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3
THE MADONNA EFFECT
AND THEWILLIE
NELSON PRINCIPLE:
THE POWEROF
CALCULATED
REINVENTION
Learning from Madonna
Whether or not youÕre a Madonna fan, thereÕs no denying the fact
that, as an artistic enterprise, sheÕs been spectacularly successful. Not
only has she sold 140 million albums over the past 25 years, but sheÕs
also garnered mammoth sales from concerts, movies, books, and
videos. In November 2005, when (according to the Drudge Report)
she Òstole the showÓ at the MTV Europe Music Awards, Robbie
WilliamsÑwho won Best MaleÑsaid: ÒSheÕs an absolute legend and
makes us all look like amateurs.Ó
All this in spite of the fact that sheÕs not a particularly great singer,
dancer, actor, or writer. Yet as one critic wrote recently, Madonna
Òstill stands as the most durable pop symbol of her generationÑand
potentially the next.Ó If you find her annoying, consider her annoying
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ability to elicit such a reaction after all these years. Consider her
extraordinary staying power in a notoriously fickle, faddish, and imita-
tive industry.
What is MadonnaÕs secret? Despite what her critics say, itÕs not
media manipulation, smoke-and-mirrors marketing, or shock. Sure,
some of that exists to get the word out, but snazzy promotion isnÕt the
reason for her success. The answer can be found in the title of her
sold-out tour in 2004: ÒReinvention.Ó Alvin Hall of the 2003 BBC
production WorldÕs Most Powerful: Madonna or Oprah? threw his
final vote for Madonna based on her Òextraordinary ability to reinvent
herself in anticipation(my emphasis) of many fashions.Ó
MadonnaÕs brand relies on crossing over from mainstream to the
margin and showing everyone else how to do it, too. She reinvents
herself by keeping her antennae attuned to the culture, norms, and
behaviors that interesting fringe groups are currently experimenting
with, groups that represent the still-raw material for tomorrowÕs mass
movements. She then discards her still-successful ÒproductsÓ and
persona, puts her personal stamp on her new material, packages it
with imagination and organizational finesse, and then leads the
masses to it.
Throughout this process, she stays grounded and disciplined.
SheÕs market driven even as she drives the market. As she puts it:
ÒYou have to find a way to be creative and have the freedom to do
what you want to do, while also being aware of what the market
demands and what people like. ItÕs a fine line to walk.Ó
SheÕs walked the line, and we all know the results: The world has
watched Madonna evolve through the stages of Òvirgin,Ó good girl
gone bad, Òmaterial girl,Ó Òboy toy,Ó Marilyn Monroe blond bomb-
shell with body-armor lingerie, female power and sexuality figure
(including everything from aerobics and weight training to erotic
dominatrix imagery), media maven, androgyny, hard-charging career
woman, AIDS and gay-rights activist, doting working mother and
childrenÕs book writer, and spiritual seeker, among others. With each
incarnation, Madonna takes her audience to the edge of conventional
wisdom, far enough to be considered a rebel and iconoclast, but not
so far ahead as to seem bizarre and irrelevant. She ushers us into an
area that will become ÒconventionalÓ one day but that for many isnÕt
quite there yet. She leaves her audience thrilled, provoked, aroused,
uncomfortable, outraged, overjoyed, incensed, or titillatedÑbut
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CHAPTER 3¥THE MADONNA EFFECTANDTHE WILLIE NELSON PRINCIPLE 65
Jeffrey Katzenberg, the former head of Disney Studios and
DreamWorks Animation, described Madonna this way: ÒShe is always
evolving; she never stands still. Every two years she comes up with a
new look, a new way of presenting herself, a new attitude, a new act,
and a new design. And every time it is successful. There is this con-
stant genesis.Ó That, my friends, is the protean mantra that applies to
any business that wants to break from the pack over the next decade.
That is also why Madonna-type reinvention is much harder than it
looks. It takes particular foresight and courage for any organization to
let go of whatÕs working today before it becomes imitated and com-
moditized, and forge a new identity consistent with emerging trends
and opportunities. IBM CEO Sam Palmisano would probably be sur-
prised to be compared favorably with a pop diva, but the leadership
that he is attempting to provide at IBM with the massive e-business on-
demand strategy is an example of what I call the ÒMadonna Effect.Ó
When Lou Gerstner handed the reins of IBM to Palmisano in
February 2002, the company was rejuvenated and prosperous. IBMÕs
business model, designed around software, servers, and e-business
technology services, was viable. Palmisano could have incrementally
built on this business model for years, perhaps by employing some of
the compulsions outlined in Chapter 2. The pack, including Dell,
Wipro, HP, EDS, SAP, Oracle, Microsoft, BearingPoint, and
Accenture, not to mention a thousand smaller niche outfits, would
have eventually caught up with all or selected segments of IBMÕs
business, but by then Palmisano would have been ready to retire with
honors, leaving his successor to inherit the mess.
Instead, Palmisano has been working feverishly to transform a
healthy IBM for future domination in a multitrillion-dollar informa-
tion technology market. He refuses to sit idly and wait for the pack to
catch up with IBM. ÒWe have an opportunity to set the agenda in our
industry,Ó he says. As a 2005 Business Weekonline memo notes, ÒHeÕs
betting that by harnessing technology to improve clientsÕ perfor-
mance rather than simply hawking machines or providing routine
tech services such as managing PCs, IBM wonÕt be hobbled by the
ongoing commoditization of tech and tech services.Ó E-business on
demand is just the sort of big-paradigm hook on which to hang a
transformation of a $90 billion colossus like IBM. It integrates IBM
with its partners, suppliers, and customers through a shared infra-
structure that allows these stakeholders to access virtually any com-
putational resource in IBMÕs arsenal. E-business on demand can
potentially help IBMÕs corporate customers save huge amounts ofHarari_03.qxd 7/26/06 2:01 PM Page 66
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money by standardizing all their computing needs and by allowing
IBM to seamlessly deposit constant, cost-saving technological
improvements into its customersÕ systems, while billing them only for
actual time spent on IBM servers and other equipmentÑjust the way
a utility would. Corporate customers receive access to huge batches
of IBMÕs industrial knowledge. Manufacturing companies can get
help designing customized consumer products. Pharmaceutical com-
panies can use IBMÕs resources to speed up their FDA approval
cycle. Airlines can receive mathematically based marketing tools to
boost repeat business among frequent flyers. IBMÕs current main-
frame, software, server, and e-business consulting services will gradu-
ally become part of an enormous ÒgridÓ network that is transforming
the way IBM operates and invests. Earnings reports show those plans
are on track. In 2005, business-transformation services revenues rose
25 percent to $900 million, and bookings rose 192 percent.
Is it a problem that IBM is Òahead of the trend,Ó as one analyst
complained, and that ÒtheyÕve focused mostly on the part customers
arenÕt so interested in yetÓ? I doubt it. As Cisco System CEO John
Chambers puts it, ÒSam is aiming to go where the marketÕs goingÑ
not to where itÕs been.Ó
This is the Madonna Effect. Not having to change, doing it any-
way. Looking in the distance and aiming for where the market is
going. Being willing to take some risk for huge potential payoffs
tomorrow, knowing that not taking a risk means that inevitably the
pack will catch up. Letting go of what wonÕt work tomorrow even if it
brings in sales today. Staying passionately persistent and honestly
walking the talk in leading the enormous organizational changes in
systems and processes. Being willing to tolerate the criticisms and
potshots from those who think youÕre nuts.
Whatever your business is, you can employ the Madonna Effect.
The winners who stay ahead of the pack over the long haul are following
the path Madonna exemplifies, whether they know it or not. HereÕs a lit-
tle self-test for you. Ask yourself how you would rate as a Madonna. If
you were to emulate her business tactics, here is what youÕd be doing:
¥ YouÕd be constantly changing, way before being ÒforcedÓ to
change by the marketplace. In fact, youÕd be restless with
sameness; youÕd never allow yourself to get locked into any pre-
dictable persona or position. Customers and investors would
agree that they donÕt know what you will come up with next,
but they can hardly wait for the next iteration.