In Pursuit of Reality

Posted: March 23, 2010 in Uncategorized

I’ve noticed staff in the most successful businesses have always got a strong grip on the realities of the business, its products and the market. The less successful ones either failed to discuss problems or are convinced of things which are not really true.

I’ve always watched this play out with interest and recently I’ve become convinced it’s one of the most important factors which influence a business’s success. I’ve seen people sit around meeting room tables for hours discussing the currently accepted reality without actually touching on anything remotely real.

Often when people tell me why something didn’t work they are describing a symptom, this lack of reality is often the root cause.

Jim Colins, Author of Good to Great researched 1,435 companies to find the factors that contributed to the success of the great ones. Based on this research, “Confront the Brutal Facts” is one of the first chapters.

One of the key factors in the success of the great companies was a series of good decisions. The good decisions flowed from the fact that they all made a consistent and thorough effort to confront reality, internalizing the facts relevant to their market. Having lofty goals can be good, but you can never lose sight of what the reality is on the ground, no matter how much you will it to be different.

To do this a management team must value honesty and encourage everyone to contribute their angle particularly if it doesn’t fit with the current view.

Here are some of the common examples:

Reality Fail 1. Setting strategy based on incorrect assumptions

This reality distortion happens when members of the management team come up with a direction for the company; they have drawn conclusions incorrectly and may have drawn on supporting evidence without fully understanding it. But the company is now convinced and the new reality is this plan will make the company successful.

Reality Fail 2. Failing to understand the company’s real problems

Companies that have executed on bad strategy will eventually come to a place where they have to discuss why things are not going to plan. This is the right time to really dig into the reality of why something is not working. This may take some proper analysis and will most likely dig up problems which may be embarrassing.
For many management teams this is not an option. There will be loose discussion which will surface the new idea of what will make the company successful. Then the company will go forward, the staff understanding the new direction as being reality.

Reality Fail 3. Failing to start bailing water

Later in the lifecycle this phenomenon can manifest itself in companies start to collapse, everyone accepts that everything is going well when what they should be doing is having heated meetings trying to get to the root cause of the companies problems.

The solution

Companies that fall into these traps generally flounder around changing direction till they fail. For businesses to set themselves up for success they need to make reality their common language. To do this they need to introduce a culture where staff and in particular the management team is encouraged to rigorously question and analyze what is accepted as reality. When decisions have to be made egos must be put aside, outside experts drawn into the discussions if necessary and everyone must be drawn on to present any evidence they have. No decision should be made till all the assumptions are verified.

John D Rockefeller is still the richest man in history (by a huge margin) and he did this by being an exceptional businessman. In the history he wrote of this life he found this concept important enough to write in the first page of chapter one.

We had discussed and argued and hammered away at questions until we came to agree, and it has always been a happiness to me to feel that we had been frank and aboveboard with each other. Without this, business associates cannot get the best out of their work.

It is not always the easiest of tasks to induce strong, forceful men to agree. It has always been our policy to hear patiently and discuss frankly until the last shred of evidence is on the table, before trying to reach a conclusion and to decide finally upon a course of action.

You can conclude that he put his ego aside, hired a brilliant team and put in place an environment which fostered good decision making and it worked. As Jim Clark wrote it’s not always pleasant to debate something rigorously but if the future of the business was involved the winning teams he identified did just that. They often had heated arguments which lasted for weeks, bringing more and more facts to the table until they reached a unanimous decision, then they all put aside their original differences and got on with it, comfortable in the knowledge that the direction was correct.

I think there is a lesson here for high tech companies where assumptions about markets with huge potential often go unchecked and direction is often set and accepted as right without analyzing reality. I would be interested to see how other people out there have observed and interpreted this.

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