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STRATEGY: It’s Time To Revisit Good To Great

I was visiting my friend in NYC the other week and while I was there he gave me back my Good to Great book on CD he had borrowed a couple years before.  There are certain things that really just hit you at the right time, at the right place, in the right mind set.  I think we have all put on some extra gray hairs, perhaps some extra wrinkles and sleepless nights within the past two years of the current economic situation.  The stress to perform in one of the worst business climates in half a century is showing in our constant fatigue of ‘hunkering down’ and trying to ‘ride it through.’  Needless to say, I personally, was ready to revisit the principles in the book.  I started listening on my ride back up north and have listened to all of it throughout my travels in the last week (that’s 10 plus hours of listening for a 24 year old – quite a feat).

I think it’s time that we all take a moment and revisit some of the key principles of Good To Great. Not because we don’t instinctfully know them, or because we face a new business climate with new rules and demands, but because the principles will help us get back to the basics, back to what made us go from good to great. The French philosopher Alexis de Tocqueville once wrote, “America is great because she is good.”  It’s time to get really good at what we do again so that we can become really great at what we do again; I think Jim Collins’ book will help:

Getting up to speed:
Jim Collins, professor at Stanford University and author of Good to Great, Built to Last, and How the Mighty Fall, with his research team scrupulously measured, calculated, refined, wrestled and argued their way to find out what makes a good company become great.  The team started with 1,435 good companies. They examined their performance over 40 years and found the 11 companies that became great. They then took key principles that each of the 11 companies applied to become great and put them in Good to Great: Why Some Companies Make the Leap…and Others Don’t. (Learn more about the premise behind Good To Great)

Key Insights:
Level 5 Leadership:
Leadership within an organization makes a difference and what’s more, the level of leadership matters.  Level 5 Leaders of the Good To Great (GTG) companies demonstrated humility and professional will revealing fierce resolve to do what was best for the company, not the leader him or herself.  The Level 5 Leaders built enduring greatness in their organizations, set up their successors for success, talked about the companies and others, but not themselves, were usually ordinary people producing extraordinary results.  Level 5 Leaders were most likely to have come from within the company, quick to give credit outside themselves when there was success, while at the same time taking personal responsibility when things went badly, and were distinctive in their approach to the people they wanted in their company. (Was Abraham Lincoln a Level 5 Leader? Listen here)

The Bus Analogy: “First get the right people on the bus, the wrong people off the bus, and the rightright seats and then figure out where to drive it.”  First who, then what.  Before ever setting the vision or the strategy of the business, Level 5 Leaders put the right people in positions where they can most influence a positive direction.  The right people live with a moral code that requires building excellence for its own sake – the organization doesn’t have to worry about motivation, vision, or direction for the individual.  The individuals will set the vision and direction as a collective team of right people with the guidance of the Level 5 Leader.  Three principles of the right people are: adaptabilityright people adapt to change much easier), motivation (the right people are self-motivated; they want to be part of greatness), and selection (it’s impossible to have a great company with the wrong people).  As mentioned before, first who, then what. ( people in the (Watch Jim Collins explain this approach)

Finding the Right People: Hiring – when in doubt, don’t hire, keep looking.  For a company to become great there must be enough of the right people to sustain growth.  Act Decisively – when you know you need to make a people change – act. Know the characteristics of who you need, bring people like that on, evaluate quickly, and act to remove them if they don’t fit. Best person/best opportunity – put your best people on your biggest opportunity, not your biggest problems.  The question is: are you going to manage your problems, or build your opportunities?

Confront the brutal facts with unwavering faith: Unwavering faith that the company will prevail was foundational to a GTG companies’ ability to confront the brutal facts of the current reality, no matter what the facts were.  The discipline of paying attention to brutal facts was developed by creating a culture of allowing people at every level to have a voice and to speak.  Four basic practices for creating this culture are:  Lead with questions, not answers; engage in dialogue and debate, not coercion; conduct autopsies (post-mortems), without blame; finally build red-flag mechanisms that stop a process if something is off or wrong.

Side note: Stockdale Paradox – Admiral Stockdale was a POW of the Vietnam War and when interviewed by Collins on how he survived all those years of torture and imprisonment he said: “You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they may be. The ones that didn’t survive were the ones who thought they were getting out every Christmas and then Christmas would pass and they’d still be imprisoned – you must confront the facts of your current reality, however never lose faith.”

Hedgehog concept: This concept comes from Isaiah Berlin’s essay in which he wrote, “The fox knows many things, but the hedgehog knows one big thing.”  The GTG model for getting to the core of this one big thing, the one thing your business does well is identified with 3 overlapping circles:  What can you be the best in the world at, what are you passionate about, and what drives your economic engine? Collins writes, “The Hedgehog Concept is a turning point in the journey from good to great. It typically takes the right people willing to address the brutal facts over an extended period of time to get the deep understanding of a hedgehog concept.”

To realize your hedgehog concept, Collins recommends going through this cycle: get the right people involved over time, ask the right questions, engage in intense debate, make decisions, autopsy the results without blame, learn from the process and apply to the next cycle (there will be many cycles).

A Culture of Discipline Combined with an Ethic of Entrepreneurship: One key to greatness is the combination of responsibility and freedom.  When creating a culture of discipline, GTG companies attract disciplined people, reward disciplined thought, and celebrate disciplined action.  With this culture, this philosophy, the company can avoid bureaucracy which is essentially created to compensate for incompetence and lack of discipline.  Such freedom within a company empowers creativity and productivity.  This is the managerial framework of GTG companies.  Three components of this disciplined culture included: getting self-disciplined people on the bus, self-disciplined people will confront the brutal facts and maintain unwavering faith in the ultimate success of the system, and finally self-disciplined people will express the discipline of action by measuring that action against the Hedgehog Concept.

The “Stop Doing” list: The “Stop Doing” list is an important tool used to still the noise of activities that do not contribute directly to the Hedgehog Concept. Some examples include: removing all titles from leaders, dismantling empire building, and re-thinking budgeting.

Technology — only accelerates momentum, does not create it: (I found this one fascinating as Collins wrote this before the advent of social media and I think he was dead on).  Part of organization discipline involved how GTG companies viewed technology.  They avoided many opportunities and focused on selection of technologies most applicable to forwarding their Hedgehog Concept. GTG companies asked themselves: does the technology fit directly with the Hedgehog Concept, and if it does then you need to be the pioneer in the application of that technology; if not,then ask, do you need this technology at all?  Would the comparison companies (those companies that never reached greatness in the study) have succeeded if given the same technologies as GTG companies?  No, says Collins.  Technology is not what made the companies go from good to great, but rather the inner drive of the company’s character and culture.  Great companies are not driven by fear of the marketplace, or fear of economic circumstances, or fear of technology advances.  They are driven by the potential they see and the stimulation of actualizing that potential.

Flywheel and Doom Loop: GTG companies not only have momentum, but they’ve found a way to harness it in service to their hedgehog concept.  Collins uses the metaphor of a flywheel and with every push in the beginning, however incremental, the flywheel increases in speed.  The breakthrough for a GTG company is when the weight or force of speed begins to work for you.  All GTG companies reported that there was not one significant push that launched them into greatness, but rather daily discipline. Collins offers a process for moving the flywheel: take time to understand your hedgehog concept, recruit the right people, focus on disciplined people, thought, action, keep the faith as the momentum builds slowly, act consistently on your focus.  Once the breakthrough occurs continue to identify how much more there is required to move to greatness, and finally, remember to celebrate along the way.

However, companies in the doom loop take all kinds of detours (Collins uses the metaphor of getting off and on the highway) thinking that the detours will magically get them to their destination.  The doom loop can be seen as having four contributing factors: reaction without understanding, new direction (or program, or leader, or event, or fad), no build-up of momentum, disappointing results leading back to reaction without understanding.

Conclusion: So how do you get it all right? How do you build a good to great company or sometimes the way I view it, how do I, personally, become good to great?  Collins would say there isn’t a single answer.  Rather, it is a systemic understanding of the whole: leadership, right people, truth-seeking, focus, discipline, passion, competence, acceleration, and technological momentum.  Good to Great companies understood that greatness comes from sustained commitment to disciplined people, disciplined thinking, and disciplined action which creates breakthrough momentum.  Perhaps these principles will help you get out from the bunker and start to set a path for renewed greatness.  We wish you success.

 

Writer’s note: It’s important to echoe Collin’s call to action that executives are not the only people who can use the GTG concept.  Managers, supervisors, church leaders, students, team members, non-for-profits can also use these principles. One can use it personally or professionally.  These concepts can be applied no matter the title.

 

Let’s get to work (tools courtesy of Jim Collins):

Good to Great Diagnostic Tool

Discussion Guide

Vision Framework

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