First Who, Then What

By?Matthew Gutierrez?and?Shawn O'Malley, edited by?Robert Leonard?· January 15, 2023

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Today we'll share insights from Jim Collins' excellent book?BE 2.0?in?just?4 minutes to read.

QUOTE OF THE DAY

"If the first two decades of the twenty-first century have taught us anything, it's that uncertainty is chronic; instability is permanent; disruption is common; and we can neither predict nor govern events.?

There will be no "new normal," there will only be a continuous series of "not normal" episodes, defying prediction and unforeseen by most of us until they happen. And that means doubling down on the "first who" principle...

Your best hedge against unexpected obstacles is making sure you have the right partners on the other end of the rope, people who can adapt to whatever you encounter on the mountain.?

Even the most visionary among us cannot always predict which ideas will work. And no one can reliably predict what the future will throw at us or even what's coming just around the corner."

— Jim Collins

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THE MAIN STORY: FIRST WHO, THEN WHAT

Overview

In the above quote, Collins states that in an uncertain world, we must double down on the "first who" principle.

If you're unfamiliar with his excellent work, you may wonder what exactly this means.?

The idea is compelling and applies to organizations and companies of all types, from garage start-ups to Fortune 500 companies to hospitals, sports teams, charities, and schools.?

Any construct of human collaboration necessitates a keen focus on the "first who" principle.?

What does that mean?

Before pursuing any meaningful aim, we should ensure we have the "right" people working with us.?

Collins explains by asking, "What's the number one, first-priority metric you look at? Is it sales? Or profitability? Or cash flows? There's one metric that towers above all others, one metric to track with obsession, one metric upon which the greatness of the entire enterprise hinges."

That metric is the percentage of key seats on our bus filled with the?right?people for those seats. In this regard, the bus represents our collaborative organization, and the seats are the different roles that people play.

The right people

?Your bus can travel anywhere and accomplish any task with great people in the right roles for their skill sets, personality, experience, leadership style, etc.?

And so long as you obsessively preserve this culture of finding the right people and role for them to assume, you can sustain a dynamic and impactful enterprise.

Collins tells us that if less than 90% of the seats on our bus are filled with the right people, then before anything else, we must focus on filling them properly.

What to know

This wisdom doesn't just apply to chief executives, though. The insights are useful for team leaders, coaches, administrators, and managers of all levels.

The point is that our operating environment is fiercely competitive, particularly for those in the business world, and most ideas will fail.?

Therefore, as much as possible, we should avoid hiring people for specific jobs pegged to narrow ideas and projects that may fail and, rather, bring on board high-quality, flexible people who can learn to succeed with any task.?

Hiring right

If that seems obvious, consider the number of job applications that advertise a specific, narrowly defined set of responsibilities. These companies are hiring people to be employees, not stewards of the organization's future.?

That's why the distinction is so critical — to build greatness, you must have great people, and great people are flexible and multi-faceted. Their diverse capabilities and willingness to learn allow them to assume various responsibilities as they grow alongside the company.

Collins calls this Packard's law, as framed by Hewlett Packard's great leader David Packard: "No company can grow revenues consistently faster than its ability to get enough of the right people to implement that growth and still become a great company."

Good culture vs. bad culture

This is easier said than done. Many organizations are plagued by internal politics, quasi-tenured employees, family dynamics, and excessive loyalty to early employees who may have contributed to the company's success.?

As a result, the organization's spirit ultimately reflects this rigid and unfit leadership, which only drives away high-quality people at lower levels until the entire enterprise has rotted from the top down.?

Collins tells us that "building an enduring great organization requires disciplined people who engage in disciplined thought and who take disciplined action — operating with freedom within a framework of responsibilities — this is the cornerstone of a culture that creates greatness...

In a culture of discipline, people don't have jobs; they have?responsibilities. When you blend a culture of discipline with an ethic of entrepreneurship, you get a magical alchemy resulting in superior performance."

Steve Jobs adds his own take on this by saying, "Make sure you're only hiring A-players," for if you select a few B -players, they'll hire B's and C's, and pretty soon, the whole operation has deteriorated.

How do you know what's a key seat?

Obviously, we can't expect to have great people in every part of a company, especially if it's a large one. For large organizations, Collins provides a few points to consider when determining what roles serve as key seats on our bus to success.?

Firstly, the person in that seat must have the power to make personnel decisions such that their choices can shape the organization's culture.?

Secondly, failure in the seat could expose the company to existential risks, whereas success could also yield a significantly outsized impact.

If a person fills a role that checks off these boxes, it's imperative that they fit into Collins' "first who" principle. Otherwise, the organization's future is jeopardized.?

Firms that recognize what their key seats are can then focus on filling them with great, empowered people.

Takeaways

As investors, we ought to place a premium on companies with a "first who" mindset that have prioritized having the right people in the right places before any short-term profitability or sales metric.?

These noble firms are best positioned to deliver truly exceptional investment returns while being the most positively impactful on society.?

In past periods, these types of companies have included the likes of Kimberly-Clark, Kroger, Abbott Laboratories, Walgreens, Nucor, Hewlett Packard, 3M, and Proctor & Gamble, among others, according to Collins.?

As leaders at any level, we should strive to fill the key seats on our bus with the right people and do so, in part, by leading by example. Be the "who" in "first who," and you'll attract like-minded individuals into your orbit.?

As your successes compound and you pull more and more great people into your organization, you can't help but achieve greatness.

Dive deeper

We'd encourage you to read Jim Collins' book?BE 2.0?for his full thoughts or check out our video summary of his other book,?Good to Great.

SEE YOU NEXT TIME!

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