It was an amazing dinner of incredibly good food, excellent wine, and a very lively conversation about strategic and operational choices given current events. As we started to wrap up and focus on next steps, I shared with the team that “the key right now is to make choices that are sustainable. Senior leaders can take risks to get better at what the company is doing, but not at the cost of loosing the engagement of their people. When people become disenfranchised, i.e. feeling disconnected from the core mission of the company and each other, then things are not moving in the right direction. It all boils down to Packard’s Law.”
Jim Collins in his book, How The Mighty Fall and Why Some Companies Never Give In (HarperCollins, 2009), explained Packard’s Law with such a clear and helpful definition: “No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth with excellence.” I like this definition and have referenced it often over the course of my career. However, I believe that it needs to be thoroughly unpacked and discussed for all involved to grasp the significance of it.
In the beginning, most people focus on the words consistently grow revenues faster because this is what they want. This is the desired outcome, the strategic goal, the expectation of owners, CEOs, and share holders. The big idea is growth, quarter by quarter, year by year.
However, most have not done the in-depth reading and reflection around the concept of sustainable growth. Jim Collins and Morten T. Hansen in their book, Great By Choice: Uncertainty, Chaos, and Luck - Why Some Thrive Despite Them All (HarperCollins, 2011), explore 10X companies, i.e. “enterprises that beat their industry’s average by at least 10 times.” Within this detailed research study, Collins and Hansen write about something they call the “20 Mile March.” As they explain, “The 20 Mile March was a distinguishing factor, to an overwhelming degree, between the 10X companies and the comparison companies in our research…. To 20 Mile March requires hitting specified performance markers with great consistency over a long period of time. It requires two distinct types of discomfort, delivering high performance in difficult times and holding back in good times.” They explain that this model of sustainable growth “builds confidence. By adhering to a 20 Mile March no matter what challenges and unexpected shocks you encounter, you prove to yourself and your enterprise that performance is not determined by your conditions but largely by your own actions…. The 20 Mile March helps you exert self-control in an out-of-control environment.” So, when a company wants to consistently grow revenues faster, it needs to create clear and self-imposed performance markers that are largely within the company’s control to achieve. Again, it is a choice defined by the company, not driven by external factors or conditions.
The next phrase in Packard’s Law that most people focus on is the right people. But I have to point out that the full definition of the phrase and the concept around is as follows: its ability to get enough of the right people. The author of Packard’s Law assumes that the reader understand the definition of the words the right people. But over the years, I have found that most people do not have a clear understanding of this concept. Referencing back to the book, How The Mighty Fall and Why Some Companies Never Give In, Collins ask the question “What makes for the ‘Right People’ in key seats?” He then provides the answer based on his research: “the right people fit with the company’s core values”, “the right people don’t need to be tightly managed”, “the right people understand that they do not have ‘jobs’; they have responsibilities”, “the right people fulfill their commitments”, and “the right people are passionate about the company and its work.” The combination of all these characteristics generates the capacity for the company to implement growth with excellence, namely 20 Mile March level growth. It also create the ability to get enough of the right people. Recruitment and retention interconnected.
For me, one phrase within Packard’s Law that I find very interesting is the following: growth with excellence. Most people define the word excellence as doing something perfectly. The dictionary defines the word as the quality of being outstanding or extremely good. For most leaders, it all comes down to being the best in something. I like this definition to a point, but find in lacking at the exact same time.
For me, the best definition comes from the work of Tom Peters who defined excellence as a workplace philosophy where problem solving, teamwork and leadership result in on-going improvements or continuous improvements in the organization. Tom Peters grasped that excellence is a constantly evolving definition because the needs of the customer are constantly changing. He does not define excellence as being a singular act once accomplished, i.e. being the best, as a one and done. Instead, it is a perpetual or continual state of improvement. Furthermore, it is a self-imposed choice, referencing Collin’s earlier idea, rather than on being driven by outside factors. In short, we want to implement that growth with excellence, because we recognize that the customer is constantly changing and we are constantly changing too.
So, when I shared all of this over that marvelous dinner, all involved understood what I meant when I said we needed to “make choices that are sustainable,” I was speaking to the importance of creating the right conditions within the company to attract the right people, retain the right people, and to empower the right people to implement growth with excellence. In essence, I wanted to support people who are mission-driven and vision-led, all day and every day. And understanding the full depth of Packard’s Law is the first step in that journey to generating clarity, alignment, and sustainable execution.
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