Good to Great (Part 2)

This is part two of a multi-part blog, sharing my thoughts on the book Good to Great by Jim Collins.  You can find the first part here.

Chapter 3 – First Who … Then What

Chapter 3 of Good to Great is titled “First who … then what.”  The author uses an analogy here of getting people together on a bus.  There are two types of trips one can take on a bus.  The first is a public transportation bus that goes from Point A to Point B, making stops every so often to pick people up and drop them off.  The other type of bus trip is when a group of people go on a trip together , like a class going to the zoo, or a company having an off-site event.

It’s all about the old adage, “Life’s a journey, not a destination.”  If you have people who focus solely on the destination and don’t care about the people they’re on the journey with it’s hard for a business to change directions.  If the group of people working together are there because they enjoy working together then it doesn’t matter as much which direction the business wants to go.

There are other benefits that come from having a group of people who simply enjoy working together.  If you have the right people together you don’t have to tightly manage them or motivate them, they will be self-motivated to be part of something great.  Conversely, if you have the wrong people on the bus it doesn’t matter if you’re headed in the right direction – the ride will still be miserable.  The right people are ones with character, work ethic, basic intelligence, dedication to fulfilling commitments, and values.  Practical skills, specialized knowledge, and work experience can be taught.

In Chapter 9 of the book Mr. Collins references Hewlett-Packard, founded by William Hewlett and Dave Packard in 1935 after they graduated with their electrical engineering degrees.  The minutes of their first meeting state that they’ve decided to form a company simply because they enjoy working together – the notes even say that the decision of what they’ll make will be made later.  You can’t get a better example than this of getting the right people on the bus first, then deciding where to go.

I feel I’m veering away from the point here, though.  The book is not saying you’re doomed if you don’t have the right people on the bus from Day 1.  All it’s saying is that it’s important to get the right people on the bus, and let the wrong people get off.  Once you’ve accomplished this, the ride gets much more pleasant.

Rigorous, Not Ruthless

There are a few subtopics in this chapter.  The first is “Rigorous, Not Ruthless.”  It covers things like hiring and laying people off.  This section makes the point that laying people off is not a primary strategy.  It might need to be done at times, and shouldn’t be shirked if it is needed, but it’s not a primary way to improve a company.  A quote from the book:

“It would be a mistake – a tragic mistake, indeed – to think that the way you ignite a transformation from good to great is by wantonly swinging the axe on vast numbers of hardworking people.  Endless restructuring and mindless hacking were never part of the good-to-great model.”

The author does say if you know that you need to lay someone off, not to hem and haw, just do it.  The moment you feel the need to tightly manage someone, you’ve made a hiring mistake.  The best people don’t need to be managed.  Guided, taught, led – yes.  But not tightly managed.  Letting the wrong people hang around is unfair to all the right people, as they inevitably find themselves compensating for all the inadequacies of the wrong people.  Worse, it can drive away the best people.  Strong performers are intrinsically motivated by performance, and when they see their efforts impeded by carrying extra weight, they eventually become frustrated.

That being said, the book goes on to point out, “First be sure you don’t simply have someone in the wrong seat.”  Here the book uses Colman Mockler (CEO of Gillette) as an example, citing that he spent fully 55% of his time during his first two years in office jiggering around with the management team, changing or moving 38 of the top 50 people.  Alan Wurtzel (CEO of Circuit City) called it, “Putting square pegs in square holes and round pegs in round holes” … Instead of firing honest and able people who are not performing well, it’s important to try and move them once (or even two or three times) to other positions where they might blossom.

The book gives two questions that might help you know when to let someone go:

“If it were a hiring decision, would you hire the person again?  If the person came to tell you that he or she would be leaving to pursue an exciting new opportunity would you feel terribly disappointed or secretly relieved?”

I’d like to add a third, which I think clarifies it a bit better: “Even knowing what you know about this person, would you hire them for some other position?”  I like this question better because I think it points directly to the idea that if the answer is yes, and you have a position in mind that they’d be a good fit for – then offer them that position.  If you’ve already got someone in that seat you might have to offer that person a different seat on the bus.  If you don’t think that person would be better suited to any other position … well, then you have to decide which of the two people would fill that seat better, and lay one of them off.

I’d like to include two other little gems of wisdom from this chapter:

  • Put your best people on your biggest opportunities, not your biggest problems. (And if you sell off your problems, don’t sell off your best people.)  Managing your problems can only make you good, whereas building your opportunities is the only way to become great.
  • Circuit City put tremendous emphasis on getting the right people, all up and down the line, from delivery drivers to vice presidents; [their competitor] developed a reputation for not being able to deliver the basics, like making home deliveries without damaging the products.

On Hiring

Part of the reluctance to let people go is because it’s hard to find good people.  Pointing back to Hewlett-Packard again, they reference “The Packard Law”:

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.

As difficult as hiring the right people can be, it’s much easier to wait until you find the right kind of person than it will be to hire the wrong person, then deal with getting them off the bus later.  The book included a nice little exchange that apparently took place between Walter Bruckart and Alan Wurtzel at Circuit City:

Walter Bruckart: “Alan, I’m really wearing down trying to find the exact right person to fill this position or that position.  At what point do I compromise?”

Alan Wurtzel: “You don’t compromise.  We find another way to get through until we find the right people.”

When in doubt, don’t hire, keep looking, even if it means growing slower than you could.

First Who, Great Companies, and a Great Life

It’s not impossible to work for a great company and still have a great life outside of work.  If you hire good people you don’t have to work 24/7 managing and/or compensating for them, and you can have a good work/life balance.  If the people you’ve hired are working 24/7 then they haven’t hired the right people (or they’ve got some issues).  Of course, if the people you’ve hired don’t have anyone reporting to them either they’re not right for the job or you need to hire more people to handle the work load.

And last but not least, another nice idea in this chapter refers to George Weissman and many of his executive colleagues at Phillip Morris (now called Altria).  They kept offices at the Phillip Morris headquarters, coming in on a regular basis, long after retirement.  A corridor at the Phillip Morris world headquarters is called “the hall of the wizards of was.”  These retired executives continued to come into the office, in large part because they simply enjoy spending time together.  I like this idea a lot.  It gives the retirees an office away from home to come to and work (even if it’s work unrelated to Phillip Morris).  That can be a matter of life and death for a retiree.  At the same time, it gives the current executives access to their brains and experience.  It’s a win-win situation.

That’s it for Chapter 3 – I’ll be posting my notes on Chapter 4 next weekend.  As always, it’s free to subscribe to get an email update when I post new material, all you have to do is click the button at the top of the page that says “Sign me up!” and enter your email address.  See you next week!

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4 responses to “Good to Great (Part 2)

  1. Pingback: Good to Great (Part 3) | Trading On Up

  2. Pingback: Trading On Up

  3. Great site you have here but I was wanting to
    know if you knew of any user discussion forums that cover
    the same topics discussed here? I’d really love to be a part of
    online community where I can get feedback from other experienced people that share the same interest.
    If you have any suggestions, please let me know.
    Appreciate it!

    • Thanks! I did a bit of searching and found another blog that has a good list of links here: http://www.refresher.com/alrpforums.html

      I haven’t gone through the links myself but it looks like it would be a good place to start. If you wind up having any discussions about Jim Collins’ book on any of those forums I’d appreciate if you’d share a link to my posts. Getting a few new reads never hurts 🙂

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