A description of Dagny Taggart, “Atlas Shrugged”, by Ayn Rand
Earlier this year I worked with two companies that couldn’t be more different.
Company one is one of the most respected names in the FTSE, and operates in a classic recession-proof sector. Company two is an unknown business in an unfashionable declining sub-segment of the telecoms sector.
Company one’s management team is smart and sharp, and would be intimidating if they weren’t such pleasant people. The Directors have a cadre of direct reports who, to my initial and ongoing bemusement, make sure that everything that reaches the Directors is high level, conceptual and visual. When working with us, one tried to insist that our presentations contained less data and more pictures – pictures for God’s sake! But, the thing is, these people weren’t acting dysfunctionally – in every meeting with us, the company Directors dwelt and debated on the concepts and vision, and seemed to skip very quickly over all of our data and analysis.
Company two’s management team is one of the most uninspirational I’ve ever met. The top two Directors could pass as the two main characters in Peep Show. But these guys love their numbers. Every question we asked them in our work with them was answered with numbers, supported by a flood of analysis. The business is managed using a set of KPIs that would have a quantitative analyst in paroxysms of delight. Everything is tested, everything is monitored.
Company one has had flat sales in a growing market, and so seen its share decline pretty much continually for the last ten years. But it now has a striking vision of industry leadership for the future, which might work. You never know.
Company two has grown revenue and profit more than 20% annually in the time since the management team came on board. This isn’t from harvesting – new services launched in the last three years now make up about 25% of profit. Company two’s vision – I’m quoting exactly here – “we’ll try a bunch of things and see what the numbers tell us”.
I think I’ve made my point. Vision can be appealing, numbers count.
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Agreed with your view but everyone needs to be on a Journey....For example: what journey are Apple on? Not the OS one, or the application one, maybe the device one, but defiantly the consumer one. The Sick Technology Cash Cow is susceptible to Moore’s Law, it will decline twice as quick in half the time, year on year. Leapfrog is the best option; but make sure you have more than one product or service so you have something to jump over. Vision is tomorrows profit and todays differentiator.
ReplyDeleteThanks Dave ... sorry Varidion. That's much-needed perspective.
ReplyDeleteOf course, I agree with you that vision, and the passion and direction it generates, is critical. Without these, our businesses would be a hodge-podge of experiments that continued until failure. They would also be boring, which I think is worse.
A greek philosopher summed up his rules of life with two questions. His first question was "is it fun?" - read: inspiring, visionary, etc. His second question was "does it work?" - read: what do the numbers show, do we make money. The two questions, of course, are complementary. Yes only to the first and you're heading for disaster; yes only to the second and you're heading for uninspired mediocrity.
I also like your point about needing multiple products and services to have something to jump over. We need to be humble enough to recognise that we don't know which will succeed (ref MS and Apple throughout their glory years), but smart enough to collect the data so we know which to invest and which to cut.