Build a culture
The only way Schultz was going to be able to change Valassis was to change the mindset of the people working there. To be able to implement any new plan that was created to diversify the company, he was going to need a cultural foundation based on innovation and risk-taking.
“You start out by telling people very specifically what you’re trying to do in terms of the culture,” he says. “That’s step No. 1 in the process. A lot of times, people are afraid to talk about what they want to change in the culture, so you have to spell out the kind of change you want.”
Schultz and his management team constructed a reward system for employees who exhibited the same willingness to think in new ways.
Among other incentives, Schultz rewarded risk-takers with opportunities for promotion.
“One of the things we wanted to do was take people and move them overseas for assignments in Europe and China and assignments in Canada,” he says. “We agreed as a management team that if people stepped up and took those kinds of assignments, when those people came back, they would get a great job. They needed to be rewarded for taking that risk.
“One of the things you have to do is get buy-in from your whole leadership organization, that you are going to reward people who take risks.”
As important, you cannot penalize innovation and risk-taking that goes wrong. When attempting to redefine your company, mistakes are part of the equation. Those are teachable moments, not punishable moments.
“You can’t have any penalties built into the system,” Schultz says. “It’s not only about a reward system; you can’t penalize folks, either. When people take risks and do things they’ve never done before, you’re going to have failures. You can’t penalize people for stepping out, taking risks and failing. You really have to view those failures as learning experiences.
“Failure becomes like scar tissue. Scar tissue is stronger than regular tissue, and people who step out, take risks and fail develop scar tissue. That makes them better and stronger the next time. What you can’t do is view it as, ‘They failed, they’re a bad person, they have no place with us.’”
