When it comes to Mergers and Acquisitions, one major contributor to the valuation process often gets overlooked: company culture.
Leaders of great companies ask: First Who, Then What?
If your company's at a standstill, you may be asking the wrong question
In his book, Good to Great, Jim Collins creates a lasting and memorable metaphor by comparing a business to a bus and the leader as a bus driver. He emphasizes that it is crucial to continuously ask “First Who, Then What?”
You are a bus driver. The bus, your company, is at a standstill, and it’s your job to get it going. You have to decide where you're going, how you're going to get there, and who's going with you.
Most people assume that great bus drivers (read: business leaders) immediately start the journey by announcing to the people on the bus where they're going—by setting a new direction or by articulating a fresh corporate vision.
In fact, leaders of companies that go from good to great start not with “where” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats. And they stick with that discipline—first the people, then the direction—no matter how dire the circumstances.
He has also developed a linear process for implementation of the "First Who, Then What?" concept. Here are his steps:
1) Get the right people on the bus.
Leaders must be rigorous in the selection process for getting new people on the bus. Invest substantial time in evaluating each candidate and make systematic use of at least three evaluation devices (e.g., interviews, references, background, testing, etc.).
When in doubt, do not bring the person on the bus. Let a seat go unfilled—taking on extra work as needed—until you have found the right person. Ensure your company does an exceptional job of retaining the right people on the bus to perpetuate your good hiring decisions for a very long time.
2) Get the right people in the right seats.
Have 100% of the key seats on the bus filled with the right people. This doesn’t mean 100% of ALL seats have the right people, but 100% of the key seats. If you think there might be a “wrong who,” first give the person the benefit of the doubt that perhaps he or she is in the wrong seat. Whenever possible, give a person the chance to prove himself or herself in a different seat, before drawing the conclusion that he or she is a wrong person on the bus.
3) Get the wrong people off the bus.
Once you know you need to make a people change be rigorous in the decision, but not ruthless in the implementation. Instead, help people exit with dignity and grace so that, later, the vast majority of people who have left your bus have positive feelings about your organization. Autopsy hiring mistakes, applying the lessons systematically to future hiring decisions.
4) Put who before what.
When confronted with any problem or opportunity, shift the decision from a “what” question (“what should we do?”) into a “who” decision (“who would be the right person to take responsibility for this?”). Spend a significant portion of time on people decisions: get the right people on the bus, get the right people in the right seats, get the wrong people off the bus, develop people into bigger seats, plan for succession, etc. Develop a disciplined, systematic process for getting the right people on the bus. With each passing year, ensure the percentage of people decisions that turn out good versus bad continues to rise.
Once you fill your bus with the right people in the right seats, it becomes less a question of where you're headed—and instead, how far you can go.
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