May 30, 2012
Believe it or not, at one point or another every business was a start up. Berkshire Hathaway, Goldman Sachs, Microsoft, and on and on. While few will become Fortune 500 companies, many organizations grow up and become fluid ecosystems that live and grow, both in revenue and in human resource. Gaining maturity, organizations arrive at a point where the growing demand on its resources require the implementation of processes and procedures in order to facilitate continued growth.
For the most part, it is part of the business life cycle. As a company matures, its day to day needs become more complex, its systems require more maintenance and support, and its customers (of course) demand higher levels of attention.
These are all enviable issues born of a good idea being brought to life; usually by an entrepreneur who brings passion, and perhaps their livelihood, to the party in exchange for the opportunity to realize their dream.
In its infancy, this is what a business is about ~ aching toward growth. As the business blossoms, the company must add the required human resources to meet the growing demand. With each new person comes a new cog in the wheel.
Often, early in a business’ life, the people bring with them an entrepreneurial sensibility. Much like the owner, they bring a high level of enthusiasm with them each and every day. However, as the business continues to grow, each new hire becomes further removed from the founders and, with this distance, risks not embedding into the tight knit culture that the company once had.
While rarely intentional, many times newfound growth leads a business to become more rigid, rendering its day to day operations to be defined by the 3 Ps (Process, Procedure, and unfortunately Politics). The best people no longer find growth; the best are substituted by those most willing to participate in the game that is being played. Sadly, this phenomenon perpetuates in organization after organization as they aim to follow the textbook for how to grow businesses through rigid processes and political hierarchy.
For the past few years, I have taught MBA Level Strategy at a local college (North Central College). The course is a second year MBA course and tends to be one of the final courses taken by MBA students before they finish their degree.
Every year, I find myself straying further and further from the material in the textbook and I gravitate more and more toward a new strategic concept: “The People Centered Organization.”
The philosophy is not new at all but it has been relegated to a ‘back burner’ as companies focus tighter on wealth, greed, and power; aiming to gain strength by replacing human capital with the 3 Ps.
The conundrum lies in that the trade off is non-progressive. Not because processes don’t enhance profitability; I would be the first to raise my hand and say that they do, can, and should. However, the operative work is “Enhance.” With better processes, companies have opportunity to optimize execution ergo achieve greater margin.
Ponder this. When these streamlined, engineered by “World Class Business Minds” processes are implemented, how are they managed? Who does the work that is left? Who is benchmarking the newfound success? Who will continue the required evolution and revolution of the process? Who will ensure that time doesn’t erode today’s best practice (and allow it to tumble into yesterday’s practice for which there is no superior replacement)?
The answer is simply profound … People. In business, the “P” that truly matters is People.
The center of any organizational ecosystem is people. Not processes, not information systems, not killer products or technology. Simply, profoundly, flesh, blood, heart, and soul. Proven time and again by companies with very simple models and ‘me too’ products realizing great success. Think Southwest Airlines, Google, or Under Armour. Southwest wasn’t the first commercial airlines, Google didn’t invent search, and Under Armour surely didn’t invent sports apparel. They saw market opportunities and they trounced on them with stellar execution by great people. Once again proving that great people can take mediocre ideas to epic success.
The moment when organizations forget that People provide their heart beat, their life blood, is the exact same moment in which that company is putting itself on life support.
Growing entities need structure, there is no denying this basic tenet. However, any business that trades its people for process is bound to be a poor business. Those that do survive will do so riddled with weak culture and troubled morale.
Now, as I enter the classroom and we discuss strategy development and execution, I have a theme. Every student who leaves my class will know and remember this theme as they set out to start and drive tomorrow’s great organizations…
“When, and only when, a company recognizes that its people are its most valued asset will that business truly have the opportunity for greatness.”