Conquering the North Face

by Hap Klopp

  Even Stephen Wolf, well versed in symbolism, made a slip—a big slip. Wolf is now CEO of United Airlines. Shortly after taking that job, he presented a leveraged buy-out proposal to the board as a means of helping solve the airline’s problems. But when the media reported it, the thing employees noticed most was that Wolf stood to make $70 million on the deal. The workers were also part of the buy out, but it was predicated on asking the workers to make concessions to allow the deal to work. Workers were outraged at being asked to make concessions so that Wolf could make $70 million. Of course, it wasn’t that simple, but the workers saw it that way. The buy out didn’t go through. For a while Wolf and the workers weren’t talking. Finally there was rapprochement, and the offer was restructured so that Wolf still made a good amount of money, but nowhere near $70 million. He took control of United and has been quite successful. But his story illustrates that even an apparent master of symbolism can be seriously hurt by one bad action.

  What you do tells people about what you think. A closed door may provide an opportunity for extra work, but it also telegraphs the message that some things are secret and visitors are not welcome. Limited access to information on computers sends the same message.

  The upkeep of your facility tells a lot about the quality of your products and your attention to detail. Things such as clean trucks, pruned gardens, and painted buildings, though not essential on one level, are really symbols of how much you care about your employees, your customers, and your product. A child-care facility, for instance, says as much to your employees about how you care for them as human beings as does their paycheck.

  Two symbols—promotions and money—are generally the most important internal symbols. If you promote on the basis of tenure rather than talent, it tells those with talent that skill has nothing to do with advancement.

  Compensation is probably the strongest symbol. If inequities exist, the workers will know. In one company I’ve worked with, the owner devised a complex system to calculate Christmas bonuses. The system was based on years of service, salary, a subjective judgment of how hard people worked, and about four other items. It was absurd—a rationalization to screw people. The formula was skewed so much to the owner that he received 93 percent of the bonus—the other 24 people split the remaining 7 percent. He thought that because he made it so formal, everyone would think it was fair. The reality was everyone thought he was trying to dupe them. Ducking reality, the owner asked one of his underlings to hand out the bonuses. Another employee in a fit of pique handed back his $25 bonus because, in his words, “the owner obviously needs it more than me.”

  Two other symbols—set up specifically to be symbols—are important enough to highlight. One is a mission statement. Unfortunately most mission statements don’t work because they are written by committees and read like it. They are long, they cover every contingency, and they are impossible to memorize. The best mission statements are the shortest. It has to be easy to memorize, and one that employees can state verbally with pride. Perhaps the best ever is IBM’s: “Think.” It isn’t specific, but it covers everything.

  The other obvious symbol is the selection of a company logo—it becomes a clear symbol of what you are. A low-cost, price-oriented company must have a symbol that is simple, clean, and frugal. A company selling high-cost, fashion-oriented items must have something that puts that image across. When you present your business card to a Japanese, you will see that person scrutinize it for much longer than an American would. They believe that what you stand for is represented by the graphic on your card. It is often the first impression you make on your customer—its importance transcends its cost.

  But for all that logos and mission statements say about a company on first glance, it is the actions of a company over the long haul that make the most important statement. Individual statements have a definitive life span. You cannot do one symbolic act and then assume it will last forever. You must continually do the symbolic, and always understand that everything you do has symbolic implications. Life is fluid; views change.

  In 1982, The North Face acquired a manufacturing firm, Black’s of Greenock, in Scotland. The idea was to provide a local manufacturing base to service our European dealers from inside the European Common Market. Black’s was a venerable name. The company had started with sails for clipper ships and evolved into manufacturing outdoor clothing and products.

  But Black’s had fallen on hard times. In an effort to cut costs, it virtually stopped new product design and marketing. The inevitable happened—lower sales. They cut costs again, which led to even lower sales.

  When we arrived, the work force was 70 percent less than at Black’s peak. People were demoralized and paranoid about their future.

  I assigned Bob Gorton, manager of one of our retail divisions, to be managing director in Scotland. His enthusiasm for the position was infectious, and his track record at The North Face was superb.

  We began by discussing how to run the company: like a typical British firm with hierarchy and formality, or in the more casual way we ran The North Face in Berkeley. The decision was easy. We opted to bring the Berkeley way to Scotland. It reflected our personality.

  A leader’s style creates the foundation for the team. I’ve seen autocrats and delegators develop great teams. The most important factor was that the leaders were genuine. I prefer to delegate, but the key is for employees to know who you are. You have to show them you, not a cardboard cutout that spins in the wind.

  On the day we signed the final papers, Bob and I met with all the workers and explained our vision, our demand to be the best, and our personal dedication to success in Scotland. We also explained our open-door policy to the executive offices. This was no mere change in policy; it was revolution. The workers were skeptical. Under the old regime the only time the workers had gone into the executive offices was if their names were called over the loudspeaker. “Come to the offices” meant to them “You are about to be fired.” That day as I was addressing the employees, one of the seamstresses turned to another and I overheard her say, “Let’s wait a couple of weeks and see if the cowboys from the Colonies are still talking to us.”

  We were, and they loved it! Bob became one of the most popular people in the company. When he resigned eight years later to join me on my consulting projects, people were openly sad and emotional. His humanistic approach had touched their hearts.

  But not all was smooth sailing. Some workers simply could not adjust to our open ways. A few months after we took over Black’s, I was back in Scotland. The head of the sales force (a sales force, by the way, that we were obligated to use for one year as part of the acquisition agreement) pulled me aside for what he called “a personal discussion.”

  “You’ve got to do something about Bob,” he said. “He’s not playing by the rules.” I was told Bob allowed workers to come into the executive offices. Bob even fraternized with the workers, the sales manager told me with much consternation. “Some days Bob doesn’t wear a tie. The next day the workers don’t wear a tie, and Bob does. It’s more than a problem; it’s sheer anarchy.” I was proud of myself when he said that because I didn’t laugh.

  Most employees, though, understood the symbolism Bob was putting across by running an open company. But it was quite difficult to explain to the sales manager the difference between freedom and anarchy.

  There was another time, however, when the sales force’s misinterpretation of our approach to business wasn’t quite so funny. Once we had the factory up and running, we decided it was time to meet potential dealers in the United Kingdom to tell them about our company, our commitment to quality, and even more so, that it was nice to be their neighbors. We wanted them to understand us as people, not just as a faceless company. We viewed it as a sort of house-warming, although it wouldn’t specifically be at our plant. We wanted to start things right, make a statement about ourselves.

  The sales force we inherited said they would set the meeting up and take care o
f everything. “It will be a lovely time,” they told us.

  What we found, however, was that our own sales force really didn’t have a clue about what we were trying to convey. Because of cultural differences or mere stubbornness on everyone’s part, we had somehow failed to ingrain in the sales force the spirit of The North Face.

  They set up the meeting in the Lake District, which is beautiful—pastoral and serene with rolling, picturesque hills. Streams and lakes dot the countryside, and trees abound. Driving to the meeting, I felt energized. The scenery was perfect for our image. But something went wrong. We turned away from the scenery into the grounds of the Clawthorpe Hotel. It was as if the sales manager had searched his entire life to find the one ugly spot in the midst of all that beauty.

  I tried to stay positive as we walked inside. The display room had no lights and no heat. The dining room, I soon found out, operated for only two hours—serving cold sandwiches. The sales manager had arranged for no drinks. He thought it would save money. I knew it would cost plenty—plenty of sales. A cash bar was incredibly unfriendly. But I closed my eyes and took a deep breath. Stay in control, I told myself. It can’t be that bad.

  It was worse. The sales manager who had told me “Don’t worry, I’ll take care of everything” stood up and gave his speech. “Welcome,” he said. “I wish I could stay here with you, but I promised the missus I’d take her to the symphony for her birthday. That is tonight. So I’ll be leaving now and turning the meeting over to Hap. Enjoy yourselves.”

  I was flabbergasted. He had told me nothing of the symphony prior to that moment. I had no prepared speech. But I knew that my actions right then would make a statement about The North Face for years to come. I smiled and went on verbal automatic pilot.

  I told Bob, “Find some solutions, quick. Arrange for free drinks, good food, and especially another place down the road where we can put across the image, as we know it, of The North Face—a friendly, caring company. We must salvage this.”

  I turned to the crowd of dealers and began to describe our company, our philosophy, and our mission. I interspersed adventuring stories with our business tenets while I waited for Bob to return. He came through, as I knew he would, and the meeting took a turn for the better.

  For years afterward, whenever we met with our dealers, we managed to get a good laugh by just saying the word “Clawthorpe.” At the time it wasn’t funny at all, but it came to symbolize our mutual struggles.

  In Scotland we managed to turn a bad experience into a humorous symbol of early difficulties. It would have been easy to be bitter about the whole thing. It could have come to symbolize many things if it had been handled differently. It certainly could have come to symbolize our ineptitude and lack of caring. But I had known better. I knew we were not inept. I knew we cared. What that meeting symbolized for me was just another learning experience on the long road of life.

  I can laugh about it now because it is funny. Tragedies had better become comedies, or else you’re in a lot of trouble. If a tragedy remains a tragedy forever, it’s a symbol of a negative force running loose in your psyche.

  It is important to be positive, to truly believe success is possible. Symbolism as a method of leadership is incredibly effective. But first you must convince yourself. If you’ve got the energy, the rest is easy.

  7

  TAPPING THE INFINITE UPSIDE:

  Good Employees Know Their Jobs

  Employees are your greatest asset—the one essential for any company. It’s so simple, yet not many executives see it, or they ignore it if they do. Of all the business essentials, and there are hundreds, people are by far the most important. I’d rather have a company with great people and no money than the other way around. Money doesn’t guarantee good people, but good people will get you money. Guaranteed.

  You can’t get or keep good people if you don’t treat them as such. And even if you can get and keep them, you cannot maximize their potential unless you excite, involve, and nurture them.

  Unfortunately the norm in business is conformity—a black, muddy river going nowhere. And even when conformity gets daring, it doesn’t roar out individuality. It insults and demeans.

  Let me give you an example: I was not the only one at The North Face who didn’t fit in at Proctor & Gamble. Mike Ravizza, a vice president of retail, found himself to be a misfit as well.

  Mike was out with his immediate supervisor one day following a typical salesman’s day, calling on accounts.

  It was 40 percent of the time driving, 40 percent sitting in the waiting room, and 20 percent selling. Mike’s boss wasn’t happy. Everywhere they went, they had to wait.

  In the car between calls the supervisor lectured Mike about “respect.” To Mike it seemed a strange word to use. But to his supervisor it was very important—like a title. He told Mike that Proctor & Gamble was the biggest and best in the industry. “We deserve respect,” he said.

  On the third call of the day the boss showed he was lost as to what the word “respect” means. There were eight people in the waiting room, sitting in stiff plastic chairs while they paged through old Reader’s Digests and pretended to enjoy such articles as “The Wonderful Things About Living Alone.” They sat down, Mike and his boss. They sat for five minutes, and then the boss grabbed Mike’s arm and said, “Come on outside. We’ve got to talk. I’m going to teach you the art of selling.” They went outside and closed the door.

  “You can’t just sit there,” said the boss. “You have to make yourself noticed.” He talked to Mike as if he were teaching him to tie his shoes. “Tomorrow I want you to go into town to a kids’ store and buy one of those Mickey Mouse hats. The ones with the ears, the cute little ears. Then I’ll tell you what to do. Next time you’re stuck in a waiting room, you pull out your mouse ears and put them on. Trust me. When the buyer comes out, he’ll notice you. You’ll stand out.”

  Mike said three words, “No fucking way.” He turned and walked off. He walked 15 miles home, and the next day he walked into The North Face, where I hired him.

  Demeaning employees is no way to excite them or motivate them. No one deserves to be treated as anything less than a thriving, pulsing human spirit with individual dreams, wants, and expectations. Dignity is a right.

  You don’t have to be as obvious as suggesting Mickey Mouse ears to insult an employee’s dignity. It is just as easy to ignore their opinions. All too often employees, though experts on their particular realm, are ignored because their opinion conflicts with the preconceived notions of titled authority.

  Robert Service ran into this. His parents were Baptist missionaries, and he was raised in Shanghai. Because of this and his raw intelligence he became an expert on China for the State Department. He had perspective. But he didn’t have support—he worked for the State Department in the early 1950s. It was the McCarthy era, and Service recommended the United States support Mao Tse-tung because that was who the Chinese people supported. The U.S. government supported Chiang Kai-shek, an exploiter and known throughout China as such. It didn’t matter; Mao was a communist, and the United States didn’t like communists. Service also was labeled communist and fired.

  He was undaunted. He landed a job with an East Coast electronics firm and rose to the presidency. Years later, when the company was sold for a large profit, he went on to the University of California for a Ph.D. in history. He was of an age when most people think about retirement, but he was back at school. It was fun for him in the classes on Chinese history—telling firsthand accounts to academic “experts” who had never visited the country. It was as if Service were teaching the course.

  In the early 1970s the United States finally recognized it would need to deal with Mao if it wanted to deal with China. President Nixon assigned Henry Kissinger to figure a way to establish relations with the Chinese. Kissinger contacted Service, who was asked to do the preliminary groundwork. It was incredible irony, working for Nixon, one of the strong supporters of McCarthyism.

/>   Lesser men would have quit when confronted with such obstacles—using former put-downs as justification for giving up or holding grudges forever. But Service is extraordinary, an enthusiastic battler who rolls with punches and then sets his sights on the next conquest. He has a saying that epitomizes his philosophy: “It’s not the mountain that wears you down, it’s the grain of sand in your shoes.”

  Bureaucracy is an obvious grain of sand. In America there was a heady period from World War II until the Vietnam War when business, though successful, became bloated, and bureaucracies increased the distance from the top of an organization to the bottom. Leaders lost touch with followers.

  It has always amazed me that the Catholic Church has thrived for nearly 2,000 years with only six layers of management but General Motors needs 14 levels. Why GM needs 14 levels eludes me. It’s a disease and a plague.

  Bureaucracy. For years leaders have cut themselves off from their followers and relied on “organization” to provide motivation. American companies have become petrified. Old-boy networks are rampant while new perspectives are shunned for fear of truth and enlightenment. It is a prejudiced system with the mechanisms of men’s clubs and a heavy reliance on specific business and law schools.

  Women were excluded from the executive levels of business. Fortunately that grave mistake is now being rectified.

  Whoever was the prophet of this modern form of management should be hung over the doors of business in much the same way Genghis Khan hung cheating tax collectors over their own doors. We have been cheated out of a human form of leadership.

  We have been denied common sense and offered instead an ineffective and inhuman science called “management.” Business has become stratified and bureaucratized.

  It doesn’t have to be that way. With a human approach communication can flourish across the imaginary borders of title and authority. Some executives would contend that the problem is that employees don’t think. I contend the problem is they are not allowed to think.