I have long held that organizational culture is the critical factor determining why some companies are wildly successful and others struggle to create meaningful value for their customers. And culture is directly tied to people. Great people executing a mediocre plan will outperform mediocre people with a great plan every single time, provided there is goal alignment across the team.
In that spirit, I want to share the guiding principles of TrueNorth Companies, an insurance brokerage firm, upon its creation in May 2001:
- Profit will determine who exists.
- Technology will determine who competes.
- Quality will determine who grows.
- People will determine who wins.
I don’t know that I’ve ever seen a more succinct understanding of business in the 21st century, regardless of industry – from high tech to medicine, from hospitality to finance.
While it’s laid out in black and white, let’s break it down:
For starters, if you don’t make money, your business will fail. And unless you’re Amazon, which didn’t turn an overall profit for nearly ten years, you’ll fail quickly. But simply making money today is no guarantee that your business will achieve its ultimate objectives. After all, the Dallas Cowboys make plenty of money, but haven’t been to the Super Bowl in 25 years. The New York Knicks make boatloads of money of too. Yet they haven’t won an NBA Championship in nearly half a century (1973). When your sole organizational goal is to win championships, these two franchises, worth over $10B combined, equate to nearly 75 years of combined failure. Making money just allows you to keep your doors open.
Today’s technology is nothing short of miraculous. Our individual Fitbits have more computing power in them than the largest mainframe computers powering large enterprise applications in the 1970’s. But no company is going to beat its competition based on its technology spending. Technology is no more than what’s called ‘table stakes’. If you want a seat at the big boy table, if you want to truly compete, then you must be willing to make some serious investments in technology. This will then give you a chance. As the various state lottery promoters say, “you can’t win if you don’t play.” But you only get a chance. You need to do more if you want your investment to pay out.
One of the more recent trends in American industry has been around ‘Six Sigma’, one way of attempting to quantify (or qualify) quality. Building off the long-term Japanese commitment to lean manufacturing processes, American businesses recognized that they had to up their game to grow, and many jumped on the Six Sigma bandwagon, minting new Black Belts who could institute processes within their organizations that would drive material improvements in product and service quality. College football programs did the same, sending members of their staffs to learn from Alabama coach Nick Saban, known for his fanatical commitment to ‘the Process’. Many of Saban’s acolytes have leveraged their learning to greater success; but just as many have not. And none of Saban’s former coaches has won a national championship. Saban’s programs of course have won six, the most ever.
Which leads us, as it always does, to people. The quality of the people on your team ultimately determines who wins in the business arena, and in your market specifically. It largely doesn’t matter how much short term profit you make, how good the technology is you utilize, or even how good your product or service is today. The only thing that matters is how good your people are at executing in crunch time over the long haul (given an adequate organizational commitment to fiscal discipline, technology investment, and product quality.) After all, none of us are interested in building organizations that have a few great years but whose achievements are ultimately not sustainable. We want to build organizations that are built to last, and consistently win the battles against our competitors for years to come.
In short, we want to create what Nick Saban has created at the University of Alabama. Yes, the school makes money on football, which allows them to exist in a D-1 world. Yes, they utilize the best human performance technology, which allows them to compete against their highly skilled SEC rivals. And yes, Saban’s process creates a high quality product that features very few defects (such as penalties or blocked kicks) throughout a season. But why do they win championships? Because layered on top of the money, the technology and a tried and true process, are the absolute best college football players on the planet. Year in and year out, Saban manages to recruit the best talent to Tuscaloosa compared to his rivals, and then commits to their continued development. It’s as simple as that. His people are ultimately better than anyone else’s people.
There are obviously other achievements which are worthy of our admiration for their ability to harness and direct human potential. Think of the Manhattan Project, the Moon landing, the development of vaccines, mapping the human genome, or the summiting of Mount Everest. Every leader theoretically seeks to create an environment whereby such achievements are possible. Granted, a company devoted to the manufacture of pipe fittings probably doesn’t seek to have a seismic impact on the overall well-being of mankind, but its leader is likely just as committed to being the top performer in its industry, and should seek to make the lives of its customers better through the delivery of high quality products at a competitive price. And that objective requires just as much commitment from smart, motivated employees as does landing on the moon for their NASA counterparts.
Thank you, TrueNorth Companies, for crystalizing a 21st century business strategy in four short bullet points. Your principles really say it all.