The only way to survive and thrive is to build a great business that can withstand the economic shocks of any market as it rises to the top of the industry. It's now more important than ever to develop sustainable strategies for attracting good customers and recruiting better leaders to serve them.
I recently sat down with my friends Mark Thompson and Brian Tracy to talk about this subject, which is also the topic of their new book Now, Build a Great Business! (Amacom, 2010). Brian, a prominent voice in analyzing personal and business success, has consulted for 1,000 companies and spoken to five million people worldwide in the last 30 years. Mark, co-author (with Jerry Porras and Stewart Emery) of Success Built to Last (Plume, 2007), is a successful senior business-communication executive and angel investor. He has served as a board member and adviser to Global 1000 companies and as an executive at Charles Schwab (SCHW).
Marshall Goldsmith: How do you define a "great" business?
Brian Tracy: In its simplest terms, a great business is one that has a great product or service. This is defined as something that people want, need, can afford, and can enjoy and take full advantage of. The simplest measure of all to predict business success is to calculate the number of times that a customer—after using your product or service or visiting your place of business—says the magic words: "This is a great company. This is a great service. This is a great business."
Every successful business or product in the marketplace is described as being a "great" product or business. When everyone in your company is focused on eliciting this response from every single customer, your business will transform—and often very quickly. One of the seven key elements that Mark and I found that all great companies have is a great product or service.
When it comes to breakthrough success, why do small startups routinely beat big businesses? How can corporate executives and managers apply your principles?
Mark Thompson: Most successful companies started small and took market share from larger competitors to succeed. Why should any small company be able to compete against big companies that have more money to spend on experienced people, better equipment, better distribution and service for customers, etc.? It shouldn't be possible, but the one core competency that big companies avoid (and managers often sabotage, even while pretending to support it) is the one thing that makes little companies win. It's innovation. All innovation requires experimentation and all experiments require failure. How many big companies tolerate failure? Would you like to be fired, demoted, or humiliated? Not likely. Managers in big companies avoid risk and failure. They think they can avoid it, but eventually it catches up with them. Small companies have no choice but to take risks that are relatively bigger (and [they] fail more often) than their larger competitors.
This is also true about individual people. According to our global research in 110 nations, successful people take risks and fail more often than unsuccessful people. Winners ultimately set themselves apart, innovate more, get smarter, more skilled over time, and get ahead because they make themselves vulnerable to risk. Ironically, unsuccessful people don't worry enough about winning. They are more concerned about avoiding failure, which severely limits their ability to grow.
The economy is precarious, the stock market is volatile, and competition is constantly changing. So why—as you stress in your book—is it a great time to start a business?
Mark Thompson: Whether it's Google (GOOG), FedEx (FDX), Schwab, or hundreds of other successful companies we studied, most of those that are still in business during this current tough economy started in "bad" economic cycles for five key reasons. First, when the economy tanks, companies cut customer service. Customers are underserved and abandoned and may even blame their current relationship. They are much more prone to consider switching loyalties at this time—and as you may know, acquiring customers is perhaps the most difficult and expensive thing any company does. Second, while your competitors are cutting spending on advertising and marketing, you can buy it for bargain prices. Third, those employees who were unavailable or unaffordable will consider working for you in a tough market environment. Fourth, all of the infrastructure you need, from leases to computers and desks, are on sale. Fifth, there are fewer competitors, period. If you've started in tough markets, there is a better chance you learned something about managing in difficult economic times.
Would you share a few tips or techniques to ease the challenges of finding great people and keeping them motivated?
Brian Tracy: Finding great people is another one of the seven strategies. Your business can only grow to the degree to which you can attract and keep great people who can help your business grow. A great person is someone who contributes much more in dollar value than you pay them in salary, income, and bonuses. Therefore, a good person is actually "free." Even more, a good person is "free, plus a profit." What this means is that a good person contributes more than they cost—and much more, yielding a profit every time you can hire one of these people.
A good person is one who fully understands what he or she is expected to do and is fully trained or qualified to do that job. The manager then provides the essential leadership, guidance, and motivation, creating an environment where peak performers can thrive.
The basic rule in hiring good people is to do it slowly and carefully, one interview at a time. As Peter Drucker said: "Fast people decisions are usually wrong people decisions."