The second line represents the WHY, the clarity of the founding purpose, cause or belief. The goal is to ensure that as the measurement of WHAT grows, the clarity of the WHY stays closely aligned. Put another way, as the volume of the megaphone increases, the message traveling through it must stay clear.
The volume of the megaphone comes solely from growth of WHAT. As this metric grows, any company can become a “leading” company. But it is the ability to inspire, to maintain clarity of WHY, that gives only a few people and organizations the ability to lead. The moment at which the clarity of WHY starts to go fuzzy is the split. At this point organizations may be loud, but they are no longer clear.
When organizations are small, WHAT they do and WHY they do it are in close parallel. Born out of the personality of the founder, it is relatively easy for early employees to “get it.” Clarity of WHY is understood because the source of passion is near—in fact it physically comes to work every day. In most small businesses all the employees are all crammed into the same room and socialize together. Simply being around a charismatic founder allows that feeling of being a part of something special to flourish. Although there may be some efficiencies to be gained, for small businesses that are perfectly comfortable staying small, the need to articulate the WHY is not as important. For organizations that want to pass the School Bus Test, to become billion-dollar organizations or work at a scale large enough to shift markets or society, the need to manage through the split is paramount.
The School Bus Test is a simple metaphor. If a founder or leader of an organization were to be hit by a school bus, would the organization continue to thrive at the same pace without them at the helm? So many organizations are built on the force of a single personality that their departure can cause significant disruption. The question isn’t if it happens—all founders eventually leave or die—it’s just a question of when and how prepared the organization is for the inevitable departure. The challenge isn’t to cling to the leader, it’s to find effective ways to keep the founding vision alive forever.
To pass the School Bus Test, for an organization to continue to inspire and lead beyond the lifetime of its founder, the founder’s WHY must be extracted and integrated into the culture of the company. What’s more, a strong succession plan should aim to find a leader inspired by the founding cause and ready to lead it into the next generation. Future leaders and employees alike must be inspired by something bigger than the force of personality of the founder and must see beyond profit and shareholder value alone.
Microsoft has experienced a split, but is not so far down the line that it can’t be put back on track. There was a time not too long ago that people at Microsoft showed up at work every day to change the world. And they did. What Microsoft achieved, putting a PC on every desk, dramatically changed the way we live. But then their WHY went fuzzy. Few people at the company today are instructed to do everything they can to help people be more productive so that they can achieve their greatest potential. Instead, Microsoft became just a software company.
If you visit Microsoft’s headquarters in Redmond, Washington, you will find that although their WHY has gone fuzzy, it is not lost. That sense of a cause, that desire to change the world again, is still there, but it has become unfocused, wrapped up in HOW and WHAT they do. Microsoft has a remarkable opportunity to clarify their WHY and regain the inspiration that took them to where they are today. If they do not, if all they do is manage the WHAT and continue to ignore the WHY, they will end up looking like America Online, a company so far past the split that their WHY is indeed lost. There is barely a hint of the original WHY left anymore.
America Online used to inspire. Like Google today, it was the hot company to work for. People clamored to move to Virginia to work for this amazing company that was changing the rules of business. And it was true that, like all inspiring companies, AOL set in motion changes that profoundly altered how we do almost everything. They inspired a nation to get online. Their cause was clear and their decisions were governed by their WHY. Their goal was to get more people online, even if their decisions in pursuit of that goal wreaked havoc on their business in the short term. With their WHY in focus, AOL pulled ahead of their competition by deciding to change from hourly pricing for Internet access to unlimited monthly pricing, a decision that created so much traffic it shut down their servers. Given the impact, the decision was neither practical nor rational, but it was the right choice to help bring their cause to life. That their systems shut down with the additional traffic only pushed them to work harder to cope with it, to ensure that America could, in fact, get and stay online.
In those days, having an AOL e-mail address was a point of pride—a sign of being one of those who was a part of the Internet revolution. These days, still having an AOL e-mail address is a symbol of having been left behind. That the meaning of something as simple as
@aol.com
has changed so dramatically is additional proof that the company’s cause has long since departed. Absent a clear WHY, size and momentum are all AOL has to keep them going. The company is not inspiring anymore, not to those who work there and not to those on the outside. We don’t talk about them like we used to and we certainly don’t feel the same way about them either. We don’t compare them to Google or Facebook or any of the other industry-changing companies of today. Like a massive freight train with brakes applied, it will still take miles for this train to come to a complete stop. It’s simple physics. At best AOL’s size will help them putter along, but without a more compelling purpose, cause or belief, the company is simply a collection of stuff. It will probably end up being chopped up and sold off for scrap (technology or customers), which is a sad reality considering how inspiring AOL used to be.
It is not a coincidence that successful entrepreneurs long for the early days. It is no accident that big companies talk about a “return to basics.” What they are alluding to is a time before the split. And they would be right. They do indeed need to return to a time when WHAT they did was in perfect parallel to WHY they did it. If they continue down the path of focusing on their growth of WHAT at the expense of WHY—more volume and less clarity—their ability to thrive and inspire for years to come is dubious at best. Companies like Wal-Mart, Microsoft, Starbucks, the Gap, Dell and so many others that used to be special have all gone through a split. If they cannot recapture their WHY and reinspire those inside and outside their organization, every one of them will end up looking more like AOL than the companies they were.
What Gets Measured, Gets Done
In the fall of her freshman year in college, Christina Harbridge set out to find a part-time job. Intrigued by the prospect of working in the antiques business, she answered a newspaper ad in Sacramento to do office work for a “collector.” Harbridge soon found out, however, that the job was filing papers for a collections agent, and even then she wasn’t entirely sure what that meant.
The collections office consisted of a huge room with dozens of phone stations, each staffed by a debt collector making call after call to a long list of businesses and individuals who owed money. The setup of the room meant there was no privacy—everyone could hear everyone else’s calls. Harbridge was immediately taken by the harshness of the tone that all the collectors used with those from whom they aimed to collect unpaid debts. “They would hound them, and practically threaten them,” she said. “They would do anything it took to get information from them.”
Harbridge recognized that the owner of the company and the collectors were all kind, gracious people. They helped each other out, listened to each other’s problems and even joined together to sponsor a homeless family during the holidays. But when they were on the phone to collect a debt, these same people turned passive-aggressive, rude and often mean. It’s not because they were bad people, it’s because they were incentivized to be that way.
Their officious behavior made perfect sense. “What gets measured gets done,” as well-known sales coach Jack Daly says. And in the world of debt collecting, the callers were given bonuses based on how much money they collected. This has resulted in an entire industry that threatens, badgers, hounds and provokes. It didn’t take long until Harbridge found herself adopting the same attitude whenever she talked with debtors. “I began treating people on the phone the way everybody else in the office treated them,” she said.
Feeling like WHAT she was doing was completely out of balance with her WHY, Harbridge decided there had to be another way. “I got it in my head that I was going to start an agency that collected by being nice,” she said. People in the collections business thought Harbridge naïve, if not crazy. And maybe she was.
In 1993, Harbridge moved to San Francisco and started her own collections firm, Bridgeport Financial, steeped in the belief that agents would have more success treating people with respect than badgering them. Harbridge built her company on her WHY—that everyone has a story and everyone deserves to be listened to. Her approach was to have her agents try to establish rapport with the debtor on the other end of the phone in the course of a three-minute conversation. The goal was to learn everything they could about the person’s circumstances: Did they have the means to pay the debt? Would they honor a payment plan? Was the reason for the failure to pay reflective of a short-term situation? “We would get people to tell us the truth,” she said. “Sure, we had a legal department, but we tried to avoid using it.” Harbridge knew, however, that no matter her intentions, if she measured the results the same way as others, the same awful behavior would result. So she came up with an entirely new way to incentivize her people. She found a way to measure WHY.
At Bridgeport Financial, bonuses were not given for the amount of money that was collected; they were given based on how many “thank you” cards her agents sent out. This is harder than it sounds. Sending out a card thanking someone for the time they spent talking on the phone requires a few things. First, Harbridge had to hire people who believed what she believed. She had to hire good fits. If her employees didn’t believe that everyone deserves to be listened to, it wouldn’t work. Only good-fit hires would be capable of creating an environment on the telephone that would actually warrant sending a thank-you card, even though the purpose of the call was to ask for money. Harbridge measured WHY her company existed, not WHAT they did, and the result was a culture in which compassion was valued above all.
But what about the other results? What about her financial results, the ones most businesses pursue first? Bridgeport Financial collected 300 percent more than the industry average. What’s more, most of the people and companies who were initially being pursued ended up doing more business with the original company that sent the collections agency after them in the first place. This is almost unprecedented in the collections industry.
Harbridge’s business succeeded not just because she knew WHY she was doing what she was doing, but because she found a way to measure the WHY. The company’s growth was loud and her cause was clear. She started with WHY and the rest followed.
Most organizations today use very clear metrics to track the progress and growth of WHAT they do—usually it’s money. Unfortunately, we have very poor measurements to ensure that a WHY stays clear. Dwayne Honoré has for the past ten years run his own commercial construction company in Baton Rouge, Louisiana, a trade he learned from his father. A leader with a deep sense of purpose, he devised some years ago a brilliant system to ensure that his values are reinforced in his company’s culture. He figured out how to measure something most people can only pay lip service to: work-life balance. Honoré believes that people should not spend all their time at work, but rather they should work to spend more of their time with their families.
Every employee at Honoré Construction is required to clock in in the morning and clock out in the evening. But there’s a catch. They must clock in between 8:00–8:30 a.m. and out by 5:00–5:30 P.M. Stay any later and they are taken out of a bonus pool. Because employees know they have to leave by 5:30 p.m., wasted time has dropped to a minimum. Productivity is high and turnover is low. Consider how much you get done the day before you go on vacation. Now imagine every day is like that. That’s what Dwayne Honoré figured out how to do. Because he figured out how to measure a value he holds dear, that value is embraced. Most importantly, because Honoré’s actions pass the Celery Test, others can clearly see what he believes.
Money is a perfectly legitimate measurement of goods sold or services rendered. But it is no calculation of value. Just because somebody makes a lot of money does not mean that he necessarily provides a lot of value. Likewise, just because somebody makes a little money does not necessarily mean he provides only a little value. Simply by measuring the number of goods sold or the money brought in is no indication of value. Value is a feeling, not a calculation. It is perception. One could argue that a product with more bells and whistles that sells for less is the greater value. But by whose standard?
My uncle used to make tennis rackets. His rackets were made in the exact same factory as a name-brand racket. They were made of the same material on the same machine. The only difference was that when my uncle’s rackets came off the assembly line, they didn’t put the well-known brand logo on the product. My uncle’s rackets sold for less money, in the same big-box retailer, next to the name-brand rackets. Month after month, the name-brand rackets outsold the generic-brand ones. Why? Because people perceived greater value from the name-brand rackets and felt just fine paying a premium for that feeling. On a strictly rational scale, the generic rackets offered better value. But again, value is a perception, not a calculation, which is the reason companies make such a big deal about investing in their brand. But a strong brand, like all other intangible factors that contribute to the perception of value, starts with a clear sense of WHY.