02 November 2011

Mercenary vs. Missionary....

Don Quixote's Windmill Adventure, by Dominica Alcantara
Find it at Fine Art America

On a Quest or For Sale?

A recent New York Times article recaps the failings of Netflix and CEO Hastings during the hasty and ill-considered move -- now aborted -- to divide the company and its customers into two camps with the creation of Qwikster.  How Netflix Lost 800,000 Customers and Goodwill, does more though, perhaps unintentionally:  it brings to light an interesting phrase delineating two principal entrepreneurial styles, the Missionary versus the Mercenary.

It's a well-written article, and I only wish the journalist had delved more into this idea, rather than using this quote from Hastings as the closer for the Netflix discussion:

"Mercenary C.E.O.'s are always preparing for a sale, and
missionary ones are always preparing for the long term."

Either style is a viable approach to founding and growing a business concern.  It isn't a matter of Good vs. Evil or Competent vs. Incompetent.  It is about the ultimate reason for creating/directing the company, its goods, and services.

Whatever his business, the Missionary entrepreneur is driven by Fulfilling The Quest.  Missionary entrepreneurs launch and fashion a business as a quest to explore and enhance particular skills and knowledge; to found a multi-generation family concern; to provide "a better solution" to a common problem;  to deliver specialised resources to overlooked niche markets; to create fulfilling self-employment or to create jobs for a community; to personally bring an invention or device to life.

For the Missionary, the expression and creation of his company is intensely personal, a natural extension of his identity and character.  Objectivity and pragmatism about following the Quest is a challenge for some Missionary entrepreneurs, but not all.  Fiscal gain is no less important to the Missionary than the Mercenary, but for the Missionary, money is the means to an end, it isn't necessarily how he keeps score.  Preston Tucker, Steve Jobs, Nikola Tesla, Ray Anderson, Barbara Sher, Barbara Winter, Elena Verlee, and Cindy Padnos -- Missionary entrepreneurs who dream(ed) the impossible dream.

Mercenary entrepreneurs are driven by The Business as Product.  When the Mercenary calculates a business, they consider it by assets like production equipment and manufacturing processes, skilled employees, goodwill and image, market share, brand strength, distribution channels, trademarks and patents, contracts, leases, real estate, specific cost centers which can be transformed into self-sustaining subsidiaries or profit centers, and other balance sheet worthy resources.  The Mercenary entrepreneur is less wedded to the company's particular products and services, constructing her decisions around maximising the sellable price of The Business As Product.  The business is a vehicle which can be heaped full with any assemblage of products and services -- or sent to the chop shop and stripped bare -- as long as the price tag on the business sparkles.

For a perfect example of the Mercenary mindset, read this:

"...the critical point is that we could in one particular moment
derive most of our earnings from one industry, such as restaurants, and
then with a single large acquisition begin to derive most of
our earnings from a different industry. Therefore, it would be
a sizable mistake if a shareholder owns BH assuming that
he or she owns a restaurant holding company
or if the owner is partial to a particular subsidiary."

[from Chairman of the Board Sardar Biglari's 2010 Letter to Shareholders of Biglari Holdings,
the company which owns Steak 'n' Shake and Western Sizzlin' restaurants]

Mercenary or Missionary, it is absolutely essential the owner(s)/CEO inform everyone with any vested interest in a business -- from vendors and employees to customers, investors and partners -- precisely which road he or she plans to travel with the bright, shiny business.

Ask me why.  I'll be happy to 'splain to you.  The really-really short version: to reach the desired outcomes, a Mercenary CEO makes vastly different calls during the game in play than the Missionary CEO.  As part-and-consequence of those decisions, the Missionary CEO and Mercenary CEO differ vastly in their management styles, their preferred business processes, metrics, and resources, the language they use to express themselves, the people they hire and how they deal with them.

Tip: next time a CEO or business owner you're involved with makes a perplexing or contrarian decision, ask yourself, "Missionary or Mercenary?"

If you are the CEO, ask yourself, "Does everyone understand where I'm going with this?"  If they don't, get busy building their awareness and their cooperation.

Other lessons to be gleaned from the Netflix-Qwikster-No, It's Netflix! drama:

  • When floating a business idea past your friends and colleagues, don't summarily dismiss their thoughts and opinions.  Keep breathing.  Take it slow.  Think it through.  Then think some more.
  • Running a business of any size, small or grand, is like playing chess -- for every move, there's a counter-move and a consequence.  To play well, you need to visualise every possible action and reaction, as far into the endgame as your brain can handle.  Like Newton's Third Law: "For every action, there is an equal and opposite reaction." (See, entrepreneuring *is* rocket science!)
  • "Having a Netflix moment" is the latest parlance for "act in haste, repent at leisure" business decisions.  Yesterday, I saw several references to "Netflix moment" at Twitter, Google+, and in comments to NY Times articles, particularly with regard to Bank of America's 180 on debit card fees and Safeway's decision to drop the trumped-up charges against the "sandwich-stealing" pregnant mom. 

And now, for our Quote of the Week, from the P.R. spokesperson for Safeway:

"It appears we may not have handled this matter in the best possible way and
we are taking the situation seriously."

See you on the patio!

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