The Rules of Business : 55 Essential Ideas to Help Smart People (And Organizations) Perform at Their Best

The editor-in-chief of Fast Company distills the key ideas, concepts, and principles of the business world into fifty-five easy-to-understand and effective rules, in a guide that incorporates commentary and insights from more than two hundred business leaders, philosophers, and practitioners. 30,000 first printing.

Chapter 1

Change

The 32-year-old company founder was tired as he sat down for a quick drink. He had done six fund-raising presentations in a row in the conference room downstairs, and the venture capitalists–still smarting from the burst of the Internet bubble–had been skeptical each and every time.

That explained his crankiness, and it could have also been the reason why he suddenly attacked the presentation his CEO–a 30-year industry veteran–had made earlier in the day.

#1
The first rule of business is the same as the first rule of life: Adapt or die.

“Right there, on his first slide, he wrote, ‘Things change.’ How could he say anything that trite?”

To his credit, the young hotshot was right. “Things change” is about as basic as a business cliché gets. But to dismiss the point out of hand is to ignore two vital facts:

1. There is a reason that sayings become clichés: They’re often true.

2. The greatest cause of death among established compa­nies is their inability to adapt to changing circumstances.

Companies have to constantly adapt and change. There is always both a looming threat as well as a massive oppor­tunity in front of them. To ignore either is inevitably fatal.

Not surprisingly, then, change is a huge leadership chal­lenge. Altering the direction of an organization is immensely difficult, and the problem is compounded by the fact that the people you depend on to execute the change–your employees–may not understand the reason why they have to do things differently. As a result, just when you need them most, they are likely to fight you at every turn.

And even if you convince them to go along, you must figure out how to change your organization effectively and in real time. In other words, you need to prepare for the future without screwing up the present.

No wonder change is difficult and why so many managers are unwilling to take on the task until it is too late. The inevitable result? Icons ranging from AT&T to Zenith (“the quality goes in before the name goes on”) have been acquired by other companies–or have ceased to exist altogether.

Still, even a cursory survey of the best companies of all time reveals that those organizations that survive for the long haul are constantly evolving in a myriad of ways. Two examples will suffice: The nature of GE’s corporate portfo­lio seems to change almost daily, and PepsiCo, which began life selling just colas, gets the majority of its sales and earn­ings today from its Frito-Lay snack division.

But, as the business headlines remind us daily, those com­panies seem the exception. The wisdom of the leaders and thinkers in this book shows just how difficult change can be. It also reveals the upside: An organization that embraces change and executes it efficiently can evolve and thrive.

How change doesn’t happen

“Picture an egg. Day after day, it sits there. No one pays attention to it. No one notices it. Certainly no one takes a picture of it or puts it on the cover of a celebrity-focused business magazine. Then one day, the shell cracks and out jumps a chicken.

“All of a sudden, the major magazines and newspapers jump on the story: ‘Stunning Turnaround at Egg!’ and ‘The Chick Who Led the Breakthrough at Egg!’ From the outside, the story always reads like an overnight sensation– as if the egg had suddenly and radically altered itself into a chicken.

“It’s a silly analogy–but then our conventional way of looking at change is no less silly. Everyone looks for the ‘miracle moment’ when ‘change happens.’ But ask the good-to-great executives when change happened. They cannot pinpoint a single key event that exemplified their success­ful transition.”

–Jim Collins, author, Good to Great
Speak to people’s feelings

“How do you get people to change? The central issue is never strategy, structure, culture or systems. All those ele­ments, and others, are important. But the core of the matter is always about changing the behavior of people, and behavior changes happen . . . mostly by speaking to people’s feelings.”

–John P. Kotter, former professor, Harvard Business School, and author of Leading Change
Change happens brick by brick

“Here’s the problem with gradual: It’s chronic, insidious and subtle. Half of all Americans are overweight? I can tell you how we got that way: one french fry at a time.We didn’t foul the Love Canal in a week. That took a generation of dumping chemicals.Your company didn’t hire 30 or 100 or 1,000 noncontributing employees all at once. That took years.

“The problem with gradual is that we don’t notice the damage until the damage is extreme. And what happens when we finally do notice? Panic sets in. We put all our efforts into finding the quick fix.

“But here’s the point of gradual. You don’t win an Olympic gold medal with a few weeks of intensive train­ing. There’s no such thing as an overnight opera sensation. Every great company, every great brand, and every great career has been built in exactly the same way: bit by bit, step by step. If every element of an organization gets a lit­tle bit better every day, then the organization will become unstoppable.”

–Seth Godin, author of Unleashing the Ideavirus
The most effective way to manage change is to create it

“To survive and succeed, every organization will have to turn itself into a change agent. The most effective way to manage change is to create it.”

–Peter Drucker, sage


Only pissed-off people change the world

“Nearly 100 percent of innovation . . . is inspired not by ‘market analysis’ but by people who are supremely pissed off at the way things are. I happen to believe that only pissed-off people change the world, either in small ways or large ways.”

–Tom Peters, co-author, In Search of Excellence
#2 Innovation is difficult and often painful. But there is no alternative. (See Rule 1: Adapt or die.)


Embrace change

“The minute you get good at something, you get comfort­able. And that leads to stagnation. People on my team have learned to embrace change.”

–Tamar Elkeles, vice president of learning, Qualcomm


Allow events to change you

“The prerequisites for growth are the openness to experi­ence events and the willingness to be changed by them.”

–Bruce Mau, founder, Bruce Mau Design
The more success you achieve

“The more success you achieve–either as an individual or as an organization–the more difficult it is to change. All of the learning that led to one kind of success becomes implicitly coded and works against your ability to unlearn. The challenge then becomes how to uncover those deeply ingrained assumptions.”

–John Seely Brown, former director, Xerox’s Palo Alto Research Center (PARC)
#3 When should you initiate change? When things are going perfectly.


The metabolism of change

“Change is not a process for the impatient. It takes time–a simple truth that many of us fail to realize. First, understand that the metabolism rate–the tolerance for change–in your boss or in your organization might be dra­matically different from your own. Undoubtedly, others in your company feel as you do. Your task is to find them.”

–Barbara Reinhold, director of career and executive development, Smith College
If you don’t like change

“If you don’t like change, you’re going to like irrelevance even less.”

–General Eric Shinseki, former U.S. Army Chief of Staff
Change doesn’t happen if you don’t work at it.

“Change doesn’t happen if you don’t work at it. You’ve got to get out there, give people the straight scoop, and get buy-in. It’s not just good-looking presentations; it’s doing town meetings and letting people ask the tough questions. It's almost got to be done one person at a time.”

–Anne M. Mulcahy, Chairman and CEO, Xerox Corp.
The faces that shape change

“Leaders ...must do more than just formulate strategies to exploit change. They must be able to help people under­stand the systematic forces that shape change.”

–Peter Senge, author, The Fifth Discipline
The search for facts

“The big work behind business judgment is in finding and acknowledging the facts and circumstances concerning technology, the market and the like in their continuing changing forms. The rapidity of modern technological change makes the search for facts a permanently necessary feature of the industry.This seems obvious, but some of the biggest changes [for the worse] came about in part because someone got an idea that he thought was eternal.”

–Alfred Sloan, the man who created General Motors
It makes sense to resist things that are a waste of time

“[Employees] know that . . . change itself is rarely for the better. If you’ve been with a company for a few years, and you’ve seen these flavor-of-the-month change programs come and go, you quickly recognize a pattern: Management launches some kind of change effort to great fanfare. Man­agers talk up the benefits and explain why this program wi...