Brain Food

Why, in Business, People Trump Strategy

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You probably know that, to execute a strategy successfully, a company needs the right people. But, for some companies, the entire strategy is people.

For instance, in 1966, Dick Cooley took over as the CEO of the bank Wells Fargo. At the time, a major change loomed on the horizon: the deregulation of the banking industry. Cooley knew he couldn’t possibly predict the major changes and turbulence that this would create. So how on earth could he ensure success?

With the right people, a business can weather any storm

Cooley’s solution was people. He reasoned that, by finding the best and brightest minds, his company would find a way to prevail, no matter what curveballs it faced.

The result?

The company prospered in the new business environment and Warren Buffett subsequently called Wells Fargo’s executives “The best management team in business.”

But Cooley was not alone in his views. Focusing on finding great people is an obsession at many successful companies. Such companies tend to hire good people immediately upon finding them, even if no position is vacant. The reasoning is that people with the right character and drive can always be trained and educated to do anything successfully, whereas people without these attributes will never change, no matter how much training they get.

Discover other secrets of great companies – including what hedgehogs have to do with success – in the blinks for Good to Great, by Jim Collins

The Systems That Are Almost Unbreakable

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What happens when you drop a wine glass on a hard floor? Obviously, it shatters. Glass is fragile – when put under stress, it breaks.

The concept of fragility is easy to understand, but what about its antithesis? What do you call something that gets stronger under stress?

Antifragile systems need a bit of pressure

Although most things will eventually break if you apply enough pressure, there are a few systems that actually benefit from stress. Periods of strain actually cause them to grow more powerful.

Muscles are a great example. When you lift weights or go jogging, you’re placing your body under stress. But your muscles don’t break. In fact, it’s exactly this stress that causes them to grow stronger.

However, a word of warning: even though antifragile systems love a bit of rough and tumble, you shouldn’t push them too far. Making them stronger is a gradual process. For example, a rookie gymnast may tear a muscle if she immediately attempts the most difficult moves.

Another example of an antifragile system is the economy. Recessions actually force companies to improve their operations, thereby strengthening the economy in the long run.

For more on the power of antifragility – including how you can build antifragile systems yourself – read our blinks to Antifragile, by Nassim Nicholas Taleb.