Rich Kalgaard: A Brief Q&A

KarlgaardHere is a brief Q&A that Amazon features in conjunction with Rich Kalgaard‘s book, The Soft Edge: Where Great Companies Find Lasting Success.

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The Soft Edge seems to tie into many of the trending themes in business these days (i.e. the power of culture, values, emotional intelligence.) Is it a choice for business leaders, or a requirement?

It’s always a choice. I’ve seen companies succeed in the short term with a great strategy and flawless execution. If you want to build a company to flip, perhaps you can ignore the soft edge. But companies that last, that survive disruptions, and that fight off economic headwinds, go deeper than just strategy and execution. They find their endurance in soft edge values – trust, smarts, teams, taste, stories. Their employees are committed and their customers are loyal.

As a publisher of one of the most respected business magazines what is something you feel most people don’t understand about being successful?

The founder of Forbes, B. C. Forbes, wrote this in the very first issue in 1917. “Business was originated to produce happiness, not pile up riches. ” This was a warning! Not all success takes you where you want to go. The companies I profiled in The Soft Edge were happy places and super successful. The leadership was highly regarded by employees precisely because the leaders had built and nourished cultures that brought out the best in people. This is what creates lasting success.

Of all the companies or people you talked to – who stood out to you the most?

Two companies really surprised me. One was Northwestern Mutual, the $25 billion insurance giant. The last thing I could ever do is wake up each morning, get on the phone, and sell insurance. I just couldn’t do it. But Northwestern Mutual’s reps do it with a sense of joy and purpose. The other company is Specialized Bicycles. The chief designer told me his goal, in building some of the world’s best racing bikes, was to find “the sweet spot between data truth and human truth.” That’s a great line and a noble aspiration. It’s what every company should seek.

Can you hire to improve your Soft Edge? Alternatively, are their ways businesses are sabotaging themselves unknowingly?

When it comes to hiring, two major findings in The Soft Edge are the importance of grit and of cognitive diversity. On grit, you want to hire people that have surmounted big challenges in their lives. Northwestern Mutual likes to hire military veterans. Specialized likes designers who have built things with their hands. They like salespeople who’ve suffered a 100-mile ride in sleet. On cognitive diversity, Nest Labs puts geeks and artists in same room when products are being designed. SAS Institute likes data analysts with backgrounds in music and art.

Out of the five things that make up The Soft Edge

Trust is the foundational soft edge. It has two components: External trust is whether your customers, suppliers, investors and shareholders trust you. Internal trust is whether your employees trust you. If you fail to engender trust in either area, your company will have problems that will not fix themselves. In a knowledge economy, trust is huge. No company can forcibly pull ideas out of employees heads, and employees will not give their best ideas to leaders or colleagues they don’t trust.

Tell me something that you didn’t put in the book and you wish you had.

I wish I had linked soft edge excellence to long-term investment strategy. I ran out of time to do the research. But anecdotally, it is there. Warren Buffett is famous for buying shares in great companies when their stock prices are low. We all understand a low price. But what, in Buffett’s mind, is a great company? It turns out that most of Buffett’s investments are in companies that display soft edge excellence in addition to clever strategy and flawless execution.

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Rich Karlgaard provides an abundance of information, insights, and counsel in The Soft Edge, published by Jossey-Bass/A Wiley Brand (April 2014). He is the publisher of Forbes magazine and author of its “Innovation Rules” column. He contends that the fundamentals of competitive advantage are changing fast. For high performance and endurance, you now need strategy & execution…and the under-recognized but increasingly vital “soft edge.” You can also check out his tweets @RichKarlgaard and his website.

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