How to build a company that will last
PEOPLE tell me that one of our company's strengths is the layer of senior executives below me. Every one of these executives plays a major role.
I wish I could take credit for knowing things would turn out so well. But I can't. When I hired each of these executives 20 years ago, I wasn't thinking about creating an effective second tier in our organisation. I needed each of them for their skills in a particular area such as television, tennis, golf, or finance.
The business grew, they grew, and the two meshed.
In hindsight, however, I think there are certain guidelines for any entrepreneur who wants a company that's built to last.
Hire people smarter than you are: I have always tried to hire people who are smarter than me in specific areas of our business - and I tell them and the outside world how smart I think they are. This keeps our company on the leading edge and it saves mea lot of time. When a client or customer says they would rather deal with them than me, I don't mind.
Pile on the work: I don't like to ''Peter Principle'' people. That is, I won't promote a great salesperson to sales manager simply to reward him for selling well. I'd rather keep that person selling and give him other things to do.
The best people tend to respond to this sort of challenge. It taps unknown resources. When the workload gets too heavy, they're smart enough to find help (usually by hiring people and enlarging their own empire).
Break the mould: I also like to give executives responsibilities that, on the surface at least, run counter to their expertise or expectations.
One of our senior people has been an avid skier all his life. When he joined our company 24 years ago, he expected to work in our fledgling winter sports division. Instead, I assigned him to golf - so he could first learn how our company did things in an area where we were well-established. Then he could apply those principles in skiing. In effect, he learned to do business in two sports in the time it took to master one.
Give them autonomy: You cannot develop leaders unless you let them lead. This means not only letting them make their own calls, but stepping aside even when you suspect they're wrong.
Give them room to err - but not twice: This is the corollary to giving people autonomy. You can't blame people for taking risks and failing. That is part of the learning process. But if they make the same mistake twice, you have only yourself to blame.
Let them think it's their idea: If there is any doubt about who deserves the credit for a corporate success, let your people take it. Your ego can stand it. Your associates will appreciate it. And the company will profit from it.
Step aside so they can step up: Part of being the boss in our company means I am in a constant process of shedding certain responsibilities. This is more than ''letting people think it's their idea''. It means clearly establishing that what was once my job is now theirs.
For example, the golf division is one of the mainstays of our company, and for years I headed up our activities in golf. But I no longer do that. I do not manage golfers. I do not travel on the tour. I do not have day-to-day line responsibilities. I do not run golf division meetings. Someone else has that job now. I have stepped aside because that is the only way our people can step up and grow.
Pay them well: Being generous with praise, advancement, recognition, and responsibility may help build a winning team, but unless you pay them what they're worth, it's no guarantee you can keep them.
Your senior people, by definition, should be making substantial contributions to the company. They're entitled to more than the satisfaction of a job well done.
How do you determine whether to hold a meeting on your turf or the other side's? Ideally, I would prefer the world to come to me - if only to save all those hours of travelling. But that's not practical or even advisable.
The issue here is comfort level. Are you uncomfortable on someone else's turf? Does meeting on your turf dramatically increase your comfort level versus theirs? Sometimes it matters.
I noticed this when I invited an industrial mogul to be my guest at the French Open, which can be a confusing scene but one that is no longer a mystery to me. This titan of industry showed up at our hospitality tent holding his pass in the air. He lookedhelpless and lost. It occurred to me that, by taking him out of his familiar environment, I had made this confident mogul a little less confident.
During those hours at the French Open, he would be reliant on me and ultimately grateful to me for relieving that discomfort. On my turf, I could prove to him I knew how to get things done.
It's a simple theory: The shark patrolling the ocean is helpless if you toss him on to the beach. If meeting on your turf can have a similar effect on someone you are trying to win over, then by all means, take that advantage.
Sometimes it's good business to meet on the other side's turf, not only as a courtesy but to see first-hand what that turf looks like. In some cases, it's a form of due diligence.
Not long ago a British entrepreneur wanted to do some licensing projects with one of our properties. After several meetings in restaurants and at our London offices, we agreed on a working relationship. Only then did one of our executives bring up the point that this fellow had assumed some serious financial obligations to one of our clients.
''Can this chap deliver his side of the bargain?'' he said. ''Has anyone actually been to his office?'' It turned out his ''operation'' was little more than a telephone, a desk and an assistant. He didn't have any of the back-office support the project required. It's possible the entrepreneur could have delivered on all his promises, but after seeing him on his turf we decided not to take that gamble.