If you ask a CEO, “what is your company about?”, he/she will probably describe the company’s products or industry or strategy. That’s all fine, and to be expected, but the more I look at businesses, the more I realise they have an underlying “essence” that transcends their products and industry and strategy (and even people).
Think about the big tech companies such as Google, Microsoft, Cisco and Apple. If you ask what these businesses are about, you’ll get closer to the root of essence.
I’m stepping a little out of my private equity circle of competence here, but I’d say Google’s essence is providing a nurturing environment for employees that supports unfettered research and development. I’m sure they’ll gush some company line about being customer focused or shareholder focused or focused on whomever is asking. But I think the essence of Google is more about its employees than anyone else.
I think Apple’s essence is about design innovation and product differentiation. Again, they may argue they’re customer focused (tough to argue after their recent silence on issues with the iMac), but the truth is plain as day. We don’t really hear about Apple’s employees the way we hear about their rock star counterparts at Google. We don’t even hear about Apple’s newest, most revolutionary technology. But we do hear about design, about simplicity, and about differentiation.
Okay, this is all a little wishy-washy, but it became apparent when we recently tried to hire people for a new investee. There was talk of “culture” and how the new person had to be easy going, easily approachable, and not too aggressive. But that wasn’t the essence of this particular company. We could hire innumerable easy going people, but would they relay “the message”?
It’s worth asking what you’d like the essence of your new/existing company to be. Compare that to what it really is and ask why. As we can see with Google, Apple, et al., essence drives businesses beyond facts and figures. Most in private equity would cringe at such nonsense, but then most aren’t advocates of long-term value creation either.
Image: Essence is more than corporate culture firm