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Hiring – Good to Great

by Jim Collins

Disciplined People: “Who” Before “What”

You are a bus driver. The bus, your company, is at a standstill, and it’s your job to get it going. You have to decide where you’re going, how you’re going to get there, and who’s going with you.

Most people assume that great bus drivers (read: business leaders) immediately start the journey by announcing to the people on the bus where they’re going – by setting a new direction or by articulating a fresh corporate vision.

In fact, leaders of companies that go from good to great start not with “where,” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats. And, they stick with that discipline – first the people, then the direction – no matter how dire the circumstances. Take David Maxwell’s bus ride. When he became CEO of Fannie Mae in 1981, the company was losing $1 million every business day, with $56 billion worth of mortgage loans under water. The board desperately wanted to know what Maxwell was going to do to rescue the company.

Maxwell responded to the “what” question the same way that all good-to-great leaders do. He told them, “That’s the wrong first question. To decide where to drive the bus before you have the right people on the bus, and the wrong people off the bus, is absolutely the wrong approach.”

Maxwell told his management team that there would only be seats on the bus for A-level people who were willing to put out A-plus efforts. He interviewed every member of the team. He told them all the same thing: “It was going to be a tough ride, a very demanding trip. If they didn’t want to go, fine; just say no. Now’s the time to get off the bus, – no questions asked, no recriminations.” In all, 14 of the 26 executives got off the bus. They were replaced by some of the best, smartest, and hardest-working executives in the world of finance.

With the right people on the bus, in the right seats, Maxwell then turned his full attention to the “what” question. He and his team took Fannie Mae from losing $1 million a day at the start of his tenure to earning $4 million a day at the end. Even after Maxwell left in 1991, his great team continued to drive the flywheel – turn upon turn – and Fannie Mae generated cumulative stock returns nearly eight times better than the general market from 1984 to 1999.

When it comes to getting started, good-to-great leaders understand three simple truths. First, if you begin with, “who,” you can more easily adapt to a fast-changing world. If people get on your bus because of where they think it’s going, you’ll be in trouble when you get ten miles down the road and discover that you need to change direction because the world has changed. But, if people board the bus principally because of all the other great people on the bus, you’ll be much faster and smarter in responding to changing conditions. Second, if you have the right people on your bus, you don’t need to worry about motivating them. The right people are self-motivated. Nothing beats being a part of a team that is expected to produce great results. And, third, if you have the wrong people on the bus, nothing else matters. You may be headed in the right direction, but you still won’t achieve greatness. A great vision with mediocre people still produces mediocre results.