Maturity and Business
February 3, 2011
I wrote recently on Maturity and the way I’ve been trying to view my life lately.
The place that I’ve found this thinking most interesting is in conceiving of my businesses (esp. THA). It’s easiest to try to solve most of our business problems in the frame of “what’s best for us right now?”. Especially in technology, which is so driven by quick-return venture capital (where we expect an exit in no longer than 3-5 years), this type of thinking is endemic. We live and die by the quarterly numbers. The most forward-thinking of us try to think 9-12 months out. Sometimes, our roadmaps extend a whopping 18-24 months. But that’s it.
And that’s a sure way to make decisions that are bad. My experience with venture capital driven businesses has been almost universally bad – the decisions that the VCs (or their hand-picked executive teams) made were almost universally oriented toward a quick exit, and, most often, in diametric opposition to what would have been done if the company had been managed with an eye toward building a long-term sustainable and profitable business. I’m not the only one with this experience - Inc published a great article about this a few years ago on Friendster that was eye-opening to me when I first read it.
Lately, I’ve been trying to conceive of our businesses in a more long-term way. I’ve been trying to think about it the way that (I imagine) we conceived of businesses 100 years ago – not as something with a quick exit, but as something that would have to feed our family for the rest of our lives. The questions I’ve been asking myself are oriented toward that sort of thinking:
- What would we be doing if our goal was to be most profitable 10 years from now?
- What is single thing that we can do as a business to make our customers’ lives better in 36 months?
- How can we best reinvest profits today to triple or quadruple them down the road?
The thing is, this wasn’t the type of business thinking that I’ve been taught how to do. Nor do I know anybody else who is. Every time I read the typical business book, they’re like reading diet books: GET RICH NOW WITH NO EFFORT AND NO ENERGY! And I love that kind of business book. But nowhere are they trying to teach you how to create something sustainable that adds real value over the long term.
If anybody out there reading this one has any advice on building a company that’s sustainable and profitable on a 50-year time scale, I’m all ears. Because, other than some of the old articles about how the Japanese created 100 year plans, I can’t really find anything that gives good advice on this one.
The Importance of Turnover
December 8, 2008
We in North America love our sports metaphors. I was reminded of that recently when I was speaking with the president of a successful and relatively forward-thinking security company, and he was telling me about his management philosophy.
“I want the people on my team to stick around. I mean, look at the New England Patriots – you think they build a dynasty with huge amounts of turnover? Nope – they kept the core of that team intact over the years.”
Well, I personally don’t agree with his stance. I have always believed that teams that stay together for too long lose the freshness and innovativeness that is required for success in these times. I heard a great quote (attributed to Tom Peters) recently:
“If the rate of change outside your organization is greater than the rate of change inside your organization, then the end is near.”
Brilliant. And true (in my experience).
But not in the opinion of my colleague. Nor, in the opinion of the New England Patriots, apparently.
But I’m a football fan as well, and something about that didn’t smell right.
So, I put together some research on the matter. And it showed exactly what I’d expect – the New England Patriots are a dynasty not because they keep their core together, but because they have built a system that manages turnover.
To summarize the research: from 2003-2008, the Patriots had approximately 33% turnover among staff and players – that is, the entire team could be expected to be replaced EVERY 3 YEARS. Yet they remained competitive during that time.
In fact, only 13 players TOTAL (3 offensive, 5 defensive, and 5 coaches) were on the team for all five of those years. (And they’re hardly “core”, unless one considers the long snapper and the running backs coach “core”). The two most important of those are Tom Brady and Bill Belichick, and even Brady’s importance has been minimized this year, given the play of Matt Cassel in the same system.
More importantly, when you look at the coaches, the turnover has all been where it would be presumed to be most important: at the top. The team has used 3 offensive coordinators and 3 defensive coordinators in those 5 years – in product development terms, that’s like switching VPs of Marketing and Engineering 3 times in 5 years.
So, I assert that the New England Patriots make my point: the reason that a company (or a football team) is successful isn’t its ability to avoid turnover, but its ability to create (esp. talent development and knowledge capture) systems and (most importantly) a culture that minimizes the impact of turnover.
The Dumbest Prediction I’ve Heard in a While
October 23, 2008
I was reading Hoff’s recent post on virtualization, and I found myself needing to write a bit of a rant. I don’t usually have much to say about what Hoff writes about, because virtualization isn’t an area that I spend any time on. But in Hoff’s critique of Tarry Singh’s latest post, there was something that blew my mind.
Tarry asserts in his post that one of the good things about hackers spending time finding vulnerabilities is that (and I quote):
“Security and Compliance will be core focus of all organizations (as regulators will come knocking at your doorsteps)”
Umm… I hate to say it, but that ain’t ever gonna happen. No matter how many regulators show up on someone’s doorstep, that counts as one of the least well-thought-out predictions I’ve ever heard.
Simply put:
- McDonald’s core focus will always be on making hamburgers.
- Nike’s core focus will always be on making shoes/clothing for athletes.
- Ford’s core focus will always be on making cars.
If those organizations ever make “Security and Compliance” their core focus, they won’t have businesses anymore.
While we may think that security is important, the day that it surpasses the core focus of any business (that isn’t in the security and compliance business) is the day that that business has taken their eye off the ball. By definition.