Exceeding Your Business’s Potential

Andrew Carnegie was one of the world’s wealthiest men. In 1901, his fortune was estimated at $480 million. That’s the equivalent of $10.8 billion in today’s dollars.

As America’s dominant steel industrialist, Carnegie was considered to have a natural genius for business. Yet he claimed to know practically nothing about the steel industry. He said that he just knew some basic business principles.

Much of Carnegie’s success can be attributed to surrounding himself with the right people, especially Henry Bessemer, a steel-making expert. He was also indebted to a host of other brilliant and talented experts in manufacturing, banking, sales, and distribution.

Carnegie didn’t try to hide this. In fact, he was the first one to admit it. On his gravestone, his epitaph reads, “Here lies a man who was able to surround himself with men far cleverer than himself.”

The same can be said of John D. Rockefeller, whose oil fortune was partly a result of business decisions made by Henry Flagler and a dozen other senior executives who worked for him.

And Henry Ford is famous for saying that his success was due not to knowing how to do things himself but to knowing people who could do them.

In my own career, I’ve known many businesspeople who exceeded their personal potential by surrounding themselves with superior people. I’ve also known businesspeople who achieved a certain degree of success … and leveled off there, because they were afraid to let their business grow beyond them.

Just the other day, I had lunch with a very bright and accomplished woman who wanted to talk to me about making a career move. She is currently running a division of one of our major competitors. In the past 10 years, she has tripled the size of the business and quadrupled the profits. She is making a very good income and enjoys all sorts of bonuses and perks.

“It seems to me that you are at the top of your game right now,” I noted. And you are working for a fine company.”

She agreed.

“So why are you talking to me?”

“It’s simple,” she told me. “My boss is a great guy and a brilliant man, but there are all sorts of things I want to do – things that will grow the business and make it more interesting. And he is refusing to let me make those changes.”

Since I know her boss, I felt confident that her complaint was valid. He is an excellent businessman – but he has very particular ideas about how the business should work, and he won’t tolerate any that diverge too far from his own.

“I’ve already got two other offers,” she told me. “If you don’t offer me a job, I’ll go somewhere else. You wouldn’t be stealing me. I am leaving.”

Her boss is losing a terrific employee, because he is not willing to have his business grow beyond the path he has personally charted. This is a limitation that will have one main benefit: The business will continue to maintain the personality that he gave it. But it will have one major drawback too: It won’t grow much bigger than it already is, because most of the superstars who are working for him will get frustrated by the limitations and go to work for someone else.

My main client owns a business that is run according to a very different philosophy. Although the principals have some very definite ideas about how the business needs to grow and develop, we give the profit center managers nearly complete freedom to come up with new products, promotions, and offers. The only restrictions are that all legal and accounting matters must be run through headquarters. Other than these two understandable limitations, the people who run the various parts of the business feel very comfortable taking our advice … or leaving it.

Our laissez-faire, free-market management philosophy caused a certain amount of disorder and confusion while the company was growing. But the majority of the most annoying problems have been gradually worked out. Today, the business is bigger, better, and more profitable than we ever expected. What’s more, it continues to grow and prosper with very little input from us.

When you have the courage to hire the very best and brightest people (sometimes even better and smarter than you) … and you give them the freedom to learn your business quickly (i.e. the freedom to make lots of mistakes) and then use their own judgment to develop it … you will be rewarded with a business that is not just bigger and more profitable than you would have created yourself, but much easier to manage, too.

How do you find, keep, and motivate these superstars? Here’s my advice:

1. Invest in your top performers.

Spend time, money, and educational resources to locate, hire, and train superstar employees. Don’t leave this to chance.

2. Keep trimming the branches.

Fire your weakest employees and replace them with stronger ones. This should be a never-ending process.

3. Treat your people well.

By this, I mean do what you think is best for them. And for some employees in some situations, that means being tough.

So forget about all the crap you read that advises all the soft stuff. Do what you have to do to make your best people work harder than they’ve ever worked for anyone else. Praise them when they do well – and praise them publicly when it’s appropriate. But don’t do so programmatically. And don’t be afraid to criticize them either. Superstars don’t need to be coddled, manipulated, or managed. They need a challenge – and they are willing to accept criticism for their handling of it so long as the criticism is fair.

4. Most importantly, give your best people good work to do … and a lot of it.

Money is not the biggest motivator for most top performers, but don’t ignore it. Pay your superstars at least 10 percent more than market – but don’t overpay them in the false belief that doing so will keep them loyal.

The ultimate reward for a superstar is the pleasure he gets from doing a good job. Make his work interesting, complex, and difficult – and he will never leave you.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]