Thursday, March 1, 2007

Thoughts on a Committment to Excellence

Here's a plug for one of the business books I actually do like, Good to Great, by Jim Collins. Its a good book for keeping on the shelf because it outlines some principles for the success of companies. One of his insights that struck me, was the commitment of top management especially, but also among middle managers to ultimate success of the company. He and his team identified a key distinction between the generation of super star CEOs (Al Dunlap, Jack Welch, Larry Ellison, Scott McNealy, etc) who sometimes emphasize their own celebrity above that of the company. Oftentimes, their genius built success, but in the long-run it proved illusory. The book has a much better researched list, but you get the idea, the primary interest of the super star CEOs is their own success, not the continued success of their organization.

I would like to elaborate on that idea of the commitment to success of the organization because it goes beyond celebrity or all-star bosses and in mediocre companies it takes the form of CYA. EVERYONE in a corporate environment is familiar with the CYA boss or co-worker. The primary interest of this person or persons is CYA, and like the celebrity CEOs, they are more interested in their survival and success than that of the company. CYA people in my experience are risk averse, and adopt a, don't-rock-the-boat mentality. In addition, they are good, "yes-men," especially in the presence of a superior. This kind of attitude which puts individual succedss over organizational excellence is detrimental to moving the organization toward the broad path to sustainable success. This brings me to another point in "Good to Great": Find the right people.

Finding the right people is essential, and the biggest reason to weeding out CYA type team members. Also, a big improvement can be changing the incentives that person faces. One the great insights in economics is that people respond to incentives. Intrinsically motivated people are difficult to identify and retain. An alternate path that an organization can take to ensure the right people are retained is to create incentives within the system to allow these people to succeed.

First, empower your employees. The modern manager is no longer a king among men but a facilitator and a coach, more than anything else. Organizational excellence is built on fully utilizing the talents of all team members.

Second, set your incentives right. Intrinsic and extrinsic motivation matter. People work on the basis of the intrinsic motivation (hence empowerment) but also ultimately for a paycheck. All jobs combine a mixture of both. Think of it as a combined pay package. For certain people, usually the right people, results matter. Pay them for those results. This is especially true for process oriented positions, pay for productivity, it'll work out better for both the organization and the employee.

Third, reward innovation and risk-taking. Take risks, as the old adage goes, nothing ventured, nothing gained. Many entrepeneurs as their organization matures become risk averse. Averseness to risk is the first sign of a stale organization. Keep it entrepeneurial, keep it a little risky and success will come. Every great company had that moment after their initial success where a follow-up was needed to an original success, as Lloyd Dobler (echoed by Van Wilder) would characterize it, "its that dare to be great situation." Being good enough is not the answer, dare to be great. Success is a relentless process of innovation and risk-taking, embrace it, don't fear it.

The sum of all these makes a successful organization culture and begins the fertilization process of a ultimate success for the organization.

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