They identified a correlations between the 2 statements:
The debate went back and forth as to whether growing HC itself was in fact a legitimate target, or whether it was the outcome of other growth-related activities. Essentially, some people were saying that the relationship between these 2 statements is linear, as in:
This is an example of ‘linear causality’, one thing leads to another. An equivalent statement might be ‘Get rich / achieve a senior status, then hire a PA’.
Over time though, in business and in life, we learn that the relationship between statements like these is often not linear, but circular. For example, if you hire a good sales person, they will help grow the business, not the other way round. Jack Daly refers to this as ‘the original sin of entrepreneurs’ i.e. the idea that ‘When I reach xxx level of sales, then I will hire a Sales Director.’ In fact, he says, it’s hiring the SD that will take you to that level of sales. Embracing this idea was a turnaround point in the growth of my previous business.
With circular causality, the relationship between the two original statements looks more like this:
A better term to describe this might be complementarity. It is an AND statement, rather than a THEN statement. One reinforces the other, with no distinct start or end point.
We find a similar relationship with what we do with companies. On the one hand, we help them to ‘think’ and about strategy and direction, and we help them with the ‘doing’ – execution. However, in order to improve the strategy, you need to move forward with execution, one reinforces the other.
These ideas tie in with two concepts that Jim Collins often talks and writes about:
Combining the concept of strategy for growth and the flywheel can take us to a most interesting model which is where the strategy of the business is itself a self-reinforcing flywheel. Take this great example about Amazon, shared by Jim Collins: https://www.youtube.com/watch?v=W9yPOFxD44o
So where did that leave the team looking to set HC targets? In this case, they did set HC as a target for the sales teams. They took the view that each person and each team they added would drive revenue generating capacity over the medium term for the business, which would drive growth.
Interested to talk through any of these ideas?
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