People or Systems – Which is More Important?WEDNESDAY, JANUARY 27TH, 2010
As my white paper Topgrading – Was Michael Gerber Wrong discusses it’s not black and white whether people or systems are most important to a company. Jim Collins places an emphatic emphasis on people, noting, “first who then what.” Gerber emphasis is on systems and reduces this to the principle that why most small business people are tied down to their business is a lack of foundational understanding that systems should run the business, so the business owner doesn’t have to.
If you’ve seen the movie The Blindside, you’re familiar with Michael Lewis. My oldest son provided me with the book this Christmas and inside it are some real nuggets that make me recall the great insights I received from his book Moneyball.
If you’re a football fan some of the next paragraph will interest you, however if you’re a business owner who doesn’t like football please bear with me while I offer the parallel Lewis offers to business. The NFL is hugely popular right now. It has gone through some dramatic changes from the 60’s and 70”s to the present revolving around the movement of emphasis from the run to the pass. In the 1960’s NFL teams ran almost 60% and passed 40%. The risk reward at that time favored the run. The average run yielded about 4 yards, while the average pass was 4.6 yards. The difference is that running backs fumbled 3% of the time while quarterbacks through and interception 6% of the time. Can you understand why teams averaged in 1975 24 pass attempts a game? Flash forward to the 90’s quarterbacks are averaging 34 attempts a game. If things stayed the same this could be disaster. In a business with normal returns, the more you produce of a good the less you can sell it for. However the average pass attempt has risen to nearly 7 yards an attempt, and where as in the 60’s most NFL quarterbacks hit on less than 50% of their throws they now compete 60% and most importantly the interception rate has fallen from 6% to 3%. The risk reward has changed, so much that teams have reversed the ratio of run to pass where now passing is 60% to run 40%.
What’s that got to do with my business and people versus systems?
How the NFL got to be a passing dominant league may just provide the insight for your business on whether or not you should place more emphasis on People or Systems. The story behind Bill Walsh and how the lack of quality players influenced an entire league in my next blog.
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