Why Some Companies are Phenomenally Successful
For years when I used to go into the office cafeteria for morning coffee, I always noticed an unassuming management printout pinned to the notice board — it mentioned our region’s 7 guiding principles. It was easy to miss, nestled amongst dozens of announcements, OSHA directives, health protocols and other office related information. I used to look at it while my Keurig brewed and there was no one to chat with this early in the morning. Honestly it looked and felt like dozens of countless other missives I saw every other day. But then these guiding principles started to grow on me as time passed.
The message was so direct in its simplicity. It simply said that if we as a team embraced and followed these principles then no force can stop our company from becoming phenomenally successful. I want to share these simple and effective guiding principles with a wider audience conveying a simple message I believe in — these will work.
All successful companies have one thing in common, they follow a set of principles or guidelines to achieve that success. Luck or good fortune do help but are not long-term guarantors of success. These guidelines vary with different kinds of organizations and evolve with time. Usually, a new company will start with some basic foundational guidelines (like 4 Guiding Principles of Amazon or Google’s 9 Principles of Innovation) and over time refine these to become the bedrock of that company’s rise. There exist some basic guiding principles that to an extent all companies should follow to be successful. These 7 guiding principles were distilled from decades of experience and painstaking trial and error by our Senior Vice President of Engineering — Tom Ellefson.
Tom has given us the following 7 Guiding Principles that we try to live by every day. I have not changed the wording of these principles but any errors in the article are all mine.
Principle 1: Recognize that we are a complex unit and that without input, cooperation, coordination, and collaboration from all groups we cannot, and will not be successful.
Coordination and collaboration together act as the grease that makes the gears of any organization run smoothly without friction. Successful companies make cooperation and coordination part of their foundational philosophy. Organizations struggle with the fact that collaboration does not come naturally for many and can be viewed negatively by their top performers. To foster collaboration between teams, an organization must induce confidence among its members so that they can make this initial investment. Collaboration is a long-term investment and teams must continue the effort until it becomes a natural and effortless way of working.
There is a difference between being cooperative versus collaborative. Team members can mistakenly equate cooperative behavior with their peers as collaborative. Ron Ashkenas, author of Harvard Business Review Leader’s Handbook thinks that very few admit to being poor collaborators, mostly because they mistake their cooperativeness for being collaborative. He continues by observing ‘that most managers are cooperative, friendly, and willing to share information — but what they lack is the ability and flexibility to align their goals and resources with others in real time.’ He goes on to differentiate the concepts of ‘serial collaboration’ which means going from one function to another versus better ‘cross functional collaboration’ which entails working with all stakeholders at the same time to reach consensus.
Teaming is another concept that pays dividends if applied correctly. It is not to be confused with structured long-term teamwork. Amy C. Edmondson (Professor of Leadership and Management at Harvard Business School) defines teaming as teamwork on the fly — a pickup basketball game rather than plays run by a team that trained as a unit for years. It can be defined as a way to get work done while figuring out how to do it better. In other words; its executing and learning at the same time according to her.
Nowadays projects and deadlines are fluid and dynamic requiring frequent course changes, out of box thinking and incorporating new ideas on the fly. Traditional structured teams were a good bet for conventional projects of years past. Today, when groundbreaking companies like T-Mobile want to accomplish something that has not been done before and may never be attempted again, they apply teaming to accomplish unheard of results consistently.
Teaming is another concept that pays dividends if applied correctly.
Conflict is an unavoidable by product of cooperation and collaboration between different teams in an organization. Collaboration will suffer if conflict is not resolved and allowed to fester. At the same time, not all conflict is bad. It does open windows to creative solutions that were not visible before. Leadership in any company should embrace and harness conflict, not avoid it. Avoiding conflict or working around it will ultimately weaken collaboration efforts. People leaders in companies should use it as a learning tool to better enable employees at generating consensus rather than punting difficult issues upstairs at first sign of conflict.
Cooperation, teamwork, and conflict in any organization are part and parcel of daily life and can benefit any organization enormously when cultivated properly.
Principle 2: Measure what you manage and manage what you measure. If everything that you monitor is doing well - LOOK DEEPER…
There is an old adage, ‘If you cannot measure it, you cannot manage it.’ Measurement in a sense confers control. It may be comforting to measure what we are managing but we run the risk of ignoring everything else, that is where the managing what you measure part comes in. Because just by limiting ourselves to measure what we know, we are only thinking about a constrained world view thereby limiting us in creating a future that is different from the past. Roger Martin (Author of When More is Not Better) postulates that the future is about imagination, not measurement.
All organizations monitor something tangible in their own ways. Financial companies measure actual and expected results for capital; investment firms focus on new and future investments and engineering companies pay attention to performance metrics daily. But all this monitoring sometimes gives a false sense of security and can mask inherent issues that can go unnoticed.
If for any company, all metrics appear to be on track with no red flags — should it feel confident and continue as before? In Tom’s view, this sense of complacency would be a mistake. When everything is going great, that is the time when companies should look for any hidden issues or ways to improve performance by looking deeper into the processes. This would never be possible in times of crisis.
Principle 3: Recognize that we are not, and will never be, a one-dimensional business. While a program may have a priority, it does not mean that all else is ignored.
Presently not a single major corporation can claim to be one dimensional. They now serve global customers, and their reach is immense. Organization structures from the 1930’s stood for decades without any major changes (think General Motors, Sears, Dupont to name a few) but even these companies were multi-dimensional. Large companies nowadays are by design complex and that complexity is a big contributor of inefficiencies and frustration. Complexity cannot be simplified but it can be understood. Ron Ashkenas (Author of Harvard Business Review Leader’s Handbook) rightly opines that it takes hard work to make your organization simple and keeping it that way.
Imagine a $160 billion company like T-Mobile with more than 110 million customers and a myriad of wireless services it offers consisting of massive departments for sales, engineering, legal, marketing, and corporate to name a few. Now consider that it possesses no common processes amongst these departments for reporting, evaluating, or tracking results — that would be a nightmare and no company would survive like that. As growing companies get more complex, the inefficiencies multiply at a proportional rate. Growth is inevitable for successful companies, and it is paramount that there is a mechanism in place for dealing with resulting inefficiencies. How would the departments talk to each other and share information? How would performance and metrics be assessed? What would be the share of resources? Which projects get priority, and which get relegated to the side?
The key is not smart people but smart people who think differently.
A simple solution for these questions is free flow of information. Traditionally information is not widely shared in complex organizations for optimal decision making. Tim Sullivan (Editor HBR and author of The Inner Lives of Markets) uses the example of nature to explain this process. Nature is complex but all its information is widely available to anyone who would look. He uses a great analogy when he compares complex organizations to an ant colony. He surmises that an ant colony is nature’s complex adaptive system. It is robust, adaptive and has a life cycle just like an organization. At an individual level however, ants are not aware of the big picture for the colony but consider their own work as existential and vital. Compare this to individuals and departments in an organization and you get the picture. He introduces the concept of ‘cognitive diversity’ to deal with complexity in organizations. Simply put, it is introducing different points of view that challenge one another. The key is not smart people but smart people who think differently.
Leaders in various departments should understand that their projects or programs are as important as the next department. This concept of equitable division of resources, time and attention is extremely important. All programs are important, but they are equally important, and one cannot be ignored at the expense of others. That is why free flow of information and emphasis is vital from the top.
Principle 4: Recognize when your world is not in control and make the appropriate changes immediately — Establish firm rules within your environment.
Control is essence of civilized life according to Freud but are we in control of what happens in the world around us? Humans by nature crave control over events, elements, and their surroundings. Being in control feels great and brings structure out of chaos, but it is an elusive commodity. In any organization, leaders with high degree of control display effective leadership — in such cases control becomes synonymous with efficiency.
Organizations establish control by following strict guidelines and rules refined over the years. They generally have goals, strategies, policies, and procedures that tell people what to do and how to do it. T-Mobile is among a very few organizations that have a comprehensive and contextualized ‘doctrine’ on how things should be done; the seven guiding principles are a vital part of this doctrine. Mark Bonchek in his article for Harvard Business Review explains the difference between process-based and principle-based management by giving examples of Google and Amazon. Google has its nine principles of innovation while Amazon has its own leadership principles respectively. In T-Mobile, control is achieved by fusing our seven guiding principles with ‘values’. Principles define what we need to do and why we do it, but values give each employees a way to relate individually to these principles.
In T-Mobile, control is achieved by fusing our seven guiding principles with ‘values’.
When you are not in control, what do you do — you can either fold or step up. How do we respond to situations when we lose control, are stuck, nervous, vulnerable and have no situational power? An excellent answer to this question is provided by Peter Bregman (Best-selling author of Leading with Emotional Courage) when he says — ‘In situations in which we may have no positional authority — we are not the leader, we don’t have all the information, we cannot make the decisions, we are not in control — we still have the power: the power to influence our own experience and sometimes the experiences of others. It might even help solve the problem. What is important is to remember that there is always a choice.’
Our world will never be fully in our control, we should embrace this fact and learn to adapt.
Principle 5: Expect, anticipate, and embrace change — it is the one constant that we will always have in T-Mobile. Agility is one of the greatest capabilities that any successful company can have.
George Bernard Shaw described it eloquently — ‘Progress is impossible without change and those who cannot change their minds cannot change anything.’
Change requires courage and most companies choose the path of ‘play it safe’ culture. Courage and boldness are not core tenets for most organizations with the result that employees are discouraged to take manageable risks and set ambitious goals. Changemakers in any company should be the norm, not an exception. Senior leadership’s embrace and engagement about affecting change at all levels is vital.
Edith Harvey (Managing Partner at Next Bridge) considers change and agility two sides of the same coin. According to him, organizations that succeed are no longer the ones that change top-down or where innovation is expected from certain people or roles. Winning teams build change agility into the heart of their culture. Change leadership is not something that you do, it’s who you are.
Successful teams need to get comfortable with uncertainty (that change brings). Future is inherently unknowable. In Robert Pozen’s opinion (President of Fidelity Investments), be always prepared to learn new skills, take advantage of new trends, and adapt to unforeseen crises' — because if you do not, you will be left behind as the world changes without you.
Successful teams need to get comfortable with uncertainty.
Tom’s principle on change and agility urges companies to improve their ability to read and act on signals of change. A company must correctly decode these signals from the external environment and then quickly act to refine or even reinvent its business processes. Middle management should focus their attention more on examining risks and uncertainties that could affect the company than spending time on traditional single-business forecasts. Instead of predicting the unpredictable, change conscious leaders should build rapid feedback loops for course correction and to ensure that initiatives stay on track. Managers should be looking beyond the day to day and monthly operations to identify trends and take advantage. Kodak, Motorola, and Sears are some of the examples where change and agility were not pursued — no need to describe where they find themselves today.
There is a misconception that building an agile enterprise means replacing traditional operations — it is a fallacy. Agility is a prerequisite for innovation, and building an agile company means finding the right balance between traditional operations and pursuing innovations. This is easier said than done in a large organization. To find an optimal balance, the leadership team can begin by creating new metrics to help determine how agile the company is, what level of agility is sought, what are the constraints in its way and whether it is moving in the right direction. According to Darel K. Rigby (Author of Winning in Turbulence), a truly agile enterprise can only be created when C-Suite embraces agile principles.
Principle 6: Be accountable to your customers, employees, and yourself. When things go right recognize those involved. When things go wrong be accountable and make the appropriate changes.
Accountability — it is that dreaded word that makes employees in any organization wince. Do we understand what accountability really means or we use the concept without understanding its true meaning? Accountability always brings out associations with punishment and lack of trust in people’s mind and not as a way to learn from mistakes or continuing self-improvement. It should not be considered as a one-off event but as long-term conversation between manager and employee.
There exists a delicate relationship between accountability and trust (Trust but Verify!). This means that an initiative to introduce more accountability into a company will be interpreted as a sign that you don’t trust them. Accountability with forced categorization (rating system of numbers, ranking of employees against peers etc.) is counterproductive as far as employee morale goes. People feel unsafe when they are put in a box like this. Gallup surveys have consistently shown that only 14% of employees feel their performance is managed in a way that motivates them and add to that the fact that 70% of employees feel their managers are not objective in how they evaluate their performance (HBR article — How to Actually Encourage Employee Accountability).
Joseph Grenny (NYT Best Selling Author) describes the relation between performance and accountability in the following breakdown.
· There is no accountability in the weakest teams
· In mediocre teams, bosses are the source of accountability
· In high performance teams, peers manage the vast majority of performance problems with one another
Evidently highest form of accountability in any organization is peer accountability. He further surmises that the role of the boss should not be to settle problems or constantly monitor their teams; it should be to create a team culture where peers address concerns immediately, directly, and respectfully with each other (HBR article — The Best Teams Hold Themselves Accountable).
Leadership and accountability go hand in hand. C-Suite is special, but it does not exempt them from accountability. John Baldoni (Author of MOXIE: The Secret to Bold and Gutsy Leadership) rightly opines that, ‘Service is inherent in the leadership equation; unless a leader is willing to put the organization first, and to live by the consequences — we will continue to see excess and lack of accountability.’
Tom rightly believes and emphasizes that falling short of a goal still has merit and such an idea can radically change how people treat their own and others’ shortcomings. Kathleen Hogan, Microsoft’s Chief People Officer reinforces this belief further by saying, ‘Being open about failure helps us balance a growth mindset with accountability. We are learning to not just reward success but also reward people who fell short while getting us closer. Learning from our mistakes gets us closer to our desired results — that’s a new form of accountability for us’
Leadership and accountability go hand in hand.
We still have a long way to go before accountability in most organizations becomes a welcomed process. Dignity and fairness should always form the foundational components of accountability if it is to succeed.
Principle 7: Our Employees are our most significant and sustainable advantage. Having a motivated, empowered and engaged highly performing workforce is truly a competitive advantage that is extremely difficult to replicate. Our long-term success is highly dependent on fostering this environment.
We have reached our final and most important guiding principle — people. In any company, people are the scarcest resource while financial capital is abundant and cheap. Eric Garton in a Harvard Business Review article argues that today’s scarcest resource is your human capital, as measured by the time, talent, and energy of your workforce. Are employees to be considered an asset or an expense — views differ on this.
We can go to any company’s website and read its mission statement; it will undoubtedly contain a line about employees being their greatest asset. But deep down, every company also knows that employees are their biggest cost, and they treat them as such. If quarterly earnings are not being met then executives start thinking about cutting perks, pulling back on training and even think about downsizing.
Gallup has done extensive research on employee engagement metric, and they peg US companies running at 33% efficiency. This means that employees in most companies are not being invested into like the asset they truly are. Employees that are actively engaged in the growth of the company think of more efficient ways to work, generate positive energy on their teams and find opportunities for producing happy customers. Successful engagement strategies directly lead to greater profits and higher productivity.
There are certain factors that create happy employees — feeling respected by superiors often tops the list. Compensation, financial incentives, health and wellness benefits, training and development opportunities are some of the other factors. When companies recognize and appreciate their employees, those employees are also likely to show loyalty to the company. It’s not wrong when they say —’ A happy workforce is a productive workforce.’
In all major organizations financial assets are scrupulously analyzed and dissected in detail by large teams of analysts every quarter. But no such attention is paid to the company’s real asset — its people. Eric Garton (Author of Managing People as Carefully as Money) observes that executives are always judged favorably for how they manage and allocate financial capital, yet they should be scored at managing human capital. He shares specific recommendations for better management of human capital. These include measuring, monitoring, and investing in human capital just like we invest in financial capital.
Companies are like complex living organisms — they grow and thrive when nurtured properly. The guiding principles outlined above do not claim to offer all the answers to every problem an organization may face. Rather they offer a holistic view and a guided path forward for any company that wants to become phenomenally successful.
Tom’s guiding principles are still hanging in the cafeteria of my office, but I don’t look at these very often now. I don’t need to. They have become a part of what I do every day.
REFERENCES used in this article
1. The Dichotomy of Leadership by Jocko Willink and Leif Babin
2. Leaders Eat Last by Simon Sinek
3. How to Avoid Collaboration Fatigue by Nick Tasler (Harvard Business Review July 10, 2014)
4. Book by Brene Brown. 2018. Dare to Lead. Random House
5. Want Collaboration?: Accept and Actively Manage Conflict by Jeff Weiss and Jonathan Hughes (Harvard Business Review March 2005)
6. Extreme Ownership: How U.S. Navy Seals Lead and Win by Jocko Willink and Leif Babin
7. There’s a Difference Between Cooperation and Collaboration by Ron Ashkenas (Harvard Business Review April 2015)
8. Teamwork on the Fly by Amy C. Edmondson (Harvard Business Review April 2012)
9. Eight Ways to Build Collaborative Teams by Lynda Gratton and Tamara J. Erickson (Harvard Business Review November 2007)
10. The Good Side of Quantifying Everything by Justin Fox (Harvard Business Review April 2012)
11. Better People Analytics by Paul Leonardi and Noshir Contractor (Harvard Business Review December 2018)
12. Simplicity Management by Ron Ashkenas (Harvard Business Review December 2007)
13. New Templates for Today’s Organizations by Peter F. Drucker (Harvard Business Review January 1974)
14. Embracing Complexity by Tim Sullivan (Harvard Business Review September 2011)
15. What to Do When You’re Out of Control by Peter Bregman (HBR August 2009)
16. Control in an Age of Chaos by Bill Taylor (HBR December 1994)
§ How Leaders Can Let Go Without Losing Control baby Mark Bonchek (Harvard Business Review — HBR June 2016)
17. Adaptability: The New Competitive Advantage by Martin Reeves and Mike Deimier (HBR August 2011)
18. 5 Behaviors of Leaders Who Embrace Change by Edith Onderick-Harvey (HBR May 2018)
19. The Agile C-Suite by Darrel K. Rigby, Sarah Elk, and Steve Berez (HBR June 2020)
20. Embrace Change, But Still Stand for Something by Robert C. Pozen (HBR January 2013)
21. The Main Ingredient of Change by Denise M. Morrison (HBR September 2014)
22. How to Actually Encourage Employee Accountability by Ron Carucci (HBR November 2020)
23. Do You Understand What Accountability Really Means? by Jonathan Raymond (HBR October 2016)
§ The Best Teams Hold Themselves Accountable by Joseph Grenny (HBR May 2014)
24. What Ever Happened to Accountability by Thomas E. Ricks (HBR October 2012)
25. Accountability Begins at the Top by John Baldoni (HBR April 2009)
26. Does Your Team Have an Accountability Problem? By Melissa Raffoni (HBR February 2020)
27. What If Companies Managed People as Carefully as They Manage Money by Eric Garton (HBR May 2017)
28. How’s Your Return on People? By Laurie Bassi and Daniel McMurrer (HBR March 2004)
29. Five Reasons Employees Are Your Company’s №1 Asset by Karolina Hobson (Forbes December 2019)
30. Treat Your People Like Assets, Not Expenses — Invest in Them by Ed O’Boyle (Gallup June 2019)
31. Do Your Employees Feel Respected? By Kristie Rogers (HBR August 2018)
