By Bill Fotsch
What would you call a group that shares one clear, objectively defined goal? In sports, that’s the definition of a team. And what do you call a team whose members focus on their own measures or accomplishments but care little about the team’s success? A good name for that team might be “the ideal competitor.” Or maybe “losers.”
Yet many companies lack just such a clear, objectively defined metric of success. Sure, they’re in business to make money. But that goal is pretty vague. Make money at all costs? (Probably not.) Make money in the short term or in the longer term? (Hmm…) Maximize return on sales or return on equity? (Many people might wonder what the difference is.)
The confusion is debilitating. Since employees don’t know what defines success, they don’t know how their efforts contribute to winning. Since they can’t easily make that connection themselves, they have to wait for someone to tell them what to do. The delay hurts the company’s ability to act quickly. Worse, the employees are reduced to serfs, and morale plummets.
Sometimes it’s very clear what defines winning. SRC, the pioneer open-book company, started its life with an 89-to-1 debt-to-equity ratio. If it didn’t make the monthly loan payment to the bank, it would go under. Each week, SRC’s people talked about how to improve the likelihood that they could make the payment. Every employee was enlisted in the cause, and everyone began thinking how they could help generate the necessary cash.
A while into this—long before anyone had heard of SRC—CEO Jack Stack came out of his office one Thursday night. The janitor stopped him and asked if all this talk about the loan payment was serious. Jack was taken aback. He replied, “You’re darn right we’re serious. The life of our company is at stake.” Or words to that effect.
The janitor then asked these three questions:
Don’t most of our sales come from the trucking industry?
Doesn’t trucking go through a downturn every five or six years?
If we’re so dependent on trucking, won’t we fail to make the payment when the downturn hits?
As Jack tells the story, he just looked at the janitor with his mouth open. The janitor said, “Well, you’re the president, so I figured I should mention this to you.” Then he walked down the hall, pushing his broom.
The following morning, Jack gathered his management team together and took them through the same three questions. At the end he said, “We need to start diversifying, and I mean now.”
The moral of this story is simple: the janitor knew what winning meant for SRC at that time. He wouldn’t have mentioned his thinking to Jack had he not been aware of the importance of the bank payment. Think of how empowering that was for him. And think how many individuals in your own company might be every bit as valuable and talented as that janitor but don’t have any idea what defines winning. How much insight, motivation and morale are you losing?
Next week’s post will discuss why it’s important to define winning with just one easily understood metric—and the week after that, I’ll explain how you can come up with that metric. But the key to the whole thing is to understand that successful teams know what it means to win—in business just as in sports.