10Minutes

10Minutes

on The Self-Made Billionaire Effect

December 2014

The new talent war:

cultivating and
keeping your value
creators
Inside this issue
At a glance: The five ways those who
produce extraordinary value differ from
other executives in your organization.
01: How Producers think differently about
ideas, time, and actionand how that leads to
breakthrough value creation.
02: Why their relative view of risk and ability to work
with the right complements are essential to success.
03: Four ways to get more Producers in your
organization: develop, hire, partner, or acquire.
04: Create an environment where Producers flourish
and Performers can better partner with them.

Since 1987, self-made billionaire wealth

has grown more than three times faster
than the world economy.1 Yet in that same
period, business leaders have struggled
to find and pursue opportunities that
bring breakthrough value. What do selfmade billionaires do that is different?

The quick take

To answer that question, we did deep-dive

research on 120 billionaires and in-depth
interviews with 16 of them. Our findings
form the basis of our book, The Self-made
Billionaire Effect.2 We found that billionaire
success lies in the ability to integrate
ideas and actions that most individuals
keep separate. This integrative ability
shows up as five habits of mind that allow
billionaires to function as Producers.

2. Whats the timeframe for taking action?

Now. Nearly 70 percent of respondents to
our 17th Annual Global CEO Survey said they
were concerned about talent issues, and 25
percent did not pursue a clear opportunity
in the past year because they believed they
lacked the talent to take advantage of it.3

Most high-potentials have some Producer

traits. But the modern corporation tends
to discourage these characteristics and
instead promote Performers, people
who excel at optimizing established
functions or processes. Many companies
operate well with Performers at the
helm. But when disruption arrives, the
Performer focus can become a liability.
Having Producers in your firm can
allow you to identify and capitalize
on new opportunities. And not having
them leaves you vulnerable.

1. Who is most affected by this issue?

Companies in industries experiencingor on
the brink ofdisruption. The billionaires in
our study operated in 19 different industries
worldwide.

3.Whats the most surprising takeaway?

More than 80 percent of self-made
billionaires earned their wealth by disrupting
highly competitive industries such as
apparel, beverages, and hospitality.

1 John Sviokla and Mitch Cohen. 2014. The Self-Made

Billionaire Effect, Portfolio Hardcover.
2 Ibid.
3 PwC , 17th Annual Global CEO Survey, 2014.

At a glance
Most companies are out of balance when it comes to talent: their organizations are predominantly made up of Performers. Unlocking significant new
value requires increasing the number of Producers, who bring to bear five distinct habits of mind.
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01
How Producers
think differently
about ideas, time,
and action
Ready for when the time is right
Many company leaders think in terms of the next
quarter or fiscal year, but Producers demonstrate
patient urgency and look beyond the short-term payoff.

10

years

Average time spent as an entrepreneur

before breakthrough
Source: The Self-Made Billionaire Effect

The first three Producer habits of mind apply to

the way they develop blockbuster ideas, their
perspectives on time during the development
process, and the actions they take to bring their
ideas to market.
Consider these habits of mind as displayed by Joe
Mansueto, founder of Morningstar, the investment
research firm.4 Mansueto was sitting at his kitchen
table in 1982, reviewing a pile of mutual fund
prospectuses. He realized selecting funds for his own
modest portfolio would be a lot easier if he could
order a single report and get comparisons of all
available funds in one place. This thought sparked
the idea for Morningstar.
1. Empathetic imagination
This anecdote provides an apt example of how the
Producer exhibits empathetic imagination, which
involves bringing deep understanding about the
needs of the customer together with the ability to
envision a new product or service that will fit those
needs. Mansueto saw that the investing market
was on the brink of change and knew from his
own experience that change brought an untapped
need for easy-to-use information. After the first
insight, Producers continue to practice empathetic
imagination to innovate and evolve their concepts.

2. Patient urgency
Ideas are vulnerable to time and timing. In the early
1980s, the mutual fund market was in its infancy, and
Mansueto knew little about running an investment
services business. Operating with patient urgency,
he spent eighteen months working for two different
investment services firms learning all he could
about the industry. Then, when the market was
ripe, he resigned from his salaried position, urgently
launched Morningstar, and wrote the first edition
of The Mutual Fund Sourcebook, his first publication
evaluating mutual fund performance. By the time
Mansueto delivered the first edition into the hands of
customersless than two years after he first had the
ideahe was a more knowledgeable executive.
3. Inventive execution
Mansueto went on to develop Morningstar with the
help of inventive execution, the ability to rethink the
fundamentals of product or business design in order
to deliver at scale. In contrast to most businesses,
which leave behind inventiveness once a product idea
is set, Producers remain willing to adjust the business
model, pricing, target client, and deal structure.
In the case of Morningstar, Mansueto designed his
products from the outset for the individual investor at
a time when investment information was exclusively
targeted to professionals and institutions.

4 John Sviokla and Mitch Cohen. 2014. The Self-Made

Billionaire Effect, Portfolio Hardcover.

02
The Producers
approach to risk
and leadership
Pairing for profit
Producers dont go it alone; they seek complementary
skills to help them realize the most value from ideas.

60

of self-made billionaires built their

businesses as part of a leadership
partnership.

The fourth and fifth habits of mind address

the unique way Producers think about risk and
leadership.
4. Relative view of risk
The image of the entrepreneur as risk taker is so
ingrained in business culture that we expected our
study subjects to reveal a lifelong love of taking big
risks with bigger payouts. But we saw no evidence
that Producers are big risk-takers. Instead we
observed that they are able to take a relative view
of risk, meaning that they assess what they could
gain compared with what they might lose. This
stands in contrast to most people, whose view of
risk is absolute, based on what they might lose.
Taking the relative view does not mean that
Producers eschew risks. In Morningstars first years,
Joe Mansueto reportedly invested $250,000 of his
own money in the businessan investment that
he stood to lose in its entirety if the business failed.
But he believed in his idea. I knew at some level I
could make this work, he explained. Worst case,
my parents would take me in. I never felt I was
embarking on a risky venture. It didnt take a lot
of capital. I wasnt married. I didnt have a family
or a mortgage. Thinking about risk and things not
working out doesnt come naturally to me. I think
more about growing a company. I am a builder. I
believe the risks are manageable. 5

5. Leadership partnership
Taking the relative view of risk may also be easier for
those who have the right people working with them
to balance their skills. Around 60 percent of selfmade billionaires we analyzed built their businesses
as part of a leadership partnership: they found
someone with the complementary skills needed to
realize the most value from their blockbuster idea.
Sometimes those partners form a founding duo, like
Steve Jobs and Steve Wozniak of Apple, or John Paul
DeJoria and Paul Mitchell of hair care company John
Paul Mitchell Systems.
Joe Mansueto launched Morningstar alone, but
quickly complemented his Producer skills with
employees who had expertise in fund analysis and
product design. Today, Mansueto has an executive
team working with him. One important member is
David Williams, Morningstars managing director
of design. It is not common for there to be a design
director among a founding CEOs direct reports.
The fact that Manuseto keeps Williams there as a
Performer partner reflects the emphasis Mansueto
places on the look, feel, and usability of the
Morningstar product portfolio. Design, in his mind,
is part of what allows Morningstar to deliver useful
advice to the individual investor.

Source: The Self-Made Billionaire Effect

5 John Sviokla and Mitch Cohen. 2014. The Self-Made

Billionaire Effect, Portfolio Hardcover.

03
Finding and growing
the Producers in your
organization

Where are your value Producers?

The R&D function isnt the only place for big ideas;
casting a wide net helps you identify and develop
the nascent Producers in your organization.

75%

70%

Cultivating Producer talent requires shifting the

organization from Performer-centric to Producerfriendly. The first step is to place the Producers you
have in roles that require the five habits of mind.
This alone will require some organizations to change.
As a rule, companies do a poor job of distinguishing
between high-profile roles that require a leader to
optimize a known space (a Performer) versus roles
that require a leader to redefine or disrupt one
(a Producer). In Performer-centric companies, all
high-performing people look like Performers, and all
roles look like Performer roles. Becoming friendlier
to Producers begins with recognizing that all roles
are not alike. Dont waste the Producers you have
in jobs that better suit a Performer; and dont place
Performers in roles that require Producers.
Once you know what you need, make sure you have
the talent to draw on. Here are four strategies to do
that:
Develop from within

Three-quarters of the Producers we studied

had direct sales experience. More than
two-thirds had ownership of a P&L before
age thirty.
Source: The Self-Made Billionaire Effect

Identify employees who are natural Producers, i.e.,

those who have created something new, like an
entrepreneurial venture or social outreach project.
Provide them with their next opportunity by putting
them in charge of an initiative from inception
through execution. For individuals who show special
promise, consider giving them free time to pursue a
new idea of their choosing.

Catalyst hires
Recruit individuals specifically to pursue new growth
or capabilities. These catalyst hires should have
the five habits of mind, which you can assess during
the interview process.6 Determine if the person is
passionate about identifying and delivering on new
opportunities, and just as important, how resilient he
or she is in the face of failure.
Production partnerships
Fill your Producer gap by forming partnerships with
organizations currently producing in a market space
you view as strategic. Producer partnerships come
in a variety of forms. Whether working more closely
with suppliers, funding startups, or incubating
skunks-works projects, companies can use the
combined resources for an entirely new Production.
Mergers and acquisitions
Pay attention to the people part of the M&A equation.
All too often, companies put newly acquired
Producers in Performer positions, driving those
Producers to leave once they receive their promised
payout. To prevent that from happening, determine
who the Producers are before the deal closes and give
them incentives to stay.

6 For sample interview questions see John Sviokla and Mitch Cohen.
2014. The Self-Made Billionaire Effect, Portfolio Hardcover.
Page 176.

04
Build an environment
for breakthroughvalue creation

Steve Jobs, Steve Case, and T. Boone Pickens were

self-made billionaires who left large corporations
early in their careers to strike out on their own.
The stories of these and dozens of other self-made
billionaires make clear that it is not enough to have
Producers in your organizationyou need to take
measures to ensure they thrive and will want to stay.
Promote Producers

Win the real talent war

Your Producers are likely to leave the organization
if you dont provide the opportunities and
environment they need to thrive.

66

If your most senior executives are Performers,

and they in turn put only Performers in the most
senior positions, then your organization is signaling
that there is no room for Producers. To promote a
Producer-friendly culture, you need Producers in
high positions. Producers need to be on the executive
team and on the board to approve new ideas and
help construct a vision for the organizations role in a
changing world. This is not an either-or proposition.
Performers are still needed in senior roles, and as
part of Producer-Performer leadership partnerships.
Develop the mindset in Performers

of self-made billionaires surveyed worked in

a large company before leaving to start their
own business.
Source: The Self-Made Billionaire Effect

Also consider how to make your Performers even

more valuable, both on their own and as Producer
complements. Junior Performers should be given
opportunities to develop their habits of mind. Not
everyone will become a Producer, but everyone can
get better at developing an integrative mindset.

Remove shame of failure

If your organization says it wants original thinkers,
and then disparages those whose ideas fail, it is not
alone. But if you want to build a Producer-friendly
culture, this approach is untenable. Publicly laud
Producers who make the attempt to build something
new even if it doesnt ultimately succeed. Show
greater tolerance for projects whose outcomes are
uncertain but potentially huge. And be sure to give
Producers some leewaythey may get it wrong
before they get it right. But if a venture does in fact
fail, cut it off. Dont keep the project and its Producer
in limbo.
Nurture Producers
If you think you can manufacture miracles, youre
mistaken. The creation of breakthrough value owes
as much to serendipity as it does to planning. There
is no way to ensure that a high-potential project
will be successful. There is no playbook to follow.
Each organization has to pursue opportunities as
they arise. By hiring Producers and giving them
the support they need, your company will more
likely have the talent pool necessary to imagine and
develop the ideas that lead to the creation of massive
new value.

If you have more

than 10 minutes

See our ideas in practice

Lynda and Stewart Resnick took the unknown
pomegranate, packaged it as the antioxidant-rich
super-juice drink and sold POM Wonderful to
the masses thirsting for healthy beverages. Learn
how the Resnicks and a select number of other
entrepreneurs built super-successful businesses
many repeatedlyin the strategy + business article,
What Self-Made Billionaires Do Best.
Learn more about what this means for your
own organization
Visit The Self-Made Billionaire Effect website.
Explore related reading
In The Self-Made Billionaire Effect: How Extreme
Producers Create Massive Value, PwCs John Sviokla
and Mitch Cohen identify five habits of mind that
allow self-made billionaires to create value on a
massive scalehabits that are in direct conflict with
the traits and practices most businesses value and
promote in their employees. Unleash your growth
potential by learning to identify and keep the talent
your business needs.
More than 80 percent of the self-made billionaires
who are profiled in The Self-Made Billionaire
Effect found success in mature industries that they
reinvigorated. Find out if your industry is ripe for
dematurity in the strategy + business article,
How Old Industries Become Young Again.

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How PwC
can help

To have a deeper discussion about The Self-Made

Billionaire Effect, please contact:
John Sviokla
Head of Global Thought Leadership
(617) 530-5359
[email protected]
Mitch Cohen
Vice Chairman
(646) 471-1500
[email protected]

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