Well, sort of.
With preferential voting, you need a majority of the votes to win. Also, you are not required to rank all of your preferences as a voter, if you want to you can just put down your first choice.
In Akno's example, John did not get a majority of the votes (5 of 12) when counting first preferences. Jim is eliminated. We then count the second preferences of the voters who voted for Jim.
Lets suppose that of those three voters, one put John as their second preference, and two put Harry. We add those votes to the first preference votes for those candidates. This brings us to a tie: John 6, Harry 6.
What to do? Well, in a tie, the candidate with the most first preference votes- in this example, John- wins.
Round 1- John 5, Harry 4, Jim 3.
Round 2- John 6, Harry 6.
Tie breaker- John wins.
Now, lets suppose that Jims voters second preferences were the other way around: two for John, and one for Harry. John still wins:
Round 1- John 5, Harry 4, Jim 3.
Round 2- John 7, Harry 5.
John wins.
The only way Harry could win, in this example, is if all three of the voters who put Jim as their first preference, voted for Harry as their second preference.
Make sense?