The secret to building a successful business

Secret chest

We know that business life has got more demanding in recent years, as the pace of change gets ever greater and traditional models are disrupted. Companies need to be more agile, flexible, dynamic, responsive, creative, innovative and resilient to survive and grow. They often look to startups, where they perceive the qualities exist, and try to extract the ‘secret serum’ so that they can inject it into their own organisations and so rejuvenate them. And how is this working for them? I’d say it’s having a limited effect, if any.

Business culture today is built around the needs of the shareholders, a rather poor proxy for the ‘owners’, and the top executives. It is focused on efficiency, profit maximisation and share price. This is implemented through complex procedures, highly quantified management systems, systematic down-skilling of roles and strong hierarchies. So there is a fundamental disconnect between how organisations are and how they need to be to survive in today’s environment.

So what’s the solution? It has always seemed obvious to me that the best way to be successful is to treat your people well and to value them. Trust them, give them responsibility, share the outcomes with them. Allow them to use their skills and expertise and to grow and develop as people. In short, treat them like adults.

By contrast, many organisations treat their people as replaceable cogs in the machine, as naughty children to be kept in line and watched at all times. They are then surprised that people behave in unproductive ways, gaming the system to get maximum reward for minimum effort, leaving their creativity and imagination at the door, having little commitment and loyalty to the business and it’s goals. In fact, these are entirely rational behaviours by people who know that they are disposable and replaceable ‘assets’.

When you treat people as adults, as valued individuals, then they bring the best of themselves to their work. They go above and beyond their duties, they achieve more than their targets, often more than you thought they were capable of.

The proof of this simple truth is to look at organisations who do treat their people this way. They outperform conventional organisations by producing twice as much profit. That’s 200% more profit. Simon Sinek points out the difference between GE Corp and Costco, the former a Wall Street darling led by ‘Mr Twenty Percent’ Jack Welch and the latter a family led business constantly criticised for it’s generous pay and benefits schemes. Whilst GE placed the share price and corporate growth at the heart of it’s business, Costco put it’s people at the heart of it’s. Over a 30 year period, GE outperformed the S&P500 during the good times, with some big ups and downs, but has struggled to track it since the financial crash of 2007. Conversely, Costco has shown steady improvement over that period but has risen even more strongly SINCE the financial crash and now stands at twice the S&P500.

Trying to extract the essence of ‘startup culture’ and inject it in the organisation like monkey gland serum doesn’t work because startups are atypical organisations and too diverse to exhibit common characteristics. The answer is much simpler and it’s in the reach of every single company and organisation out there, from corporate behemoth to corner shop. Treat your people like people, value them and invest in them. Look after your people and they will look after your business.

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