Category: People

Good to Great by Jim Collins

Good to Great by Jim Collins analyses commonalities between highly successful businesses and their differences to mediocre businesses.

Contrast to most other books in this category

The books I’ve read in this category have had at least one good take-away point but many of them are just that – a good take-away point wrapped in a lot of fluff so that something can actually be distributed and sold. Nobody would pay for a few bullet points on a postcard. I would put Lean Startup in this category – the only key message in the book can be summarised by the below image.

Spotify's MVP model

In contrast, Good to Great’s author is Jim Collins. He is an academic and the book draws on a the findings and the journey of a large research project that he headed at Stanford University.

Brief summary

The research team selected companies listed on the New York Stock Exchange that out-performed the average for their vertical for 12 (?) consecutive years by at least three times. This is important to rule out the tail wind of an industry-specific boom, the tenure of one individual and happy coincidences. Picking publicly listed companies means that financial data is easy to come by and as accurate as possible.

The author identifies twelve companies and for each, identifies a comparable company in the same vertical that performed roughly on average for the same vertical in the same period. The book explores a series of commonalities between the companies in the first category and the differences between them and the comparison companies. The focus is on the people within the company – their leadership skills, their worldview and so on.

What’s reassuring for me

I didn’t read this book for reassurance. However, the book devotes a chapter, that is preceded by a clear message that it is a particularly important chapter, to what I had come to believe is the most important skill for a small business owner.

Brutal honesty

Companies are full of numbers – profit, revenue, growth rate, customers acquired and lost, people acquired and lost, marketing ROI and so on. However, sometimes the numbers aren’t what we want to see. Perhaps a period was turbulent and the numbers for that period are embarrassing. Perhaps one project was particularly bad and distorted the average – and it feels easiest to move on and forget about it. Perhaps some people within the company generate much less value than others but fixing it could open new a can of worms.

What I have come to believe is the most important skill for a small business owner is the ability to be brutally honest. That is, to start with unbiased numbers, to do broad and unbiased analysis regularly, to draw unbiased conclusions and to act on them without bias. It’s often easier to gloss over a subject, to accept a situation as inevitable and to tell the message that you want to tell.

However, by conducting broad, regular and unbiased analysis, forming unbiased conclusions and acting on them systematically, you can start to work on making the changes you really need to make.

Recruiting software engineers

The dynamics of tech businesses are often said to be unusual, from the extensive freedoms given to developers, to the scale of funding that is thrown at American and Canadian startups, to the willingness. to take on immense challenges. This week, The Economist commented on the unusually short period in which shareholders often demand a return on their investment.

It’s often said that talented software engineers are unique in that they are as highly regarded as traditional professionals (doctors, lawyers…), intelligent, well paid, but also often work from home, late at night, after a few beers. A tshirt, jeans and messy hair are perfectly acceptable and, for those who do work in an office, the office is rarely just a series of desks and chairs – pool tables, stocked fridges, mini-golf courses and so on are all justifiable.

The reason for this is well expressed in the first chapter of Peopleware. People who work with their hands are often interchangeable parts of a machine and sometimes easily replaced due to the abundance of labour. People who work with their minds make a unique, multifaceted contribution. It’s for this reason that, in my view, nothing short of the best fit should suffice when recruiting. A bad fit could do more than add dead weight – it could change the overall company dynamic for the worse.

Around nine months ago, I realised that I would need to grow our (very) small team, and that whereas great clients weren’t in short supply, people who can do more than just implement functionality are in short supply. I approached three recruiters. One had unique access to talent at the local university, another was a sole trader and the third owns an established recruitment company. The latter two claimed to specialise in tech recruitment roles and came recommended to me.

We would expect to pay them an absolute minimum of £3000+VAT for each candidate that we recruit. We would expect that they would weed out the majority of candidates before we see them as they are obviously unsuitable, then we would interview the rest and perhaps, we would make an offer of employment to something like one in 20 of the original list. In other words, we should expect to pay an absolute minimum of £150+VAT for each remote possibility because it takes time to build up the list, filter it, meet good candidates, buy them a coffee and chat to them, and so on.

In reality, however, I found that I was constantly pushing all three recruiters to action and giving them a range of tools to broaden their search, such as detailed profiles of people who I know would be a great fit, great flexibility with regard to salary and a willingness to meet any candidate they can find myself.

After some time, I realised the problem. Software engineers are inundated with recruiters sending them copy-paste recruitment adverts whenever their Linkedin or GitHub profile contains certain keywords. A great example is how software engineers with “Chef” in their Linkedin skills list, when it is obvious that their culinary skills are not their strongest asset (!), are targeted for food service jobs. As a result, techies tune out recruiters and recruiters scale up their automation in the hope of finding anyone who might be a suitable candidate. It’s a vicious circle.

Realising that the time I used pushing recruiter and trying to scout out an effective recruiter could be better spent, I attempted it myself. I built up my own lists from word of mouth and highly targeted Linkedin and GitHub searches, and I pestered everyone I knew who could feasibly know someone who could know someone. I travelled up and down the country and bought an awful lot of coffee. I had much greater success than I had expected because, as it happens, candidates prefer to speak to someone who understands the role and is able to make decisions, and universities, public bodies and friends of candidates all like to see more and better employment.

It took about a month – but I finally had a short list of great people who I knew I could work with, and who I knew were willing to consider a change of career. They all had other commitments, from a PhD thesis to complete and submit, to leases, notice periods and so on. That’s ok though, because I know that between now and Christmas, I there are 6-7 great candidates who will be willing and able to make the move and I know that every one of them would be a great fit.