How My Biggest Client Built His Empire Without Managing Anyone

“We don’t talk much about office morale,” my main client said in a memo to his top execs recently. “Why not? Partly because we don’t know much about these things. Another is that we don’t think about it.” (Note: When he says “we,” he means “I.”)

As far as I know, this has always been true. When I first met him 30 years ago, he showed no interest in management issues. And when I began consulting with his company 10 years after that, he hadn’t changed.

“We practice a form of management called spontaneous order,” he’ll say right now if you ask him about his management style. (I call it “benign neglect.”)

“There are some things you can’t ignore,” I used to tell him. “Like P&L statements.”

But he was never interested in the operational aspects of his business. His solution to an operational requirement was to put an ad in the local newspaper, hire a warm body, and let them figure out how to do the job themselves.

When the head bookkeeper came in and plopped the latest P&Ls on his desk, he’d look up from his typewriter suspiciously. I never saw him go through those meticulously detailed reports. But the next day, the stack was always sitting neatly in his trash basket.

He gives his full attention to only four things:

• The quality of his products
• The satisfaction of his customers
• Writing good copy
• Reading marketing results

It’s not that he believes the other aspects of his business don’t matter. It’s just that, as he says, “We don’t know much about those things.” (Note: “We don’t know much about” means “I am bored to death by.”)

But he’s always surrounded himself with smart people — accountants, bookkeepers, marketers, and, eventually, even lawyers — who cared about “those things.” And he hired me.

I was eager to “take charge.” And one of my early contributions to the business was getting operations to run properly. But I never tried to change his management style. I recognized that it was working very well with the six or seven people he interacted with every day. And I realized that he was paying attention to the most important things any business owner can pay attention to: finding the best ways to bring in new customers and keep old customers buying.

This gets us back to his recent memo about the issue of office morale.

“Early on,” he wrote in the memo, “I would get questions about office morale. I remember a trusted employee came to me and said: ‘Morale is very low in the office. The other employees aren’t very motivated. We need to do something.’

“Instinctively, I replied: ‘Find out who has a morale problem and fire him!’

“I didn’t know whether this was a good idea or not. It was just a grumpy reaction, not a well thought out business strategy. But later I realized that this approach works as well as any other. Probably better.”

(Note: I’ve never seen him fire a single soul. And that person he referred to with “a morale problem”? He wasn’t fired. Perhaps ignored.)

He cited a study in the memo which found that an organization of as few of 100 people could spend 100 percent of its time merely working out internal issues.

And that, he pointed out, is exactly the opposite of what you want. Business builders want their employees to be figuring out marketing angles, improving products, and writing better advertisements. They don’t want them “worrying about where to put the coffee machine… or why so-and-so doesn’t get along with so-and-so.”

“The last thing you want,” he said, “is to open the door to a discussion of ‘morale.’ It’s like going to a marriage counselor. When he asks you what’s wrong with your marriage — you’re bound to find something!”

He’s right, of course.

As I’ve often said in ETR, the purpose of a business is to make a profit by providing or selling a product/service. The way to make the business work is to focus all your energies on making the product/service better and the selling more effective. You do those things by learning and caring about the customer. Not by concerning yourself with whether or not your employees feel appreciated.

It’s the difference between having an outward or an inward perspective on running your business.

If you want to be a great business leader, you have to teach your employees, too, to focus outwardly, on their customers — not inwardly, on themselves. It’s the customers, you must remind them, who keep you in business… and pay their salaries.

Effective managers don’t spend their time trying to make their employees happy. Why? Because it doesn’t work. Like most inward goals, it is nugatory and self-destructive — more likely to cause dissatisfaction than to motivate.

This doesn’t mean that you should be insensitive to your employees’ working conditions, benefits, and compensation. My rule on that: Give as much as you can. Having a healthy business means retaining good people. So pay them as much as you can afford and give them plenty of “extras” — so long as you have the profits to pay for it and they have helped earn those profits by making your customers happy.

 

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]