990s to become a major player in global beauty care when its only asset was Oil of Olay, then small and down-market. Among the conditions necessary to make the Olay brand into a vehicle for P&G’s expansion in this product category was that customers would have to accept a much higher price point. P&G tested this “barrier” condition and found it to be possible—ultimately turning Olay into a multi-billion-dollar brand.
Another important section of the book concerns corporate culture. Martin rejects the idea that you can fix culture—which he defines as “a book of rules residing in the minds of employees that guides how they interpret situations and decisions” (p. 91)—through sweeping top-down initiatives. Rather, he prescribes “altering how individuals work with each other,” (p. 9) like how at Rotman he initiated individual meetings with faculty around their annual assessments where he asked whether they needed help from the school that they weren’t getting.
Martin argues that CEOs he knows fail not because they don’t work diligently enough toward a goal, but because they use the wrong approach or model.
Among the other approaches Martin proposes:
- Think about competition as something that happens around serving individual customers rather than as a battle between companies. “This calls for an approach that is less inspired by hierarchy and more by respect for the insights of the people in direct contact with customers,” Martin writes. (p. 16) This also involves eliminating any layer of management that doesn’t add net value to the layer below it. Employing this logic, P&G, for example, got rid of regional presidents in 2019 and shifted their control to product category heads.
- Put customers before shareholders. “Thinking about the customer forces you to focus on improving your operations and the products and services you provide, rather than on spinning lines to shareholders,” Martin explains. (p. 38)
- Acknowledge that customers often prefer the familiar solution to the perfect one. Successful companies often aggressively alter branding in anticipation of market changes, when “for customers, ‘improved’ is much more comfortable and less scary than ‘new,’ however awesome ‘new’ sounds to brand managers and advertising agencies,” Martin writes. (p. 51) The few times P&G significantly changed Tide’s packaging—such as by making it blue instead of orange for Tide Coldwater—the company found it didn’t work.
- Creating great choices requires imagination more than data. “The presence of data is not sufficient proof that outcomes cannot be different,” Martin writes. (p. 79) He describes how Lego’s sales data suggested girls were much less interested than boys were in its toys. But the issue was that it hadn’t figured out how to inspire girls, and when it did with Lego Friends in 2012, it successfully expanded its market.
To be sure:
- The book relies heavily on Martin’s experience consulting with P&G, which he contends gave him first-hand view of the business scenarios he describes.
- Most of the chapters in A New Way to Think are adaptations of previously published Harvard Business Review articles. For the most part, they feel up to date and relevant. That includes the culture chapter, which was rooted in an article from 1993.
- It’s hard to argue that some of the approaches Martin outlines are truly new ways of thinking. As he acknowledges, the idea of focusing on customers is one previously stressed by management thinker Peter Drucker, among others.
Memorable anecdotes and facts:
- Customers are fickle. Customers of Tom’s toothpaste buy it just 25% of the time, and Colgate and Crest buyers are loyal only 50% of the time.
- Martin and then-CEO A.G. Lafley overhauled P&G’s onerous business unit strategy review presentations in 2001 by banning participants from presenting PowerPoint decks. They succeeded in making the sessions more about discussing strategic questions.
- When a Rotman faculty member approached Martin to complain about a colleague, he would suggest that they go immediately to the other person to work it out. No one ever took him up on it, and people stopped coming to him to complain about other faculty members behind their backs.
- “No business can compete on the front line with one hand tied behind its back by a layer above that is not creating enough value to counterbalance its cost.” (p. 19)
- “If the global CEO isn’t too busy to do in-home visits and store checks, how is it that you are?” (p. 21)
- “To achieve real culture change, executives should focus on and show discipline in how they structure the human interactions that make up an organization’s working day.” (p. 109)
- “All executives know that strategy is important. But almost all also find it scary because it forces them to confront a future they can only guess at.” (p. 141)
- “Given that strategy is primarily about revenue rather than cost, perfection is an impossible standard.” (p. 149)
- “What is the use of the distinction between strategy and execution, between formulation and implementation? The answer is none at all. It is a pointless distinction that in no way helps the organization. In fact, it does great damage to the corporation.” (p. 156)
- “The secret is to stop thinking about acquisitions as if targets were jewels to be mined. Think of M&A rather as a meeting of minds, in which the acquirer helps the target to fully realize its value-creating potential by making new opportunities available, offering smarter management, and providing access to new and complementary capabilities.” (p. 214)
The bottom line is that A New Way to Think, if nothing else, encourages readers to look critically at conventional approaches used to tackle business problems and consider alternatives. It champions the sensible idea of focusing on customers rather than shareholders or corporate egos and hierarchy. And it provides valuable examples of how cultural change is best pursued indirectly, through day-to-day shifts rather than top-down decrees.
You can order A New Way to Think at Bookshop.org or Amazon.
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