Cultivating High Performance

A number of years ago, I got a call from my friend Jack. Jack had started his own company and by the late 90s he had built a very successful $40 million business. It had grown very quickly and was profitable -- but Jack had begun to feel uneasy.

As we discussed his concerns, Jack's first words were "it just isn't fun anymore." When I replied -- "who said it's supposed to be fun"-- there was a long silence on both ends of the phone. The comment was intended half in jest, but we were both struck by its implications. It wasn't long before we had framed the question that would occupy our discussions for months to come: As a company grows, does it have to stop being fun?

Our early discussions focused on the point at which it stopped being fun for him. Although Jack could not identify the precise point at which it began to change, he clearly knew when he was enjoying it most. Despite the usual life and death struggles of an early stage company, he felt that the early years were the most fun. I can remember his words clearly, "Without a doubt," he said, "those were the most trying times -- but they were best times as well."

Having had a similar experience some years earlier in a company I built from a business plan, I knew exactly how Jack felt. We too had grown rapidly and were very profitable, but my unease was caused by something else. We had built our business through an intentional focus on continuous innovation. We were involved in a rapidly growing industry and we were constantly out in front of our customers in meeting their needs. Innovation propelled us to the dominant position in our market.

But as we approached $50 million in revenue, I sensed that we had lost the innovative edge that was the hallmark of our business. To recapture that magic, I tried a number of different things. And although we had some success, the results did not get us back to where I had hoped. As Jack and I discussed my situation, we wondered if his concern and mine were caused by the same problem.

At this point we began to frame the question more broadly: Do you have to be a small company to have that entrepreneurial spirit -- a spirit that makes it a fun place to work and where people's creative juices flow best? Yet we both knew of larger companies where that entrepreneurial spirit existed -- although it always seemed to be in a small, early stage division. The theme that seemed to be common in all these situations was the existence of a small, close-knit group of people tightly focused on a common objective.

Neither Jack nor I had a clear sense of the exact nature of the problem -- and we certainly didn't have all the answers. But from then on this issue was on my radar screen. As I read books and articles by the great minds of business, I found some good ideas and tried many of them. Yet I couldn't find what I felt was a complete description of the problem, much less a comprehensive framework for the solution -- if in fact there was a solution to this dilemma.

Years later I was thinking about this again when I remembered something Jack had said that didn't sink in at the time. We were talking about how he felt when he had just 30 employees. Jack believed that everyone knew what they were trying to achieve and everyone was a part of it. His comment was, "All the employees felt like it was their business as much as it was mine -- it was as personal for them as it was for me."

My most vivid recollection was of his comments about performance. He said, "Our performance as a group of 30 people was staggering. We were a well-oiled machine, producing at an exceptional level." Jack continued by using a sports analogy. "We felt like we were the underdogs in the NCAA Finals of basketball. We didn't necessarily have the best athletes, but we got the most out of every person, and as a team we were all focused on one thing -- winning the championship."

But the statement that resonated best with me was, "If I got proportionately as much out of the hundreds of people who work for me now as I did when we were 30 employees, our performance would be off the charts."

Bingo! Finally, I think I understood the nature of the problem that caused Jack to stop having fun and caused my company to lose some of its innovative edge. The problem is -- how do you create (or sustain) the high performance that seems to be a natural result of a well-managed entrepreneurial environment?

To address this problem, we first have to define what we mean by a high performance environment.

Jack's sports analogy suggested the answer -- a high performance environment is one in which every employee willingly and enthusiastically contributes the maximum of their energy and talent to the objectives of the company. While it sounds simple, this definition presents two fundamental challenges: