The Vital Difference
The greatest strength of this country has always been the freedom and opportunity it provides to all its citizens to rise in life as high as their aspirations and effort can carry them. During the early decades of American history, this strength remained largely in potential, conceded in principle for all but recognized as a real possibility only for a minority and actually realized in their own lives by just a few individuals who possessed some exceptional talent or made an extraordinary effort. There were very few Thomas Edisons, Andrew Carnegies, and Henry Fords even a hundred years ago.
But this is no longer true. Today the possibility of unlimited achievement has become real in the minds of most Americans, a fervent aspiration in the hearts of many, and an actual realization in the lives of a significant number. The highest levels of education, social status, political power, and commercial achievement have been attained by thousands and tens of thousands of people whose ancestors immigrated to the shores of America a century or less ago, outcast, impoverished, and illiterate. Today there are more highly educated people in every small town than most states contained a hundred years ago. In 1870 only one doctoral degree was conferred in the entire United States. In 1970 more than 29,000 were conferred. Today there are more important and influential people in every major city than the entire nation once contained. The number of M.D.'s has increased nearly 6-fold in the last century and the number of dentists 15-fold. From 1900 to 1970 the number of engineers increased 40-fold. Many companies have made almost as many millionaires in the last few decades as the whole nation produced during the entire nineteenth century. Apple has traversed the ground between a garage-scale operation and a multi-billion-dollar corporation in 8 years, arriving in the exclusive Fortune 500 club faster than any company before it and making more than a hundred of its employees millionaires in the process. Tandem Computers, Inc. produced at least 25 millionaires while climbing to the Fortune list in just a decade. Nor are the achievements confined to electronics. Federal Express grew from nothing to a $1.4 billion business in just 13 years.
All this goes to show one thing: Opportunities in every field are greater today than ever before. And if we still persist in being more conscious of the obstacles than we are of the potentials, it only reflects the limitations imposed by our vision and our attitude, not the actual limitations to our growth. At the turn of the century, there were about 50 major corporations in the United States. Today Fortune lists 500. In another 50 years, there may be 5,000 or even 50,000. There is no inherent bar to growth, because growth is creative. It creates new opportunities, new technologies, new markets, and new wealth, which support further growth.
Apart from statistics, there are other facts right before our eyes that we usually ignore. When a market is expanding, many companies prosper, but not all. Those that fail in a buoyant market are labeled incompetent or unfortunate. When a market is shrinking, many companies fail, but not all. Those that survive in a period of declining market are labeled efficient or lucky. But what about companies like IBM, Sears, Delta, Marriott, Northwestern Mutual, and General Mills, which have not only survived during harsh times but continued to expand? All our labels prove inadequate. We can dismiss as luck a company's growth through one or two troublesome periods for its industry or the economy as a whole. But we cannot explain away the fact that of the top ten companies on Fortune's most admired list in 1984, only one of them ever reported an unprofitable year, and that was way back in 1921. Where we cannot attribute someone else's success to luck, our next recourse is to concede that it was accomplished by people of extraordinary genius or talent. We have been at pains to show, as Edison said, that genius is mainly a question of hard work.
Still it is very difficult to conceive that those individuals and companies that have achieved phenomenal success and multiplied it thousands of times over decades do not possess something extraordinary. And, in fact, they do. It is not an extraordinary ability, it is an extraordinary knowledge. In some, that knowledge is partially or completely unconscious. It is expressed as a feeling or a hunch or strikes them as just plain common sense. But if you closely observe the lives of America's most successful corporations and do not get caught up in their words and strategies and explanations, you will find that their success falls into a pattern and follows the process that we have described in this book.
Development of Corporate Personality
Energy is converted by an organization into products and services for customers, welfare and well-being for employees, profit for shareholders, and service to the national economy or the society at large. Profit is the easiest of these results to measure, and therefore, it is the clearest index of corporate success. But actually, successful companies tend to produce all of these results in far greater measure than average companies do. In Chapter 3 we quoted statistics to show that this is true even of their contribution to society.
But these are not the only expressions of energy in a company. Energy can be converted into short-term material results. It can also be invested and absorbed by the organization for its own development, for the growth of its personality and capacities, just as an enormous amount of energy is absorbed and invested in the development of a child's body and mind.
We recognize that the primary purpose of childhood is for the child to grow and to develop its personality, not to achieve any immediate success in life. All its achievements later in life depend on and are limited by that early development. Even after the body is full-grown, we recognize the importance of a continuing investment of energy to increase one's knowledge and skills. When you stop growing, you start dying. Yet in the lives of companies, we focus on material results from day one and usually neglect the most critical task of allthe development of the powers and capacities of the corporate personality. Ultimately it is the strength and capacities of that personality that set the limits on corporate achievement. For sustained corporate success, there must be an ongoing and continuous effort at corporate self-development.
And the force and consistency of that effort, through the years and through the generations, is what makes the vital difference between companies.
A corporation grows as its personality develops. The development of corporate personality involves two movementsthe release of latent energies from the components of the company and the conversion of that energy into productive power.
In companies with a well-developed corporate personality, energies are released by the psychic center when it takes an expansive attitude or adopts higher values for implementation. Once the energy is released, the psychic center sets the direction for the conversion of those energies into productive power by the rest of the corporate personality.
But not every company has a mature personality, and no company begins its life with one. Personality has to develop over time. In the early stages, the release of energy and its conversion into power through value implementation are done by the founder or a dynamic CEO, who lends his or her own personality to the corporation for its development. The founder or CEO taps the potentials of people, organization, technology, the market, and capital and utilizes the energy they contain to raise the level of value implementation in the company and launch it on a period of rapid growth.
The decision to adopt a higher value and implement it requires enormous energy. Therefore, energy is an essential prerequisite for value implementation. On the other hand, the adoption of higher values also releases energy, and the implementation of these values harnesses the enormous latent potentials of the company for its growth.
The release of energy from the components, the implementation of higher values, and the development of the corporate personality are actually three inseparable aspects of a single process, which occur simultaneously and complement one another.
When raw energy is generated and released, controlled and disciplined, organized and refined, harnessed and utilized for the development of the corporate personality, it is converted into organizational power. When sufficient power collects and is gathered, focused, and directed for the translation of high corporate values into physical practices, that power is expressed as a solid mass of radiating intensity like that observed in mature, highly successful companies. The constant conversion of energy into intensity for the continuous development of the corporate personality and the perfection of all its activities is the process that generates sustained corporate success. That process has been described previously in this book. It consists of movement in two directions: from action to ideal and from ideal to action.
In every action, we release and express energy. By giving greater attention and concentration to each action, we execute it more perfectly. The energy is upgraded into skill. Each single skilled movement is only one link in a series of actions. By systematically linking skilled actions with the proper timing and sequence, the activity can be accomplished far more efficiently. The skilled acts are combined to form systems. Isolated systems of skilled activity can be coordinated and integrated with other activities to form an organized and unified whole. Systems are united to create an organization. This mass of interrelated and interconnected systematic activities needs to be controlled, coordinated, and directed from a common center. As an organization becomes more integrated and unified, it develops a psychic center, which determines its direction and guides all its activities. The upward movement from raw energy to skilled action to systematic activities to coordinated and integrated organization to creation of a psychic center is the process by which personality develops through action.
The process also moves in the other direction. The ideal values or goals of the psychic center are transmitted down through the organization to be expressed as more perfect actions. The psychic center accepts a new value or goal, or it increases its commitment to the values and goals it has previously accepted. It translates that commitment into an enthusiastic determination to upgrade its own performance. It then creates new organizational structures, standards, rules, and systems to achieve higher performance on the value; or it upgrades existing structures, standards, rules, and systems to the level required. It acquires new or improved skills that are necessary. Finally it expresses its higher level of commitment, organizational capacity, and skill as improved physical performancebetter-quality products or technology, faster service, cleaner facilities, better-maintained equipment, and so on. The results of this process are higher sales and profits, more satisfied customers and employees, and a contribution to the economic or social development of the nation.
The entire process can be reduced to five key ingredients:
1. A committed management and skilled, enthusiastic staff.
2. A systematic and coordinated organization.
3. Superior technology and quality products.
4. A harmonious relationship with the market.
5. Optimal and creative utilization of financial resources
When any of these components is raised to a higher level, it is as a result of the process described above, even though a company may not conceive of it in these terms when it acts. The growth of any one component increases the overall capacity of the corporate personality; but unidimensional development of one part can have only limited benefit for the whole. Growth must be balanced and harmonious in order to be continuous and yield maximum results.
By raising the other components up to restore harmony with the fastest-growing part, the organization expands in capacity and grows even further. By continuously adopting higher levels of value implementation as the goal and following the steps outlined in Chapter 12, each part can be continuously raised higher. More and more energy is generated, transmitted, and converted by the corporation, producing greater material results and greater growth of the corporate personality. When the process is continuously followed, endless expansion and enduring success are the inevitable result.
Converting the Process into a Method
The process we have described here with reference to the development of corporations is the same process by which individuals and societies grow and evolve. It is the process of human development. This process occurs spontaneously, inevitably, and irresistibly whenever the essential conditions for it are met, just like a chemical reaction. But normally the development of personality is slow, sporadic, and partial, because all the essential conditions for growth are not always present or not present in the proper proportions and combinations or not blended together in the proper manner by force of circumstances.
In other words, the process occurs unconsciously and incompletely. Some energy is released by external conditionscrises and opportunities. Some values are implemented partially and haphazardly by force of necessity or to improve performance. As a result, the organization moves forward, bounds upward to a higher level, and again levels off.
This is the process by which the corporate personality evolves naturally and unconsciously. It is a process initiated from outside, which results in an inner growth. But the same process can also be consciously initiated. It can be initiated from within by the psychic center to the degree that the psychic center is developed and is conscious of the process. This is what happens to some extent in mature companies like Northwestern Mutual when they set for themselves a greater challenge in the absence of compelling outer circumstances. The process leads to growth of the company and further development of the corporate personality.
When the process becomes fully conscious and is consciously implemented, it is converted into a method for continuous development of the corporate personality and expansion of the company. Since the conscious method is more complete than the unconscious process, the growth is greater and more rapid.
In the early stages of corporate evolution, the psychic center is not developed enough to consciously initiate this process on its own. It can only respond to external events. But a founder or CEO with a developed personality can lend a personality to the company and initiate the process of growth to the extent that the CEO knows it.
For growth to become a permanent and enduring feature in the life of an organization, this process must be institutionalized. What has been done at times by the founder or a CEO must become a permanent activity of the psychic center, continuously releasing and converting energy for endless expansion and enduring success.
Where to Begin
This process can be utilized by every company. How the process is utilized depends on where you want to go and how serious you are about getting there. It depends on your goal and your willingness to make the effort required to achieve it. Though the process is relatively simple, the effort is arduousit is in direct proportion to the height of the goal. A tenfold expansion requires a tenfold greater effort.
No hardworking person is suddenly capable of a tenfold greater effort than before. But all are capable of improving the quality and quantity of their effort to 100 percent of their capacity and sustaining it at that peak level if they really want to. The effort to achieve and maintain performance at peak capacity releases, not tenfold, but a hundredfold greater energy over time. The key is to fully exhaust the present capacity.
For those who are willing to make that total effort, there is no limit to the goals they can achieve, no end to their expansion. But there are several preconditions for that effort.
Choose your goal. The decision must be complete, the commitment total, the willingness enthusiastic.
Know what it involves. You must conceive of the amount of effort required to achieve the goal and be willing to make it. You must recognize all the skills needed to realize the goal and be ready to acquire them. You must understand the type of organization demanded for that higher level of functioning and be ready to create it. You must be aware of the higher level of motivated staff the achievement demands and be willing to raise people's enthusiasm to that level. You must know the values that can help you realize the goal and enthusiastically accept them.
Learn the process. Growth is usually achieved without understanding. Understanding comes later. But when knowledge of the process precedes experience, the process is far easier, and the progress is much more rapid. The process has to be conceived in practical terms, as it has been described in Chapter 12.
Work happily to achieve it. Growth is fastest, easiest, and greatest when the effort is made happily and wholeheartedly. High results are hard to achieve with a grudging or complaining attitude. The effort itself should become self-fulfilling and self-rewarding.
Implement comprehensive strategies. To achieve your highest goal, implement as many of the following strategies as you can. The more you implement, the faster and farther the growth.
1. The CEO should endeavor to become a significant individual.
2. Encourage every manager to become a significant individual.
3. Implement all the corporate values completely in every department and activity of the company.
4. Create and implement a plan for maximum development of all the potentials of people, organization, technology, market, and capital.
5. Upgrade all substandard operations to the level of maximum efficiency and energize all efficient operations, so that performance on every one of the company's 500 to 1,000 functions is improved in some measure.
6. List all the functions of the company and arrange them in a hierarchy of levels. Place each function in its proper order of sequence and identify all the other functions with which it should be coordinated or integrated in order for operations to be perfectly harmonious. Using this list as a goal and the present operations as a starting point, work out a step-by-step action plan for increasing the level of coordination and harmony at all points.
7. Identify the highest multiple of growth that you believe the company is capable of achieving and you are willing to work for. Draw up a detailed plan of how the company would be constituted and function if that goal were achieved. Compare that plan with the company's existing level of functioning. Work out an action plan to bridge the gap between the two.
Not every company is in a position to make a comprehensive effort for growth at a particular point in time. If conditions do not permit implementation of comprehensive strategies, the same method can still be utilized to double a company's present level of profits. Partial strategies such as the following should be considered:
1. Take any one value and implement it to the highest level of perfection conceivable in every single aspect of the company's functioning, as Du Pont has implemented safety and Marriott has implemented systems.
2. Or take every corporate value listed in Chapter 3 and increase the company's level of performance on each one by 5 percent to 10 percent.
Small Steps Leading to Great Results
For immediate gains that are disproportionate to the effort required, implement as many of these isolated strategies as possible:
1. Increase slightly the level of attention given to people at all levels.
2. Improve slightly the quality of products and/or raw materials.
3. Raise the average level of education in recruitment.
4. Impart one new skill to each manager and worker.
5. Improve coordination of two major systems or coordinate all systems that relate to a single activity.
6. Offer incentives for continuing education or training, innovation in technology, innovation in office or production procedures, and/or greater knowledge of the market.
Some things are good in themselves, regardless of whether or not they are expressed; knowledge is one of them. We believe that even an understanding of the process described in this book can make an individual a better manager and a corporation a better company.
There is an inexhaustible potential within the organization. It is inexhaustible because the more it is drawn from, the greater it grows. The more enthusiastically it is tapped, the more it increases at its source. The more it is enjoyed, the more it expands.
People and companies have grown to where they areand they continue to developby drawing from this boundless potential. Those who have used this potential to unleash the powers of sustained corporate success have learned how to make a vital difference, in their lives and in the lives of their organizations. The first qualification is to want it. The more you want it, the more you grow. The more conscious you become of it, the more it beckons you to further growth. That is the essential message of this book.