“Inward” Vs “Outward” Business Management

“Everything which is properly ‘business’ we must keep carefully separate from ‘life.’ Business requires earnestness and method; life must have a freer handling.”Goethe (Elective Affinities, 1809)

According to Inc. magazine, Ed Ossie built MTW Corp. (a consultant to web-based businesses) into a very successful company by creating a “people-first” culture there. “People-first” management means that the needs and ambitions of the employees (he calls them “stakeholders”) guide the company’s growth. Their interests are the company’s No.1 concern. According to the article, Ossie has brought the company from $7 million in 1998 to $40 million last year. The number of stakeholders during that period has increased from 50 to 215, and Ossie expects to add another 85 people this year.


“People want to be heard,” says Ossie, “and if you can communicate to someone that you not only heard him but you understood what he said, that’s the greatest affirmation you can give another person.”


Affirmation? That doesn’t sound like the way a CEO should be thinking. Or talking. I won’t be holding any stock in MTW.


Don’t get me wrong. I believe in supporting your employees, in giving them a good place to work and in listening to their suggestions. But I don’t believe in catering to their personal interests. I don’t believe it’s my job to help them feel “affirmed,” whatever that means.


Business has a purpose, and that purpose is to make a profit. If you don’t pay attention to that primary purpose, all the other stuff can’t be done anyway. So what is going on with Ossie? And how do I explain his success? Here’s my take on him.


Ossie’s conversion to feel-good business management took place afterward. To succeed at IBM — to take his division from a start-up venture to an operation with 1,500 people in 20 countries and revenues topping $20 million — he took a more traditional route.


For example, he worked almost nonstop. He flew 2 million miles, left more than a few bodies on the workroom floor, and neglected his family so much that his wife divorced him. Later, confused about all the carnage he’d caused, he came upon Jeff Pfeffer, a Stanford  professor, who wrote “The Human Equation: Building Profits by Putting People First.” Ossie listened to Pfeffer’s message, and he fell in love.


That’s understandable after all he went through. Everyone wants to be a nice guy.


You know where I stand on this issue: You do neither yourself nor your employees a favor by running an inward-looking business. Your business is not about you. And it’s not about your employees either.


It’s not about making you or your employees happy or smart or rich or affirmed. You may get such benefits as a consequence of your business, but that is not the purpose of your business.


The purpose of a business is to make a profit by providing or selling a product/service. The way to make the business work is to focus all your energies on making the product/service better and the selling more effective. You do those things by studying the product and learning and caring about the customer. In other words, the way to run a successful business is to look outward — toward the product and the customers — and not inward — toward yourself and your employees.


There is an irony at play here, and it’s related to a larger ironic truth we discussed before. If you spend your energies trying to make yourself happy, you will be eternally frustrated. If you direct your energies toward pleasing other people, happiness comes to you.


The same is true in business. If you run your business to provide affirmation to yourself and your employees, you will get none of it. But if you do everything you can to make your customers more satisfied, you will enjoy good profits and feel good about them.


This is the kind of message that rubs a lot of people the wrong way. So if you have a different view of it and want to tell me about it, post a message on the ETR Bulletin Board (www.earlytorise.com).