The #1 Predictor of Success in Your Business - The 60/30/10 Rule

Over my 35 years in business, I have seen lots of companies grow, scale and prosper but even more struggle, fail and fade into a distant memory. Over this period, I have developed a Rule that I believe is the #1 Indicator of a Company's potential success. I call it my 60/30/10 Rule.

This Rule relates to the formula by which executives in a company can think about ensuring their company's success. To all of you business leaders out there, if you want to build a company that will succeed in the marketplace, may I suggest the 60/30/10 rule. It is simply this:

60% of the success or failure of your organization is PEOPLE dependent.
30% will relate to your product, service or expertise
10% is Dumb Luck*

This rule is not based on a particular scientific study but rather on my long-term observations in the corporate world. When a company gets great employees, the company is invariably successful. The inverse is also true--when companies lose their most talented team members, the company loses momentum. Stated another way, the direct impact of people to an organization's success is more important than the company's product or services.

My good friend, Amy Rees Anderson, recently wrote in a Forbes article:

"One of the most important lessons I learned during my years as a CEO was that great employees are not replaceable. It isn't the technology or the product that make a company great, it's the people."

When I think about our wonderful growth and experience at Fusion-io, (A company that went Public on the NYSE in 2011) to be sure, 30% of our success was due to the wonderful technology built by the Founders. David Flynn and Rick White. But until it was surrounded with people like Jim Dawson our VP of Sales, Steve Wozniak our Chief Scientist, Lance Smith our COO, Shawn Lindquist our General Counsel, Dennis Wolf our CFO, and even our remarkable Executive Assistant, Shannon Heward, together with terrific Board members like Scott Sandell, Ray Bingham and Shane Robison, it would not have mattered how good the technology was. Until you have the people to shine the proper light on your innovations, you will just remain an average company.

The reason I dove back into running a company after our success at Fusion-io was because HireVue was all about bringing in the right talent to any organization. Even though today's world is obsessed with great technological innovations, it is my conviction that the People element will continue to be at the heart and core of any great company. The CEO of every company still should be the Company's CTO - not Chief Technology Officer but Chief Talent Officer.

A Company's most important assets go home every night. Great leaders will do everything they can to ensure that their valued team members show up the next day as passionate and enthusiastic about their company as they were on the day they arrived on the job.

If you look at the mega successes in today's world of technology, the best decisions they ever made have been "Who" decisions - When Apple brought back Steve Jobs to run the company in 1996, that was a "Who" decision. When Lou Gerstner came back and turned IBM around in the early 90's - that was another "Who" decision. When we hired Steve Wozniak, the man who revolutionized a generation of computing when he invented the Apple computer, as our Chief Scientist at Fusion-io, that was our "Who" decision that turned out amazingly well.

Global leadership authority Claudio Fernandez-Araoz wrote a book last year published by the Harvard Business Review Press entitled: "It's not the How or the What but the Who."

To that, I say Right On!

As Louis Gerstner, former IBM CEO, opined:

"Computers are magnificent tools for the realization of our dreams, but no machine can replace the human spark of spirit, compassion, love, and understanding."

Having said that, today's technology landscape is more dynamic and fast-changing than ever before. Innovation needs to be a Corporate imperative. In order to not just survive but thrive, successful companies have to be on the cutting edge.

But even with that, your process to win the innovation war should start and end with People, that is, your own team members and your customers. Every company should have a structure for driving innovation - but it needs to capture the wealth of ideas from its people. Truly disruptive innovation comes from listening to people and implementing their game changing ideas.

Without exception, every successful business owner with whom I have worked over the years is surrounded by passionate and driven team members and advisors. Great leaders know they can't do and see everything themselves.

The power of people to any organization cannot be overstated. I am fond of the expression that every business transaction has its basis in a personal relationship. Think of the last ten really successful deals your company did. How many came from a direct cold call?

* On the Dumb Luck portion of the formula - there are times in our lives when Karma does occur, i.e, a serendipitous moment when we meet someone or learn of an idea that is a game-changer. Some people seem to have more dumb luck than others. But I am telling you categorically, the harder you work, the more you give to others, and the more you show up at places and events, the luckier you become.

In the end, remember this: Your most important and enduring achievements as a company will be accomplished through people.

Here is a simple lesson I think we should all learn: As you build your firm or enterprise, focus on the talent you are bringing into the organization before focusing on the technology you are building. To be sure, you need to start with a Vision or an idea but then it is critical to bring in the right people to execute on that idea.

And I might add that as you get your company up and running, remember that it is happy, high-performing people that will have the most direct impact on your bottom line. In a Towers Watson study of 50 companies over a one-year period, organizations with high employee engagement had a 19 percent increase in operating income and nearly 28 percent growth in earnings per share (EPS). Conversely, companies with low levels of engagement saw operating income drop more than 32 percent and EPS decline 11 percent.

In a book I wrote last year entitled "Up Your Game, 6 Timeless Principles for Networking your Way to the Top," I offered this tip:

"Nothing will define you more than the people who impact your life at pivotal junctures. So surround yourself with great human beings who can elevate you."

As I said earlier, it is my strongly-held belief that the #1 Predictor of Company Success is: PEOPLE!
As Colin Powell once said:

"People get work done, not buildings, not staffs in a generic sense, and not plans, but people."