Lead on Purpose

Promoting Leadership Principles in Product Management


4 Comments

It’s all about the people

The first principle of the Five Factors of Leadership is that people are assets. Every organization, be it a technology company or a non-profit charitable organization, is composed of people. The people – not the buildings, equipment or intellectual property – compose the true assets of any company. Everything that exists in the world today, that might be considered an asset in the accounting sense of the word, was once the idea of one or more people who did the work to bring it to market. Knowing this will help product managers (or anyone for that matter) understand the need to tune in to their teams and provide opportunities for their people.

A great example of this principle can be found in the history of Kingston Technology Corporation, founded by John Tu and David Sun. Kingston Technology took off as technology startup in 1987 (during a major stock market downturn). Rather than looking at their situation through the lens of scarcity, they looked for opportunities. They started a small company that produced nothing but memory for computers. To differentiate themselves from other companies (and allow a slightly higher profit margin) they:

  • Provided a five-year, no questions asked warranty (the industry standard was 90 days)
  • Focused on lifestyle for employees and their families
  • Paid the highest salaries for comparable positions
  • Paid 5% of pretax corporate profits directly to the 401(k) accounts of their employees
  • Guaranteed the employees that should the company ever go out of business, there was, in escrow, one year’s salary for every employee.

As a result, Kingston averaged less than 2% attrition, nearly unheard of in any organization. This meant that training costs were reduced, experience levels were high, and people performed to the very best of their abilities.

When the company was finally sold, Tu and Sun set aside $100M of the proceeds and divided it among the employees. The bonus was not as a traditional ‘pay grade relative’ bonus. Instead it was created and distributed based entirely on time with the company. The average payout to all employees, from highly trained engineers to assembly line workers, was $75,000.

As an organization, Kingston recognized the principle that people are the real assets. They understood, and subsequently proved, that it’s all about the people:

People who crave success
People who believe they can achieve
People who believe there is an abundance
People who recognize and appreciate other people.

Disclosure: Many thanks to my good friend Steve Reiser for his contribution to this post.