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ChangingMinds Blog! > Blog Archive > 18-Nov-18

Sunday 18-November-18

The Pick-of-the-Crop Effect: How industry leaders sustain their lead

There is a tendency that when a company becomes an industry leader, they remain at the head of the pack for a considerable time, losing their crown only after a sustained period of incompetence or when industry forces change dramatically, such as when wordprocessors replaced typewriters or when internet companies provided alternative ways of performing traditional business.

However, there is another, hugely important factor that is often missed.

People like success and like to work for successful businesses. Such businesses may offer good pay, but more importantly they offer status. It is so much nicer in conversation to say you work for Coca Cola than Valley Springs Cola. Big companies are also more visible and simply because potential candidates can see them do more people apply for job positions.

The result is that industry leaders have better quality applicants for any jobs. They can go to universities and make offers to top students and have a fair confidence that their offer will be accepted. As a result, the people who work in big companies are, on average, likely to be of higher competence than those in smaller companies. This is not always true of course as clever people may seek to get in the ground floor at startups, want to work in particular places or just do not want to be a small cog in a big machine. Yet the point remains: big companies, more and better applicants.

The key in this lock is the most important process in any business: Selection.

The way you seek, assess, appoint and promote people is a critical factor in the success of your business. If you use a quick interview on the premise that you know you can sum people up pretty quickly then you will be like many business people who appoint in haste and repent at leisure. People who look good in interviews may well turn out to be not as great as they boasted. Good selection should be a far more careful process, testing factors such as technical competence, social skills and cultural fit.

You also need to make sure you are attractive to prospective candidates. People choose employers (and the best people are very choosy) on brand and brand values. When they boast to their friends about where they work, they may think twice if you have a socially disliked product, such as tobacco, or have received negative press on topics such as equal opportunities.

Size is hence not the only factor, though it is often important. To take advantage of having the pick of the crop, you need to be both attractive and very carefully selective. But then once you have great people working for you, this is the engine that powers all success. And great people are also great adverts, who tell their smart friends and family and create the products and events that make you look great.

The biggest danger here is hubris. Big companies that are successful can start thinking that they are too big to fail or that they are geniuses and whatever they do will be successful. This is not always the case and great companies always have great leaders plus great employees who focus on both the present and the future, consistently delivering customer-satisfying value today while reinventing what may be to come.

Bottom line: It's all about the people, so focus hard on them.