I’ve been spending a lot of time recently thinking about our company. Investigating what Simon Sinek calls “the why?” Why does Biznews exist? Why is society better because we’re here? Most importantly, are those involved in the company fulfilled and happy?
Pretty profound questions that emerge whenever you invest time listening to the thought-provoking Mr Sinek, among the best of the emerging leadership gurus. One whose message is resonating. For instance, the most famous of his TedTalks on YouTube, “How great leaders inspire action” has been watched almost 50 million times. Inspirational stuff.
When interviewing him four years ago, I discovered an affinity with Sinek. Not only because he spent most of his first five years in Johannesburg and still has a connection to South Africa through family members living here. More so because his perspectives on business helped me feel mine weren’t that whacky after all.
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Perhaps because my B Comm studies at university career only lasted a year, I never did absorb the establishment’s directive that business existed to serve shareholders – and in essence its goal was to make the most money in the shortest possible time.
So, from the first business I founded, a small news agency with the unimaginative name of Alec Hogg & Associates, everyone on the team knew exactly how much money we were making (or, when we moved into publishing through a horse racing newspaper, losing).
When things formalised as my 1997 creation evolved into the publicly listed Moneyweb, this approach was expanded. Each new team member first had to be interviewed by everyone else before being hired. And once on board, staff were trusted with all information that mattered, with a monthly pizza-fest where the latest financials were shared and discussed.
There was also a practical side to this. At Moneyweb, our policy was to distribute 25% of the company’s pretax profit as a quarterly bonus. So seeing how the business was trading and knowing what slice of the bonus they would get, helped ensure we never encountered the corporate scourge of “disengaged workers”.
Once we’d started in this path, it became logical that everyone on the team knew what informed the key decisions being made. Especially when we had to weigh up some tough calls that affected profitability (and bonuses) but delivered better returns in the longer-term. These decisions became collective. And, because of it, tended to work out.
Coming from that background I find it really interesting to watch the corporate world edging towards the open approach promoted by Mr Sinek. For converts like me it just makes sense. But for old leopards from a school championed by profit-first celebrity CEOs like Jack Welch, changing their spots is more difficult. Usually it has to be forced on them.
That’s happening because the world of work is increasingly dominated by a new generation born into a world where information flows freely and secrets get quickly exposed. To them, that ubiquitous command and control managerial style of the 1980s and early 1990s is anathema. They refuse to buy into it. So move on as soon as something better is offered.
This reality, and the massive cost of high staff turnover, has been permeating boardrooms in developed economies, forcing changes. But at home in SA, it still seems to be struggling to take a proper hold. Which isn’t all bad news. Because in capitalism, dumb decisions informed by the status quo always open up opportunities for those with broader minds.
Of late, Sinek has been expanding his concepts by sharing observations flowing from research for his latest book. He has applied classical game theory to business and concludes that there are two types of games – one of infinite duration and the other which has an end. To succeed, your strategy is dependent on which type of playing field you’re on.
Sinek argues that business is an infinite game, an easily accepted view if you consider that business has been around for longer than any company which ever existed and will still be here after every current business has disappeared.
Most companies, Sinek says, fail to appreciate this. Instead of focusing on sustainability, they devise strategies for a finite playing field – one where “winners” do so by generating more profit/gaining market share/higher market capitalisation than “losers”. So in tough times, they apply short-term “weapons” like slashing jobs to boost profit margins.
Also, studying your competitors so that you can “beat” them, Sinek reckons, further informs this misunderstanding. Because nobody can “win” an infinite game. When you’re on an infinite playing field, as every company is, the goal is longevity. That means taking far-sighted decisions, riding out the storms and consciously combatting a short-term focus.
The result of all this, our leadership guru continues, is to put the focus on building a values-based company, one where employees are first, customers second and shareholders third – exactly the opposite to the priorities most companies adhere to.
Millennials intuitively “get” this because they think differently to those who informed the way the world of work is structured. So, too, do those companies which are succeeding in a world where most businesses are continuously blaming external factors for their floundering. Companies which are succeeding are doing so by embracing a changed world.
Jeff Bezos of the global juggernaut Amazon.com talks about every morning at the business being “Day One” – a fresh start. Since creating the massively disruptive beast, Bezos has evangelised about obsessive customer focus – something only achieved when staff (and he has 566,000 of them now) are engaged and aligned to that common purpose.
Berkshire Hathaway’s chairman Warren Buffett thinks the same way. He regularly talks about each of more than 80 subsidiary companies in the group working every day at expanding their moats – something done by engaged staff paying attention to the little things, often unnoticed on their own, that taken cumulatively transform organisations.
Also Reed Hastings who founded Netflix, a company expanding its customer base by 28-million people a year, who isn’t fazed about competitors entering the movie-streaming business. Instead, he sees free-to-air television as the real competition, so is investing more into original content to keep staff excited and improve service to customers.
What got me onto this thought path was after recently coming across a business doing exactly the opposite. Inversion is often the best teacher: seeing what not to do is often more valuable than attempting to replicate the successful – the really good ones never share their actual secret sauce anyway.
A few hours spent studying the small print in recent annual reports of this “inverted” example presents one with a conscience-free executive team that has been pulling literally tens of millions out of the business while simultaneously retrenching hundreds of staff and freezing the salaries of the rest.
Staff turnover at the company is almost 20% a year. Put differently, at that rate of change, within five years everyone working there today will have been replaced by a fresh face. That translates into minimal institutional memory, thus a culture of repeating of mistakes rather than learning from them.
It’s not rocket science to forecast what the results of that archaic approach will be. But it does help us appreciate why the future belongs to those businesses who do the opposite. And embracing the Sinek Way.
