Start Your Engines: The Last BBA Lecture (Part 3: The Human Side of Business)
In an interesting twist of the college schedule, I had the privilege of giving the BBA seniors in my capstone course their last-ever lecture in college. Knowing this, I decided to recap the most important things they learned in business school. (Part 1; Part 2)
Part 3: The Human Side of Business
Drucker was famous for saying that “culture eats strategy for breakfast,” but never underestimate the value of a healthy breakfast! Design your strategy in accordance with your sustainable and unique value proposition, but then make sure that the structure and culture you create for your company are consistent with your strategy. Remember that the cultural principles that you instantiate when you start the company will dictate who joins it, and your people will both uphold and update those values, as will the future stakeholders of your business.
Remember, too, that you need to be careful about what you incentivize your people to do, and act as though every stakeholder relevant to your company seeks to maximize his/her own profit. As such, if you incentivize your company to be conservative and maintain consistency, you will develop a hierarchical structure that protects the core of your business. But, if you reward creativity and innovation, you will have a flat and flexible company that can respond to changes in the market, even though it may not have the same consistency and dependability of other firms.
People really are your most important assets, and you need to do far more than provide lip-service to that principle. More than your machines or your technology, the most money, time, and effort should be put towards maintaining your people in top working condition. Keep Maslow’s Hierarchy in front of you, and know that, just as the value your company creates enables people to climb the hierarchy, the work that people do in your company is part of their self-actualization and self-transcendence processes. Unimpeded, all human being pursue self-actualization and self-transcendence, and getting high performance and creativity out of employees depends in large part upon the firm’s ability to remove obstacles from its employees’ pursuit of their best selves.
And always, always follow Davis’s Rule of Firing: Never fire someone you cannot arrest or sue.
It’s crucial to treat business as the human endeavor that it is. Numbers are critical, and should never be ignored, but numbers are only as good as the contexts that create them, which include the measurement tools, the theories that build the measurement tools and analyses, and the premises that underlie the use of those numbers. Decisions made only by the numbers lack discretion and wisdom, if only because numbers can tell only so much of the story. Correlation is not causation, and even highly-verified research findings tell you nothing definitive about the individual in front of you. Be aware of the limitations of any decision-making procedure, and respect the possibility of error, statistical or human.
Thus, use evaluations as an opportunity to shift and adjust instead of making irrevocable decisions — any review, be it of a product/service, employee, or supplier, should be for coaching/developmental purposes only, and never for a decision to continue or discontinue. The decision to continue or discontinue should be rooted in whether all parties profit from the transaction or continued relationship, and evaluation should be used to assess how to maximize the profit of all parties. If it is found that one of the parties does not, and cannot profit, from the relationship, then the relationship needs to be renegotiated, and potentially dissolved based on the evidence and potential available to all parties.
Business is a human endeavor, and as such the Silver Rule of Business has a human side, as well. Put yourself out of business (and into a better one) before your competitors do translates to Put yourself into a better endeavor before competitors box you out of your own market. To put that in humanistic terms: Never stop pursuing self-actualization!