David Pottruck and Terry Pearce preach that a caring corporate
culture is a better motivator than fear or greed
Disciples of Machiavelli's "The Prince" and Sun Tsu's "The Art of
War" will surely detest David S. Pottruck and Terry Pearce's "Clicks
and Mortar: Passion Driven Growth in an Internet World," for its lessons
contradict their cherished beliefs. Yet in spite of the difference in
outlook, this book is as useful as these classics.
"Clicks and Mortar" is not the sort of book that I usually like. It
is mainly about the soft side of management, which too often can be
soft-headed. Clicks and Mortar, by contrast, is incisive, despite its
liberal use of words like "passion,", "caring," and "love".
The title misleads "Clicks and Mortar" is not about the Internet
per se but the larger topic of how to manage today. Pottruck, president
and co-CEO of Charles Schwab, and Pearce, a consultant specializing
in leadership, believe that culture and values are central to lasting
institutional success, particularly now that the Internet enables customers
and employees to ferret out managers who fail to live up to their promises.
The authors dispute the notion that fear and greed are the best motivators,
particularly where innovation is concerned. As they put it, "Filling
a need is not just the way to make money, it is the way to create commitment.
...The desire to serve others is a greater motivator than the desire
to beat the competition. And if these two ideas are right, then playing
collaboratively on a team helping others to be as good as they can be,
is a more desirable state to most people than competing with others
within the organization for position and power." They cite supporting
evidence, such as studies demonstrating it takes strong bonds within
research groups to achieve superior performance
Even though this thesis may sound consistent with leading-edge conventional
wisdom, it is actually quite radical, for most organizations' commitment
to team play is only skin deep. Even for Internet companies, the lure
of stock-option-based riches is the glue that binds most organizations
together. And Pottruck and Pearce illustrate how their model differs
from typical corporate practice. The authors present alternating chapters,
with Pearce concentrating mainly on general principles, Pottruck providing
examples from his experience as Schwab,Citibank, and other companies.
The strength of "Clicks and Mortar" lies in its detail. Most books
about new organizational precepts stay at a level of generalization
that conveniently obscures conflicts (like how to reconcile lofty principles
with profit targets) and glosses over implementation.
One major theme is the central role that values play, and how management
must reinforce them every day. Pottruck depicts Schwab as a company
that goes to considerable lengths to adhere to its values and argues
that its success results largely from this effort. Fittingly, Schwab's
value statement is pithy: "Fairness, empathy, teamwork, responsiveness,
constantly striving to be worthy of our customers' trust."
As the book recounts, Schwab managers do more than tell stories consistent
with these principles every major decision is allegedly measured
against them. For example, Schwab spent $2 million to give employees
covered parking in Phoenix because it would be unfair to have their
cars ruined by the blistering summer sun, and even redesigned products
because the staff felt they were not "Schwab-like."
Pottruck and Pearce are generous with their knowledge, and "Clicks
and Mortar" is chock-full of pointers for anyone who wants to become
a better manager. It covers everything from how to structure performance
reviews, foster greater diversity (Schwab, alone am one financial services
firms, has achieved gender parity), manage technology projects, devise
advertising, and evaluate marketing research. Pottruck describes how
he changed his own style to be less domineering and more cooperative,
and even describes mistakes he made and the steps he took to remedy
A cynic might ask, if culture really is the key to Schwab's success,
why would the authors share the company's secret? There are two likely
First, it is that it is extremely difficult to create and maintain
a values-driven organization, because it demands the punctilio of honesty.
Schwab constantly questions whether it delivers what customers want,
not only reviewing surveys but also probing their meaning, and relying
on small scale market tests as the only reliable indicator. The company
is equally rigorous about examining its own practices unlike
most corporate managers who feel threatened by uncomfortable data.
Second, Pottruck and Pearce appear to believe they are leading a seismic
shift in how managers operate, and like all evangelists, they want to
spread the word. Whether or not one becomes a convert, "Clicks and Mortar"
is a welcome and badly-needed antidote to the high speed, hyperventilating,
soulless New Economy ethos expounded by the likes of Fast Company and
Business 2.0. In fact, much of what these journals preach is merely
traditional management practice adapted to Internet time, uncertainty,
and pay scales.
What "Clicks and Mortar" sets forth is a much more fundamental, and
ultimately more rewarding, change in priorities.