When times get difficult, stay focused
When I first read Built To Last, the book by Jim Collins and Jerry Porras, I was mesmerised. It was based on six years of intensive study of exceptional companies like Hewlett-Packard, 3M, Motorola, Procter & Gamble, Merck, Nordstrom, Sony, Disney, Marriott, and Wal-Mart. They had all shown phenomenal growth and had been around for an average of nearly 100 years. They had performed 15 times better than the overall stock market since 1926. They are still good companies and some of them perform well today. However, some of them (not least Hewlett-Packard, Motorola, and Sony) have had their problems. The frameworks that Collins and Porras claimed marked these companies out as being built to last are entirely sensible and much recommended, but they don't guarantee continuing success.
I was reminded of the lessons of business triumphs this weekend as I read an article on the success of the JD Wetherspoon chain led by the larger than life Tim Martin. Much as I disagree with his views on Brexit, I can’t help liking his hands-on approach to management. He and his management spend a good deal of time each week visiting their pubs. This is much in the way that Sam Walton, the founder of Wal-Mart, insisted his managers visited stores from Monday to Thursday. Martin claims his success comes from following the Wal-Mart example of piling it high and selling it cheap and making lots of small improvements to his pubs. He looks for ideas for improvements from customers and staff. According to Tim Martin, customers know more than management about what needs improving. His words, not mine, are "the key is not to have the top brass reaching too many decisions".
This is good stuff. Constantly listening to customers is a management principle we could all follow to our advantage. We should also bear in mind that Wetherspoon has grown from just one pub when Tim Martin founded the company in 1979 to around 900 outlets today. He must be doing something right. And then we remember what we learned in Built to Last - what has happened in the past is no guarantee of what will happen in the future. Will Martin's emphasis on scale and efficiency see him through the next 40 years? Wetherspoon's six-month results have just been published and they show a blip. The company reported lower profits for the six months. Profit before tax fell by 19% to £50.3 million (compared with the same period a year ago), in part caused by staff costs which increased by £33 million.
It is at times like this that frameworks can save the day. The frameworks that we should choose are those that help us adjust to changing customer needs. Those that find a new strategic direction are powerful drugs only to be used in extreme circumstances. At times like these it is worth reading the value disciplines framework. It is a great reminder to stay focused.