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Company Lore
 

Reviews of six new business books. Includes tall tales about the launch of Home Depot and IKEA; ways to motivate your hottest employees; and the inspirational story of a banker to the poor.
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Book Value

Tall tales from big companies

  • Built From Scratch, by Bernie Marcus and Arthur Blank with Bob Andelman (Times Books, 1999)
  • Cannondale, by Dan Wildhirt, John Schubert, and Mike Steere (VeloPress, 1999)
  • Leading by Design, by Ingvar Kamprad with Bertil Torekull (HarperBusiness, 1999)

Ah, sweet merchandising. Built From Scratch: How a Couple of Regular Guys Grew the Home Depot from Nothing to $30 Billion is the story of the founders of the Home Depot, by the founders of the Home Depot: Bernie Marcus and Arthur Blank. It's filled with familiar, even legendary, tales: how the company was founded after Daylin Corp. CEO Sandy Sigoloff, better known as "Ming the Merciless," fired Marcus and Blank from the Handy Dan Home Improvement Centers; and how Ross Perot passed on an opportunity to invest $2 million for a 70% stake in the Home Depot, which would be worth approximately $58 billion today.

Books of this ilk--tales of huge companies with humble origins--seem to share some telling qualities, at least as far as Built from Scratch and Leading by Design: The IKEA Story go. One is that the book has to include your core values. (The Home Depot's are listed up front; IKEA's are at the end.) Another is that your humble origins must be really humble. So the IKEA story traces its entrepreneurial roots to founder Ingvar Kamprad's boyhood, when he sold belts, wallets, watches, and pens out of a brown cardboard box. Oddly, though, a lot is made of Kamprad's youthful attraction to "the Nazi myths and movements of the 1930s." We're also told that in person, Kamprad "reminds you of some venerable African freedom fighter, who with a mixture of humility in the face of the responsibility but with the obvious pride of leadership confronts his people after the liberation." Seems a bit much.

There was an opportunity missed in Leading by Design. It's too much about Kamprad and too little about the business. A better book would have brought the same creativity to the IKEA story that the company brings to its stores.

On the other hand, Cannondale: Handmade in USA does a wonderful job of capturing the feel of the bicycle company. It's the strongest management book of the lot even though its authors aren't traditional management writers and it's published by VeloPress, which specializes in books on biking.

The book also covers the entrepreneurial-roots stuff. We learn that company founder Joe Montgomery's stormy relationship with his father--himself a successful entrepreneur--led him to feel he had something to prove. We learn that Joe stank as an investment banker, that he succeeded as a partner in a New York City restaurant, and that it was the proceeds from selling his share that helped him finance the launch of Cannondale.

But what's really terrific about this book is that you get a sense of the company's passion for its product. The writers don't shy away from talking about design in highly technical terms--the things you learn about tube stiffness!--but for the most part, we're treated to how Cannondale pursued the goal of making the best bicycles in the world. It wasn't always easy. The company seemed to stagger along until it went public, on November 15, 1994. Unlike the executives of a lot of companies, Cannondale's management embraced the new accountability brought on by going public. "We had to mature to a higher level," says Scott Montgomery, Joe's son and a Cannondale executive, "or we would be high-profile, embarrassing washouts."


Show me the money

  • Hot Groups, by Jean Lipman-Blumen and Harold J. Leavitt (Oxford, 1999)
  • The Nudist On The Late Shift And Other Tales Of Silicon Valley, by Po Bronson (Random House, 1999)

Ok, here's the deal: hot groups is the new buzz term for bands of people who love their work so much, they never want to leave it. Through anecdotal research, Lipman-Blumen and Leavitt have distilled what makes a hot group hot. If you want hot groups in your company, they say, loosen controls, organize less, check work less frequently, and forget performance evaluations, since they emphasize the individual over the team.

Of course, there's a downside to hot groups. They can be addictive and have an adverse effect on members' relationships outside the workplace. But they can transform a simple knowledge worker into one who works with all of his or her being.

Hot groups can exist only in an environment that allows for experimentation and wild creativity. Of course, managers still need to take some responsibility and set deadlines for the group, but the authors say that sometimes employees just need to be told what the goal is and they'll rise to the occasion. "Don't make the usually incorrect presumption that everybody already knows what you want," they write. People in hot groups live and breathe the project they're working on and, the authors contend, are much more driven by a sense of achievement than by the promise of rich cash rewards.

That's the antithesis of the argument in Po Bronson's The Nudist on the Late Shift. It's cash that Bronson says is the mantra of the moment in Silicon Valley. Not that that's anything new.

Lipman-Blumen and Leavitt make a sound argument that some workers commit whole hog for the sheer juice they get from achieving a goal. Bronson makes an equally compelling observation that when that juice is money, you can muster up all the motivation anyone needs to succeed.


Give me your poor

  • Banker To The Poor, by Muhammad Yunus (Public Affairs, 1999)

In 1976, Muhammad Yunus was head of the economics department at Chittagong University in Bangladesh. On a visit to a village, he and a colleague met a woman who caned bamboo stools. She financed her craft business by borrowing at usurious rates from the moneylenders, who were charging the village women a vig of as much as 10% a day. The next day Yunus had a list drawn up of the 42 other villagers who were borrowing from the moneylenders. Yunus lent them $27 each and said they could repay him anytime, without interest.

Those $27 loans were the beginning of what became the Grameen Bank, which today makes $1.5 million in microloans to the poor every working day. Since the Grameen Bank opened its doors, in October 1983, its repayment rate has reportedly been greater than 98%. "Giving the poor access to credit allows them to immediately put into practice the skills they already know," writes Yunus, "to weave, husk rice, raise cows."

Banker to the Poor: Micro-Lending and the Battle Against World Poverty is Yunus's story. His values stand in stark contrast to those of the folks in Silicon Valley. In Yunus's world, very small amounts of money transform lives. The scale may be small, but the impact his efforts have can be breathtaking.


EXECUTIVE READER

SETH GODIN
Founder of Yoyodyne Inc. (which was purchased by Yahoo for about $30 million in 1998), vice-president of direct marketing at Yahoo, and author of Permission Marketing

RECENT FAVE: The Tom Peters Seminar, by Tom Peters. "It's like Geritol for tired businesses, with its burst of energy, its cavalcade of big ideas, its irreverence, its sheer overwhelming wonder of how to do business right."

ALL-TIME CLASSIC: Secrets of Closing the Sale, by Zig Ziglar. "Zig's best book, and one that could quite possibly change your life by changing the way you look at problems. It may seem like overkill, but the 16-tape audio set is well worth traveling with."

NONBUSINESS GEM: The Man Who Folded Himself, by David Gerrold. "One of the first science-fiction books I can remember. It showed me an entirely different way of looking at the world and at opportunities."

ON THE NIGHTSTAND: The manuscript of the forthcoming Confessions of a Venture Capitalist, by Ruthann Quindlen. "Ruthann has captured the gestalt of Sand Hill Road [in Menlo Park, Calif.--the heart of Silicon Valley] as only an insider could." The expected publication date is July 2000. --Mike Hofman

Last updated: Aug 1, 1999




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