Conquering the North Face

by Hap Klopp

  At The North Face we had two employees, John Kirschner and Bill Werlin, who were downhill ski fanatics, and they both wanted the company to expand into downhill ski clothing. I was dead set against it.

  The problem, as I saw it, was that The North Face had established a reputation for making the very best truly functional equipment, and downhill skiers as a group cared more about fashion than function. I believed downhill ski equipment by its very nature was inconsistent with our company image—an image based on function more than anything else. Our equipment always did what it was supposed to. If it looked good, that was a bonus.

  But Kirschner and Werlin weren’t convinced. Every time I turned them down, they’d come back with even more details on why I was wrong. Their views were based on the market and the reasoning of people like Theodore Levitt, the business theorist who suggested one reason railroads went out of business was because they didn’t see the big picture. According to Levitt, railroad companies never saw themselves as being in the transportation business, but rather just in railroads.

  “It’s the same with us,” said Kirschner and Werlin. “We can do more than just backpacking and mountaineering.”

  “No way,” I said.

  “Fine,” they said. And a couple of weeks later they were back in my office again.

  The most amazing thing is that these two were almost exact opposites. Werlin was flamboyant, sales and marketing oriented. Kirschner was into detail and precision. They were not the kind to be drawn to each other. Except, of course, for one thing—their mutual love of skiing.

  They just attacked the project, and me—in a kind way, of course. They were determined. What they explained to me over and over was that there was a large market of skiers who needed equipment that worked. These skiers, said Werlin and Kirschner, had been abandoned by most of the industry, which had, as I knew, gone to fashion.

  Finally their intensity and logic won me over. The way I figured it, these guys believed in the idea of expanding into downhill ski equipment so much that it was worth the risk to give it a try. They became our product champions. What we created was a ski clothing line based on something we called Extreme Gear. The name to the public meant it was for extreme conditions. Our inside joke was that it was extremely expensive.

  But it sold. I was wrong. Werlin and Kirschner were right, and the new ski line sold what we called tonnage—a hell of a lot. The uniforms were eventually chosen for instructors at over 100 ski areas including Aspen and Vail.

  It would have been easy to remain stubborn in my refusal, basking in the false glory of a titled ego. Many executives do just that, certain they know more about everything than their underlings.

  It’s depressing to listen to most executives talk about business. They use the jargon they learned in business school—phrases such as “cost of capital” and “internal rates of return.” They think they sound intelligent and logical, as if their removed, impersonal style has all the answers.

  But they miss the point. It’s clear when they speak to their employees. In the minds of many so-called leaders, success has nothing to do with people. They see all the profits, machinery, and plans as essential, but they view their work force as a burden. It’s so sad.

  The truth is people are the greatest asset of any company—the only one with an infinite upside. Machines and facilities wear down. They depreciate. And as time goes on, they become obsolete.

  But a highly motivated, creative employee can return many times over what he or she costs. The key, of course, is not just to hire them but to listen to them and empower them. If you do, the rewards are tremendous.

  Teresita Perez is tremendous. She was one of my employees, a smiling little dynamo from the Philippines—dedicated, intelligent, and highly skilled. Terry was one of the first people we hired, an original member of The North Face family. In the factory she was a sort of matriarch to the other workers.

  She was always smiling. She worked in the finishing department of our factory, doing thread trimming and final quality inspection of our products. Hers was a busy job, and she was happy and proud of her work.

  One day, a few years after we hired her, she came into my office crying. We had grown a lot—we had about 500 employees, so I didn’t see her every day anymore. But here she was in my office crying. She was visibly shaken. I didn’t know what to think. I was afraid something horrible had happened. Something had, she told me. The down-filled jackets her department was processing had defects, yet almost 100 had made it past three quality control inspectors and past her supervisor. She felt terrible. She didn’t want to get anyone in trouble, but she knew The North Face’s image of quality. The products weren’t up to those standards, as she explained it. They could destroy the image of the company. It wasn’t right, she said. It was tearing her up personally.

  I supported her. There was nothing to that decision—if she cared so much and had been with the company so long, her judgment was fine by me. The jackets were brought back and, of course, she was right.

  I don’t think it’s possible for any leader to feel more proud or touched than I did at that moment. I knew my vision of quality had connected to her. She knew my door was open and I wanted to hear from my employees. She knew more about her job than I did. All I had to do as a leader was recognize her expertise. My job was easy.

  Leadership is creating an atmosphere of trust. You have to listen to employees, and then back up what you say. You have to treat people like people, not morons, and not like machines.

  If all your employees are idiots, what does that say about you—the person who hired them? Listen and reward them. Recognize them. Every year at The North Face we’d recognize employees by giving them little trophies for years of service. You wouldn’t believe how important those were. Recognition has to be given with class and humor and absolute sincerity. You have to be a leader, but first you must be a partner.

  One Friday after work I went out with some of my executives and we began talking about what we saw as a discrepancy in our company: most of our management time and effort went toward our subpar employees, trying to get them up to our standards. We had unfairly overlooked our superior performers. They were really the ones who deserved our attentions. They deserved some recognition.

  We came up with the Golden Trimmers Award. Trimmers are the pincerlike hand tools used in cutting threads from garments. Trimmers are constantly sharpened, but after extensive use they have to be replaced. We bronzed a few discarded trimmers. We decided to put them on a pegboard with a tribute to the winners I wrote up and our corporate seal. It wasn’t expensive, and it didn’t take a long time. But it did take caring. In a formal ceremony we acknowledged their contribution. Something like this could easily come across as an empty gesture, but it wasn’t. It was genuine. Our great employees deserved recognition, and this was something from the heart—something uniquely The North Face.

  Six years later I was invited to the home of one of our employees for a special dinner celebration. It was a major celebration—the attainment of her U.S. citizenship. All of the employee’s immediate family was there, as were her cousins, nieces, nephews, uncles, and aunts. After I had been introduced to everyone, I happened to look on her mantel. There were photos of her children, a beautiful vase, and, yes, the Golden Trimmers Award. I knew then that what we had done six years earlier mattered. It had worked.

  Rather than a huge, faceless bureaucracy that relies on rules and authority, it is always better to have some sort of informal network of human contact that lets employees know they are trusted.

  One way we did this was by holding our long-range planning meetings far from the buildings of The North Face. We went to locations that allowed people to interact. Frequently we’d go to Trout Lake, 1,300 acres of unspoiled paradise near Spokane, Washington. It was my parents’ place—it’s very special to me.

  The stated goal was to come up with a plan. The parallel goal was to have fun. It was a retreat, a gathering of minds—a chance to
connect much deeper than was possible in the hectic world of business. We played games, we fished, we mountain biked, we had contests, and we gathered in groups. We talked, drank beer, and got to know one another better. It was work. Yeah, right. It was fun. Sure, we accomplished a lot. But what we accomplished even more than an agreement on our plan was a renewed enthusiasm—a rebirth of the collective spirit. We were rejuvenated.

  We focused on people. We rejoiced at individuality—as long as it was focused on common goals. Everything was done with thoughts of family, opportunity, freedom. The goals were always quality, energy, creativity. Differences were more than tolerated; they were celebrated.

  The North Face was the ultimate melting pot—at any one time we had 14 different languages spoken in our company, five used regularly in our written communication. We had employees from every part of the globe—Asia, Europe, South America, the United States, you name it.

  One day the mayor of Berkeley brought a group of visiting Soviets to see our factory. The Soviets were mostly impressed and asked incisive questions. But there was one who didn’t fit in with the rest. At first I noticed his clothes—better tailored and higher-quality fabric. Soon I figured out he was the Communist party representative, since none of the others talked to him. When I told them about the variety of people who worked for us, most of the Soviets were impressed by the open culture in our company. But not the one who stood alone. He asked, “Is the real reason that you hire all these immigrants to exploit them for low wages?”

  “No,” I explained, “our employees are paid better by us than our competitors. The real reason we hire anyone is because we think they can produce quality. Quality is not something that has geographic barriers or definitions.”

  The idea in all personnel decisions is to foster community—eliminate the toxic envy that plagues many companies. The way to do this is to let people be themselves.

  Employees look to leaders for how a job should be done. They will emulate or approximate that style as long as they can do it within the boundaries of their own personality. It’s a fine line to walk, but it’s easy if you know how. Employees want guidelines and vision, but then they want to be left alone to flourish as they see fit. They want constant access to you, but they don’t want you leaning over their shoulder. They really want you out of the way so they can take over and perform. They want vision, control, and creativity.

  W. L. Gore is a company that offers all of this. Gore makes a number of products, but the best known is a waterproof, breathable fabric, Gore-tex. It revolutionized the outdoor apparel market. The company was founded by William Gore, who had previously worked for E. I. du Pont. It was at Du Pont that Gore began to think about a new way of motivating people. When he founded his own company, he put it into effect. He called it the lattice work system.

  At Gore everyone is described as an “associate” and treated as an equal. They use the analogy of a boat on the water to explain what level of decisions can be risked by employees. They described decision making as drilling holes in the side of the boat. Any holes drilled below the waterline must be reviewed by others. In other words, risk is good, but don’t risk everything. If a decision is large enough to affect the health of the whole organization, then the whole organization should be brought into the decision-making process. But small mistakes won’t significantly wound the company, and the reward of small mistakes is that the employees will learn. And Gore, using this philosophy, has become phenomenally successful.

  Every time employees learn, they improve. To constantly leave decisions in the hands of superiors kills motivation and may cost you expertise. After all, someone doing a job eight hours a day usually knows more about that particular activity than his or her boss. Authority does not equal knowledge.

  A few years ago I decided I would try the sport of ultralight airplane flying, and I saw firsthand why one should not blindly trust anyone putting himself off as an authority.

  Flying these tiny planes looked like fun, and it required no pilot’s license. It offered a chance to get into the back-country quickly, and I could land the plane virtually anywhere.

  The salesman was all hype, a vision in polyester—he liked me from the instant he saw me, or so he said. “It’s simple,” he explained. “These are the safest planes around because they are incredibly sturdy and their light weight makes the glide ratio so good.” I was skeptical. The plane looked flimsy—just a skeleton and a propeller.

  But still, it did look like a hell of a lot of fun. I like fun. He explained to me I could master flying the plane in one day, and without a license I could be flying solo the next day.

  I grilled him a bit. I asked how difficult the planes were to maintain. “I’m not very mechanically inclined,” I said. “How can I be sure everything is as it ought to be?”

  “Don’t worry,” he said. “I know all about these planes. Everything’s perfect. I’ve only been flying these a short time myself. But they’re so easy, I learned it all in one day, just like you will.”

  I was ready to go for it. What the hell—life is short, have dessert first and all of that.

  He collected my money, and we began to push the ultralight to the takeoff area. Another man came and helped. The second man’s hands were greasy—I presumed he was a mechanic. As we were pushing, the mechanic made small talk. But then, after pushing a short way, he stopped and turned to the salesman. From easy conversation, his face had become serious. “Where is the wing nut?” asked the mechanic. “The one that bolts the right wing down?”

  The salesman responded, “What wing nut? I’ve never seen one on that bolt and I’ve been flying this thing for weeks.”

  “The wing can be wrenched off without it,” said the mechanic. He fished a wing nut from his pocket and installed it. “You’re damn lucky.”

  I was flabbergasted. But the mechanic assured me everything was fine now, so I decided to try it.

  The flight was exhilarating. But I was wary—what else was there about the plane that the salesman didn’t know? I never did buy the plane, though admittedly it was lots of fun. I wasn’t going to have a mechanic around, and I knew what I didn’t know. The salesman obviously didn’t. I wasn’t an expert on the planes, and neither was my supposed teacher. His authority proved false.

  If you want the truth, go for knowledge, not authority. And if you want your employees to have knowledge, you have to reward it with trust and honesty—a willingness to involve them in decisions that affect their own job. Employees must be allowed to grow. They have to be excited and motivated.

  Al Hildebrand understands this. He is a large man, a onetime draft pick of the Houston Oilers. He never made the team, but he used his football bonus money to pay his way through business school. He had a successful 25-year career with Spectra-Physics, a San Francisco Bay area company specializing in laser beams.

  He retired at 49, well off and happy. At a business school reunion on the day he retired, I asked him what satisfied him most about his career at the company. It wasn’t the wealth, he said. It wasn’t the title of vice president.

  Rather, it was two things. The first was that he put his physics training to good use by inventing six items that received patents. The second gave him even more satisfaction, he said. “I led, managed, and encouraged eleven subordinates who later became CEOs of Silicon Valley companies.” He was most proud, he said, that the people under him flourished.

  When leaders recognize that individual growth leads to organizational growth, they have found the key to the kingdom. A company such as Spectra-Physics that loses 11 employees to their own dreams is much stronger than a company that never loses anyone to personal ambition. It is essential to feed and nurture personal ambition. Sure, you’ll lose a few people to their own dreams. But is it really a loss? When a child grows up, do you lose that child?

  Of course not. As Hildebrand said, nothing gave him more pride. The two most important things to offer any child, any employee, are roots and wings. Roots to grow,
and wings to fly. With both, potential is virtually limitless.

  8

  WRESTLING WITH GORILLAS:

  Obstacles to Fulfilling Your Passion

  There were these two guys, the Whittakers. Lou and Jim. Big guys, each six foot five. They were twins with lumberjack arms and the suntanned-sunburned look of perpetual outdoorsmen. Jim was the first American ever to scale Mt. Everest.

  They were climbing on a windswept glacier with an expedition in Alaska. It was in the middle of nowhere, a desolate ice field; the winds howled. A member of the team got injured. He desperately needed medical attention. As the sun quickly began to slide over the horizon the temperature fell precipitously. The Whittakers knew they had to do something, and do it fast.

  They called by radio for a helicopter to evacuate the injured person. Usually they would call in a jet helicopter to whisk an injured climber to safety, but there wasn’t one available. They couldn’t wait for one to become available—the man’s condition was worsening. So they sent for a standard helicopter, one not well suited for high altitudes. It wasn’t pretty. The landing was rough. But the helicopter did get there. They had to quickly load the climber into the helicopter because taking off in the dark would be impossible. They loaded him but had no time for relief. When the helicopter tried to lift back off the glacier, it couldn’t. The air was too thin. The wind was blowing long, cold blasts, and the blades of the helicopter kicked out clouds of snow. With the light rapidly disappearing, the Whittakers knew it could be a matter of life and death for their companion. Pulmonary edema was just one of the fears.

  Time was running out, so the Whittakers improvised. They each grabbed a rail of the helicopter and heaved it off the edge of the glacial cliff. The Whittakers watched—entranced by the object of their actions. Down it went, like a rock through the thin air. Finally, halfway down the blades of the helicopter caught air and it took off toward the hospital. Talk about audacity, talk about confidence—they had them both.