Why leaders must stay close to the work and customers

1 The bottom line

Leaders who stay close to the work, the product and the customer see the truth before reports soften it. Distance lets problems grow unseen and lets leaders chase what interests them instead of what the business needs.

2 Key takeaways

• Go to the front line yourself, in person. Information that passes through layers arrives polished and thin.
  • Elon Musk, SpaceX27:19 spends about 50% of his time talking directly to engineers, so engineers are the source of truth.
  • Ingvar Kamprad, IKEA58:15 appeared at stores unannounced, sometimes at 5:30 in the morning, to get unfiltered news.
• Do some of the work yourself. You can only judge a job you have felt.
  • Elon Musk1:04:35 requires software managers to code at least 20% of their time and solar roof managers to install roofs.
  • Herb Kelleher, Southwest Airlines9:00 loaded bags on the Thanksgiving Eve tarmac as founder and CEO.
• Build routines that pull in weak signals early. By the time a signal is strong, everyone sees it.
  • Jensen Huang, Nvidia29:05 reads about a hundred "top five" emails a day, and one recurring machine learning theme led to Nvidia's GPU acceleration investment.
  • Jeff Bezos, Amazon30:14 makes corporate staff work customer service for a few days every two years, himself included.
• Get the customer's truth first-hand, including the feelings data misses. Surveys and middlemen answer only the question you thought to ask.
  • Coca-Cola2:53:00 tested New Coke taste with 200,000 people but never asked how they would feel losing the original, and Classic returned after 79 days.
  • Amancio Ortega, Inditex11:55 opened Zara in 1975 because selling through third parties left him guessing what people wanted.
• Distance is costly when you use it to avoid the parts you find boring or hard. What you skip is where the surprises hide.
  • Larry Ellison, Oracle30:18 ignored sales, accounting and legal for his first 15 years as CEO, which fed the 1991 crisis that nearly ended the company.

It is a summary of a summary with the inconvenient details removed.

Elon Musk, SpaceX

2.1 Go to the front line in person

Walk the floor, ask the people doing the work, and act on what they say.

• Turn up where the work happens and ask for ideas. Sam Walton did this constantly.
  • Sam Walton, Walmart38:20 despised comfortable offices and spent his time in stores, warehouses and competitors' stores.
  • He rode 100 miles in a semi-truck, showed up at 2:30 in the morning with donuts to ask dock workers for ideas, then gave them what they asked for.
  • When a customer's daughter complained about a refund, Walton had the manager hold up the shorts at the Saturday meeting.
• Ask the people closest to the work what annoys them, and go unannounced.
  • Ingvar Kamprad, IKEA58:15 talked with the men delivering goods and asked what annoyed them most and whether they got morning coffee.
  • Amancio Ortega, Inditex38:54 never had an office. He moved between factory, warehouse and design, ate in the employee cafeteria and knew each worker's name.
• Back up written instructions with personal contact.
  • At GE, David Packard, Hewlett-Packard15:24 was responsible for quality on mercury vapor rectifier tubes, many of which failed or blew up. On the factory floor he found the engineers' written instructions were inadequate for the workers.
  • Working with them directly, he identified every possible cause of failure, and every tube in the batch passed its final test.
• Get your hands dirty beside the people building the product.
  • Soichiro Honda40:40 spent almost all his time in the labs, smeared with grease beside development engineers, who described a president they could talk with as an equal.
  • Thomas Edison47:45 was as dirty as any workman and jumped into dug-up streets to find faults. One employee served half a century and said Edison made him feel he was making something with him.

2.2 Do some of the work yourself

Hands-on work tells you what is hard, what is possible, and which problems are real.

• Make managers do the job they manage.
  • Elon Musk1:04:35 says software managers must spend at least 20% of their time coding. Managers without hands-on experience are like cavalry leaders who can't ride a horse.
  • When a roof engineer had never installed a roof, Musk told him he did not know what he was talking about, and the man spent the next day on one.
  • The next 24 hour meeting after the engineer installed roofs went far better.
• Put design next to production so mistakes hurt right away.
  • Elon Musk18:36 placed engineer cubicles at the edge of Tesla's assembly lines. People who see the flashing lights and hear the complaints fix flawed designs the same day.
  • He later called separate design and production groups a mistake he made long ago.
• Ask the line workers where the limit is, then test it.
  • Elon Musk1:08:07 asked the Starship welders, not executives, how thin the tank walls could go. They said 4.8 mm, he asked about 4, and he told them to try it.
  • The tank walls went to 4 mm.
• Stay on the tarmac, or in the sales calls, as the company grows.
  • Herb Kelleher9:00 spent six years doing every job at a soup factory and called it the best education he ever had.
  • Bill Gates, Microsoft47:45 wrote the checks and took the calls when the company had 30 employees, and for several years he alone made the cold calls.
  • Kelleher41:56's advice to other CEOs was to spend more time with their people and less with other CEOs.

2.3 Know the numbers and the details cold

Close contact means being able to answer from memory, and reading the facts every day.

• Expect leaders to know their numbers without calling anyone.
  • Henry Singleton, Teledyne32:30 praised an executive who could instantly give exact sales figures for any company he supervised.
  • Singleton43:00 also signed every check for his ranch after retiring. He said each check reminded him of the event behind it and taught him how the business worked.
• Study every part of your industry, and read the daily facts.
  • John D. Rockefeller, Standard Oil8:25 traveled to the oil regions and talked to producers, carriers, jobbers and railroad men. He also visited rival refiners in three cities.
  • He received a daily sheet of crude on hand, barrels and gallons shipped.
  • He saw exports jump to about 70% of output in 1866 and acted at once.
• Boil the facts down to one number and repeat it.
  • Elon Musk54:36 did the math and found Tesla survives only at 5,000 Model 3s a week. He repeated it to every executive, put live output monitors in the factory and moved onto the floor himself.
  • At Tesla a monitor showed each station as green or red, and Musk1:01:22 headed straight to any red light to find who owned the problem.
  • The tent line was rolling sedans three weeks after the idea, and Tesla then started making 5,000 cars a week.
• Go learn in person instead of sending someone to take notes.
  • Jensen Huang, Nvidia38:40 attended an academic conference on machine learning and neuroscience himself. He told an employee, "I'm here to learn."

2.4 Build routines that bring weak signals to you

Make contact with the edge of the company a habit, not a mood.

• Open a channel from every level and read it yourself.
  • Jensen Huang29:05 asks employees at every level for five action-led bullets on their work and what they see in markets, customers and competitors.
  • He wants signals while they are still weak. A recurring machine learning development in the emails led to Nvidia's investment in GPU acceleration tools.
• Make everyone, including you, take customer calls, and give front-line staff a way to stop the line.
  • Jeff Bezos, Amazon30:14 requires corporate staff to work as customer service agents for a few days every two years, and he was not exempt.
  • During his training an agent predicted a customer's damaged lawn chair complaint because the packaging for that new product was inadequate.
  • Remembering Toyota's andon cord, Bezos said customer service needed one, so agents could surface problems as soon as they were noticed.
• Wire up real-time data and send scouts to see the present.
  • Amancio Ortega, Inditex15:45 computerized his company in 1974, before the first Zara store existed. Zara now receives daily information about what is happening in all of its stores.
  • Inditex24:45 has people in New York nightclubs, Paris shopping areas and trendy Spanish bars tracking what people wear today, not in two years.
• Ask customers what else they need, not only what they will buy.
  • David Packard, Hewlett-Packard28:00 asked the Naval Research Laboratory what other instruments it might need.
  • The orders taught HP to make instruments it had never manufactured.

2.5 Get the customer's truth first-hand

Sell direct, listen in person, and work backwards from what the customer says and feels.

• Own the customer contact instead of leaving it to middlemen.
  • Akio Morita, Sony41:30 believed third and fourth parties would not share Sony's enthusiasm or explain its new technology. Sony opened a Ginza showroom where customers tried products with no salesman.
  • Amancio Ortega11:55 saw store buyers order products nobody wore on the street, so he opened his own stores.
  • Morita52:00 moved his young children and wife to the United States to learn how Americans lived, calling himself a believer in total immersion.
• Start from the customer and work backwards.
  • Ortega14:00 said he would manufacture what the customer wants, unlike fashion houses that create first and then persuade.
  • At Amazon, Bezos25:53 kept asking for mockups and customer detail, then had teams write a press release and FAQ for a product that did not exist.
  • The Kindle was the first product built this way. Most of Amazon's major products since 2004 used the process.
• Listen first, then design to the customer's own checklist.
  • Facing Michael Jordan's exit to Adidas, Nike sent designer Tinker Hatfield to Chicago to listen. The Air Jordan 3 followed the checklist, with the Jumpman logo and only a small swoosh. Phil Knight and Bill Bowerman, Nike2:38:40
  • The guarantee rose from $2.5 million to at least $18 million, and the Jordan brand did $6.6 billion in FY22.
• Answer small customers yourself, and treat every touchpoint as the product.
  • Morris Chang, TSMC5:17 called Jensen Huang himself after Nvidia, with 50 or 60 employees, wrote that TSMC's San Jose office had ignored him.
  • Within two or three years Nvidia was one of TSMC's five biggest customers.
  • Steve Jobs, Apple1:10:58 said every customer interaction raised or lowered respect for the company, from using a Mac to calling support to buying a song on iTunes.

2.6 What distance costs

When leaders lose sight of the front line, the damage shows up as surprises.

• Do not delegate away the parts you find boring.
  • Larry Ellison, Oracle30:18 says his first 15 years of "extreme delegation" were closer to abdication. He was only doing what interested him.
  • The neglect fed the 1991 crisis that nearly ended Oracle.
• Check that customers actually want what you are building.
  • Microsoft's Longhorn promised a new graphics engine, a web services framework and the WinFS file system, but no developers asked for WinFS and the pieces never compiled into one build. Microsoft2:18:20
  • Three quarters of corporate PCs were still on XP three and a half years after Vista launched.
• Never bury or ignore what customers tell you.
  • In the late 1950s a blind taste test found people preferred Pepsi. Woodruff ordered it never shared and never repeated. Coca-Cola1:57:00
  • In 1975 a Pepsi bottler's agency rediscovered the result. Pepsi passed Coke in bottled share in 1977 after taking the Pepsi Challenge national.
• Know how your product is used and made, even when you do not control it.
  • Miners bought Nvidia's consumer cards through retail channels for a use Nvidia could not track. When crypto winter hit in 2018, revenue declined and the stock fell 50 percent. Jensen Huang, Nvidia1:02:00
  • Nike first told the press it did not make shoes when child labor reports hit. It later set supplier standards, published supplier lists and ran third-party audits. Nike1:45:21
  • Bank of America told franchisee banks it had sold a marketing system, not an operating one, after assuming its own California situation applied everywhere. The result was the 1968 revolt that led to Visa. Dee Hock, Visa45:40

2.7 Where they differ

Distance has worked for some, and closeness has limits, so fit the routine to your product and your stage.

• Distance can work if you pay for it in other ways.
  • Andrew Carnegie, Carnegie Steel41:42 managed through written reports, sometimes from Scotland. Staying clear of operations let him harass managers without worrying about his own performance.
  • The author suggests closer involvement might have made him easier to live with but a less successful tycoon.
• Closeness to the customer does not mean obeying the customer.
  • Steve Jobs, NeXT25:09 ignored his advisory council's $3,000 ceiling and shipped a $10,500 computer.
  • NeXT shipped only 205 computers by the end of its launch year, against a need to sell 16,000.
  • Jobs1:06:37 did focus on the point where a person meets the machine, because people care about what is on the screen, not the insides.
• Hands-on depth has an expiry date, and intensity has a price.
  • Soichiro Honda40:40 retired when he felt the technical demands of new products were beyond him.
  • Ray Kroc, McDonald's26:26 mopped restrooms in a good suit and screamed at his manager over an unlit sign or litter in the lot. He wanted perfection and did not try to be likable.