The Many Lessons of Andy Grove

Time 1997We lost a great business leader earlier this year. His name was Andrew S. Grove, known to many as Andy Grove.

He survived Nazi-occupied Hungary as a child, then Soviet-controlled Hungary, immigrating to the United States at the age of 20 in 1956.

He received a Ph.D. in chemical engineering from U.C. Berkeley and became a star engineer at Fairchild Semiconductor.

He left the stability of Fairchild Semiconductor with Silicon Valley legends Robert Noyce and Gordon Moore when they co-founded Intel. Together they later entirely reinvented Intel from a manufacturer of memory chips to the dominant producer of microprocessors.

He was Intel’s CEO from 1987 to 1998, the famous “Intel Inside” years when personal computing exploded from the hobby to the consumer market.

He wrote the legendary book Only the Paranoid Survive, published in 1996 and still a must-read for anyone who wants to understand innovation and the power of creative destruction.

For many years he co-taught a course in strategy with my dear friend Robert Burgelman at the Stanford Graduate School of Business.

If you think everyday people always had the internet, email, streaming video, and smart phones, you have a loose grasp on current events, let alone history. Andy’s leadership at Intel took us from the 8086 to the Pentium chip, from monochrome to color displays, from floppy to CD disks, from no hard drive to software that could be installed.  If you didn’t live through the transformation of the universe from analog to digital, from buying hardware and software at Computerland and Electronics Boutique to Best Buy and Costco, it’s hard to explain the magnitude of this growth cycle. Andy is one of those guys who really changed the world.

Okay, you get the point, about 0.001% of mortal beings have a resume close to his. You can read his full bio on Wikipedia. I want to share something more personal about him, the key takeaways from the few times I met him in person during roadmap briefings at Intel in the 1990s. Among the many lessons I learned from Andy Grove, here are five that continue to guide me daily:

  1. Creative Destruction Is Real – Whatever product you ship today is already obsolete, no matter how well it is selling. If you are not working on the replacement for it, someone else is. That is why you have to be paranoid. You will always be correct if you presume you are about to be outperformed in the marketplace of goods and service. Never get comfortable, never rest on your laurels, or you will be gone in a heartbeat, wiped off the map while you are collecting your awards for last year’s success. I learned from Andy that almost every startup that presumes it is built to last is almost certainly on a crash course with obsolescence, that the vast majority of even robust corporations today last about half as long as a human life. Companies don’t reinvent themselves, they are reinvented by courageous, visionary people.
  2. Beware the Strategic Inflection Point – By the time a market has fully morphed at scale, it’s way too late to react. You can’t see a strategic inflection point coming, you can only acknowledge it in hindsight while confessing your memoirs. Sorry, Monsieur Business Plan, the landscape changes in real time! Because you have learned to be paranoid, you are going to figure out one dreary morning that something you are doing in your company is hugely wrong. Some product you are readying for release is going to tank no matter how much you spend on marketing. Remember when Bill Gates discovered the internet? Remember when Mark Zuckerberg discovered mobile? Those were Intel-inspired moments. They turned their companies on a dime the same way Andy helped turn Intel on a dime when they realized the market for memory chips had commoditized and microprocessors were the way forward. I learned from Andy to always remain nimble, that sunk cost is always sunk cost, eat it and move on. Achieving competitive advantage before others see it coming is where your investments must be all the time.
  3. Science Is Inescapable – No matter what your market cap might be, you can’t fake math. Pithy slogans don’t make better computers, engineers do. For Moore’s Law to work (roughly twice the computing power will be available every 12 to 24 months for the same cost) staggering volumes of calculations have to take place on a tiny silicon chip without the transistors melting down. If you want to win at the engineering game, it takes the boldest and brightest team of advanced engineers you can assemble. They need the time to do the math, which is why Intel was already designing the 486 chip while shipping the 286. You can’t predict when the equations will be solved, you can only form a thesis and test your working models until they clear quality assurance. I learned from Andy that there are no sustainable shortcuts in quantifiable outcomes, the minimum viable product be damned! If you try to cheap your way through a poorly constructed algorithm, science will have its way with you and the result won’t be a proud moment.
  4. Constructive Confrontation Works – A lot of people who didn’t grow up in the Intel culture found it an impossible place to survive. Intel was a place where undisciplined, random conversation was never the norm. Almost anything anyone said could be challenged directly and aggressively by anyone in the hierarchy. Even when you were visiting Intel as a channel partner, anything you said could get shoved down your throat as instantly as you said it. Was this nice? It wasn’t meant to be nice. It was meant to improve products, driving ceaselessly toward unattainable perfection. That was how Intel maintained design and manufacturing leadership for a generation, by always challenging assumptions, never accepting compromise or forging an unholy consensus simply to move on. It isn’t the right culture for everyone, but at Intel, you bought into it or got your walking papers. I learned from Andy that in constructive confrontation, it’s always the idea that gets attacked and never the person. You might feel that you are being attacked, but you aren’t. Your ideas are being made better or mercifully eviscerated.
  5. Resilience Is a Mandate – Imagine a guy who made it from the Holocaust to the highest level of American thought leadership—all the obstacles, all the challenges, all the knock-downs, all the reinvention. To embrace the example of Andy Grove is to embrace the notion of resilience as the single greatest motivator available to anyone at any stage of emergence. You don’t give up, you don’t give in, you don’t quit. You always expect more from yourself. You learn from your mistakes, you study your failures, you learn from your adversaries. Want to survive? Want to triumph? Want to leave a legacy? There is no other way. I learned from Andy that you stay in the game, you look forward at opportunity, and you try again—only harder. Resilience isn’t a nice-to-have. Resilience is fuel for the soul.

Andy was a living example of realizing possibility through discipline. It is extremely rare to find an innovator with startup DNA who can personally evolve into the CEO of a multinational corporation. It is equally rare to find a top-notch engineer who embraces consumer marketing as a key strategic initiative. Andy championed the “Intel Inside” campaign as a branding mechanism that made an otherwise invisible component a necessity for personal computer manufactures to tout. When the consumer press seized upon an obscure failing in a sample of Intel microprocessors, Andy accepted the criticism as a byproduct of his brand promise. He insisted his team correct the deficiency with renewed quality assurance rather than defend the company’s position with arguments the consumer would never understand. He was book smart, business smart, and street smart all at the same time. He gave back way more than he ever took off the table in every way imaginable.

If you ever worked on one of my teams, I probably bought you a copy of Only the Paranoid Survive and quizzed you on it a week later. Andy’s words, thoughts, and ideas remain that important to me. He was an industry icon and a human being impossible for me to forget. I hope none of us ever forgets Andy. He remains a truly one-of-a-kind inspiration.

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This article originally appeared on The Good Men Project.

Photo: Time Inc.

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Built to Launch?

I aspire in this post to be among the elite—one of the few business bloggers on the planet currently not commenting on Marissa Mayer becoming CEO of Yahoo. I have never met Marissa, but her reputation speaks strongly for her. I wish her well because I always want good people to succeed, and in this case I also want to see Yahoo succeed. I hope she reads my article about Yahoo from last year that predated her last two predecessors and figures out a way to restore much-needed competition to the landscape of search. Hmm, seems I’m writing about her. Okay, enough said. Got get ’em, Yahoo! Stop.

Now my real topic for the week—not surprisingly, also about succession.

Venture investors Marc Andreessen and Ben Horowitz have been steadfast in their support for keeping Founder/CEOs at the helm of the companies they back, from early blog posts on their site that state their philosophy to more recent comments in the Wall Street Journal that reinforce their sometimes contrarian assertions. Not only do they believe most deeply in the Founder/CEO success model, they have championed multiple class shares that keep CEOs in authority with majority control even without majority ownership. Their point of view is clear, consistent, and well-argued—and thus far their financial returns in aggregate have been extraordinary. They want vision, they want independence and long-term creative thinking, and they want continuity.

I am not sure I have an absolute opinion yet on absolute power for a start-up CEO; we’ll have to see how those play out over the next ten or twenty years. I do worry that without senior team loyalty and continuity, it may not matter whether a CEO stays or goes. Teamwork is what matters in today’s intellectual property centric companies, and if your team is not stable, I wonder if your company can remain so. Surely new blood is a great infusion when parsed appropriately, but it needs to be in balance, at equilibrium with a set of players we can count on.

What about the top-tier executives, perhaps a level down, who seem to jump freely from ship to ship, following their own personal muses, particularly after liquidity gives them the ability to set themselves free? Is this good for companies and long-term shareholder value, for companies with massive capitalization that are taking on investment—public or private—ostensibly with some hope of being Built to Last?

Clearly within our pressured and fragile economy, the bonding relationships between employers and employees have become increasingly tenuous. “At-will employment” is not just boilerplate in an offer letter, it means what it says, that jobs are temporal. Employees not under contract may depart a gig when they wish without much obligation, and employers may equally freely dismiss them (to the extent those decisions are not discriminatory) without much warning or explanation. Companies are predisposed to protect earnings and cost-cutting can be a tactic to achieve those goals, the favor of which gives employees good reason to always be in the market. Although there are any number of topics I can extract from that thread and will do so in the future, that is not my key focus here. This is not about everyday turnover and the anxiety it creates, it is about senior level turnover as a litmus test for investors.

Reality is, a lot of high-profile employees in high-profile start-ups seem to jump ship early these days. I am not so sure that they are cashing in as much as their attention spans or personal desires lead them from one thing to the next. Some examples:

• Two of Twitter’s co-founders who served as CEO left the job and their day-to-day roles, although one returned, not as CEO, but as head of product. The third co-Founder also left day-to-day responsibilities.

• Facebook’s most recent CTO, who joined the company in 2008, departed voluntarily almost immediately following the IPO. Facebook also lost an extremely high-profile CFO in 2009, and a number of other prominent C-level executives have churned through in the years leading up to the IPO.

• Groupon’s former COO, a Silicon Valley veteran brought in to steady the ship, spent about a year on the job day-to-day before moving to an advisory role.

• Yahoo continues to make headlines with five CEOs in five years, although the situation here is different. The last one to leave on his own timeline was media veteran Terry Semel, who preceded the five. Perhaps more curious at Yahoo is the level below CEO, where the turnover has been even more active, voluntary or otherwise.

• Google is now being celebrated as iCEO University, for which it has reason to be proud with strong executives like Sheryl Sandberg, Tim Armstrong, Dick Costolo, and now Marissa Mayer all willingly accepting significant challenges. My sense is this is sustainable as long as founders Larry Page and Sergey Brin stay on the job (guided by the advice of Eric Schmidt), but at some point the spinning off of entrepreneurs may take a toll as it did at once great legendary giants like Sun and Silicon Graphics (also keep an eye on HP).

It is hard to fault someone with talent and wealth for leaving a position with an “old company” to tackle a brand new start-up concept. They have the creativity, they have the yearning, and they can absorb the personal risk. Yet these aren’t exactly old, mature companies they are leaving, even in internet time. If talent retention is critical to continuity and leadership is demonstrated by example, what does it say about loyalty to the “rank and file” millionaires of Silicon Valley hungry to pursue their dreams when so many of the top dogs or near top dogs are endemically antsy?

Can you build a company that is Built to Last when many of your brightest employees—especially those made wealthy with capital they can reinvest—are thinking Built to Jump? Should shareholders in emerging high-valuation private and public companies be concerned with the New World of high turnover that is largely viewed as the way things are? There is already risk enough in holding stakes at the high valuations these companies will need to grow into, but if these are essentially knowledge-based companies where the key assets go home to their families each night, how much should owners worry whether they come back tomorrow or start a new company that’s more fun? Are these companies Built to Last or Built to Launch—launch themselves to early prominence, and launch the careers of the stars who emerge from their ranks?

Retention and the war for talent are surely talked about a lot, but I wonder if these are just buzzwords now, if key stakeholders really are losing sleep over the next spun-off employee or just prepared to roll with the punches. For anyone who has ever led a company, the notion of culture is no small issue, and companies where the culture is strong have a heritage of continuity that gives them a shot at longevity. Do we now assume Creative Destruction is such a powerful force that short-lived companies are a norm, regardless of culture and continuity? I wonder, and look forward to checking the Fortune 500 again for a few more decades to see how this plays out—not to mention the long-term trend on aggregate net job creation we so desperately need for our economy to go the distance.

I am not suggesting that employees should stay past their welcome or interest level, and in no way would I ever want (or tolerate as a manager) any form of stagnation in the form of tenure-based retention or retention for continuity’s sake. The case I am trying to make is for a tiny bit of balance in an Old World concept known as loyalty—which has been very good to me on both sides of the desk for most of my years on the job. It has been said that in today’s world loyalty is between individuals, not within companies, and there is every reason to understand how that has come to be. Yet if companies are not loyal to employees and employees are not loyal to companies, can these kind of companies really be long-term investments for shareholders? Said another way, if the system and talent are not demonstrating loyalty and commitment, should investors?

Dodging The Greatest Hits Graveyard

I’ve kept a frequent presence at rock concerts ever since I was a kid. Back in the day, live rock and roll shows were reasonably affordable—even if you did have to sleep on the street to get tickets—because bands toured in support of the latest record they had produced. Live shows were a catalyst for selling singles and albums, pushed local radio play, sold t-shirts and memorabilia, and paid for the road antics of the bands who could live and party on “permanent vacation.”

The concert world today is obviously different because the ecosystem is so drastically different. There are still monster arena tours like U2, Springsteen, or the Rolling Stones 50th (gasp!) corporate sponsored anniversary. There are small gatherings of devoted fans at venues around 5000 seats for tireless road warriors like Cheap Trick or Chicago. There are nostalgia plays in casino showrooms or destination bars with one or two surviving members of one-hit wonder acts. And there are tremendous new stars like Adele who play the old game a new way and can still fill amphitheaters at top prices, sell plenty of music downloads, and inspire faith that the CD has a tiny bit of life left for the bygone tribe.

What I have noticed over the course of this music evolution is the underlying key to longevity and not moving down the food chain hasn’t much changed—the survivors tend to deliver a healthy balance of old and new material. This is no small problem, as the fans who come out to concerts are no doubt screaming for an artist to play their big hits. It’s natural. It’s satisfying. It’s a trap.

TSO2005A few weeks ago my wife and I went to see one of our favorite groups, the still somewhat niche band Trans-Siberian Orchestra, best known for their annual Christmas shows and the ever-present holiday single, Christmas in Sarajevo. TSO blends heavy metal power chords with classical music and electric violins, usually with an interspersed layer of spoken storytelling. Several years ago they started branching out from Christmas themes, recording and touring a fantasy tale called Beethoven’s Last Night. This was the first time we had seen the show performed live, and while it was familiar to us, it was not well-known to much of the devoted audience. That was pretty brave, I thought, to tour a concept album that was not necessarily top of mind with their audience, but then they did something I found even more courageous. Toward the end of the show, when they had finished playing Beethoven and the audience expected they would play some oldies, they instead played several entirely new songs that had not even been released online. No one had heard these songs except those who had seen the tour, and the applause following was as you might suspect a bit tentative. The nervous quiet during these songs was not because they were bad, it was because they were new. If you are a regular on the live music scene, you know that awkwardness—but without it, there are no new hits.

New music has to be debuted at some point, that’s why it’s called a debut. Audiences can be very tough on new songs, they pay good money to hear hits and the survival of any act is contingent on meeting the expectations of fans. Yet long-term success is equally contingent on innovating, and facing an audience with the unknown or unfamiliar is always a daunting prospect. Who would willingly trade thunderous applause for quiet, polite clapping? The greatest acts know they have no choice.

Most of the hot Top 40 bands in the 1970s and 1980s would periodically release Greatest Hits albums, mechanical collections of their charting singles, usually pushed by their record labels for bankable cash acceleration. Some of these became all time bestsellers, notably The Eagles and Elton John. The question I always used to wonder when I handed over my cash for a dozen song vinyl collection was whether this was the end of the band or the beginning of a new chapter. For too many, we know how that played out, and we know where those bands are playing today, if at all. A Greatest Hits or “Best of…” album was easy money, the equivalent of predictable thunderous applause. Pushing out new work would remain the heart of risk, and the genesis of going to the next level.

Nothing about this cycle is unique to music. Business is the same, especially technology wrapped as consumer products. You need to play to your familiar success, the current incarnation of your brand, but the moment that catalogue is fixed, you’re doing dinner theater rather than headlining at Carnegie Hall. Think RIM with the standing ovation worthy Blackberry, Kodak and Polaroid with endless scrapbooks of silver snapshots, perhaps now Best Buy longing for a different curtain call than their former contender Circuit City. They all climbed the charts, but staying there remains a different story.

Steve Jobs liked to say that he never believed in focus groups, because it was not the job of customers to tell you what they wanted—how could they know what they wanted when it hadn’t yet been invented? No civilian could concretely describe iTunes, the iPod, the iPhone, or the iPad prior to their release. You can only imagine how many pundits prior to the success of these inventions could tell you of their impending doom solely on the basis of unfamiliarity. Of course Apple never stopped marketing its core line of computers during this unbelievable expansion of reach, they were still playing hits while composing new material and seeding it to the faithful, those with whom they had established profound affinity and could ask to trust them further with the unknown.

I also don’t think it is a coincidence that Steve Jobs was a huge fan of The Beatles, who in an active career that spanned all of about eight years never stopped putting out new material, took themselves off the road to focus on composition and the creative process, then reinvented their sound with almost every album, including a few radical pivots like Sgt. Pepper. Is it counter intuitive that the actual career of The Beatles was so short despite all that new material and no Greatest Hits collection until after their break-up? Possibly, but if impact is the name of the game, it is hard to dispute that The Beatles succeeded most of all at avoiding that most dreaded of dead-ends, The Greatest Hits Graveyard. Their incomparable legacy remains vibrant because they pushed themselves so hard to be innovating all the time while crowd pleasing.

Celebrated descriptors like “Built to Last” and “Good to Great” are hard-won praise tied to nimble companies for navigating the same difficult balance for so many years of reinvention. It’s a lesson in courage and vision that is as difficult to learn as it is to replicate, but it is that very bravery that can guide any individual career from ordinary to enviable. Facing the anxious reception of the untried might not be pleasant when a clear alternative is available, but it’s the only trail that bypasses the one-hit wonders.

Eyes on HP

Hewlett-Packard is not just any company. It is iconic. Like Disney, Ford, General Electric, Apple, Microsoft, and a few others, it is not only part of business history, it is deeply wound into the fabric of American history. Modern Silicon Valley pretty much begins with Hewlett-Packard—the foundations of information technology as a new sector of productivity, the power of innovation, the hardware/software product life-cycle, the beginnings of west coast venture capital, and the splitting atom of employees spinning off from the mothership to become founders themselves. The Hewlett-Packard story until recently is a magnificent tale.

HP WayBill Hewlett and Dave Packard really did start in a garage. One of the very first products they sold was a precision audio oscillator, to of all people, Walt Disney. They captured their thoughts in a book, The HP Way, reinforcing the need for a company to have a mission and a vision. When we talk about a job being more than a paycheck, a lot of that comes from the work ethic and values of Hewlett and Packard. They set the stage for a generation of entrepreneurs. They made it okay to fail, as long as that failure contained learning that was honestly disseminated. HP on an engineer’s resume was gold. The sales and marketing team was second to none.

It is almost impossible to understand the impact of a global company with over $125B in annual revenue and 325,000 employees changing CEOs four times in six years, not including the interim CEOs between hires. Carly Fiorina, Mark Hurd, and Leo Apotheker each left the company for different reasons, and while the HP board is now taking a lot of heat for perhaps not scrutinizing their decisions around these leaders carefully enough, that is unfortunately water under the bridge. The company is now under the direction of former eBay CEO and recent California Gubernatorial candidate Meg Whitman, who will need to move quickly and definitively to steady the ship.

HP has seen numerous mergers, divestitures, and acquisitions throughout this period of seismic change, and each time one strategy replaces a previous version, the impact is costly. Whitman has said she believes the strategy in place at HP now is largely correct, so if the issues she is facing are managerial, perhaps we will see a positive impact sooner rather than later. My guess is she will dig into strategy a bit more in the coming months, and then move aggressively to make her mark. The sooner she can restore confidence with customers, employees, and shareholders, the better it will be for all those who do care deeply about the company’s future.

Why is HP so important in the scope of business enterprise? When you dig into exceptional business books like Built to Last and Good to Great, both by Jim Collins, you realize just how hard it is for even the strongest corporations to go the distance in an environment of creative destruction. As Collins points out so often in the data he cites, only 62 of the original Fortune 500 companies named on the original list in 1955 remain there in 2011.

The great former CEO of Intel, Andy Grove, talks at length about the “strategic inflection points” facing companies at every stage of their evolution—particularly technology companies—in his critical study Only the Paranoid Survive. Grove makes it all too clear how easy it is for a well established organization with vast resources and expansive markets to miss a fundamental change in the continuum of progress, only to catch its error to late to be fixed, having been lapped by any number of competitors.

Where Collins approaches the challenge largely from the aspect of defining and reinforcing a brand, Grove looks at it from the point of view of ceaseless innovation and refusal to accept the status quo as satisfying. Both approaches are vital, but neither has a chance in the face of organizational chaos. Products, features, and benefits must remain in constant flux, but ideals and values are their balancing counterparts. Remove the rudder from a very fast ship and it really doesn’t much matter what is powering the engine room.

It takes both leadership and strategy to steer one of these mammoth ships through the rough seas of business change, and simply taking those notions for granted is the easiest way for a company to fall from grace. Robert Burgelman, a colleague of Andy Grove who teaches strategy at the Stanford Graduate School of Business (and is also a former board member of mine), tells us that strategy becomes real when we apply resources to concepts. We see that very much in action now at HP, but we see those resource decisions changing too frequently in real-time. The leadership of the CEO drives that strategy from concept to action, from white board idea to investment cost center, and if strategic shifts are reversed before cost centers become profit centers, value can be destroyed at an astonishing pace.

No CEO or strategy is meant to last forever, but change them too often, and costs pile up without reward. The toll on staff morale is immeasurable, and the lost jobs from reversing decisions may never be recovered. Employees feel the impact in loss of income, shareholders get pummeled. Customers just move on.

It’s time now for HP to turn the corner. As I said, HP is iconic, it is Silicon Valley. We need it as an example in the tech sector of a company that is Built to Last and can continue to grow from Good to Great. HP dates to 1939. It is the standard-bearer for all the great companies that followed its mantra, were born in garages, and now have office space in the adjacent neighborhoods. If we want to believe companies like AOL and Yahoo can find new creative life through reinvention, we have to have models for long-term success. We need succession plans that show great companies can transcend their founders and achieve new levels of success by ensuring that values are more than words in the employee handbook, and that they are liberating, not confining, as long as the leaders who embrace them help guide their teams through increased commitment to innovation with coherent planning and rigorous evaluation. No shooting from the hip, but no fear of change.

On a pragmatic level, we also need the jobs, particularly in HP’s home state of California. Surely the majority of new jobs in our nation will come from small business and startups, but we can’t afford to lose the ones we have in the enterprise, not for the families who depend on them, not for the state budget that needs the payroll tax. Because of its deep history in the community and legend, HP leads the ethos in Silicon Valley in so many ways, its stability is a reflection of hope, its instability a drag on the headlines when we need a shot of optimism.

This is a once in a lifetime career and company defining opportunity for the new CEO at HP. It’s like getting the chance to manage the NY Yankees after three bad seasons no one saw coming. They might be on a losing streak, they might have made a bunch of bad trades, but they’re still the Yankees. Everyone knows they can win, that they have the resources to win and a history of winning. Meg Whitman just needs to ask herself, what kind of game does she want her team playing, who does she want in the line-up, and where does she need to better read the competitive landscape. A little consistency in management will go a long way.

Let’s hope Hewlett-Packard has it right this time. There is already new criticism of HP’s board that they acted too quickly in hiring Meg Whitman, that she should have first been named interim CEO, or that her background is not right for the job. Their decision has been made, so I am rooting for the new CEO. This isn’t politics, this is P&L. It is critical that Meg gets this right and succeeds. A win for her in this role is a win for all of us.

Character, Competency, Compatibility

The Three Cs of a Gig That Fits

Experience has taught me there are largely three things that matter in getting to yes on a hire. Anything less and both sides are settling. Settling is a precursor to the inevitable. Get all three, or don’t make/take the offer.

Character in my mind is a priori. If someone is not of solid character, nothing else matters because the first time something goes wrong—likely less than fifteen minutes after they fill out the forms in HR—they will be faced with a decision: cop to the wrong and seek help in righting it, or bury it deep in the corporate sewer. I read once where a smart boss told a new hire, “If you blow it and you tell me, we have a problem; if you blow it and don’t tell me, you have a problem.” If both human beings are of sound Character, a visible shared problem is always better than a hidden solo problem. Character is honesty, integrity, the whole shooting match. Fail that test, don’t turn the page.

Competency closely follows Character, a good deal less ethereal but equally measurable. Do you have the experience and learning to at least approach the tasks you will need to handle? If the job involves math, you must know what an equation is. If the job requires sales in a language other than your own, you probably should speak that language (unless you are specifically advised otherwise, in which case you probably should speak it anyway to rise above the pack). If someone asks you how you did this or that in your last job, you must be able to tell them, with specifics. A forensic accountant is not a nuclear engineer—you just can’t fake either one of those. Don’t try.

Compatibility (sometimes known as Chemistry) is the human connection. This is the one you can’t measure, validate or pre-sell. It’s a gut check. You know it usually within seconds of meeting the person on the other side of the desk. At the highest levels, it is a bridge of trust, where two people decide on a first impression that they possibly can work together, and then in subsequent meetings commit to the notion that they probably can work together. There is mutual respect at the levels of Character and Competency which allows Compatibility to be possible, and it most often expresses itself in easy conversation, unforced give and take, and with some luck a common sense of humor. Compatibility is the bond that lasts through the greatest of hardships, pulling leadership teams together in hard times and allowing the grandest of celebrations in good times.

Let’s presume at almost any late stage of hiring you are going to be out of the running if you haven’t met the Character and Competency hurdles. How important is Compatibility? It’s everything.

You simply aren’t likely to get anywhere near a final decision without Character and Competency, and in the final rounds, presume that this has become a level playing field, because it probably has. All final candidates are likely good candidates. Now the hirer and candidate both have to decide if a finalist is going to fly. That decision in almost all circumstances will be based on Compatibility.

Why do I share this? Because increasingly I am sourced as a reference for senior level candidates, but I can only help a recruiter or hiring manager and the candidate with the first two items, Character and Competency. Honestly, by the time they get to me, everyone involved has pretty much figured that out. References checks are not entirely perfunctory, but they aren’t far off. Sure, if you lied a reference can serve you up, but then you shouldn’t be a final candidate anyway. The real challenge is Compatibility, and that is entirely up to you. Don’t downplay it, don’t dismiss it as vapid politics. Acknowledge that human beings want to put themselves in the best of all possible situations knowing that the worst of all possible situations will emerge on a moment’s notice. If you have to fight a war, you want the people on your side to be on your side. The interview process is where you find out if that is possible. Be aware of it, accept it, prepare for conversation that addresses it. Compatibility is the determining factor in a hire; that is something you just can’t fake, certainly not in the long run. You want pain, try being in any hierarchy without compatibility.

Remember, most people don’t quit jobs, they quit bosses. Get this right at the hiring stage and everyone will be a lot happier and more productive, creating opportunities that are Built To Last.