Jennings traveled the globe in search of the fastest growing companies in the world for his book It’s Not the Big That Eat the Small —It’s the Fast That Eat the Slow. Next, he and his research team studied more than 40,000 companies and identified the ten most productive companies in the world for his bestselling book Less Is More. Then, following two years of research, he profiles in his latest book, Think Big, Act Small, the leadership of the only ten companies in the world to have grown both revenue and operating profits by ten percent or more annually for ten consecutive years.
Morris: What prompted you to write Less Is More?
Jennings: As its subtitle correctly indicates, I wanted to study and then explain how great companies use productivity as a competitive business tool but of even greater importance to me, I wanted to share the lessons to be learned from the most efficient and productive that anyone or any company could follow. In other words, how to get more done with the same or less!
Morris: Where did you begin?
Jennings: First, I want to point out that all of the research for all of the books with which I have been associated is conducted by a “dream team” of associates who share my guiding principle that no one is less important than the author. I acknowledge all of them by name in each of the books.
OK, where did we begin? First, we agreed on the criteria for selecting the companies included in the book: revenue per employee, return on equity and return on assets, and operating income per employee. Then we added two other considerations. First, has the company been overexposed? Nokia, Southwest Airlines, and Harley-Davidson made our final cut but were not the subject of extensive in-depth research by the team. Also, might this company pull an Enron? We were eager to avoid the embarrassment of selecting and praising a company such as Enron that went from being America’s high-flying seventh-largest company into a Dumpster in a matter of months.
Morris: Then what happened?
Jennings: The research began and continued through several “cuts.” Prior to the final selection, several pit bulls (cleverly disguised as CPAs) sank their teeth into the companies’ public data with the admonition to take it apart, put it back together again, and provide as much assurance as possible that each of the companies was strong and likely to endure. Here are the eight we finally selected: IKEA, Lantech, Nucor, Ryanair, SRC Holdings, World Savings, Yellow Freight, and The Warehouse.
Morris: That’s quite a diverse group. Earlier you referred to lessons to be learned from the most productive companies. So what did the research reveal?
Jennings: Actually, a great deal…and all of it really is relevant to any organization, whatever its size and nature may be. For example, as I traveled throughout and beyond the United States while helping to obtain the information needed, a single indisputable fact kept confronting me: Unlike other companies, all productive companies know the difference between tactics and strategy. That difference is the foundation that allows them to stay focused and build remarkable companies. They have institutionalized their strategy. Each has a simple BIG objective. Jim Collins calls it a BHAG, a Big Hairy Audacious Objective. Same thing.
Leaders of the eight companies we selected vigorously prevent anyone from mucking up their drive to productivity with some strategy du jour or the latest alphabet-soup management theory. All the most productive companies we studied began their journey into productivity by adopting a simple BIG objective. It doesn’t seem to matter what it is…only that one exists, that it’s authentic, and that it fundamentally impacts the way business is done.
Morris: How to obtain buy-in for the simple BIG idea?
Jennings: Our research suggests six tactics: live the idea every day, sell it with passion and commitment, deal with the unions and cynics…then move on, fire some people who undermine productivity, abandon anything that distracts from the simple BIG idea, and prove to everyone that you are in it for the long haul. Re the last tactic, Gary Hamel claims that the typical corporate executive spends only 2.4% of her or his time thinking about the future.
Morris: What else did you and your associates learn?
Jennings: We were eager to learn how the most productive companies permanently motivate their workforces. Here are three key points:
1. Create a safe and secure workplace: give meaning to work, make workers stakeholders and give them responsibility, allow mistakes (e.g. value them as learning opportunities), foster teamwork (e.g. eliminate “politicians”), and encourage diversity (e.g. constructive confrontation and candor).
2. Find an external enemy to fight: Direct your company’s competitive spirit and energy at a significant external goal. Keep everyone focused on achievement rather than engaging in competition between and among themselves. There is great power in an attitude expressed in a song Paul Williams wrote years ago, “You and Me Against the World.”
3. Then Get out of the way: Leaders in the most productive companies get out of the way because they trust that their group of carefully selected people will do what is right…and do it right.
Morris: Near the end of Less Is More, you offer twelve rules for doing more with less.
Jennings: Of course I think they’re all important! And they are…but seriously, although I am a compulsive compiler of checklists, I fear that they suggest that the given task or objective is far simpler to achieve than in fact it really is. The twelve are really more guidelines than rules. Suggestions, if you will.
That said, people who have read the book and then attempted to follow the recommendations in the final chapter tell me that three of the most important are these, and I quote:
o “Spend your time building a culture, not a business model – one based on truth, honesty and respect. Be authentic and live the values.”
o “Ask WTGBRFDT – ‘What’s the good business reason for doing this?’ – of every decision you’re called on to make. Don’t delude yourself.”
o “Turn every function into a system and map it out. Then constantly ask the people who do the work how to eliminate waste and make the system better. Everything we do is part of a process. And all processes are interconnected…and interdependent.”
As I said, these and the other nine are suggestions, not hard and fast “rules.” We probably should change that word in the next edition!
Morris: Please explain the title of your latest book, Think Big, Act Small, written with lead Researcher Brian Solon and researcher /editor Greg Powell.
Jennings: One day as we were completing research for that book, I was conducting a follow-up interview with Pattye Moore, former president of Sonic Drive-In. The interview was almost over but I had one final question. “What’s the magic,” I asked, “that’s allowed Sonic to raise its revenues and profits by double digits every year?”
That’s an easy one,” she answered without hesitation. “We think big but we act small.” When big companies start acting big, they get in trouble.
Those few words absolutely nailed what we’d found inside every high-performing company we discussed in this book. Each one thinks big but acts small.
Morris: How many candidates did you and your associates consider for designation as the best performing companies in the U.S. and which did you finally select?
Jennings: We began to gather information about 70,000 companies. Among all of them, which have increased their revenue and profits by at least 10% for ten years or longer? Only nine qualified: Cabela’s, Dot Foods, Koch Industries, Medline Industries, O’Reilly Automotive, PETCO Animal Supplies, SAS Institute, Sonic Drive-in, and Strayer Education.
Our findings genuinely surprised us. We didn’t discover any “mind-bending tactics” or “top-secret methods” that enabled these companies to grow their revenues consistently and sustain that growth for at least a decade. Instead, because each has nailed the fundamentals better than all other companies, their dramatic and consistent growth occurs naturally, even organically.
Morris: How easy was it to obtain interviews with the CEOs of the nine consistently profitable companies after you selected them?
Jennings: That was another surprise for us. Getting inside each of these companies was like pulling teeth…only worse! Eventually we spent time with and got to know the leaders of these remarkable companies and realized that, sure, part of their reluctance to open themselves and their companies up to us was remain secretive but more revealingly, none of these leaders had any interest whatsoever in being portrayed as a “celebrity CEO.” The very thought is anathema to them.
Morris: Although there are no doubt significant differences between and among these nine CEOs and their companies, what do they share in common?
Jennings: That’s a critically important question. During our research, we identified seven traits that all of the CEOs share in common. We call them the “main attributes of humbleness.”
Stewardship: Each of them sees her or his role not as a swashbuckling soldier whipping the corporate steed on to new conquests, but as a steward entrusted with the responsibility of carefully and judiciously shepherding and guiding the organization. It is a responsibility each of them takes very seriously.
Transparency: In the nine companies, because there is zero personal profit or gain to be achieved in hoarding, trading, or trying to passionately protect knowledge, everyone involved has access to the same knowledge and information.
Accessibility: One of our standard requests was for a walking tour of the facilities and, to prevent any possibility of the tour being staged or orchestrated, we always made our request at the last possible moment. During every one of the tours of hallways, factory floors, and company lunchrooms with the leaders, there were always warm, affectionate, first-name greetings, often accompanied by gentle ribbing and teasing.
The other four “attributes of humbleness” are Work Ethic, Stand for Something, Erase Superficial Superstitions, and No Big Office. We discuss each at some length in the book, citing countless examples of how each of the nine companies has taken on the modest and humble personality of its leadership. These are truly inspired, collegial, group endeavors where the momentary accomplishments of individuals are overshadowed by the consistent, long-term achievement of a team that’s gently and deftly kept on course by a humble leader. Staying down to earth is Building Block #1 when the leaders of any company (regardless of size or nature) are determined to achieve and then sustain consistent growth of both revenues and profits.
Morris: What are the others?
Jennings: There are ten Building Blocks, each of which is examined in depth in the book. They are:
1. Down to Earth (i.e. seven “attributes of humbleness”)
2. Keep Your Hands Dirty (e.g. SAS Institute)
3. Make Short-Term Goals and Long-Term Horizons (e.g. Sonic Drive-In)
4. Let Go (e.g. Cabela’s)
5. Have Everyone Think and Act Like an Owner (e.g. Koch Industries)
6. Invent New Businesses (e.g. Dot Foods)
7. Create Win-Win Solutions (e.g. Medline Industries)
8. Choose Your Competitors (e.g. PETCO Animal Supplies)
9. Build Communities (e.g. Strayer Education)
10. Grow Future Leaders (e.g. O’Reilly Automotive)
Years ago, after giving a speech in Hong Kong, I was approached by an elderly Chinese lady. “I enjoyed your speech very much,” she said to me. “The things you said were really just simple common sense.” Then and now, I consider that a very special compliment. Of course the seven attributes and the ten building blocks are obvious! That’s the good news. Now here’s the bad news. Leaders in most companies do not nail these fundamentals.
Morris: Before concluding this interview, please share your thoughts about the leader as steward.
Jennings: That is a subject of compelling interest and importance to me. Frankly, I consider it a very special privilege to meet and then get to know so many great business leaders, all of whom see themselves as stewards to whom the welfare of others is entrusted to their care.
Stewards share all information with everyone within their organization. When this happens a company develops true knowledge workers. Hidden agendas, palace intrigue, and using knowledge as the coin of the realm disappear. Stewards are always accessible and available for employees and associates, shareholders, vendors and suppliers as well as for customers. They are truly humble; it’s not about them but about others. They keep their hands dirty and spend loads of time with customers trying to figure out how their company can help other companies grow. They are teachers and mentors who are thrilled by the prospect of helping other people grow, develop, and prosper in all areas of their lives. In fact, Stewards feel called to serve. They believe they are doing the most important work in the world…and they are.
Being a good steward in all relationships with others is the greatest opportunity facing every business leader.