By Lorenzo Jooris, CEO of Creative Zone
Knowing who to bring on board—and who to drop off—might just make all the difference for your business.
It earned a place almost immediately in the business lexicon of 20 years ago, but “get the right people on the bus”—the flogged-to-death metaphor for a large company—was first coined in the 2001 business bestseller, Good to Great: Why Some Companies Make the Leap… and Others Don’t by management guru and Stanford mathematician, Jim Collins. But what does “the right people on the bus” mean, exactly?
WHO TO FIRE, WHO TO HIRE, AND WHERE TO PUT THEM
A section in the book, First Who; Then What, outlined the process of achieving greatness by removing the “wrong” people from the bus, getting the “right” people on board, and knowing where to seat them, in a metaphor about putting the right hires in the right positions. Personnel changes had to be dealt with before deciding where the bus was going. Consequently, no organization could decide its strategic direction until the personnel issue was settled.
To demonstrate his point, Collins spent five years researching over 1,400 companies over the preceding decades, in some cases, to show how their stock price performed in relation to personnel changes and other incremental actions. In Collins’ words: “We systematically scoured a list of 1,435 established companies to find every extraordinary case that made a leap from no-better-than-average results to great results”.
Systematically? Inquisitive readers might question why he chose only US publicly traded companies at a time when globalization was marginalizing the parochialism of the 20th century, or why he favored historic data over live observation, or maybe why he chose to omit private and family- or employee-owned enterprises from his analysis.
SUPPORTING ACTIONS FOR “THE RIGHT PEOPLE ON THE BUS”
The “right people on the bus” model requires a culture of discipline and depends on taking the right turn on the “flywheel effect versus the doom loop”. Let me explain.
The flywheel effect is about gaining momentum through consistent, disciplined, and sustained effort. By consistently taking small, incremental steps and making sound decisions, even average performers can become exceptional. The opposite of this positive momentum is the “doom loop.” This occurs when companies resort to reactive transformation programs as a quick fix for underperformance but fail to progress due to the lack of sustained, cumulative effort required to build real momentum.
According to the “right people on the bus” model, with everything in place after emptying and filling the vehicle (and putting the right people in the right seats), a company can achieve a culture of discipline, which, in turn, promises extraordinary results. A combination of disciplined people, disciplined thought, and disciplined action delivers star performance. If a company gets this combination right, according to Collins, it doesn’t need excessive hierarchy, bureaucracy, or control processes.
So, were further ingredients added to this magic recipe? Yes; and that’s where the hedgehog theory comes in.
The hedgehog theory is based on a parable from the ancient Greek poet Archilochus suggesting the world is divided into two kinds of people: those who are fascinated by the infinite variety of things (foxes) and those who relate everything to an all-embracing, central, system (hedgehogs). In short, it boils down to the fundamental belief that the fox knows many things, but the hedgehog knows one big thing. This tenet led managers to believe they could distil a complex world into an actionable, simplistic insight to promote a laser focus of almost religious zeal.
Although our world is unpredictable, multi-faceted, complex and dynamic, potentially great organizations could boil these realities down into just one simplistic and enduring insight. The aim of the hedgehog concept was to create a laser focus on what’s important to a company’s success.
How? Imagine a Venn diagram with three circles. Each circle represents an important question:
- What are your organization and its people passionate about?
- What drives your company’s economic engine?
- If there’s something your company can do better than any other, what is it?
Where those three questions intersected was where that one simple actionable insight crystallized.
Could it really be this easy?
APPLYING THE BUS TO MODERN-DAY ENTERPRISES
Before we look at the weak points of Collins’ theory, it’s fair to point out the unarguable common sense among a set of theories that were largely uncomplicated by the world’s complexities. Deep down, his “Level 5 leaders” were serious, consistent, competent managers. As experienced CEO and broadcaster Margaret Heffernan pointed out in a 20-years-on review of the theory, discipline is an undeniably desirable quality, as is diligence, focus, and clarity; you’d be hard-pressed to find anybody who’d want to see less of them. And the book’s subtext and main surviving truth, I’d argue, is that execution really does matter.
But although “confront the brutal facts” was a phrase Collins was fond of repeating in Good to Great, modern-day readers tempted to do the same might conclude that Collins’ analysis of the data doesn’t really survive contact with today’s realities. We can easily ignore some of Collins’ contradictions; his claim that “greatness is not a function of circumstance” nevertheless saw a book that served up flattering, easy and simplistic wisdom to vulnerable investors, burned and jaded by empty promises of internet greatness in the immediate aftermath of a dot-com bust, sell four million copies. After all, it offered the illusion of inexorable laws of nature—the cloak that dresses Good to Great’s central principles—with a conceit that was achieved with little more than pseudoscience.
However, it’s his analysis of the stock performance of the star companies cited—all 11 of them, out of more than 1,400 studied—that might prompt students of Good to Great to ask whether these companies were indeed great, or simply anomalies in a sleight of hand designed to give the impression of a controlled experiment. Remember, just a handful of high performers is all that’s needed for a portfolio to outperform the market. As McKinsey pointed out: “The magic of compounding means a few extremely good stocks can offset many poor ones. When you take the … best performer [tobacco firm Philip Morris] … out of the portfolio, the positive margin … disappears.” Were it not for big tobacco, the outperformance of Collins’ 11 stars would vanish like cigarette smoke in the wind.
SO, WHO ARE THE RIGHT PEOPLE?
There’s a growing body of scientific evidence demonstrating that it’s how a group of individuals works together—and with one another—that truly differentiates high-achieving teams from under-performing teams. Collins offers little detail on how to identify “right” or “wrong” individuals in a theory that seems to occupy a peculiarly linear world. As such, there’s no space for the brutal fact that we can’t make any serious correlation between action and performance without leaving vital room for systemic thinking. That, in my view, is the brutal, axiomatic fact. What’s far more important in the real world is what psychologists call the enhanced “collective intelligence” of a team of employees. Wherever they’re sitting, right or wrong.
So, does the First Who; Then What theory offer any value to today’s leaders? Inconvenient context is banished from a set of theories that tries its hardest to discover a timeless truth, and while readers will still find some accidental common sense in between the book’s flattering simplicity and its absent context, the realities of the past 20 years haven’t exactly been kind to Collins’ theories.
It therefore seems fitting that the last word on Good to Great, a manly, confidence-and-strength set of theories very much of its time, should go to the aforementioned Heffernan—as she put it: “The difficult part about running a company is thinking, alone and collectively, making sense of a tumultuous world in the search for good decisions. It’s the part few see, but it’s where the action is … Anyone who imagines that there is just one way to be a great leader is blind to context and the complex interplay of the millions of factors that contribute to, or block, a firm’s success.”
