Advance Praise for Break From the Pack “Break From the Pack offers a broad array of valuable and exciting insights on how to succeed in today’s competitive environment. Unlike so many books that are long on generalities and short on specifics, Harari’s book offers tangible examples of ‘how to’ and ‘how not to’ succeed in key strategic issues. I recommend this book to any business leader.” —Garry Betty, President and CEO, Earthlink “Oren Harari has done it again! He has produced a fascinating book that inverts the rules and that will keep you up at night remaking your management strategy and tactics.” —Karen Ignagni, CEO, America’s Health Insurance Plans (AHIP) “Break From the Pack is a refreshing look at the fundamentals of business success, written in clear, concise language with real con- tent and practical advice.” —Gordon Bethune, retired former Chairman and CEO, Continental Airlines, Inc. “In Break From the Pack, Oren Harari has once again confronted us with challenging new realities. With clarity and humor, he has made the complex and counterintuitive feel like good old common sense. The book is both entertaining and practical. It provides a new perspective on the business challenges we are experiencing today.” —Ray McCaskey, President and CEO, HCSC (BlueCross BlueShield of Illinois, New Mexico, Oklahoma, and Texas) “With a style that makes business metrics almost fun, Oren Harari examines pitfalls that have felled seemingly indestructible compa- nies and identifies how underdogs become visionary leaders.” —Michael Milken, Chairman, Milken Institute “Executives will benefit from Harari’s fresh view of market dynam- ics, the imperative for differentiation, and the call for executive attention to both the ‘above ground’ and the ‘underground’ of every organization. His calls for ‘zero defects as the price of admis- sion’ and for a ‘passion for purpose and a passion for precision’ fit the health care executive’s agenda perfectly. If you are one who checks out a management book by reading the final chapter first, I guarantee you’ll jump back to page one of Break From the Pack and enjoy the full read!” —Richard J. Umbdenstock, President-Elect, American Hospital Association “Dr. Harari’s analysis of the leadership challenges in today’s global marketplace is compelling and powerful (and funky). He has developed an exceptional model to help organizations achieve top performance and competitive advantage. Business leaders in any country will find his advice clear, meaningful, challenging, and attainable.” —Kjell Nordstrom, Ph.D., Stockholm School of Economics and Coauthor of global bestsellers Funky Business and Karaoke Capitalism Break From the Pack Break From the Pack How to Compete in a Copycat Economy Oren Harari, Ph.D. Vice President and Editor-in-Chief: Tim Moore Acquisitions Editor: Paula Sinnott Editorial Assistant: Susie Abraham Development Editor: Russ Hall Associate Editor-in-Chief and Director of Marketing: Amy Neidlinger Cover Designer: Alan Clements Managing Editor: Gina Kanouse Senior Project Editor: Kristy Hart Copy Editor: Krista Hansing Indexer: Lisa Stumpf Compositor: Laurel Road Publishing Services, Inc. Manufacturing Buyer: Dan Uhrig © 2007 by Oren Harari Publishing as FT Press Upper Saddle River, New Jersey 07458 FT Press offers excellent discounts on this book when ordered in quantity for bulk purchases or special sales. For more information, please contact U.S. Corporate and Government Sales, 1-800-382-3419, [email protected]. For sales outside the U.S., please contact International Sales, 1-317-581-3793, [email protected]. Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners. All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the United States of America First Printing August 2006 ISBN 0-13-188863-3 Pearson Education LTD. Pearson Education Australia PTY, Limited. Pearson Education Singapore, Pte. Ltd. Pearson Education North Asia, Ltd. Pearson Education Canada, Ltd. Pearson Educatión de Mexico, S.A. de C.V. Pearson Education—Japan Pearson Education Malaysia, Pte. Ltd. Library of Congress Catalog Number: Harari, Oren. Break from the pack / Oren Harari. p. cm. ISBN 0-13-188863-3 (hardcover : alk. paper) 1. Success in business. 2. Competition. 3. Creative ability in business. 4. Originality. 5. Quality of work life. I. Title. HF5386.H249 2006 658.4’01--dc22 2006000278 To Katy Anderson, who broke from the pack long ago This page intentionally left blank CONTENTS Prologue 1 PART I RESISTING THE PULL OF THE PACK Chapter 1 Welcome to Commodity Hell: The Perils of the Copycat Economy 15 Chapter 2 How to Lose: Ten Compulsions Guaranteed to Keep You Mired in the Pack 37 Chapter 3 The Madonna Effect and the Willie Nelson Principle: The Power of Calculated Reinvention 63 Chapter 4 Curious, Cool, and Crazy: Building a Culture of Disciplined Lunacy 85 PART II HOW TO BREAK FROM THE PACK Chapter 5 Dominate or Leave 107 Chapter 6 Put the Pieces Together for a Higher Cause 133 Chapter 7 Build a Defiant Pipeline 155 Chapter 8 Take Your Customer to an Impossible Place 177 Chapter 9 Take Innovation Underground 201 Chapter 10 Consolidate for Cool 225 PART III HOW YOU CAN LEAD THE PACK Chapter 11 You, the Leader of the Pack: A 12-Step Recovery Program 253 Epilogue 283 Index 287 ix This page intentionally left blank ACKNOWLEDGMENTS This book is a result of two years of research and six months of inten- sive writing. During that time period, several individuals “stepped up” with support for which I am truly grateful. At Pearson Prentice Hall, editor-in-chief Tim Moore was always available as a genuine source of support. Paula Sinnott was instru- mental in shepherding the entire manuscript to fruition, even while being interrupted by the birth of her daughter! Russ Hall provided very helpful editorial input on the actual “wordsmithing” of the man- uscript. Amy Neidlinger, with the assistance of Susie Abraham, was invaluable in developing and executing the vital marketing of the book. And without the expertise of Kristy Hart (and Christy Hackerd) in production, there wouldn’t even be a physical book for us to read. Andrew Dailey, Herbert Harari, and Royce Flippin read early drafts of the manuscript and gave me encouragement and valuable feedback. David Groff read multiple drafts and provided continuous insights and advice that made a huge difference. Over the past three years, many smart, creative MBA students who I’ve taught at the University of San Francisco provided input and analyses that became extremely useful as I wrote this book. Two MBA students deserve special accolades: Nicole Jackson and Kyra Peyton served as outstanding research assistants. Their contributions to this book were immense. And throughout these three years, Gary Williams, the recently retired dean of the business school at USF, gave me continual support and resources to complete this project. Throughout this process, I had numerous commitments to corpo- rate clients. At my office outside the University, Lauren Swalberg stayed on top of these commitments, made sure that I fulfilled them, xi xii BREAK FROM THE PACK and in general maintained a remarkably calming order on the chaos that sometimes surrounds my professional life. Lynn Johnston has been a terrific book agent. In addition to excelling at the “regular” work that an agent does, she showed great patience in reviewing, and rejecting, my early proposals and ulti- mately helping me shape the vision for this book. Most important, I want to thank my wife, Leslie, and my sons, Jordan and Dylan, for once again putting up with me. The process that an author goes through is often not easy on a family. During the final six months when I actually wrote the book, I was often out of commission for them. They hung in there and deserve more praise and gratitude than I could possibly acknowledge here. To all these individuals, and to all the others whose kind words kept me going, many thanks. ABOUT THE AUTHOR In 2002, Oren Harari was selected by the London Financial Times and Prentice Hall as one of “the world’s greatest management thinkers” and was featured with 39 other prominent individuals in the book Business Minds. For the last 25 years, as a leading author, lec- turer, and consultant, he has presented provocative new perspectives on competitive advantage, organizational change, and transforma- tional leadership. In his books, articles, and blogs, Harari debunks conventional approaches to management and describes the strategic decisions and leadership behaviors that actually do propel organizations into a successful position of competitive advantage. His 2002 book The Leadership Secrets of Colin Powell (McGraw-Hill, 2002) reached the best-seller lists of The New York Times, BusinessWeek, and The Wall Street Journal. Other books that he has authored or co-authored have achieved bestseller status and numerous accolades, including BeepBeep! Competing in the Age of the Roadrunner (Warner Books, 2000), Leapfrogging the Competition: Five Giant Steps to Becoming a Market Leader (Prima Publishing, 1999), and Jumping the Curve: Innovation and Strategic Choice in an Age of Transition (Jossey-Bass, 1994). Harari has contributed to many publications, including Harvard Business Review, Business Strategy Review, California Management Review, and Industrial Relations, as well as numerous nonacademic publications. He was the senior monthly columnist for Management Review from 1991 to 2000, and for the following two years he was the lead weekly columnist for the online magazine Mworld.org, the American Management Association’s informational website for the xiii xiv ABOUT THE AUTHOR management community. Currently, he is on the editorial board of the Journal of Managerial Issues. He served as a senior consultant with the Tom Peters Group from 1984 to 1996, and, in 1997 and 1998, he was the first designated “management expert” for Time Vista, Time magazine’s direct resources interactive website for businesses around the world.