On Only The Paranoid Survive

I recently finished reading Only The Paranoid Survive by Andrew S. Grove.

Below are excerpts from the book that summarize the key points presented by the author:

1- “Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left. I believe that the prime responsibility of a manager is to guard constantly against other people’s attacks and to inculcate this guardian attitude in the people under his or her management.”

2- “We all need to expose ourselves to the winds of change. We need to expose ourselves to our customers, both the ones who are staying with us as well as those that we may lose by sticking to the past. We need to expose ourselves to lower-level employees, who, when encouraged, will tell us a lot that we need to know. We must invite comments even from people whose job it is to constantly evaluate us and critique us, such as journalist and members of the financial community. Turn the tables and ask them some questions: about competitors, trends in the industry and what they think we should be most concerned with. As we throw ourselves into raw action, our senses and instincts will rapidly be honed again.”

3- “A strategic inflection point is when the balance of forces shifts from the old structure, from the old ways of doing business and the old ways of competing, to the new. Before the strategic inflection point, the industry simply was more like the old. After it, it is more like the new. It is a point where the curve has subtly but profoundly changed, never to change back again.”

4- “Of all the changes in the forces of competition, the most difficult one to deal with is when one of the forces become so strong that it transforms the very essence of how business is conducted in an industry.”

5- “When an industry goes through a strategic inflection point, the practitioners of the old art may have trouble. On the other hand, the new landscape provides an opportunity for people, some of whom may not even be participants in the industry in question, to join and become part of the action.”

6- “When a strategic infection point sweeps through the industry, the more successful a participant was in the old industry structure, the more threatened it is by change and the more reluctant it is to adapt to it. Second, whereas the cost to enter a given industry in the face of well-entrenched participants can be very high, when the structure breaks, the cost to enter may become trivially small.”

7- “I suspect that the people coming in are probably no better managers or leaders than the people they are replacing. they have only one advantage…the new managers come unencumbered by such emotional involvement and therefore are capable of applying an impersonal logic to the situation.”

8- “As these questions to attempt to distinguish signal from noise: 1) Is your key competitor about to change? 2) Is your key complementor about to change? 3) Do people seem to be “losing it” around you?”

9- “I call the divergence between actions and statements strategic dissonance. It is one of the surest indications that a company is struggling with a strategic inflection point.”

10- “Ideally, the fear of a new environment sneaking up on us should keep us on our toes. Our sense of urgency should be aided by our judgement, instincts and observations that have been honed by decades spent in the business world. The fact is, because of our experience, very often we managers know that we need to do something. We even know what we should be doing. But we don’t trust our instincts or don’t act on them early enough to take advantage of the benign business bubble. We must discipline ourselves to overcome our tendency to do too little too late.”

Regards,

Omar Halabieh

Only The Paranoid Survive

On My Years With General Motors

I recently finished reading My Years With General Motors by Alfred P. Sloan.

This is a true business classic. In this book Alfred Sloan shares his years of wisdom – while heading General Motors – in a variety of areas including planning, strategy, finance, leadership, innovation and management. Alfred was a true pioneer of his time in building the discipline of management and his approach is just as applicable now as it was in the early 1900s.

Below are key lessons in the form of excerpts that I found particularly insightful from this must read classic.

1- “I feel that a proper balance can and must necessarily be established in the course of time between the activities of any particular Operation and that of all our Operations together and as I see the picture at the moment no better way or even as good a way has yet been advanced as to ask those members of each organization who have the same functional relationship to get together and decide for themselves what should be done where coordination is necessary, giving such a group the power to deal with the problem where it is felt that the power can be constructively applied. I believe that such a plan properly developed gives the necessary balance between each Operation and the Corporation itself and will result in all the advantages of co-ordinated action where such action is of benefit in a broader way without in any sense limiting the initiative of independence of action of any component part of the group.”

2- “I am not going to say that rate of return is a magic want for every occasion in business. There are times when you have to spend money just to stay in business, regardless of the visible rate of return…Nevertheless, no other financial principle with which I am acquainted serves better than rate of return as an objective aid to business judgment.”

3- “The growth in the capital employed in General Motors reflects the progress of the corporation. In an economy based on competition, we have operated as rational businessmen, a fact I have tried to demonstrate with  close description of the development of our approach to management. The result has been an efficient enterprise. It should be noted that a rising successful economy like that of the United States is not only an opportunity, it is also very demanding on those whose ambition is to excel in it. “

4- “I believe that the franchise system (dealerships), which has long prevailed in the automobile industry, is the best one for manufacturers, dealers, and consumers.”

5- “The potential rewards of the Bonus Plan to ego satisfaction generate a tremendous driving force within the Corporation…To the recipient it is also an evaluation of his personal contribution to the success of the business. It is a means of conveying to the executive a form of recognition which he prizes independently of his monetary compensation.”

6- “It has been a thesis of this book that good management rests on a reconciliation of centralization and decentralization, or “decentralization with coordinated  control.” Each of the conflicting elements brought together in this concept has its unique results in the operation of a business. From decentralization we get initiative,  responsibility,  development of personnel, decisions close to the facts, flexibility – in short, all the qualities necessary for an organization to adapt to new conditions. From coordination we get efficiencies and economies It must be apparent that c-oordinated decentralization is not an easy concept to apply.”

7- “…To meet the challenge of the market place, we must recognize changes in customer needs and desires far enough ahead to have the right products in the rights places at the right time and in the right quantity. We must balance trends in preference against the many compromises that are necessary volume. We must design, not just the cars we would like to build, but more importantly, the cars that our customers want to buy.”

8- “I also hope I have not left an impression that the organization runs itself automatically. An organization does not make decisions; its function is to provide a framework, based upon established criteria, within which decisions can be fashioned in an orderly manner. Individuals make decisions and take the responsibility for them.”

Regards,

Omar Halabieh

My Years with General Motors

On Fast Food Nation

I recently finished reading Fast Food Nation – The Dark Side of the All-American Meal by Eric Schlosser.

The purpose of this book, about the fast food industry, is best summarized by the author within the introduction: “I do not mean to suggest that fast food is solely responsible for every social problem now haunting the United States. In some cases (such as the malling and sprawling of the West) the fast food industry has been a catalyst and a symptom of larger economic trends. In other cases (such as the rise of franchising and the spread of obesity) fast food has played a more central role. By tracing the diverse influences of fast food I hope to shed light not only on the workings of an important industry, but also on a distinctively American way of viewing the world.”

This book recounts the history behind the uprising of fast food to become a dominant force in our modern society. However, what most of us do not know is : “what lies behind the shiny, happy surface of every fast food transaction”. Eric goes on to investigate every aspect of the fast food industry: people, cattle, vegetables, health etc. The storytelling techniques that he uses throughout the book bring this expose to life. The stories are descriptive, personal and touching.

A very educative and enlightening read, and a rude (much needed) awakening about the food industry in general and the fast food industry in particular.

Below are key excerpts from the book that I found particularly insightful:

“The history of the twentieth century was dominated by the struggle against totalitarian systems of state power. The twenty-first will no doubt be marked by a struggle to curtail excessive corporate power. The great challenge now facing countries throughout the world is how to find a proper balance between the efficiency and the amorality of the market.”

“Today’s fast food industry is the culmination of those larger social and economic trends. The low price of a fast food hamburger does not reflect its real cost – and should. the profits of the fast food chains have been made possible by losses imposed on the rest of society. The annual cost of obesity alone is now twice as large as the fast food industry’s total revenues.”

“The right pressure applied to the fast food industry in the right way could produce change faster than any act of Congress. The United Students Against Sweatshops and other activist groups have brought widespread attention to the child labor, low wages, and hazardous working conditions in Asian factories that make sneakers for Nike.”

“Nobody in the United States is forced to buy fast food. The first steps toward meaningful change is by far the easiest: stop buying it. The executives who run the fast food industry are not bad men. They are businessmen. They will sell free-range, organic, grass-fed hamburgers if you demand it. They will sell whatever sells at a profit. The usefulness of the market, its effectiveness as a tool, cuts both ways.”

“Whatever replaces the fast food industry should be regional, diverse, authentic, unpredictable, sustainable, profitable – and humble. It should know its limits. People can be fed without being fattened or deceived. This new century may bring an impatience with conformity, a refusal to be kept in the dark, less greed, more compassion, less speed, more common sense, a sense of humor about bran essences and loyalties, a view of food as more than just fuel. Things don’t have to be the way they are. Despite all evidence to the contrary, I remain optimistic.”

 

Regards,

Omar Halabieh

Fast Food Nation

Wall Street Demystified

I recently read the book Wall Street – How it works and for whom – by Doug Henwood. This book can be downloaded (for free) from its website.

As the title indicates, this book is an introduction to Wall Street – how it works and for whom. The book is composed of seven chapters as follows:

1- Instruments: This chapter covers the range of instruments traded on Wall Street, such as stocks, bonds, derivatives, currencies etc.

2- Players: This chapter covers the main stakeholders including households, nonfinancial business, financial institutions, the government etc.

3- Ensemble: This chapter discusses how the markets are intertwined, with a focus on credit, finance and the economy, allocation etc. It also includes a sample trading week to put these concepts into action.

4- Market Models: This chapter presents the numerous financial models that have been devised to simulate the market. It also discusses features of these markets, namely efficiency, disinformation, noise, fads, and bubbles.

5- Renegades: This chapter discusses in detail the Keynesian view of the markets, as well as those of Marx.

6- Governance: This chapter is about Corporate Governance, with a section on the relation of Wall Street and the government.

7- What is (not) to be done?: This last chapter includes the author’s thoughts on a number of economic issues such as social security, the Fed, investing socially, taxation, corporate transformation.

The breadth of topics discussed within this book is commendable, backed by a plethora of references for further reading in areas of interest. Chapters 1 and 2, serve as a great introduction and primer on the financial markets. The insight, stories and practical example presented make this book accessible. A final, and important comment to keep in mind, is that the author presents the content of the book (particularly the later chapters) from a leftist perspective.

Regards,

Omar Halabieh

Wall Street

Out of the Crisis

I just finished reading Out of the Crisis by W. Edwards Deming.

Dr. Deming best summarizes the purpose of the book: “This book teaches the transformation that is required for survival, a transformation that can only be accomplished by man. A company can not buy its way into quality – it must be led into quality by top management. A theory of management now exists. Never again may anyone say that there is nothing new in management to teach.”

He then proceeds with outlining and subsequently detailing his “14 points for management”. These fourteen points, he argues, form the basis of the required transformation of the American industry:

“

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

6. Institute training on the job.

7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.

8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

11a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.

11b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

12a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.

12b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating of management by objective.

13. Institute a vigorous program of education and self-improvement.

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

“

While the book may seem dry at points, particularly if being read from cover to cover, it encompasses numerous gems in management. Particularly as it relates to the overall management of and leadership in quality and its importance to re-gain competitive edge.

Below are key excerpts from the book, that I found particularly insightful:

1- “This increase in production led to a new goal. The new goal will create questions and resentment among production workers. Their first thought is that the management is never satisfied. Whatever we do, they ask for more. Here are the fruits of exhortations: 1) Failure to accomplish the goal 2) Increase in variability 3) Increase in proportion defective 4) Increase in costs 5) Demoralization of the work force 6) Disrespect for the management”

2- “The job of management is to replace work standards by knowledgeable and intelligent leadership…Wherever work standards have been thrown out and replaced by leadership, quality and productivity have gone up substantially, and people are happier on the job.”

3- “Incidentally, computation of savings from use of a gadget (automation or robotic machinery) ought to take account of total cost, as an economist would define it. In my experience,  people are seldom able to come through with figures on total cost.”

4- “Quality must be measured by the interaction between three participants: (1) the product itself; (2) the user and how he uses the product, how he installs it, how he takes care of it, what he was led to expect; 3) instructions for use, training of customer and training of repairman, service provided for repairs, availability of parts. The top vertex of the triangle does not by itself determine quality.”

5- “There are two types of quality in any system, whether it be banking or manufacturing. The first is quality of design. These are the specific programs and procedures that promise to produce a saleable service or product: in other words, what the customer requires. The second type is quality of production, achievement of results with the quality promised. Quality control works both with the product and with the design of the product. And it is at this point that quality control begins to differ from the traditional system. To find the mistake is not enough. It is necessary to find the cause behind the mistake, and to build a system that minimizes future mistakes.”

6- “…Good agreement between independent results of two men would only mean they have a system. It would not mean they are both right. There is no right answer except by methods agreed upon by experts.”

7- “Figures on accidents do nothing to reduce the frequency of accidents. The first step in reduction of the frequency of accidents is to determine whether the cause of an accident belongs to the system or to some specific person or set of conditions. Statistical methods provide the only of analysis to serve as a guide to the understanding of accidents and to their reduction.”

Regards,

Omar Halabieh

Out of the Crisis

Keys to Small Business Success

I recently finished reading The E-Myth Revisited – Why Most Small Businesses Don’t Work and What to Do About It – by Michael E. Gerber.

The book revolves around a central idea, that there exists a myth (“E-Myth”) which states: “Small businesses are started by entrepreneurs risking capital to make a profit. This is simply not so. The real reasons people start businesses have little to do with entrepreneurship. In fact, this belief in the Entrepreneurial Myth is the most important factor in the devastating rate of small business failure today. Understanding the E-Myth, and applying that understanding to creation and development of a small business, can be the secret to any business’s success.”

To overcome this myth and it’s accompanying challenges, the author argues for the deployment of a Franchise Prototype model. It begins with the owner realizing that “your business is not your life…the primary purpose of your business is to serve your life, you can then go to work on your business, rather than in it”.

One might then ask him/herself, how do I convert my existing business into this new operational model? This is where the Business Development Program, comes into play. The program introduced by GERBER in this book is based on the execution of the following seven steps:

1- Your Primary Aim: ” What do I value the most? What kind of life do I want? What do I want my life to look like, to feel like? Who do I wish to be? Your primary aim is the answer to all these questions.”

2- Your Strategic Objective: “A very clear statement of what your business has to ultimately do for you to achieve your primary aim.”

3- Your Organizational Strategy: Structure the way the business is going to work, in other words creating the organizational chart – roles and responsibilities.

4- Your Management Strategy: “A system designed into your prototype to produce a marketing result.”

5- Your People Strategy: The way the “game” (vision/aim) is communicated to the team at the outset. This includes everything from the position contracts (organization chart), to operations manuals, to the standards for performance and accountability.

6- Your Marketing Strategy: Knowing who your customer is (demographics) and why they buy (psychographics)

7- Your Systems Strategy: The “set of things, actions, ideas and information that interact with each other, and in so doing, alter other systems.”

What sets this book apart is the analysis that the author performs, through a sample business, of issues small business owners encounter. This includes the different personas the owner takes on, as well as the evolution of the business through the maturity cycle. This analysis is what allows the readers to appreciate and embrace the proposed prototype framework that the author then introduces as key to success. A must read in the area of entrepreneurship and small business.

Regards,

Omar Halabieh

The E-Myth

Value-Based Leadership

I recently read the book  “The Endurance: Shackleton’s Incredible Voyage” by Alfred Lansing. While the story of the adventure itself is fascinating and highly recommended, the book is also filled with leadership lessons.

Here is a link to a great presentation by Dr. Michael Harris (Value-Based Leadership) that discusses leadership in general, and then focuses on the Leadership attributes displayed by Shackleton, as an illustrative example (along with brief background on the journey itself). The author of the presentation argues, and rightfully so, that the keys to Shackleton’s success relied on six key elements:

1) Planning and Calculated Risk

2) Team Building

3) Conflict Resolution

4) Communication

5) Flexibility and Agility

6) Leading by Example through Values, Courage and Optimism

These attributes were as much applicable then, during this epic adventure, as they are now for any current or aspiring leader.

What sets this book apart is that the lessons are left to the readers to extract and interpret, while captured in a thrilling story.

If you are interested in learning more about this heroic journey, please see the wiki page: , read the book and/or watch the movie .

Regards,

Omar Halabieh

Endurance: Shackleton’s Incredible Voyage

Ten Lessons From Great People Decisions

I recently finished reading Great People Decisions – Why they matter so much, Why they are so hard, and How you can master them – by Claudio Fernandez Araoz.

The book’s main premise is that “Making great people decisions is a craft, and it can be taught and learned”. Here are ten lessons I learned and excerpted from reading Great People Decisions:

Lesson 1: People Decisions Are Vitally Important to You and Your Organization

“If you prove to be skilled at solving “people puzzles,” your career prospects will almost certainly get brighter. Conversely, if you repeatedly fail to  get the right person in the job your career will suffer(…)Mastering great people decisions will do both. It will enhance and improve your personal relationships, and increase your professional satisfaction.”

Lesson 2: The Success Formula

“…The formula for career success includes at least four other factors (besides luck). They are: 1) Genetics, 2) Development, 3) Career decisions, and 4) People decisions. I am convinced that these factors reinforce and build upon each other, and create a multiplier effect. I also believe these different factors have different weights in our life.”

Lesson 3: People Decisions Are Hard

“Collectively, these factors  help explain why making people decisions is so damnably difficult: 1) Statistical Odds 2) Difficult Assessments a) Impact of assessment errors b) Unique jobs c) Changing jobs d) Intangible traits e) Inaccessible candidates 3) Psychological Biases a) Procrastination b) Overrating capability c) Snap judgement d) branding e) Evaluating people in absolute terms f) Seeking confirmatory information g) Saving face h) Sticking with the familiar i) Emotional anchoring j) Herding 4) Wrong Incentives a) Candidate circumstances b) Political pressures.”

Lesson 4: The Great Paradox

The majority of us are not equipped with the right tools to make great people decisions – “…we get little formal training in making the right people choices, both because of a lack of initial awareness about its importance and because of the false belief that this skill is not learnable. Then, when we’re in a position to learn from experience, we often can’t learn from experience. And to top it all off, we think we’re far better at people choices than we really are(…) And great people decisions need active management. They are less like a physical infrastructure, and more like money: They achieve their true potential only if you figure out how to deploy them effectively.”

Lesson 5: Knowing When a Change Is Needed

“In order to successfully implement a strategy, not only do the right leaders need to be chosen, but those leaders need to be aligned across the different hierarchical levels of an organization(…)Even when people changes are justified, it’s usually very difficult to implement them…your goal should be to define your decision-making process in advance, so that it will be as disciplined and objective as possible.”

Lesson 6: What to Look For

“1) Knowing what to look for is important because a) Some characteristics are better predictors of success. b) You need to focus youefforts. c) You will avoid discrimination. d) You will be faced with difficult tradeoffs among real candidates. 2) All of the following characteristics are important a) IQ (although most candidates for senior positions already have high levels b) Relevant experience, particularly for senior positions c) Emotional intelligence-based competencies, particularly for senior positions d) Potential, particularly for junior to middle-management levels e) Values, in all cases 3) A highly disciplined process must be followed a) Confirming the managerial priorities b) Identifying the key competencies required c) Clearly defining them in behavioral terms d) Agreeing on the required levels and relative weight for each key competence.”

Lesson 7: Where to Look: Inside and Out

“Large companies should continually invest in succession plans and inventories of talent and key competencies. In addition, special internal and external efforts should be made for specific needs, particularly at the top. Despite the proliferation of advertising options and the promise of the Internet, direct contacts continue to be extremely powerful. Clever sourcing is both an extremely effective and efficient way to identify highly qualified real candidates. In many cases you can generate most candidates on your own. Professional help can be useful for senior positions, new jobs, when you need to cast a wide net, or for confidentiality reasons.”

Lesson 8: How to Appraise People

“You can significantly increase your organizational capability in this critical area by: a) Selecting the right assessors b) Training them following proven practices c) Reviewing assessments before confirming the hiring or promotion decision d) Following up over time the results of these decisions, for individual as well as organizational feedback purposes.”

Lesson 9: How to Attract and Motivate the Best People

“Best practices for attracting and motivating the best people include a) First, understanding the candidate’s motivation, concerns, and alternatives b) Sharing your passion about the opportunity c) Paying competitively for the relevant market, without overdoing it d) Setting up the right incentives, with great care in their design e) Properly dealing with any special risks f) Having enough courage to do exceptional things in exceptional cases.”

Lesson 10: How to Integrate the Best People

” a) Companies can do several things to support integration: 1) Being proactive at internal communication and candidate preparation 2) Properly preparing the ground within the organization 3) Closely following up the process at regular intervals, monitoring the level of organizational support, relationship building, working of the business model, and setting the stage for early wins. b) Candidates should also take charge of their successful integration: 1) Ensuring the right sponsor 2) Realizing that the integration work is harder than expected 3) Asking up front for the type of organizational support required 4) Focusing on a few key areas 5) Properly managing expectations 6) Confirming the new team 7) Spending enough personal time with all relevant stakeholders.”

What are some lessons you have personally learned with regards to making recruitment and hiring decisions?

Regards,

Omar Halabieh

Great People Decisions

On The HP Way

I recently finished reading The HP Way – How Bill Hewlett and I Built Our Company – by David Packard.

As the title indicate this book is about the story of Hewlett Packard as told by one of the founding partners David Packard. This book offers a corporate history of how the company started from the infamous garage into a global enterprise, but more importantly focuses on the guiding principles on which this company was built – the HP Way.

What stands out in the HP Way is the deep commitment and belief in values and principles. These radiate from the founders and affect everyone and everything at HP. The HP Way covers all aspects of operations within the company and with external stakeholders (customers, shareholders etc.) in a way that transcends time and specific technologies (see below excerpts). Almost half a century later most of what is discussed is just as relevant than as it is now.

HP is currently in a desperate need to revive the HP Way and transform itself in order to turn itself around and succeed in the future. A highly recommended read.

Below are excerpts from the book that I found particularly insightful:

1- “…it has been a guiding principle in developing and managing HP. Get the best people, stress the importance of teamwork, and get them fired up to win the game.”

2- “We published a second version of the objectives in 1966 and they are as follows…1) Profit: To recognize that profit is the best measure of our contribution to society and the ultimate source of our corporate strength…2) Customers: To strive for continual improvement in the quality, usefulness, and value of the products and services we offer our customers…3) Field of Interest: To concentrate our efforts, continually seeking new opportunities for growth but limiting our involvement o fields in which we have capability and can make a contribution. 4) Growth: To emphasize growth as a measure of strength and a requirement for survival. 5) Employees : To provide employment opportunities for HP people that include the opportunity to share in the company’s success, which they help make possible. To provide them job security based on performance, and to provide the opportunity for personal satisfaction that comes from a sense of accomplishment in their work. 6) Organization: To maintain an organizational environment that fosters individual motivation, initiative, creativity, and a wide latitude of freedom in working  toward established objectives and goals. 7) Citizenship: To meet the obligations of good citizenship by making contributions to the community and to the institutions in our society which generate the environment in which we operate.”

3- “An important element of the HP Way has to do with the company’s relationship with its shareholders and the investment community. A primary objective in this area is to provide consistency in our corporate performance, including steady growth in earnings and equity.”

4- “At that time our policy at HP was to regard increased market share as a reward for doing things well – for providing customers with superior products and services and keeping our costs down. This has been a basic policy from the very beginning of our company, and we expect it to continue in the future.”

5- “The key to HP’s prospective involvement in any field of interest is contribution. Our objective is to expand and diversify only when we can build on our present strengths, and with the recognition that we have the proven capability to make a contribution. To meet this objective, it is important that we put maximum effort into our product-development programs. This means we must continually seek new ideas for new and better kinds of products.”

6- “The fundamental basis for success in the operation of Hewlett-Packard is the job we do in satisfying the needs of our customers. We encourage every person in our organization to think continually about how his or her activities relate to the central purpose of serving our customers.”

7- “…gains in quality come from meticulous attention to detail and every step in the manufacturing process must be done as carefully as possible, not as quickly as possible. This sounds simple, but it is achieved only if everyone in the organization is dedicated to quality.”

8- “It’s imperative that there be a strong spirit of helpfulness and cooperation among all elements of the  company and that this spirit be recognized and respected as a cornerstone of the HP Way.”

9- “Although we minimize corporate direction at HP, we consider ourselves one single company, with the flexibility of a small company and the strengths of a large one – the ability to draw on corporate resources and services; shared standards, values, and culture; common goals and objectives; and a single world identity.”

10- “I should point out that the successful practice of management by objective is a two-way street. Managers at all levels must be sure that their people clearly understand the overall objectives and goals of the company, as well as the specific goals of their particular division or department. Thus, managers have a strong obligation to foster good communication and mutual understanding. Conversely, their people must take sufficient interest in their work to want to plan it, to propose new solutions to old problems, and to jump in when they have something to contribute.”

Regards,

Omar Halabieh

The HP Way

On Built To Last

I recently finished reading Built To Last by James C. Collins and Jerry I. Porras.

This book is about visionary companies – ones that are built to last. These companies are defined by the authors as “”Visionary companies are premier institutions – the crown jewels – in their industries, widely admired by their peers and having a long track record of making a significant impact on the world around them. The key point is that a visionary company is an organization – an institution.”

The objectives of this book are best summarized by the following excerpt: ”In a nutshell, we had two primary objectives for the research project: 1) To identify the underlying characteristics and dynamics common to highly visionary companies (and that distinguish them from other companies) and to translate these findings into a useful conceptual framework. 2) To effectively communicate these findings and concepts so that they influence the practice of management and prove beneficial to people who want to help create, build, and maintain visionary companies.”

A great follow-up read to Collin’s Good to Great. Jim reveals what makes visionary companies tick, their culture, their core values and their audacious goals. The in-depth research and objective analysis are to be commended. Particularly the approach of comparing each of the companies discussed to their main respective competitor. This comparison helps anchor and exemplify the ideas presented. Furthermore, the call for continuous improvement and stimulating progress is stressed as a caution for visionary companies from falling behind (which some already have). A must read!

Below are excerpts from the book that I found particularly insightful:

1) “Built to Last, it turns out, is not fundamentally about building to last. It is about building something that is worthy of lasting – about building a company of such intrinsic excellence that the world would lose something important if that organization ceased to exist.”

2) “…Visionary companies distinguish their timeless core values and enduring purpose (which should never change) from their operating practices and business strategies (which should be changing constantly in response to a changing world). This distinction has proven to be profoundly useful to organizations amid drastic transformation.”

3) “In a nutshell, we had two primary objectives for the research project: 1) To identify the underlying characteristics and dynamics common to highly visionary companies (and that distinguish them from other companies) and to translate these findings into a useful conceptual framework. 2) To effectively communicate these findings and concepts so that they influence the practice of management and prove beneficial to people who want to help create, build, and maintain visionary companies.”

4) “…The continual stream of great products and services from highly visionary companies stems from them being outstanding organizations, not the other way around.”

5) “In short, a highly visionary company doesn’t want to blend yin and yang into a gray, indistinguishable circle that is neither highly yin nor highly yang; it aims to be distinctly yin and distinctly yang – both at the same time, all the time.”

6) “Profitability is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of the visionary companies. Profits is like oxygen, food, water, and blood for the body; they are not the point of life, but without them, there is no life.”

7) “…I firmly believe that any organization, in order to survive and achieve success, must have a sound set of beliefs on which it premises all its policies and actions. Next, I believe that the most important singly factor in corporate success is faithful adherence to those beliefs…Beliefs must always come before policies, practices, and goals. The latter must always be altered if they are seen to violate fundamental beliefs.”

8) “If an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself except [its basic] beliefs as it moves through corporate life…The only sacred cow in an organization should be its basic philosophy of doing business.”

9) “Indeed, the drive for progress is never satisfied with the status quo, even when the status quo is working well. Like a persistent and incurable itch, the drive for progress in a highly visionary company can never be satisfied under any conditions, even if the company succeeds enormously.”

10) “Big Hairy Audacious Goals…A BHAG should be so clear and compelling that it requires little or no explanation…A BHAG should fall well outside the comfort zone…A BHAG should be so bold and exciting in its own right that it would continue to simulate progress even if the organization’s leader disappeared before it had been completed…A BHAG has the inherent danger that, once achieved, an organization can stall and drift in the “we’ve arrived” syndrome…A company should be prepared to prevent this by having follow-on BHAGs…Finally, and most important of all, a BHAG should be consistent with a company’s core ideology.”

11) “…here are five basic lessons for stimulating evolutionary progress in a visionary company…Give it a try – and quick…Accept that mistakes will be made…Take small steps…Give people the room they need…Mechanisms – build that ticking clock.”

12) “The essence of a visionary company comes in the translation of its core ideology and its own unique drive for progress into the very fabric of the organization – into goals, strategies, tactics, policies, processes, cultural practices, management behaviors, building layouts, pay systems, accounting systems, job design – into everything the company does.”

13) “Lessons of alignment for CEOs, Managers, And Entrepreneurs: Paint the Whole Picture…Sweat the Small Stuff…Cluster, Don’t Shotgun…Swim in You Own Current, Even if You Swim Against the Tide…Obliterate Misalignments…Keep the Universal Requirements While Inventing New Methods”

14) “…as you walk away from reading this book, we hope you will take away four key concepts to guide your thinking for the rest of your managerial career, and to pass on to others. The concepts are: 1) Be a clock builder – an architect – not a time teller. 2) Embrace the “Genius of the AND.” 3) Preserver the core/stimulate progress. 4) Seek consistent alignment.”

15) “Building a visionary company is a design problem, and great designers apply general principles, not mechanical lock-step dogma. Any specific how-to will almost certainly become obsolete. But the general concepts – adapted of course, to changing conditions – can last as guiding principles well into the next century.”

Regards,

Omar Halabieh

Built To Last