What Drives a Great Company: The People or the Process?

Running a company is not an easy task particularly if it is being run by  a tyro businessman. Making it great on the other hand is such a herculean task more so when he has so many things to put in balance failing which it will fail within the shortest possible time. The share number of companies that have started and collapsed all over the world is alarming. How then do you build and run a successful company in a free market system that provides us all with more opportunities to fail than to succeed? Is there a template or model of greatness the presence of which in any company would indicate with a degree of certainty the success of such a company and the absence of which would indicate a company that is not likely to pass the test of time?  

There has therefore always been a contention as to what distinguish a great company when emphasized between the people producing the result or the process of producing the result for the company. Is it the talents within the organization that drives it that makes it great or the system that drives it? Research on organizational behavior has shown that identifying what truly drives a company between the people and the process goes on to make it outstanding. It is what will make it outlive the founder. It is what will make it a profitable company.

Let us first put the two in proper perspective and then critically identify which out of the two can make an organization thrive and outstanding.

What is a people dependent company?

David Ogilvy in his book ‘David Ogilvy on Advertising’ advised that people should use the ‘Russian Doll Principle’ while hiring. What this translates to is that when hiring talents, you should always hire people bigger and better than you to run your business, adding that if this is done you’ll end up with a company of “giants’. However, on the contrary if you hire people smaller than you, you’ll end up with a company of “dwarfs”. By saying this, Ogilvy was not referring to physical size but the skills, integrity and ability. Therefore if you hire great people, your business becomes great and your life becomes easier. Hiring the wrong people on the other hand will make life and work harder and more frustrating for your business.

A people dependent company therefore is one that depends on its talents to thrive. It is one that is driven by its people. It is the technicians that practice what they know how to do best that makes the company outstanding. The outstanding results produced by the business are dependent on the work of the abundance of talents and experts within it. The company therefore makes it a duty to engage the right talent.  They will go to any length to employ the best. In people oriented companies the people are therefore the most important assets.

What is a process/system dependent company?

The process/system is said to be ‘a set of procedures or steps that you build into your business to ensure a predictable outcome each time and every time.’ Michae E Gerber observed that ‘by working on your business as opposed to working in it, you will develop processes/systems in all areas of the business – sales, production, marketing, distribution etc.’ Overtime, the business will become a well oiled machine needing only occasional adjustment for changes in the market, competitive environment or customer demand. The system therefore offers the businessman the unique opportunity to get the freedom that he went into the business to achieve in the first place. With systemic thinking, the businessman can implement and maximize all good business ideas each time and every time.

A process dependent company therefore is one that is driven by processes. Processes come about through innovation that has been quantified and orchestrated with a view to identifying the best way of achieving result or the best way of doing the work. Through innovation, quantification and orchestration the work would be organized into a replicable system such that the result you intend to produce can be achieved in exactly the manner you wish them to be. The way people produce extraordinary results are identified, repeated and then leveraged into processes/systems. Consequently, the outstanding replicable results and outcomes can be produced as often as the organization desires. In system/process dependent companies, the system/process is the most important asset.

What then drives a great company?

To answer the question “What drives a great company?” we will turn to Michael M Gerber. In his book “The E Myth Manager”, he opined that “the process and not the people distinguish a great company”.

This is a view I share too and for the following reasons:

1.       In a people dependent company, the main assets (which are the people) go home every day. Whereas in the system dependent organization the assets which is the processes are there all the time.

2.      In the people dependent company, the attention is on who is doing the work rather than how the work is being done. This is not the case in a process oriented company. The focus of attention is usually on how the work is being done.

3.      In a people oriented company, anytime an expert resigns or fall sick, the company is in trouble. In the process dependent company however, since the attention is on how the work is being done, operation manuals are usually available which makes people of less skill capable doing the job after undergoing required training.

4.      Human beings are generally difficult to manage. Therefore in people oriented companies, management of the people is usually a problem. This is not the case in the process oriented organization. The management manages the system rather than the people.

5.      In the people dependent company emphasis is placed on attracting the right talent at whatever cost to the business. Talents (especially passive talents) who are not desperately in search of work tend to play hard to get which consequently escalates the cost of recruitment. With a system in place however, average talents could be trained to do the job especially with the availability of operation manual which details the various procedures and tasks expected of a particular position.

From the foregoing, it is evident that what distinguishes a great company is actually the process put in place to achieve results rather than the people employed. Employing right talents is good. However, identifying how the right talents can achieve results with a view to replicating it and using it as regularly as a company desires (which is what process does) is much better. Greatness comes with achieving desired results as often as a company desires. With the system in place, the desired outcome will be replicated as often as it is required. Predictability is therefore the norm. This is the hallmark of a process dependent company and of course is the model that should be copied by any company aspiring to achieve greatness.

Besides, the small scale business cannot afford to attract and employ the best talents out there in the labor market (active or passive). The small scale business will therefore be in a better position to innovate and create systems, employ average workers who they could then train to run the system and in the process produce great outcomes. By doing so, their companies will become as great as they wish, believe me.

These however are my views. What about you? Comments are welcomed.