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Risk Taking and Nontraditional Approaches to Business Success
 

By Pamela Babcock  10/17/2012
 

 

NEW YORK CITY—Despite challenging economic times, business leaders said recently that risk taking and the ability to drive innovation and infuse it into their organizations have been key to their success.

For TaylorMade-Adidas Golf Co., that meant taking advantage of a softer marketplace by aggressively bucking trends and reinventing product development. Among other things, the company developed a white metal driver in the typically staid golf world, where such clubs were usually black, dark brown or navy blue. Sales took off and the company is now the world’s leading golf equipment manufacturer.

“The thing I’ve learned the most about moving forward is incrementalism is no longer an effective way to compete,” said Mark King, CEO of TaylorMade, to attendees at the World Business Forum, held here Oct. 2, 2012. “The way to really make an impact in the marketplace is to try to do something extraordinary—to try to change the conversation.”

King, who has been called the Steve Jobs of the golf industry, said extraordinary things happen by “unleashing the culture of the company by telling all people they are part of the innovation process. Once you create that kind of energy and excitement, great things happen.”

Trusting the Power of People

King began his career in sales when the company was just an independent golf shop, and became president and CEO of the organization in 1999. The Carlsbad, Calif.-based business has seen a steady rise in revenue. Since 2002, it has grown from $300 million to almost $2 billion annually—all during a downturn and in a slow-growing industry.

One reason is the company’s emphasis on distributive leadership. King believes that employees at all levels should be involved in decision-making and goal-setting.

“For us, creativity and innovation is about leading change and doing things different,” King said. “We just started to trust that the power of people would move us forward.”

Sales are up 50 percent in the past two years. “What this company has been able to do just in the last two years, at a time of so much uncertainty in the economy, I find just staggering,” observed Trish Regan, a Bloomberg Television anchor and host of the network’s daily “Street Smart” program, who hosted the session.

Taking Advantage of a Soft Economy

The past decade has been tough on the golf industry, particularly since consumers have cut back on spending on discretionary items. TaylorMade realized consumers will still spend some money. King said the company decided to create “a hot, new, exciting product,” and realized that how it was launched and talked about was key.

For consumers in any category, “if there’s a new innovative product like Apple, they will stand in line to get something that they already have because they think they have to have it,” King said.

When TaylorMade decided in 2010 to offer a line of white drivers, it not only gave consumers something new and different, but also drove the company’s market share in the category from 30 percent to 53 percent.

The clubs were innovative, but so was the way in which the company spoke to customers, in that it launched products through tour events, relying less on traditional print and television advertisements. 

“We’ve become kind of the cool brand in golf,” King said, “and we continue to try to push the envelope.”

A Nontraditional Approach

Many of these decisions were the result of King’s leadership development. In 2004, he hired a CEO coach for the first time and was introduced to the concept of distributive leadership, which argues that the traditional command-and-control model of management is outdated and doesn’t lead to sustainable results.

That’s kind of how the white-colored drivers came about. An employee who didn’t even work in product development suggested it, and initially, King and others in product development “pooh-poohed” the idea. But after a little research and a few designs, they decided to move forward with it.

“In a traditional organization, that kind of decision would have never taken place, because the organization would have kept it in check and done something more conservative, more incremental,” King said.

King recognized it was a risky move, but said the greater risk “is really being comfortable with your success. I think humility and … trying to find what’s next and trying to change the rules of the game is the lens that we look at the world through.”

Expand Before You’re Ready

New York City real estate entrepreneur Barbara Corcoran, who’s also a judge on the ABC reality show “Shark Tank,” shared a similar message about risk taking. She emphasized the importance of “expanding before you’re ready” and recognizing when you’re on to something so hot that everybody wants it.

Her life wasn’t always about multimillion-dollar listings and celebrity status. Corcoran grew up in a family of 10 children living on the ground floor of a three-family home across the Hudson River in Edgewater, N.J.

“My mother ran the household like a boot camp. She was a wonderful motivator who believed in bringing out the best in each of her children and only focused on the positive. I really started my business education watching how my mother ran her house,” Corcoran told attendees.

Corcoran, who had 20 jobs by the time she was 23 years old, then moved to Manhattan to start a real estate business with her boyfriend. He later left her for her secretary, but Corcoran wasted no time packing her toothbrush and moving out. She went on to run The Corcoran Group, which she sold for $66 million in 2001.

On Creating Excitement

Corcoran learned several lessons along the way:

Expand before you’re ready. It’s a motto Corcoran practiced every year while building her business. If she needed another 40 desks because she had 40 new salespeople, she rented an office with 80 desks, and the work followed. “It made no sense, but it’s just like closet space. It’s the only way you can be little and get ahead.”

Everybody wants what everybody wants and nobody wants what nobody wants. During the 1980s real estate recession, a large insurance company asked Corcoran to look at 88 apartments with an eye toward selling them. No one was buying and prices were down 40 percent. Many were nearly complete structural renovations. Corcoran was about to go out of business but hatched an idea to create buzz.

Regardless of condition, she priced all the apartments on average, so all studios were one price, all one-bedrooms were one price, and so on. Word spread quickly: get there early, and you might get one of “the good ones.” The day they went on sale, more than 200 people were snaked around the corner of the property. In just over an hour, all were sold.

“Why would the last guy [in line] dare take the ugly apartment on the ground floor with no kitchen?” Corcoran asked. “Because he saw 100 people behind him who wanted it” and couldn’t have it, she said.

Pamela Babcock is a freelance writer based in the New York City area.

Quick Links:

SHRM Online Business Leadership page

Related Article:

Leadership Lessons from Robert Gates and Jack Welch, Business Leadership Discipline, October 2012

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