In this chapter, Fisher discusses how the four important criteria described in Chapter 1 come to be within an organization. Basically, it has to do with the people within the company. While it is somewhat easier to come up with the characteristics of an individual one would want running a small business (a determined, entrepreneurial personality with drive, innovative ideas and skill), it is a somewhat more complex matter to gauge the criteria required for large businesses.
The corporate chief must not only be able, but he must have surrounded himself with able people. One way for the investor to determine if this is taking place is by looking at the salaries of the chief executive versus the rest of the executives. High disparity suggests one person is running the show. Furthermore, the team must not be engaged in a struggle for power, but rather must be working together to achieve corporate goals.
Management must also be constantly grooming juniors who can grow into larger roles as the company expands. While hiring from outside may be necessary at times as a company moves into new product lines or requires new functions, Fisher believes that successful firms that are able to hire from within have a tremendous advantage. Fisher basically claims that a large company that must bring in a new chief executive from the outside is a sign that something is wrong with existing management.
Working as a team is not enough, however. Collectively, management must guide their actions by the following three key elements for a business to be successful:
1) The world is changing at an increasing rate
2) Employees must feel that their company is a good place to work
3) Management must be willing to sacrifice today for sound long-term growth
Fisher uses examples at Dow Chemical, Texas Instruments, and Motorola to illustrate how they have managed to be successful on the items listed above.