During a 24-year career at McKinsey, John Brady advised chief executives of consumer giants. Here he shares his top ten insights
1. WASTE TIME GOSSIPING
Believe in the power of gossip. Most of the really interesting insights I gained as a management consultant happened either when I was chatting in clients’ office doorways at the end of the day or drinking with them late at night. In such circumstances you’re able to think more freely and pick up details that are often far more important than the obvious stuff. There is a theory that we’re at our most creative on the edge of consciousness – that our brains are sent into overdrive and enable us to solve seemingly intractable problems. Gossip has a similar, turbo-charging effect. It helps you make connections in your head that you might miss under the pressure of a normal 9-5 regime.
2. MAKE SLOW DECISIONS
When making decisions, everyone should try to learn, and then follow their own mind rhythms. Some people like to jump to answers very quickly, others prefer to ponder issues overnight. To avoid being forced into making poor choices, it’s important to work out which camp you’re in. I’ve watched people make terrible mistakes simply because they’ve been pressed into a snap decision, rather than allowing themselves the chance to mull it over. Be thoughtful about how your own brain works, and respond accordingly.
3. UNDERSTAND THE TRUE IMPORTANCE OF CREATING VALUE
Too many business leaders don’t think clearly enough about what creating value actually means. In simple terms, in the current economic climate if you’re using the money borrowed from the bank or investors to deliver more than a minimum nine per cent return, you are creating value. If not, you’re destroying value and the investors may as well have put their money in the bank. A surprising number of people confuse creating value with creating something that is valued.
4. FIND A SECRET FORMULA
Many businesses lose sight of the formula that helps them make money. In retail, for example, they often get consumed with just opening the door and closing it at the end of the day. But the real skill can be sourcing products that no one else can, or sourcing them better. If, for instance, you’re selling wine, the mechanics of opening and closing the store are pretty unimportant – the secret formula might be finding vineyards no one else can reach. Discovering a formula is hard and there are many blind alleys. But a clear strategy will establish what really matters, and help you work out how to do it better than everybody else.
5. THINK BEYOND THE OBVIOUS
When considering a course of action, one typically thinks of the first order effect. For instance, the first order effect of introducing a seatbelt law in this country was that passenger deaths declined. However, since drivers knew their children were safely strapped in, they drove a little faster – so the number of pedestrian fatalities increased. That’s a second order effect, and these are at the heart of smart thinking in business. Unfortunately, second order effects are far more easily identified with hindsight. But if you start thinking in those terms, you stand more chance of spotting them.
6. FOCUS ON WHAT’S WORKING
If you ask a businessman who owns 30 shops what he’s really focusing on, he’ll tell you his priority lies with his five worst performers. I think that’s wrong. Instead he should be concentrating on making his top five performers even better – they’ll be far less time consuming and give him far more bang for his buck. In fact, there’s an argument for axing the bad ones completely, leaving him more time to spend on the profitable areas of his company.
7. JUDGE QUALITY NOT NUMBERS
Arguably the most important job of any chief executive is thinking about his staff. Yet regular evaluations are seldom carried out in Britain because we’re too embarrassed to assess our colleagues. On the rare occasions assessments do happen, businesses tend to look for quantitative measures – invariably poor surrogates for real performance. Ask anyone to identify the good and bad performers in a business and they’ll be able to do so. We do it all the time without thinking, so it’s easy to pick up enough qualitative measures to give a surprisingly accurate reflection of a colleague’s performance.
8. BITE THE BULLET FAST
I’ve never found a chief executive who said he has moved too early in removing underperformers. So if you’ve made up your mind that someone is not going to deliver, you should let him go – mainly for his sake rather than yours as you’re wasting his career by letting him stay in the wrong job. Bizarrely, most supposedly tough chief executives drag their feet in firing senior staff – perhaps partly through cowardice but also through fear that it will damage their companies. But businesses are much more robust than people think. You can remove a number of senior people and a company will carry on running smoothly for months. Ironically, this includes chief executives.
9. GET STRESSED.THEN DROP A BALL
Stress can be really useful in helping to galvanise you into action. Rising up to a certain point it can improve your performance, though passing this level can be destructive both personally and professionally. It’s therefore best to learn where your sweet spot is and, bizarrely, try to bring yourself up to that level without exceeding it.
A lot of chief executives are good at managing stress and everyone has their own techniques. The worst type of stress is typically the feeling that you’ve got too many balls in the air, which are all beyond your control. One way to address this is to drop a ball. Usually, it won’t matter. Either the ball will sit there to be picked up later or someone else will do it for you.
10. BE A SNEAKY DIARIST
I remember working with a chief executive who deliberately used to double-book his diary. He’d have two meetings happening in two separate rooms in his office.
If one team needed his input, he’d stay and focus until they were on the right track. But if the meeting was going well, he’d slip into the other. If both were running smoothly, he’d move on to something else entirely.
Obviously you have to be very important to get away with this but the principle is sound. Decide where you can add most value and don’t waste 20 minutes on something if you’ve cracked it in ten. And never attend meetings where you’re there for form’s sake alone.
This is an extract from ‘25 Years, 25 Insights’, published by Piper Private Equity to mark its 25th anniversary. A specialist in consumer brands, Piper founded Pitcher & Piano and has helped grow businesses such as Boden, Las Iguanas and Maximuscle.
John Brady joined McKinsey & Company in 1980. He developed its retail practice, became a director and led its UK consumer sector, European retail practice and European marketing practice. In addition to sitting on the Piper advisory panel, Brady is also a non-executive director at Greene King, Aegis and Hanson.