Strategic Discipline Blog

On a scale of 0 to 10 with ten being extremely lucky, how lucky are you?

A group of 12 young men, high school age have just completed a strenuous basketball practice.  The coach has asked them to join him in his class room to discuss the upcoming season.  He’s a new coach this year, although he has many years of experience.  He asks the team what place they expect to finish in the conference noting that this is a team sport and it’s important the team has a goal to shoot for.  He asks everyone to write down their expected finish, and then collects the results.  The votes are counted.  Ten voted for first place, 2 for second.  

What place do you think the team finished?

If you said second you’re right.  The account is from my senior season of high school basketball.  What does that tell you about the importance of having the right people on the bus?  Our team had steadily improved the previous two seasons.  When I was a sophomore the varsity basketball team hadn’t won in 36 games.  Our team largely composed of sophomores won two games that season and finished 2 – 17.  The next season we improved to 12-7.  We were a confident team going into our senior year.  As a junior I recall playing in the final game of the regular season against a team who was battling us for 3^rd place in our conference. In addition to this battle, I was in a close contest with one of their players for the scoring title in the conference.  I recall two of our players telling me before that game not to worry, they would make sure this player didn’t score so not only would we win the game they’d make sure I’d win the conference scoring title.  That’s the kind of players you want on your team, people willing to sacrifice for the good of others and the team. 

What’s the ultimate throttle on growth?  

For any great company, it’s not markets, technology, competition, or products. The one thing above all others: the ability to get and keep enough of the right people.

If you’ve read Michael Gerber’s book The E-Myth Revisited, the emphasis on systems can lead you to believe people are not your most important asset.  As I noted in the White Paper, Was Michael Gerber Wrong, Gerber’s emphasis on systems is so intense it’s easy to lose sight of the importance of people in building your business equation.  In Good to Great, Jim Collins states, “The old adage ‘People are you most important asset’ turns out to be wrong.  People are not your most important asset.  The right people are.” 

Even Gerber subsequently recognized this and is quoted in the Forward to the book How to Hire A-Players, “It takes A-Players to conceive, design and build a world-class business system so C-Players can produce A-Player results. How To Hire A-Players tells you how to find the A-Players you need to grow your business.  Read it, or forever settle for less than you deserve.”

The hardest part of hiring is delaying a decision when you are not confident about the people you’ve interviewed for the position.  Whether you use Topgrading or not [We strongly urge our clients to] the cost of hiring the wrong person makes it prohibitive to move forward if you wish your business to grow.  Many business owners don’t feel they have the time to go through the Topgrading process.   A three-hour-plus interview, tandem interviews, reference checking, completing a job summary scorecard, etc., seems too time-consuming.   When you add up the cost of a wrong decision the compelling results tell you that to do otherwise is courting disaster and swallowing prohibitive expense.  So why do so many business owners continue to hire the wrong person?  They don’t have a system and they don’t see the hidden expenses of their mistakes.  Hiring estimates for mis-hire under $100K salary is 14 times.  Over $100K the cost shoots to 28 times.  Even if you discount either of these two numbers, the reality is whatever you pay the wrong person; you paid much more than you would have had you selected the right person.  Add in the frustration and cost time to repeat the process again.

Collins in Good to Great emphasized three practical disciplines for getting the right people on the bus.  His case for Strategic Discipline begins with Practical Discipline #1: When in doubt, don't hire- keep looking.  He refers to the immutable law of management physics, Packard’s Law named for the co-founder of HP.  No company can grow revenues consistently faster than its ability to get enough of the right people to implement that growth and still become a great company. If your growth rate in revenues consistently outpaces your growth rate in people, you simply will not-indeed cannot-build a great company.

How many times have you made the wrong decision on the people you hired?  How much has this cost you and how much will it cost you in the future?  Do you recognize how important making the right people decision are?  If you did why would you make the same mistake over and over?   

At the Growth Summit are many of our Gazelles clients.  Verne started the program on Tuesday morning sharing a video promo from NBC on a new prime-time series “School Pride.”  It’s extreme make-over for schools.  The show tells inspiring stories of communities coming together with public-minded companies like Logical Choice Technologies and many others to renovate aging and broken public schools. Cameras follow students, teachers, parents and community members as they roll up their sleeves and rebuild their own schools, concluding with the unveiling of a brand-new, completely transformed school.

David Sokol, Warren Buffet’s Mr. Fix it, indicated his team meets to work on a five to ten year plan each year.  Many companies overlook the need to do long term planning, and in fact long term planning can seem passé as technology and the pace of change render forecasting to be so difficult.

What Differentiates a Multiplier from a Diminisher?  A discussion with a client this weekend punctuated his ability to use this characteristic to bring out the best in people.  Liz Wiseman, author of Multipliers, asked the Growth Summit Audience last week which of the following responses most differentiated Multipliers from Diminishers:

Verne Harnish’s focus on the first day of the Growth Summit Strategy provided some insightful ideas about strategy.   Here’s the one that I thought was most thought provoking.  Is your strategy a plastic cup or a fine wine glass?  This question asks you to make a gut reaction to your strategy.  That’s a good way to say do you feel solid about it or not?  If you tapped your glass with a spoon would it get knocked over or would it hold up and ring true?

It is a recurring theme I almost wrote about yesterday.  Today several speakers addressed it again - the importance of discipline and the value of strategic thinking and preparation over strategic planning.  David Sokol, Warren Buffet’s Mr. Fix it and the man consistently mentioned as Buffet’s eventual replacement, Chip Heath [Switch] iz Wiseman [Multipliers], and Verne Harnish all delivered insightful messages today.  I’ll offer more from each in my blogs ahead. 

In advance of the Fortune Fall Growth Summit, Gazelles coaches gather to sharpen our plowshares [so to speak] and learn new best practices and ideas from the thought leaders.  Today included a new tool from Verne Harnish to help identify the 4-9 critical processes that drive a success as well as Verne’s new concept on Strategy.  He specifically provided a best practice example from one of our Gazelles clients, Build Direct, that’s applying the Seven Strata of Strategy with great success.  More on these in future blogs and newsletters.

My wife, youngest son and I journeyed to Kennedy Space Complex on Friday ahead of the Fortune Fall Growth Summit.  Witnessing firsthand the size of the rockets and the place where so many historic space launches took place was inspiring.  It was also fascinating to learn all the products and services that developed directly from the space program.  [Did you know that grooved highways came from NASA’s determined efforts to learn how to slow the Space Shuttle?]