Sports/Entertainment
Cavalier attitude
How Dan Gilbert overhauled the Cleveland Cavaliers’ culture to drive growth
By Kristy J. O’Hara
Smart Business Akron/Canton | January 2007
On a crisp autumn day in 2004, Dan Gilbert went in search of fall festivities with his family by visiting a pumpkin patch.
Upon arriving, he found irony in a sign reading “Pumpkin Patch,” with an arrow pointing in the opposite direction of the field. While some would let it go and laugh it off as stupidity, Gilbert pursued it. He interviewed a young man working at the patch about it, and when the Gilbert clan returned in 2005, the sign was corrected and accurately guided Great Pumpkin seekers to the patch.
In life and in business, Gilbert expects excellence and works toward a championship level as chairman and founder of Quicken Loans and majority owner of the Cleveland Cavaliers, but errors, inaccuracies and apathy get in the way. He has trained himself and his employees to constantly raise their level of awareness to improve as an organization using a list of values he calls “Isms.”
He lives them himself to empower others to do the same, and these “Isms” create a strong cultural foundation for a successful organization. When he took over the Cavs in early 2005, he knew he could change the culture and help guide the organization’s turnaround process if he could build this foundation.
He has since grown the franchise to an estimated $102 million in revenue in 2005, according to Forbes.com, which also values the team at $356 million, ninth in the NBA.
“If you want to grow and you want people to understand who you are, the whole thing is getting your people everywhere to understand who you are and not what you do,” Gilbert says. “What you do is pretty simple. We play basketball in front of people. We give mortgages to people who want to buy homes.
“That’s pretty easy, but the harder part is to define as an organization who you are and make sure everybody knows who you are because when you know that, then the decisions that you need to make are a lot easier because it’s in conjunction with who we are or not.”
Communicate the game plan
During orientation, new employees meet the arch-nemeses of values, green cartoon monsters such as the two-headed Vic and Tim; thoroughly-pierced, belly-baring Lola Vel; craggy, cigarette-smoking Nora Sponse; and the roller skating Lou Polle, with a flashy smile donning a sharp suit and shades.
Gilbert spends Day 1 of orientation with employees, and these cartoon characters help illustrate mistakes and situations that poorly reflected on or affected the companies in the past. These character puns also help communicate the values and add humor to the colorful and easy-to-understand handbook. It’s important to Gilbert that the company and the way he presents its values are attractive both externally and internally.
“These are great concepts, but unless it’s packaged and presented right, it’s never going to give,” he says. “The typical corporate culture is so broken because the package you’re presenting is so, almost offensive, in a lot of cases. Even if the message was good inside, the wrapping is so unappealing, it may not even get to people.”
To ensure his message gets through and employees buy in, Gilbert views himself as the Chief Ism-ologist.
“The leader is setting that foundation, setting that culture and, No. 1, living it, and No. 2, being a champion of it and really carrying that flag throughout the organization,” Gilbert says.
“When they see little things or see things that don’t go with who you are, they take action, and they’re always teaching and telling people.”
Having upper management actively involved in the training process helps new employees realize that the big guys in charge execute their own game plan.
“They know the very senior leaders of the company live it, breathe it, believe in it,” Gilbert says. “They hear it, so that’s important. I get so many e-mails from people that say, ‘I can’t believe you guys would spend the time with us as new employees,’ and my question back, or to anybody, is, ‘What could be more valuable from a chairman or CEO’s business life than spending all these hours or whatever it takes with new people to engrain who you are?’
“The bigger you get, the harder it becomes, and if you don’t spend your time on that, you’re going to become the typical, bureaucratic company, and that’s not good for anybody.”
As Gilbert notices both good and bad things in his companies and life, he communicates his observations via e-mail and adds them to his training materials so he can cite specific, real-life examples. For example, several employees have scheduled auto-response e-mails when they’re away from the office, yet failed to give a last name of the alternative contact person or that employee’s full phone number and e-mail address.
This is how Vic and Tim creep in to help Lola Vel in making that customer a victim of low service levels.
“You might as well put a [middle] finger on it because that’s basically what you’re telling your customers and clients, right?” Gilbert says.
These examples help people comprehend what each value means and how it applies to everyday actions.
“You make assumptions that people understand things, and not everybody does,” Gilbert says. “Everybody comes from different backgrounds, different cultures. ... Everybody’s different, so you have to explain it.”
Practice daily
While LeBron James did his job of lighting up the Toyota Center during last year’s All-Star game in Houston, the exterior lights forming the arena’s name didn’t do the same. For much of the weekend, they stayed burned out, and Gilbert noticed.
“The thing isn’t the fact that the light is burned out,” Gilbert says. “The thing is, why was it burned out three nights in a row? All you do is call the guy to fix the light. But can your person call the guy? Could you call the guy? If there was a sign on your building and it burned out, would you know who to call?”
Success is in the little things — be it fixing burned out lights or emptying overflowing trash receptacles.
With 5,000 employees across his companies, Gilbert has trained 10,000 eyeballs to constantly improve the minutia. To illustrate his point, he describes how the small things convey an image, such as when one enters an office and “the magazines are Highlights magazines from 1964 with coffee stains on them like you’d see at the dentist office.”
He poses the question: Would the average receptionist think to purchase new magazines and get reimbursed for them to improve the look of the welcome area? Most wouldn’t because of the red tape to cut through to either get permission or get that money back.
“If you trust them to greet your clients — they’re the first person that they see to represent the face of your company — but for them to go out and get new magazines, they would have to go get what? A permission slip? A form?” Gilbert says. “It comes down to trust. You’re paying them money — good money, in most cases — do you trust them? If you pay people for the value of their judgment, you have to let them judge.”
And the little things add up, just as free throws win games not only in the last 60 seconds when the pressure is on but throughout every minute, even when the sense of urgency hasn’t kicked in. The key is getting players to feel a sense of urgency and play hard in the first quarter instead of waiting until the fourth, when a full-court press, foul trouble and fatigue creep up. Whether those players are on the basketball court or in the board room doesn’t matter. When employees take care of the small stuff when clients aren’t around or deals aren’t on the line, it often eliminates a potential crisis or embarrassing situation.
“People aren’t used to or don’t have experience at really looking around all the time,” Gilbert says. “You have to keep reminding yourself. You have to keep reminding everybody. It’s not about necessarily working in your business, but it’s also working on it and taking a step back and being aware of everything.”
When employees leave jobs where they’re tied to their 49-square-foot cubes with rolls of red tape and enter a company that instead empowers them, leaders need to encourage them to voice ideas and solutions.
“They always felt and have known this and wanted it, but they were handcuffed in their decision,” Gilbert says. “They weren’t able to do the things they wanted to do, not because people were bad or wrong or whatever that were running it, but because bureaucracy had built up, and they had to get through too much to make decisions.”
When people proactively make decisions but those decisions lead to mistakes, leadership should commend them for their efforts and help them learn from the mistakes instead of berating and penalizing them. “If you hire good people and you really trust them, and you show them that you trust them, then they’ll trust you,” Gilbert says. “But that means that they’ll make mistakes sometimes, and that’s OK. They can’t be perfect. No one’s perfect. ... If you destroy them over one decision, then everybody will be gun-shy, and it won’t work. You have to accept failure. You just gotta keep believing and trusting people, and they’ll trust you back.”
Allowing employees to take initiative, solve problems and make decisions also allows the organization to prosper and minimizes bureaucracy.
“If you want to grow a business, you have to let your people” do it, Gilbert says. “You can always give input or opinion, but 99 percent of their decisions, they gotta be able to make.”
Keep your eye on the prize
The lights go down, and the energy level quickly soars in anticipation as the fans jump to their feet, clapping and cheering for their heroes as the swords that form the corners of the mammoth scoreboard move outward and spew fire, the heat felt even in the upper seats.
While the enthusiasm inside Quicken Loans Arena has climbed, so have revenue and ticket sales, as the Cavs have rocketed from the bottom rung of the NBA to one of the top franchises in both categories. Both the emotional and business growth are byproducts of Gilbert driving creativity and innovation instead of the bottom line. “Businesses are fooling themselves,” Gilbert says. “Time is the most valuable commodity of all, so the amount of time being spent by key people shopping coffee services or plastic forks, the gain in that is so small compared to things that are on the top line like innovation, creativity, new ideas, sales, marketing. It’s a 10-to-1, 50-to-1, 1,000-to-1 leverage.”
Gilbert prefers employees thinking of big payoff ideas that could, say, sell 3,000 more tickets — yielding thousands of dollars on the top line — instead of scrutinizing spending 27 cents on a paper plate versus 29 cents to save on the bottom line. “People can see that very clearly,” Gilbert says. “Well, if I said, ‘I didn’t spend my time doing that because today I brainstormed our five ideas I’m going to launch next year,’ although eventually that maybe works to 10,000 times that savings, you can’t immediately measure that. “You can’t go into your boss’s office and say, ‘I saved you 2 cents a paper plate.’ A lot of people have a hard time with that, but that’s one of our things, too — a penny saved is a penny. A penny saved is a penny. That’s it. Never add it up. It doesn’t add up.”
Gilbert obsesses about finding better ways, and he drives that mentality into his people by asking a simple question: How do you carve a pumpkin? The traditional approach calls for cutting the lid off the top and scooping out the insides through that hole.
But by cutting the hole in the bottom instead, the insides come out easier, you can still carry it by its stem, and then you just place the pumpkin over a candle or light instead of reaching inside.
Using a different approach generates a new way of thinking and even better ideas.
“First of all, there is no box,” he says. “Is it in the box or out of the box? You gotta throw out the box. I don’t like using it anymore. If it’s outside the box, that means it’s right near the box. There’s no box — period.
“It’s not even in or out. It’s just wide open space — a blank white board.”
The team wins, not individual players
Upon entering the Cavaliers’ new offices, make yourself at home on the plush, modern chairs that sit on a wood floor painted like a mini basketball court. Watch ESPN on the 61-inch plasma HDTV hanging on the wall.
Walk around the clear wall full of basketballs from floor to ceiling to grab a slushy, cappuccino or any Pepsi product from the fountain drink machine. With beverage in hand, sit down for a meeting at the high, round, metal table engraved to look like a basketball, or enter the All-Star conference room with the carpeting resembling a ball — bright orange, with black forming the seams.
The Cavaliers’ offices ooze excitement, energy and an attitude that proudly proclaims, “Yeah, we work in a fun, entertaining business — don’t you wish you did, too?” But just months ago, Gilbert could have blindfolded and transported you there, taken the blindfold off, and you’d think you were in any other boring, corporate-America office.
Employees couldn’t fully embrace the values working in dull, drab offices that could have been those of any bank or law firm, so he completely overhauled them to drive creative brainstorming.
But often when new ideas are generated in an organization, people get caught up in the political game. Gilbert says it’s not about who said what or who did what, it’s about the actual ideas and what’s best for the organization.
“It doesn’t matter if the brand new receptionist or operator or courier came up with the idea,” Gilbert says. “It doesn’t really matter. What matters is, ‘what’ is better. When an organization gets caught up in the ‘who,’ it really is compromising to what it could be.
“It’s just about hierarchy and who said what, and people are worried about what they say and how they’re going to get promoted. They’re not always going to volunteer or give feedback with what’s best and right because they know they’re not going to be judged necessarily by what’s best for the company. They’re going to be judged by how they said what in front of who.” Eliminating a “who” focus starts with how an organization treats people via its policies and perks.
“Ninety-nine percent of companies in the world, are there corporate parking spots up front for supervisors?” Gilbert says. “Meanwhile, there’s women eight months pregnant who are parking a half a mile away and walking in the cold. They’re pissed off before they even walk in the door.”
By getting away from titles and seniority and instead focusing more on problems and solutions, companies can be more efficient and cut out the politics. But even in an organization dedicated to cutting out the crap, bureaucracy still seeps in.
Gilbert says it’s important to stay close to your business and keep the doors open so people don’t start whispering and speculating about what leadership is plotting behind closed doors.
“The natural thing is for companies to become that way, so you have to constantly be aware of fighting it and setting the tone and living it yourself, or it will fall apart,” Gilbert says.
The other obstacle is converting people who come from other companies, where politics was the all-star. Gilbert compares it to “The Wizard of Oz,” with employees falling victim to Dorothy Syndrome.
“Sometimes you give it to people, and if they’re coming from other companies, they don’t believe it at first because they’re so used to being about the who and not the what,” Gilbert says. “You have to tell them not just one time or five times, but a hundred. You had the power all along. ... Tap your shoes three times, and it would have been OK.”
And just as Dorothy trusted Glinda, employees have to trust management before they will take your words as truth and not throw them out as lies. Gaining that trust boils down to creating a uniform message and sticking to and living it.
Now that Gilbert has been with the Cavs for nearly two years, long-tenured employees in the franchise are beginning to see it’s not lip service, and he’s serious about the values he promotes.
“Just like Einstein discovers E=mc2 — he didn’t make it up, it’s the laws of the universe — we also like to believe that these are laws of the human interaction universe,” Gilbert says. “People who are successful in businesses and life, I think they realize the same things, most of them, and they discover them.”
And as the 300 full-time employees in the Cavs camp continue to discover these values, they will spread like fans doing the wave.
“Once you know who you are, then the who starts manifesting itself everywhere.”
HOW TO REACH: The Cleveland Cavaliers, www.cavs.com
