All Products are By-Products
If you read the popular business books out there, they’ll say that a great company is one which beats the market (i.e., it achieves financial performance better than the market average, over a sustained period of time). Are only financially successful companies great? Can’t a company with a minus sign in their cash flow be great? Is profitability the only measure of success? A financier would assent frantically here.
Granted, being profitable guarantees longer survivability, but it does not equate greatness. I have always found fascinating the fact that many seem to numbly compress all the complexity of an organization into a single fluctuating metric: stock price. And I’ve found it even more fascinating that also many put money on top of those oscillating metrics without having a single flying clue what’s going on with the company behind such plots. Like, families owning stock in companies making laser-guided bombs. Anyway, I’m not here to question how financial markets, families nor guided bombs work, I am here only to analyze what company greatness is and is not.
Companies are not just a number on a Bloomberg screen. Nor are they mere money amplifiers. Companies are an intricate arrangement of people organized towards a common goal. Armies of different sizes made of fighters without any other weapons than their talent, their knowledge, and their abilities. Each member from these armies is a person with a full story of their own, with all the typical highs and lows of life: wins, losses, divorces, struggles. Yet, with all that baggage, they gather every day with other colleagues and cooperate to achieve a set of shared goals. That is fascinating. Way more fascinating than the products the company can make. Products are ephemeral and artificial. The ultimate achievement is the harmonic choreography of motivated gray matter behind the products. All products are by-products of this dance. But yes, in general, no one pays for the orchestra, everyone pays for the music.
I’ve been proud, so far, of not having quoted the famous guy in the black turtleneck in any of my past articles, but he said something - albeit cheesy - quite spot on. Alas, here it goes: “do what you love and you’ll never have to work in your life”. The phrase captures the gist of what company greatness is: a great company takes the effort to give each of its members something to do that they love. Less cheesy: a great company gives zero work to their people. Because, when you really enjoy what you do, work does not feel like work in the economic sense of the word (selling labour to pay the bills). When you enjoy what you do, work turns into more like playing, into something which feels natural thinking about, because it keeps your mind engaged, solving challenges creatively, autonomously yet collectively, making someone’s life - a customer, a colleague - better in the process. On the contrary, a company which simply trades manpower for money and dictates what to do is a shithole to be avoided; too many people in the world are trapped in these kinds of organizations without having the chance to choose to go elsewhere.
As I have written before, you’re only great when you’re consistently great as boundary conditions change. As markets fluctuate, as business cycles come around, as hype wanes. As deadlines go missed and stress rises. That’s how true greatness is put to the test. A great company will navigate the storms, absorbing the shock of the waves by means of an increasingly thickening bow. Guiding itself back on track by always minding that first who, then what.