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A 12-Step Recovery Program to Break from the Pack—Step 12: Know When to Hold, Know When to Fold

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Rather than being the boxer who stays in the ring too long, one of the most important and honorable attributes of a great leader is to know when to stay and when to exit.

This article is excerpted from Break From the Pack: How to Compete in a Copycat Economy and is the last in a twelve-part series.

Step 12: Know When to Hold, Know When to Fold

Leading the pack requires immense time, energy, commitment, and devotion. It's not for the faint of heart. Rather than being the boxer who stays in the ring too long, one of the most important and honorable attributes of a great leader is to know when to stay and when to exit. You might want to leap from your pack into another pack, an entirely new business, and then work to break out from that one. Or, you might want to exit the race altogether. But as a leader, you make the decision. Don't let events or others do it for you.

To a use a poker metaphor, when should you hold, when should you fold? Peter Standish at Warner Records is eloquent on this point. "When you lose the passion and love for what you do, it's time to find another career," he says. "You've got to have a passion. It can be a project, an endpoint, a personal vision, but it's got to inspire you and drive you past those distractions which load up every organization, like bureaucratic b.s., political battles, and unfair policies. My passion is the music and the artists and the Warner colleagues I work with, and the great CDs and DVDs and promotions we can create together. I work my butt off, but without the passion, I would be consumed by all the frustrations in my company and all the difficulties in my industry. Passion and love get you through all that crap. It's like a marriage. When you lose the passion and love, it's time to leave."

Paul Orfalea, for instance, left. I worked with the Kinko's founder in the 1990s, when he was beginning to express stress and unhappiness because he felt that "the company owned me, I didn't own it." Orfalea stepped down as CEO/chairman in 2000, engineering the sale of the company to private equity firm Clayton Dubilier and Rice, which ultimately sold it to FedEx.

On the other hand, Ken Olevson, like countless other talented maniacs, worked with passion and integrity, got amply rewarded, and ultimately concluded that the fit with his employer wasn't great for the long haul. He found an even better position in another company. In 1999, Bernard Rapoport retired from his leadership position at American Income Life Insurance, and wrote me that "at 82 years old, I will be starting a new company. I don't know exactly when because I haven't made the selection, but there is no use wasting time. If I am not building, I am not happy." When I talked to his assistant, Barbara Chonko, in late 2005, she told me that she can barely keep up with him; he's involved in several boards and is an active partner in the management of three small niche companies in the specialty glass industry. When I caught up with the man (88 years old!) himself, he described each of his companies with enthusiasm and told me that he's having a ball. He's still holding.

Knowing when to hold and when to fold is an act of reality and integrity. That distinction brings us, finally, to Robert Winquist and Sherry Backman, who head VSi, a contrarian children's sticker company. VSi lost its pack-leading edge when its competitors began to imitate its products and processes. I wish I could tell you inspiring stories about how VSi once again broke from the pack, but the reality is a little more complex.

As Sherry Backman told me, "In the beginning of VSi 10 years ago, I sometimes worked up to 120 hours a week. I sometimes slept in the office. The business succeeded beyond my expectations, but I burnt myself out. Over the past couple years, when we became one of many suppliers and we didn't stand out any more, and the industry stopped growing, I had to question whether I had the energy to continue. Robert and I began to have conversations about closing down or selling out."

Backman said that once the company got pulled back into the pack by imitators, VSi survived with a little profit because it figured out ways to cut more costs and get to market with new products a little faster. But Sherry Backman and Robert Winquist knew that such steps were too small and incremental to have a sustained impact. The company stayed mired in the pack. The in-house energy and excitement dipped. Backman and Winquist's frustration and pessimism grew—until one day the big "aha!" moment came when they realized that they didn't have to limit their output to the flat flat-vending industry. Their further investigations showed that VSi could maintain its current business as a cash cow and exploit a new, potentially huge opportunity by bypassing the vending machines altogether and going right to the customer. While they are still staying in the flat vending business, they are also switching to another set of sticker markets that offer untapped break-from-the-pack possibilities.

Winquist and Backman are drawing plans to partner with distributors to place their stickers and tattoos right on retail store shelves. They are also targeting new direct customers, like doctors and dentists, who might want to receive regular state-of-the-art customized stickers to give out to young patients. Most radically, they are developing and manufacturing a toy sticker- and tattoo–printing machine, to be sold in retail stores, that will let kids make their own stickers. They also intend to capitalize on their www.stickers.com website to make it more of an interactive community of kids, an initiative that will further extend the VSi brand and allow kids to pay online to create their own stickers and order them directly from the Web. They also want to emulate HP, which reaps a profit bonanza from its inkjet cartridge aftermarket products for printers. "Imagine—we can create our own cartridges to supply our machines that kids will use to make their own stickers and tattoos," exults Sherry Backman. "We can become the industry standard."

Will all these ambitious plans allow VSi to break from the pack again? Quite possibly, though there's no guarantee for anyone. Most promising is the fact that Winquist and Backman now have a "fire in the belly" again because they can once again see exciting growth opportunities. They also finally understand the concept of unleashing other people's talent, so they won't be working 120-hour weeks anymore. But they'll be working. They're not ready to fold 'em yet. They're holding. I wish them luck.

As I wish you luck. Breaking from the pack in the relentless Copycat Economy is no small feat. But it's a doable accomplishment, and, dare I say, a noble one. You, too, have the capability to help your organization break into the lead and provide yourself and your customers, employees, and investors the joy and reward that come with being on the leading edge. I wish that fate for your organization, and I hope that, regardless of your job title, you will choose to make yourself one of the leaders in that effort.

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