The Oz Principle Blog

Organizations have enormous power to focus efforts on collective goals, objectives, issues, problems and results, if they so choose. It’s the power of an organization’s convergent effect—people coming together in a planned and organized way to accomplish something mutually beneficial for all involved. Of course, that’s what organizations do. However, when organizations fail to identify what matters most, they allow their natural converging power to diffuse and dissipate. Here’s how one well-known organization stays focused on what matters most.

By all measurements, Berkshire Hathaway’s performance has been nothing short of amazing. What’s the company’s secret? There is no doubt whatsoever about what matters most: beating the S&P index by investing in the right businesses and trusting talented management with operating decisions. Berkshire Hathaway owns a diverse range of service, manufacturing, retailing and food businesses, including property and casualty insurance, carpet, bricks and concrete blocks, clothing, retailing, diamonds, flight training, newspapers, candy, farm equipment, consumer finance, industrial coatings, restaurants, engineering software, furniture retailing and leasing, footwear and more. The company’s operating culture is simple: operating decisions are made by managers of the business units.  Berkshire Hathaway claims to have superior CEOs running its businesses, while investment decisions and all other capital allocation decisions are made by Chairman Warren Buffet in consultation with Vice Chairman Charles Munger.

Berkshire Hathaway’s investment/acquisition criteria further clarify what matters most: “1) large purchases—at least $50 million of before tax earnings; 2) demonstrated consistent earning power—future projections are of no interest to us, neither are turnaround situations; 3) businesses earning good returns on equity while employing little or no debt; 4) management in place—we can’t supply it; 5) simple businesses—if there’s lots of technology, we won’t understand it; 6) an offering price—we don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown.”

Yes, what matters most is perfectly clear to Berkshire Hathaway’s operating managers, acquisition candidates, and shareholders. What about your organization? Do you know what matters most? Can you write it down and get a majority of the people in your organization to agree? If not, join our Accountability Community at www.ozprinciple.com, to learn more about how to clarify what matters most in your organization.

Accountability Community is a registered trademark of Partners In Leadership Inc.

The exchange of ideas has become crucial in the majority of today’s work environments. Why? Change is accelerating. Information is proliferating. Product life cycles are shortening. Agility in execution is intensifying. Innovation has become a precondition for sustainability. The maximization of idea-sharing, at all levels, allows organizations to become flatter, more agile, and less dependent on hierarchy, which in turn promotes commitment, self-management, innovation, collaboration, and learning. Consider how one corporate icon does it.

With millions of employees and hundreds of billions in revenue, Wal-Mart manages to share ideas of every kind at every level in its organization. At weekly merchandise meetings employees, called associates, are encouraged to share their ideas openly and with passion. Every idea counts and is taken into consideration. On Saturdays there’s more sharing of ideas, information, and knowledge, along with informal entertainment. Every day in the stores, associates are encouraged to look incessantly for ways to improve the operation. Sam Walton’s legacy of rules, ten of them, still guides the global retailer; here are two of them that address idea-sharing:

• Communicate everything you possibly can to your partners. The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them. If you don’t trust your Associates to know what’s going on, they’ll know you don’t really consider them partners.

• Listen to everyone in your company. Figure out ways to get them talking. The folks on the front lines—the ones who actually talk to the customer—are the only ones who really know what’s going on out there. You’d better find out what they know.

Sharing ideas of every kind at every level is a way of life at Wal-Mart and the results are obvious. Not only has Wal-Mart revolutionized the retailing industry, it has become a model of successful management throughout the world. Without question, sharing ideas openly and actively throughout an organization is one of the best ways to build accountability, commitment, and greater collaboration.

Are ideas, information, and knowledge shared actively and readily within your organization? To learn more about turbo-charging the exchange of ideas throughout your organization, we invite you to join the Accountability Community at www.ozprinciple.com.

Accountability Community is a registered trademark of Partners In leadership Inc.

Are there people inside your organization that do not receive the respect they deserve? Are there people outside your organization—vendors, suppliers, partners, communities, customers, or other stakeholders—that likewise fail to receive respect from your organization? If so, why? What about the people who report directly to you? Are any of them respected more than others? If so, why? Are you respected by your peers and leaders? When did you last feel seriously disrespected? What did you do about it?

Consider Procter & Gamble, a company that regularly graces Fortune’s most admired company list. Through ups and downs, this well-known consumer products company has maintained the respect of millions of people throughout the world. One of the main reasons is P&G’s own profound respect for individuals. Flowing from P&G’s purpose to “Provide branded products and services of superior quality and value that improve the lives of the world’s consumers” are key principles and values of the Procter & Gamble culture and work environment. These principles are as follows: 1. We show respect for all individuals; 2. The interests of the company and the individual are inseparable; 3. We are strategically focused on our work; 4. Innovation is the cornerstone of our success; 5. We are externally focused; 6. We value personal mastery; 7.We seek to be the best; and 8. Mutual interdependency is a way of life.

One of the important benefits of taking accountability for respecting individuals and their individuality is an unusually high level of trust that facilitates astonishingly open and candid discussions about mistakes, learning, failures, and how to foster improvement. Think about it. “See It” is the first step Above The Line. To learn more about how to build greater respect for individuals and individuality in your organization, we invite you to join the Accountability Community at www.ozprinciple.com.