Please take a few minutes to read the following (DO NOT consider it as a TLNR…)
Entrepreneurial success is fueled by creativity, imagination, bold moves into uncharted waters, and visionary zeal. As a company grows and becomes more complex, it begins to trip over its own success -too many people, too many new customers, too many new orders, too many new products. What was once great fun becomes unwieldy ball of disorganized stuff. Lack of planning, lack of accounting, lack of system, and lack of hiring constraints create friction. Problem surface -with customers, with cash flow, with schedules.
In response, someone (often a board member) says, “It is time to grow up. This place needs some professional management.” The company begins to hire MBAs and seasoned executives from blue-chip companies. Process, procedures, check-lists, and all the rest begin to sprout up like weeds. What was once an egalitarian environment gets replaced with a hierarchy. Chains of command appear for the first time. Reporting relationships become clear, and an executive class with special perks begins to appear. “We” and “they” segmentation appear -just like in a real company.
The professional managers finally rein in the mess. They create order out of the chaos, but as they also kill the entrepreneurial spirit. Members of the founding team begin to grumble, “This isn’t fun anymore. I used to be able to just get things done. now I have to fill out these stupid forms and follow these stupid rules. Worst of all, I have to spend a horrendous amount of time in useless meetings.” The creative magic begins to wane as some of the most innovative people leave, disgusted by the burgeoning bureaucracy and hierarchy. The exciting start-up transforms into just another company, with nothing special to recommend it. The cancer of mediocrity begins to grow in earnest.
George Rathmann avoided this entrepreneurial death spiral. He understood that the purpose of bureaucracy is to compensate for incompetence and lack of discipline -a problem that largely goes away if you have the right people in the first place. Most companies build their bureaucratic rules to manage the small percentage of wring people on the bus, which in turn drives away the right people on the bus, which then increases the percentage of wrong people on the bus, which increases the need for more bureaucracy to compensate for incompetence and lack of discipline, which then further drives the right people away, and so forth. Rathmann also understood an alternative exists: Avoid bureaucracy and hierarchy and instead create a culture of discipline. When you put these two complementary forces together —a culture of discipline with an ethic of entrepreneurship— you get a magical alchemy of superior performance and sustained results.
[J. Collins, Good to Great: Why Some Companies Make the Leap… and Others Don’t]
Fascinating, as a few other texts I have ever read. In an engineering representation.
It might sound impossible (…), but the largest part of companies stops or at the one-but-last level or at the rightmost deviation. But, still there is a solution… Let us try to summarize how it is still possible to make the jump for a good company to a great one:
- Build a culture around the idea of freedom and responsibility, within a framework.
- Fill that culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities. They will “rinse their cottage cheese.”
- Don’t confuse a culture of discipline with a tyrannical disciplinarian.
- Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection of the three circles. Equally important, create a “stop doing list” and systematically unplug anything extraneous.”
In short: They hired self-disciplined people who didn’t need to be managed, and then managed the system, not the people.
As usual, much easier said than done, but at least we know how to do that. Let me close with the never-ending question: Once you know the right thing, do you have the discipline to do the right thing and , equally important, to stop doing the wrong things?