the injunction to “listen to the voice of the customer” is today one of the most common forms of advice to business. Indeed, for many firms it has attained almost religious significance. Yet as we revisited the firms in our group, we could not help noticing that, while listening very carefully to what their customers were saying, the employees-at every level-also seemed to have an understanding of their mission that transcended the customer’s voice. It was as if they were also listening to an inner voice, a voice that was not always in perfect harmony with the voice of the customer. As William Weisz, former CEO of Motorola, once put it: “When you are pioneering in something the world doesn’t even know it wants, you have to have a belief that the world is going to want what you have, and that it will start falling all over its feet to get it.”
Similarly, though these firms were paying very close attention to their competitors, their actions in the marketplace were not purely reactive. Their strategies were shaped as much by a core belief in what they were trying to accomplish as by the drive to pre-empt or mimic the competition. These are companies that never seem to stop thinking hard about who they are.
Take Boeing, a firm with a history of taking huge financial risks-“betting the company” to build the next generation of planes. The best-known example is the 747. One of the greatest gambles in aviation history, the development of the hugely expensive 747, like other Boeing projects before and after, was not really a response to a competitor, since no other company was then seriously entertaining such a project. Nor was the project justified purely on the basis of return on investment. Indeed, given the risks involved for the company’s existence, it is quite unlikely that such a decision could ever have been justified on purely financial grounds. Although profitability was always involved in the decision, by most accounts it was Boeing’s sense of itself as a company whose mission is to push the envelope of commercial aviation-a company that “eats, breathes, and sleeps” aeronautics-that made the difference.
Levi Strauss, mentioned at the beginning of this article, provides a very different example. One of the few unequivocal success stories in the struggling American apparel industry over the past decade, Levi Strauss’s emphasis on the long term, on building its organizational capabilities, and on increasing the contribution made by its workers to the business, has set it apart from the volatile, highly reactive, often exploitative norm in the rest of the industry.
Perhaps the biggest test of the company’s commitment to these values has been posed by its network of overseas subcontractors, some 600 of them sewing Levi’s in 35 countries. Though the company still relies primarily on its U.S. workforce to manufacture products sold in North America, its global competitiveness is heavily dependent on its access to the low-cost labor in many of these countries. But not all of them are known for respecting the rights of their citizens to work in safe conditions, and some have failed to meet international norms regarding human rights.
The company’s top managers had to face the question of how to apply their ethical standards in such cases. The choices weren’t easy. To insist on a universal standard of behavior among suppliers would rule out production (and probably also sales) in some of these countries-with immediate negative bottom-line impact. Furthermore, the loss of jobs would almost certainly be a severe blow to the employees of the affected subcontractors, for whom risky work might well be better than no work at all. On the other hand, for Levi Strauss to waive its ethical standards in its overseas dealings would smack of hypocrisy and risk alienating U.S. workers already fearful of losing their jobs to cheap foreign labor. Besides, rumors of child and prison labor don’t help sell jeans.
In 1992, the company introduced new guidelines governing its dealings with overseas business partners. The guidelines asserted that the company had “a heritage of conducting business in a manner that reflects its values. As we expand our sourcing base to more diverse cultures and countries, we must take special care in selecting business partners and countries whose practices are not incompatible with our values. Otherwise, our sourcing decisions have the potential of undermining this heritage, damaging the image of our brands, and threatening our commercial success.”
When we reconnected with Levi’s soon after that policy was promulgated, the company was struggling to decide what to do about its operations in China, a decision that involved balancing the Chinese government’s human rights violations against the costs of losing access to the potentially enormous Chinese market. Eventually, Levi’s decided to discontinue all production, sourcing, and sales in China, a decision that a top executive described to us as one of the toughest the corporation has ever had to make.
Once again, the point is not that Levi’s decision was driven purely by ethical, altruistic concerns. The company was clearly also very apprehensive about the risk to its brand image posed by Chinese labor and human rights policies. The point is that the decision to terminate Chinese operations grew out of a deeply held sense of what Levi’s stands for, in which issues of commercial brand, corporate values, and self-image are all intertwined. It is a decision that would not-indeed, could not-have been made if the company had been reacting only to external market pressures.
Another example of this internally driven behavior is offered by Motorola. The successes of Motorola over the years in a wide range of communications and electronics markets cannot be ascribed purely, or even primarily, to a goal of beating the competition, even though that has very often been the outcome. But unlike Levi Strauss, what drives Motorola is not primarily a set of ethical concerns or an egalitarian philosophy. The most important motivation seems to be the more technical objective of always trying to do better than before, the impossible quest for “perfection before the customer.” Mobilizing the entire company around apparently impossible goals has long been a central part of Motorola’s leadership strategy. Targets such as the famous “Six Sigma” quality goal of reducing the error rate in every one of the company’s processes to fewer than 3.4 mistakes per million operations have helped create a common vocabulary and sense of purpose for a company that is considerably more decentralized than most others its size. Even more important, stirring the pot this way has kept the organization moving and searching. As longtime chairman Bob Galvin put it: “It doesn’t really matter what the goal is exactly. As long as it is reasonable. The point is to stimulate. To catalyze.”
Galvin, who chooses his words carefully, is perfectly aware that goals such as Six Sigma quality strike many observers as less than reasonable (and the company, despite making vast improvements, did in fact fall short of the Six Sigma goal). But the idea of Motorola as a company that is driven by a long-term vision to pursue the seemingly impossible is integral to its sense of corporate self. Galvin adds: “At times we must engage in an act of faith that key things are doable that are not provable.”
In recent months Motorola has been sharply criticized on Wall Street and in the business press for overextending itself, falling behind with new product introductions, and other transgressions. But Motorola has weathered worse crises in the past, and though a recovery isn’t ensured this time, it would be unwise to write off an organization that over the decades has repeatedly drawn on its fundamental values to renew itself and its products.