To begin with, we changed the huddle process. Previously we’d had weekly huddles in the subsidiaries and biweekly huddles for the company as a whole. In the companywide meetings, we would have each subsidiary forecast its numbers for the month, more or less as we’d been doing it from the start. I began to think, however, that the practice might be

One risk is that people will become arrogant and start benchmarking against themselves instead of their competitors, which leaves the company vulnerable to all kinds of unpleasant market surprises. The other risk is that people will grow complacent. They’ll feel so comfortable with what they have that they’ll resist attempts to change it—even if th

There’s a downside of having a great culture. When people like working in a company, they tend to stick around for a long time. That’s good, except that after ten or fifteen years, they start losing touch with the outside world. They know only what they’ve learned in your business, which poses two great risks.

We did that using three simple mechanisms. First, we looked at the lists we’d received from our managers, supervisors, and professionals when we’d asked them to name their replacements. Lo and behold, many of the same names were on different lists. Those were obviously the people seen by their peers as the company’s rising stars. In addition, we gi

Companies tie themselves in knots trying to determine the right criteria for leadership and to pick out the individuals with leadership potential. I believe you can save yourself a lot of trouble by letting your people tell you who the leadership candidates are.

Focusing on the Future The experiments couldn’t help but make SRC a stronger, better company. Then again, I could say the same thing about the other benefits of the new strategy. Together, they had the potential to take SRC to another level. By that, I mean they would turn us from a company that was good at operating in the present into one that wa

There’s a great benefit you get from sharing equity in a business. You can, in effect, pay people more money without putting the additional cost into the product—which gives you a huge competitive advantage. It’s a particularly big advantage when you’re competing with other companies, not only for customers, but also for employees, as every busines

THE EQUITY ADVANTAGE

Here, too, we saw our strategy helping us strengthen the company by reducing costs in our established businesses as we moved managers into the start-ups. In effect, we’d be replacing high salaries with low salaries, since someone who’s starting out in a job almost always earns less than someone who’s been doing it for years. The lower our fixed cos