MANILA, Philippines - In any facet of life there are truths or sayings that have stood the test of time, and prove to be eternally relevant pearls of wisdom. “Experience is the best teacher†or “Necessity is the mother of invention†are classic examples of timeless sayings that can guide us.
Business is no different, and despite the fast-paced changes in today’s global economy, there are time-tested truths that are relevant year after year, decade after decade. As part one of a recurring series, here are some of the best ones I have seen proven true, time and time again over the years:
• If you take care of the people, the business will take care of itself. The poor to average companies think of their people as just cogs in a machine — all the same and easily replaceable. They do the bare minimum in terms of treating their people right and trying to improve their lives. They adopt a very brutal “take it or leave it†position versus their organization, paying as cheaply as they possibly can. And this is why they are poor or, at best, average. They never get the best out of their people, tap into their true potential. They don’t inspire their people to greatness. They don’t generate loyalty and commitment to the company’s best interests.
The best companies realize that people are their most important asset. They care for their people; they go the extra mile. They take care of them, not only in terms of compensation, but also in the little things, those signs of caring that build loyalty. They invest in the people, in training and development, in health and in retention. They realize people are not just “cogs†but losing a key individual can take years and millions to replace.
• In business, being a little paranoid is a good thing. Nothing can kill a business faster than complacency and arrogance. Many companies have found themselves sitting on top and then allowing arrogance to drive them to ignore emerging trends or innovative ideas. Kodak ruled the world of photography until they laughed off the digital camera. Today, who owns a Kodak camera? Coke turned their nose up at Red Bull, until it became a billion-dollar brand and forced Coke to try and come in late with their Burn energy drink brand. Too little, too late, born of complacency. The list goes on and on.
I first heard this truth from A.G. Lafley, the CEO of Procter and Gamble and one of the best businessmen I have ever worked with. And he is right. Paranoia keeps you on your toes. It makes sure one never gets caught by surprise or at risk of underestimating competition. It is better to err on the side of paranoia and assume most competitive moves can be a risk, than to get caught napping and ending up as the next Kodak camera.
• In the absence of facts, organizations will come to their own conclusions — always negative. All organizations undergo change, from restructuring to downsizing to key management changes. As these kinds of moves impact people’s jobs, and hence their ability to provide for their families, they are big news and a source of high levels of gossip and worry.
Imprudent business leaders try to keep everything under wraps and treat their organizations as children who can’t know too much. They try to keep a lid on the news, not realizing every organization, from the White House on down, has leaks. But they stubbornly keep information close to the vest, and the people, in the absence of information, start to create their own version of reality and when doing so, never give management the benefit of the doubt. They conjure up the worst.
The smart leaders treat their people as mature adults. When the time is right, they lay all the cards on the table, share the facts, no matter how painful, and treat their organization as a vested stakeholder in the changes. And they find that their organization rises to the challenge, appreciates the trust, and gets on board seamlessly with the changes.
• The consumer of today will not pay for a company’s inefficiencies. There was a time when consumers in many categories had limited choices. Monopolies could exist. But not any longer. In a true global economy, products and services from anywhere can and will be available. It’s a true open market. The companies that are lean and mean, that spend wisely and deliver consumer value, will win. Those that think they have a right to charge consumers more will lose share and become antiques. Understand your consumer value. Your cost structure. Benchmark versus the best. And make the changes you need to stay competitive, or the consumer will vote with her pocketbook and you’ll learn the hard way!
Stay tuned for part two for more business truths!
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Questions or comments can be directed to JamesMichaelLafferty.com.