Bernhard Schroeder: Part 1 of an interview by Bob Morris

SchroederBernhard Schroeder is the Director, Lavin Entrepreneurship Center Programs and oversees all of the undergraduate and graduate experiential entrepreneurship programs on the San Diego State University campus. He also has responsibility for the Center’s marketing and outreach on both the SDSU campus and in the San Diego community. He is a part-time Clinical Faculty, Entrepreneurship teaching several entrepreneurship course including Creativity and Innovation.

Prior to moving to San Diego, Bernhard was a Senior Partner in the worlds’ largest integrated marketing communications agency, CKS Partners, which in 1998 had offices in over 30 countries, more than 10,000 employees and over $1 billion in revenue. Bernhard joined CKS in 1991 and working with the other four partners, grew the firm to almost $40 million in revenue by 1995 and led CKS to a successful IPO that same year.

He has experience working with Fortune 100 firms like Apple, Nike, General Motors, American Express, Mercedes Benz, Kellogg’s and others as well as start-up companies. He was involved in the initial branding and marketing launches for startup companies Yahoo! and Amazon. Today, he mentors more than 20 founders of startup companies in San Diego with yearly revenue ranging from $400,000 to more than ten million.

His book, Fail Fast or Win Big: The Start-Up Plan for Starting Now, was published by AMACOM (February 2015).

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Morris: Before discussing Fail Fast or Win Big, a few general questions. First, who has had the greatest influence on your personal growth? How so?

Schroeder: Two people had a huge impact on my personal growth. The first was my father who instilled in me the notion of working to get what you want. He worked two jobs for 14 years to put five kids through private school. Never saw him much in those years but we had an amazing relationship after he retired. So, I started working and making money at the age of 11 and I thought that was completely normal.

The other person who I never thought would have an impact on my life but did was my aunt. Looking back, my aunt was just a good average person who was fun to be around but no one that really stood out in my family. That all changed one day. I was 19 at the time, full of piss and vinegar trying to figure out what I wanted to do with my life. I was definitely struggling trying to determine how one laid out their life, like it was a play or something. I was told by my father that my aunt was dying. Just like that. Stomach pains for a few weeks, then the diagnosis. Terminal cancer. Three weeks to live. Having never experienced death in the family, I could not get my head around the concept of death. My aunt was only 38, looking amazingly healthy and was going to die. She had told my father she wanted to meet with me. My fear and apprehension was, “What do you say to someone who is dying?”

I met her in a hospice room at the hospital. When I walked into the room, she was sitting on the bed with a serious mound of paper all around her. I asked her, “What are you doing?” She replied, “I am organizing my life so as not to be a bother when I am dead.” For the next three hours, we talked about life. My life. Her life. And she started to tell me about all the things she had never done or had regretted. She sacrificed for the family and lost the love of her life (my aunt had never married). I can almost picture her sitting on the bed and talking to me as she said,” Bern, no matter what you do with your life, don’t ever have regrets. Don’t ever settle for something you don’t agree with. And live life as if you were going to die tomorrow.” That day when I left, I don’t think I realized what had just happened. But her words would come to define the way I lived my life. My personal life and entire career was defined by this statement,” I will not spend one day being in a place where I don’t feel I belong.” And that is exactly the way I have lived my life.

Morris: The greatest impact on your professional development? How so?

Schroeder: Three mentors have had the most impact in my professional development. The first mentor was in my very first marketing job. I did not realize it at the time because if you have never been mentored before, you really don’t know it is happening (being mentored). The key element is trust. We usually don’t build a quick trusting relationship with our boss. But looking back, he leaned in…he nurtured me, pushed me, scolded me and praised me. In the two years I worked for him, I received five years of experience and advice. He actually created a solid platform for my entire career.

The second person was a few years later and he was a crusty kind of curmudgeon guy we brought in from Xerox. Within about two weeks of meeting him (I reported to him), he pulled me into his office and flatly stated that I was terrible at two things: I did not know how to listen, and I really did not know how to sell. Now, you have to realize in just three years at this marketing agency, I had risen from entry level employee to vice president. So, I thought to myself “this guy is full of shit.” But over the next 3-4 months, he actually proved to me that I really did not listen and I was really not accomplished at the art of selling or as he liked to put it, the art of getting people to buy from you.

He did two things that changed my professional life. The first thing he did was to send me to a “Spin Selling” seminar in San Francisco which I did not want to attend. The three-day sales seminar changed my outlook on my personal and professional life. I learned the skillset of listening. I learned the difference between what people wanted and what they needed. I learned personality types and how to read a room. It was amazing. The second thing he did was simple. He honed my ability to trust my instincts. This is a really hard skill “or feeling” to develop. You can’t really see it. Can’t really take a class or seminar in instinct. Over the next two years, after every client or prospect meeting, he would ask me to deconstruct the meeting. What was “really” going on in the meeting, who were the decision makers, what did they really want and so on. Then, based on my deconstruction and thoughts, he would give me feedback on where I was spot on and where I was completely off and why. Again, you don’t really see or understand it when you are going through personal development in a deep way but looking back, it was huge.

The third person taught me about the power of teams. Up until I met my third mentor, I thought that all my accomplishments to date were based on me. That is, my success was singly determined by me and what I could accomplish. I had been on pretty fast track since coming out of school late (undergraduate at 27 years of age) and I was motivated to move aggressively in building my career. Took on risky promotions and difficult clients and was successful. When I met this person who would become my third mentor, I did not really see him as even being a potential mentor. First, I felt I was his peer. We were both about the same age, both had accomplished a lot and were now partners in building what would become a billion dollar company. But early in my relationship with him, he pulled me aside and in a very nonchalant conversation told me two things: I was not a strategic thinker and I absolutely did not know how to build teams of people that would go “to war” for me. I thought about that. Over the next two years, he taught me how to be real with people. How to nurture and care for the talented stars working for me. I learned the art of management where everybody wins. The other thing he taught me about strategy was perspective. To use a military analogy, I was always the lieutenant or captain building and rapidly executing marketing campaigns. But I was not the general, sitting on the hill or further away, who was looking way beyond the battle…looking at the how the entire war would be waged. I learned an immense amount of strategic perspective from him that lifted me to a new level of branding and marketing strategy. One that allowed me to clearly create brand and marketing strategies for my future clients (like Amazon and Yahoo!) with a very strategic plan, strong on tactics but amazing on marketplace strategy.

Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.

Schroeder: It’s hard to identify a turning point or epiphany in one’s life unless it’s something cathartic. Something that shakes or even defines your core. I would have to say, looking back, it was my aunt’s death. Her calmly talking to me as she was dying about never having regrets really formed the basis of how I would view life. I did it my way or the highway. I had people tell me, “ I don’t really like you…but you are one of the sharpest marketing people I have ever met and I respect you.” And seriously, all I wanted was to be respected. I did not really care if people liked me. Never have. The other part of what has become my mantra is I firmly believe no one was born to do anything…so what will you do? I have crafted my career around constantly challenging myself and enjoying life. I am not working on the cure for aids or cancer, so trust me, I have a perspective on what’s important in life. Sell another car or book, great. But don’t get hung up on that. I have wanted to make impacts and bring people along for the ride. I still stay in touch with people I hired and mentored in the mid 90’s. I mentor more than 20 founders of companies in San Diego. I reach thousands of students on the SDSU campus with messages of entrepreneurship, passion and doing what you want to do. It’s the most fun I have ever had.

Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?

Schroeder: This is a tough question, especially since I work on a university campus. I look back and view my formal education as a necessary part of life to learn some core basics and learn how to become a good speaker and writer. I look at what impacted my life and formal education has played a very small role. My accomplishments have come from doing what I wanted to do that pushed me, really pushing the edge of marketing, mentorships and work/play experiences.

Morris: Of all the films that you have seen, which – in your opinion – best dramatizes important business principles? Please explain.

Schroeder: Okay, going to date myself here. I remember seeing A Wonderful Life several times and realized two things: I don’t want to be the hated banker guy and I do want to feel like I was important or loved enough to be missed. I also wanted to care about people. Second movie was Dead Poets Society. I wanted to live carpe diem…to seize every day. I did not want to have a meaningless professional career. I did not want a job. I did not want to settle or conform. I did not want to do what other people wanted me to do. I did not want to live through other people expectations. The third movie was Wall Street. I both wanted and did not want to be Charlie Sheen. I wanted success to come from hard work but not from cheating. I never wanted to compromise my integrity or ethics. Maybe walk up to that line but not cross it. The second thing, I knew I was going to be involved in growing or running a big company someday. I did not want to be Gordon Gecko. I did not want to be that guy that ruined people’s lives for money. Maybe that’s why still today, I carry a slight disdain for some venture capitalists. I encourage all the founders I mentor to bootstrap and eat top ramen so as to preserve their equity for as long as possible so that they can maintain control of their companies should they ever have to take on investors.

Morris: From which non-business book have you learned the most valuable lessons about business? Please explain.

Schroeder: Tough question. What do I say to sound pithy here? As I look back to the books I read in my formative years, I think of Papillion, The Outsiders, Catch-22, The Godfather and a few others. I think the one book that impacted me with its realism and symbolism was One Flew Over the Cuckoo’s Nest. If you have read this book or seen the movie, you are not supposed to like Randle Patrick McMurphy. But the more I read the book, I saw Randle as one of the few sane people in the book. My takeaway from the book relating to business was life is crazy, don’t try and completely predict it. Whatever your situation, make the best of it and change it if you can. And don’t ever conform in your beliefs or who you are…no one really cares anyway especially in business. And if you can befriend people on your journey, do so. They could be the part of your professional life that matters most. I don’t really remember, in a fond way, all the billions of dollars of products or services I helped sell in my career. I do remember the people, good or slightly crazy.

Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-tse’s Tao Te Ching:

“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”

Schroeder: I remember the time in my career when I started hiring, training and mentoring people smarter than me. It changed my life. They accomplished so much more that I could have and the more credit I extended to them, the more my partners praised me. I had people that worked for and with me meet me years later and simple say, “Bern, working with you was the best time of my professional life…if you ever create another company; let me know, I would like to run with you again.” Those same people I hired and mentored then have today gone on to be leaders at companies like Starbucks, Google and Apple today.

Morris: From Howard Aiken: “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

Schroeder: This is so true. First of all, your own ideas can only be made better by sharing them. Second, how will find the people that will help you build something amazing if you don’t share your idea? Third, if you never share your idea, it’s probably not going to happen anyway.

Morris: From Richard Dawkins: “Yesterday’s dangerous idea is today’s orthodoxy and tomorrow’s cliché.”

Schroeder: Fascinating quote. I wrote something the other day when asked about what advice would you give today’s CEO’s? Prepare for your company’s demise by destroying it yourself. In other words, assume you do not have the best company in the world and as markets shift, consumers change preferences and trends continue to disrupt marketplaces, hedge your bet on new ideas that could become companies that will be relevant. Blockbuster should have bought Netflix in the early days. Borders should have formed an alliance or purchased Amazon. Kodak should have actually created GoPro. And so on. If I were CEO of a large company today, I would be investing in a spate of emerging startups that someday would actually eat me.

Morris: From Isaac Asimov: “The most exciting phrase to hear in science, the one that heralds the most discoveries, is not “Eureka!” (I found it!) but ‘That’s odd….’”

Schroeder: Most people think breakthroughs or amazing things are done on purpose. I don’t subscribe to that theory. The people that create breakthroughs know they don’t have the perfect methodology or innovative formula. It’s the process of trial and error and always asking why. It’s the curious and adventuresome people that create amazing things. It’s also the willingness for people to pivot when they see something that’s odd and investigate it or even change the nature of the company.

Morris: From Thomas Edison: “Vision without execution is hallucination.”

Schroeder: I teach a Creativity and Innovation course in the Entrepreneurship program at San Diego State University. It’s kind of a crazy good class. In every class, I give problems to the students they have to solve in about 40 minutes. They never know if it’s an individual or group assignment and they have no idea ahead of time about the actual problem or opportunity. They do know they should spend a majority of the time understanding the exact problem. Once the problem is identified, they try and create as many ideas or possible solutions without judgement. Quantity over quality. And this is the creativity part of the class. The innovation part is to implement the best solution. If there is no implementation, there is no innovation. So, bottom-line, you can brainstorm and “vision” all you want…if you never launch or implement your idea, it is all a fantastic hallucination.

Morris: Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”

Schroeder: Well, I figured out early in my career, I would never be a fit for any large bureaucratic organization. Worked with General Motors in the late 80’s as I started my marketing career, and after one year, thought, how the hell does anything get done in this company? It was remarkable to watch. An amazingly well-run, corporate machine that made all the moving parts move but had no clue about what was really going on in the marketplace. One that was completely out of touch with its customers and whose senior executives were obsessed with getting to the 14th floor (executive row at GM). Vowed I would never be part of or work in a company like that in my life.

Morris: In one of Tom Davenport’s recent books, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?

Schroeder: In my own experience, it’s very hard to create/build a functional leadership team that can actually make collective decisions that are necessary and wise. The reason? Lack of trust. In my own experience, we actually accomplished this at CKS Partners, the marketing firm I built with four other partners. From a very early stage (I joined them when they were only about 20 people), we really worked at having an open culture, embraced integrity, no politics and one for all. Easy to say, tough to do. It took several incidents and opportunities to refine and define the mantra. I would say it took about two years until we were all bought in and trusted each other…then we exploded, creating a billion company in less than five years. As we were growing rapidly, every month, we flew in to Cupertino and met as partners…we hashed everything out. We agreed on key issues and opportunities. We agreed on acquisitions. We went to dinner together. We smoked cigars on the beach together. We had each other’s back. We celebrated each other’s success and pitched in to help others in trouble. Our collective decision making was solid. I will never work with people like that again in my life. Complete and utter trust.

Morris: Here’s a brief excerpt from Paul Schoemaker’s latest book, Brilliant Mistakes: “The key question companies need to address is not ‘Should we make mistakes?’ but rather ‘Which mistakes should we make in order to test our deeply held assumptions?'” Your response?

Schroeder: No one actually wants to make a mistake on purpose. It goes against human nature and acceptance in business. But in business, when is safe a death trap? So, it’s not that you embrace mistakes, but you intentionally push the envelope to the point where mistakes will be made, hopefully measured ones, (ones that don’t kill the product or company). You learn from exploring the marketplace edge and then you make strategy moves that will help you succeed. Best analogy is a military one where you send a scouting party up ahead. You don’t want them to alert the enemy, you don’t want them to get killed. You do want intelligence that will help you define the battle or the outcome for the war. You know the risks. You can’t not send them out, you don’t have enough information. So, you send them out, small group of ten to learn what they can and hopefully come back. Same thing applies in business. If you are not testing your beliefs in your products or services with customers or prospects all the time, assessing emerging markets or trends, your competitors certainly will. You take measured risks.

Morris: In your opinion, why do so many C-level executives seem to have such a difficult time delegating work to others?

Schroeder: Because they still believe it’s all about them. They don’t understand it’s about making everyone around hem successful. Some C-level people truly believe no one can do the job as well as them and they want the credit. Not true. If they go down in a plane crash, plenty of other people will step in. They were not born to run McDonalds. If they don’t run it, someone else will. They lack true leadership skills and confidence. They have truly not figured out how to build trust or teams that trust each other in the company environment. Sometimes, it’s not their fault. The culture or environment might be such where its dog eats dog. A great example of amazing leadership that has built a culture of trust is Pixar. Up and down the organization, anyone can attend the “dailies” (review of current animation projects). An intern can ask a question. Someone from animation can question marketing. What a trusting organization. What amazing leadership.

Morris: The greatest leaders throughout history (with rare exception) were great storytellers. What do you make of that?

Schroeder: I think storytelling is an amazing art. It just can’t be bullshit. The story has to have a higher message or meaning other than be about you. It has to be human. It has to have a lesson or two inside. The best storytellers I have met who are leaders of companies share a common trait. They are humble. When they are telling a story, you lean in because you know there is going to be something in this story that you will not see coming. And that’s the magic of storytelling. Sometimes the absolute truth is the best. Even if it’s not perfect. It’s hard to be confidently honest when you are telling a story but if you believe in yourself, then it comes easily. I could tell a story of how I took the phone call from Jeff Bezos in 1996 and immediately saw the big opportunity. Not true. The real story I tell is that I did not know who he was, did not think Amazon was a great name and really did not want to drive in the rain to Seattle to meet with him. I did not really understand the potential of the Internet and certainly did not imagine ecommerce was going to be big. At the urging of my creative director, we went to the meeting. There you go.

Morris: During my interview of Jon Katzenbach, he said that – in his opinion – the most difficult change to achieve is getting people to change how they think about change. What do you think?

Schroeder: Wow, that’s deep…. After my career at CKS Partners, I came down to San Diego to fix companies that were broken or about to be broken by their competition. These companies needed to change immediately. So how do you tell people the company needs to change or its irrelevant? The company will cease to exist in its current form. Here is what I learned from fixing four companies in seven years. It’s not about getting people to change how they think about change. It’s about getting them all to agree on a common mission where a high degree of creativity/innovation and high pressure is needed in order to survive and grow. If you can create this culture, change is seen as the norm.

Let me explain. I had one turnaround where I absolutely did not know where we would take this company when I joined them. But after about 60 days of analysis and talking to industry experts and analysts, the opportunity became clear. Now, when we told the employees (about 400 at the time) about where the company had to go, they laughed at us. Seriously, senior leaders thought we were joking. They simply refused to accept change or see how the marketplace had shifted. No one was joking when we raised $35 million dollars from investors and the next week laid off 200 people who simply did not buy into what we were doing. We put the remaining people under a common mission and high pressure to get there. Two years later this “valueless” company sold for more than $110 million and was considered an emerging leader in the wireless space. So, the message is to create a culture where constant change is seen as necessary and even celebrated or the company will become irrelevant.

Morris: In recent years, there has been criticism, sometimes severe criticism of M.B.A. programs, even those offered by the most prestigious business schools. In your opinion, in which area is there the greatest need for immediate improvement? Any suggestions?

Schroeder: Teaching at a university and visiting quite a few others over the past eight years has allowed me to really “see into” several MBA programs from some of the best schools in the world. What I would say to most of these universities is “that the world has changed.” It’s moving faster and faster. Innovation and change is the norm. Disruption is the norm. But the focus of quite a few top MBA programs is still on basic business principles of the traditional MBA. Here is what I would tell university presidents and deans (and I have). One, create a solid program where 50% of the program is amazing core courses in the MBA. Two, the other 50% that has to be taught has to do with creating culture in rapidly growing companies, leadership skills and building solid competencies in creativity and innovation. You can teach someone how to be more creative or innovative. There are tools you can use. But you need to combine them with mindset, culture and environment in order to be successful. Companies are being created rapidly today and have to pivot often in order to grow. This is the new norm. We don’t need more MBA managers right now. We need people who are leaders, at every level of a company. As I talk to employers today, they assume someone at a university is getting an education in their discipline; they tell me they need more creative and innovative thinkers. And they are talking about undergraduates. What would be their request of MBA’s?

Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any advice?

Schroeder: CEO’s should worry that their company will become irrelevant or that they have the wrong business model. We are moving to a Millennial dominated world, where the largest population group will be 18-35 by 2025. These CEO’s today need to really understand this group. It’s their biggest challenge as this group will set the new norms in everything. From the way they consume food, media, transportation, etc. Blockbuster is gone. Borders is gone. McDonalds is reeling. Hollywood is pissing their pants at the media content disruption and entrepreneurs everywhere who understand and are ready to pivot with this group are rejoicing at the opportunities.

Morris: I agree with John Kotter about the importance of buy-in, of creating a sense of urgency, when launching change initiatives. In your opinion, how best to develop a broad and deep commitment within the given workplace?

Schroeder: Tough question. How do you get everyone on a common mission? I think everyone needs to own a piece of the reward if you are going to ask everyone to own a piece of the mission. For our company, that meant we gave everyone equity in the company about 3-4 months ahead of us going public with our IPO offering. You could immediately feel the mood and temperature change in our company. We already had amazing talent and solid morale. But when people become “owners”, they really are invested in the outcome even if they don’t know exactly how it ends. You can either force the urgency (you have no other choice so you tell employees what has to happen) or you can make them part of the urgency and ask for their help. We asked and they responded. At the point we gave all employees equity, we were about $35 million in revenue….four years later, we crossed over $1 billion.

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Bern cordially invites you to check out the resources at these websites:

His website link

Lavin Entrepreneurship Center link

Fail Fast or Win Big Amazon link

TEDx Encinitas video link

StartUp Circle video link

LinkedIn link

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