Managerial succession mechanism
In this article I will talk about my little discovery, which fundamentally turned my mind about the issue of staff selection.
According to Steve Jobs, the difference between the middle and the best among working professions is on average 2/1. For example, the best cashier will be able to work twice as fast as the average. At one time, Jobs found that among developers of both software and hardware, "the difference between the average and the best is 50/1, and maybe 100/1."
Jobs said: "This is extremely rare, but I was lucky to devote my life to this." This was his discovery, one of the keys to Apple's greatness today.
Choosing a team, Jobs argued that it was necessary to look for Class A employees - only the best. In addition, he considered one of the most important tasks of the head of the company, this is not only the selection of Class A employees, but also the deliverance of the company from the "dominance of mediocrity."
Jobs is now widely circulated by Google and other IT companies. According to Laszlo Bock in the book “Work steers”, the difference between the best Google developer and the average 300/1.
Assuming that class C employees (average) are between two standard deviations (separated by a median) with a normal distribution, and each class occupies 2 standard deviations, then we can get the following table:
When we talk about the difference between the best and average, we will keep in mind the difference between the grandmaster and the second-rate student.
I made such a chess analogy for organizations regarding their value. I took Apple’s value for the champion’s title, then logarithmicly divided the categories. Champion and challenger separated by half a step. The table is very conditional, however, we will use it as a guideline for comparing companies relative to their value.
International categories of business companies by analogy with chess for 2016
I drew attention to the leaders of companies capable of organizing people and achieve great achievements. By betting on developers, Steve Jobs and his team put Apple into the champions.
If the difference between the best and the average developer is 100/1, then the difference (as follows from the table above) between the team of grandmasters and second-rate managers: 1000/1 . When selecting managers for a team, we must put in 10 times more effort, trying to find the best of the best.
Looking at the successes of Apple, Google and Facebook, the market is in a fever from the Jobs approach in finding the best developers. In this regard, the salaries of developers exceed the salaries of managers. A director can receive significantly less than a key developer.
I propose to switch the focus in the selection of personnel and devote most of my time to the selection of strong leaders. I believe that this is the best time to find talented managers.
Jim Collins in his study found that companies, making the transition from good to outstanding results, usually started with a strengthened management team. At the head of such a team, in the terminology of Collins, there was always a “5th level leader."
As time showed, after the transition to outstanding results, the chain of managerial continuity was lost, and companies began to stagnate. Between the owners began a "squabble" for power, and talented management transferred to other companies.
The great achievement of Steve Jobs was the withdrawal of his company from a state of near bankruptcy to world leaders. However, his mistake was that he did not leave behind a stronger team of successor managers with sufficient power to continue to work effectively. Over the past 7 years, Apple has not released revolutionary products. We see only the next version of iPhones.
Jim Collins in the book "From Good to Great" showed the transition only one step. Next, I will try to add to this a simple and obvious mechanism that can turn into a spiral staircase, leading the company to the pinnacle of success.
Although I’m an agnostic, for the sake of beauty I will call the team of successor managers “Son”. The team that grows it is Father. Power in the company will be called the "Holy Spirit."
Possessing the "Holy Spirit", the "Fathers" and "Grandfathers" must take care of the work of the succession mechanism. Thus, the company will receive long-term progressive development.
The recursive mechanism of managerial continuity looks primitive, however, it can be difficult to implement. There can be many problems on the way to its implementation, such as greed, pride or unwillingness to learn and find those who are stronger than you.
According to Steve Jobs, the difference between the middle and the best among working professions is on average 2/1. For example, the best cashier will be able to work twice as fast as the average. At one time, Jobs found that among developers of both software and hardware, "the difference between the average and the best is 50/1, and maybe 100/1."
Jobs said: "This is extremely rare, but I was lucky to devote my life to this." This was his discovery, one of the keys to Apple's greatness today.
The difference between the average and the best
Choosing a team, Jobs argued that it was necessary to look for Class A employees - only the best. In addition, he considered one of the most important tasks of the head of the company, this is not only the selection of Class A employees, but also the deliverance of the company from the "dominance of mediocrity."
Jobs is now widely circulated by Google and other IT companies. According to Laszlo Bock in the book “Work steers”, the difference between the best Google developer and the average 300/1.
Assuming that class C employees (average) are between two standard deviations (separated by a median) with a normal distribution, and each class occupies 2 standard deviations, then we can get the following table:
| Class | σ | Share | Chess analogy |
|---|---|---|---|
| A | > 3 | 0.135% | Master - Grandmaster |
| B | 1..3 | 15.73% | 1st category - CCM |
| C | -1..1 | 68.27% | 3 - 2 digits |
| D | -1 ..- 3 | 15.73% | 4 category and below |
| E | <-3 | 0.135% | Learning disabilities |
When we talk about the difference between the best and average, we will keep in mind the difference between the grandmaster and the second-rate student.
I made such a chess analogy for organizations regarding their value. I took Apple’s value for the champion’s title, then logarithmicly divided the categories. Champion and challenger separated by half a step. The table is very conditional, however, we will use it as a guideline for comparing companies relative to their value.
International categories of business companies by analogy with chess for 2016
| Title | Company value, $ m |
|---|---|
| Champion | 724 773 |
| Challenger | 295 887 |
| Grandmaster | 49,315 |
| Master | 8 219 |
| Master Candidate | 1,370 |
| 1st category | 228 |
| 2nd category | 38 |
| 3rd category | 6 |
| 4th category | 1 |
| Newbie | <1 |
I drew attention to the leaders of companies capable of organizing people and achieve great achievements. By betting on developers, Steve Jobs and his team put Apple into the champions.
If the difference between the best and the average developer is 100/1, then the difference (as follows from the table above) between the team of grandmasters and second-rate managers: 1000/1 . When selecting managers for a team, we must put in 10 times more effort, trying to find the best of the best.
Looking at the successes of Apple, Google and Facebook, the market is in a fever from the Jobs approach in finding the best developers. In this regard, the salaries of developers exceed the salaries of managers. A director can receive significantly less than a key developer.
I propose to switch the focus in the selection of personnel and devote most of my time to the selection of strong leaders. I believe that this is the best time to find talented managers.
Recursion to strengthen the management team
Jim Collins in his study found that companies, making the transition from good to outstanding results, usually started with a strengthened management team. At the head of such a team, in the terminology of Collins, there was always a “5th level leader."
As time showed, after the transition to outstanding results, the chain of managerial continuity was lost, and companies began to stagnate. Between the owners began a "squabble" for power, and talented management transferred to other companies.
The great achievement of Steve Jobs was the withdrawal of his company from a state of near bankruptcy to world leaders. However, his mistake was that he did not leave behind a stronger team of successor managers with sufficient power to continue to work effectively. Over the past 7 years, Apple has not released revolutionary products. We see only the next version of iPhones.
Jim Collins in the book "From Good to Great" showed the transition only one step. Next, I will try to add to this a simple and obvious mechanism that can turn into a spiral staircase, leading the company to the pinnacle of success.
Although I’m an agnostic, for the sake of beauty I will call the team of successor managers “Son”. The team that grows it is Father. Power in the company will be called the "Holy Spirit."
- Step “Son”: Learn how to work effectively and exceed the results of the “Father” team.
- Step "Father": To assemble and train a much stronger team of managers who will complete Step 1.
- Step “Holy Spirit”: When the “Son” team performs Step 1, the “Father” team receives a significant stake in the company and directs the “Son” to Step 2.
Possessing the "Holy Spirit", the "Fathers" and "Grandfathers" must take care of the work of the succession mechanism. Thus, the company will receive long-term progressive development.
Conclusion
The recursive mechanism of managerial continuity looks primitive, however, it can be difficult to implement. There can be many problems on the way to its implementation, such as greed, pride or unwillingness to learn and find those who are stronger than you.
Sources
- "Steve Jobs" - Walter Isaacson.
- “Work steers” - Laszlo Bock.
- "Steve Jobs: The Lost Interview" - Bob Kringley.
- Good to Great - Jim Collins.