The Magic in the Middle Kingdom

Volume 19 Letter 9

Working hard for something you don’t care about is called “Stress”.   Working hard for something you do care about is called “Passion”.[1]   Tapping into that passion has a lot to do with how you develop and execute your strategy.  It’s called “pushing strategy into the organization” and it works because it makes good use of people’s passion.    To do this you’ll need to develop a solid vision and objectives and then be brave enough to let your business teams determine the best way to allocate resources to meet those goals.

At opposite ends of the spectrum are management styles that can create a lot of stress in the kingdom.    At one extreme, strong visions and strategies are implemented by employing a pyramid style structure, directives conveyed via command and control.   Teams are given a strategy and told exactly how to execute it but while the orders might be followed to the letter, any passion for the job is quickly turned into stress since team members have no say in how the strategy will roll out.     At the other end of the scale are innovative, free spirited companies, so focused on team collaboration and creativity that they fail to set focused business goals.  Initiative, artistry and innovativeness abound but with no direction or a fuzzy company vision and objectives, teams struggle with how to allocate resources to the many and varied projects, again leading to lots of stress.

Finding a balance between the rigid structure of command and control and freewheeling innovative thinking is mission critical for any successful leader who hopes to tap into that magical sweet spot where teams are both focused and passionate.   Watch how Pixar Communications almost drowned in their creative juices before finding this balance.

Ever heard of the Pixar computer?   Didn’t think so.  Pixar developed a very cool computer that sold exactly zero units.  Pixar Communications was started by George Lucas of Star Wars fame.   He started the company to develop the hardware and software needed to generate the graphics for his sci-fi movies and transfer that to film.   The Pixar computer was an attempt to commercialize their cool technology so others could also create special movie effects.     Turns out people enjoyed watching his movies but not trying to make them.   After losing a pile of money George Lucas sold Pixar to Steve Jobs and by 1994 Pixar was sinking in debt.   Jobs had ploughed roughly 50 million dollars into the business and still had little to show for it.  Pixar employees were living in fear that Jobs would march in with an iron fist and burst their freewheeling creative bubble but the difficulty was that something had to be done.  The creative company simply wasn’t creating anything of commercial value. There was trouble in the Kingdom.

A frustrated Steve Jobs called Lawrence Levy and asked him to be Pixar’s CFO.   Lawrence Levy turned the free spirited, artistically driven,  money losing company into a commercial success and transformed a 50 million dollar loss into a 7.6 billion dollar sale to Disney 12 years later.

Lawrence Levy determined early on that Pixar needed first to get focused on the right market and also to find some business discipline.  Pixar was full of creative types who were convinced that building cool stuff was their mission so Levy’s first order of business was to re-define Pixar as an entertainment company rather than as high-tech company.   This was important because, at the time, Pixar was basically being run by the techies.   He needed to get everyone focused on making movies as opposed to cool tech gear.    Secondly, Levy introduced meaningful business systems to keep Pixar focused on its movie production goals.

It’s at this point that Levy struggled with how tempting it was to construct a top down, authoritarian kingdom where every decision would be made by him or Steve Jobs.   However, he states, as efficient as that style of management may be, the price of that efficiency is poor information at the top leading to sloppy decisions made on hunches and instinct.   Besides, instituting a top down style of management, in Levy’s opinion, would have gutted Pixar’s creative juices.  Instead, he knew he needed to tap into the organization’s creative DNA and re-kindle their passion for movie making while creating that tension that must exist between creativity and commercial results.  To do this he purposely left the organizational structure flat meaning no one had authority to ram anything through – it had to be negotiated.  He called it a talking organization.

According to Levy, in every film there is an inevitable crisis point and he emphasized that it’s at this point it’s important to leave the creative types and engineers to hash out the problem themselves. This is where the magic happens, in the Middle Kingdom.   It takes more time and it’s frustrating but, according to Levy, his teams would always find better solutions than could either he or Steve.  The proof was in the box office – Toy Story, A Bugs Life, Finding Nemo, Wall-E ………blockbuster after blockbuster.    What we can learn from Pixar and Lawrence Levy:

  1. Find the middle kingdom:  Both top down authoritarianism and unbridled creativity can lead to poor outcomes.   Find that place between creativity led and results driven with goals( the “What”) that are set centrally and a strategy (the “How”) that is set by the business teams.
  2. Organization structure is important:   Flat organizations create more dialogue.  This can slow decision making but can produce better decisions.
  3. Cool stuff is not a goal:  Creativity is wonderful but it must be constrained by market realities.   Use those realities to set boundaries and rules.
  4. Analyze your market:  Lawrence Levy moved Pixar’s focus from building cool graphics to entertaining people.

In every business there is a tension that exists between creativity and making money;  the trick is to find that sweet spot in the middle, engaging creative and innovative teams in decision making while setting boundaries and deadlines that reflect commercial realities.   Where is your middle kingdom?

1.    Quote from Simon Sinek
2.    Octavian Report,  Lawrence Levy on Pixar, Steve Jobs, and the Middle Way

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