Those who do not learn from
History are condemned to repeat it
Here’s a quick test of investment acumen. Based on
facts presented for roughly the same period, not at two vastly different points
in time, choose the company to invest in
Option I : The company deals in petroleum products, has
90% of the world’s capacity in oil refining, 20,000 oil wells, 6000 km of
pipelines, 5,000 tank cars and 100,000 employees
Option II : The organization makes soaps and candles,
employs 80 people and has a turnover of USD 1 million
Made your choice? Was it Option I : Standard Oil, or
Option II : Proctor and Gamble?
One has ceased to exist, despite the endless money and heavy artillery at its disposal. The other : flourishing today with revenues of USD 83 billion,
and a source of a never-ending pipeline of leaders of
repute
One synonymous with ‘Robber Barons’ and reviled as ‘the
most cruel, impudent, pitiless, and grasping monopoly that ever fastened upon a
country’. The other ranked in 2011 the fifth most admired company in the world,
- an enduring institution that defines ‘Soft Power’
Back to that choice. Not many would have taken a second
look at the P&G of the 1880s
Even today, the modern-day equivalents of Standard Oil are ceaselessly
sought to be emulated, driven by chants of ‘BIG
MONEY’. As equally, there’s a complete ignoring of the only basis of extraordinary and sustainable wealth
generation : building a reputation. Those who do not learn from history are
anyway condemned to repeat it
And what is repute built upon? One vital component is the
people the organization employs. Whether they have the values and beliefs that
the organization needs to sustain and grow. Equally rigorously, not
ruthlessly, letting go those in whom these values are not part of their nature
In one of the most comprehensive
researches to be published over the last decade, a study of 7000 small and
medium enterprises over a 30 year period showed that only 9 of them broke
through to the big league. Some collapsed; - others floated along as a business,
never becoming an institution. Effectively, 999 out of 1000 companies failed to
ever breakthrough
No two of these 9 breakthrough companies
are from the same industry. When examined to understand what helped them
dramatically exceed the performance of the other 6991 organizations, the
answers seemed to be identical : have good people
No surprises there? There are, if you
look at the way these 9 breakthrough companies defined ‘good people’ : It
does not matter where, or whether at all, they went to school. The simple
operating principle therefore of these companies : Recruit for attitude, train for
aptitude
And how did they benefit from this credo? None of the
companies that broke through did so because of the backing of big money or the
size of their businesses. In the words of the owners of these companies they
did so because ‘When you have the right people, you do not need other people’s
money’
Our take on this at Transforma : when you do not have the right people, you forever need other people’s money.
Or continue to chase a miasma that the primary source of strength lies in the
size of the business or the amount of money at the disposal of the company
Our second take : how many investors
would truly have spotted the extraordinary qualities of these 9 companies and
invested in them at time that would have yielded them returns beyond their
wildest dreams? In other words, how many have the orientation to truly spot the
P&Gs of the world and ignore the Standard Oils?
On to more pragmatic matters
If we have to gain from the practices of these 9
breakthrough companies, what can we do differently? For starters : recruit, develop,
retain and promote an individual based on his values and beliefs, rather than his
current level of skills and knowledge
Why so? Because one takes one’s nature to the grave
The way one thinks and acts NEVER changes. Even if one does
so outwardly, the true nature reveals itself when in a position of power. When there are no longer counter-checks.
And because this bundle of values and beliefs that define a person is so
unchangeable, it serves as a basis for making forecasts about him with
pin-point precision, years in advance
This is
what we at Transforma do while assessing individuals. The assessments look for the critical components of an individual’s
true nature so that an organization can take informed and precise decisions
about who is truly worthwhile to take or keep on board, to invest in, and to
promote. So that the probability of profitable growth, over an extended
period of time, is considerably enhanced
So that, if you are in 1880, you do not
have the mortification of listening to the gurgling sound of good money, along with
crude-oil, going down the drain because of choosing option I. So that one learns
from history, rather than repeating it
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