One of my favourite business books, one I have read several times and has had a major impact on me, is Jim Collin’s bestseller, “Good to Great”. Although several of his examples of great companies have suffered in the recent downturn, “Good to Great” is still a legendary book, with smart principles that any businessperson can model their strategy on.
Collins says, “almost any organization can substantially improve its stature and performance, perhaps even become great, if it conscientiously applies the framework of ideas found and used by Good to Great companies.” The book touches on seven themes, which he found in companies that have gone from good to great:
1. Good is the enemy of great
This idea is similar to the “good is never enough” concept from Built to Last, a book Collins co-authored before Good to Great. In this first section of the book, Collins urges companies to focus equally on what to do, what not to do and what to stop doing. I believe what defines people (and organisations) is not what you do, but what you don’t do. Collins believes that most companies focus too much on what to do and ignore what not to do or what they should stop doing. He asks the questions; are you doing things based on tradition or industry standards? What assumptions or processes have you rested on because they were “good enough?” Collins believes that being “good” should be viewed as the enemy, because it stops you from becoming “great”.
2. Level 5 Leadership
Collins uses “Level 5 Leadership” to describe a certain type of leader he recognized from the companies which made the leap from good to great. They were more than just “clock builders,” they had unique characteristics such as humility and a professional will towards excellence. This type of a leader has zero tolerance for mediocrity, is focused (or as Raymond Ackerman says “focuses on a pin head”) and is known for taking credit for bad performance while giving credit to others when things go well.
3. First who… then what
Collins says, “People are not your most important asset. The right people are.” This is a little controversial in an age when businesspeople are told that all team members/employees must be treated with equal respect. Not so, says Collins. He uses the analogy of a bus driver, while describing how to create a winning team within your organization. He recommends that you first get the right people on the bus, then get the wrong people off the bus, then the right people in the right seats, and finally, figure out where you want to drive that bus. He says good leaders get the wrong people off the business quickly and that you are doing those people a favour by allowing them to find a bus where they are better suited. He recommends hiring people with characteristics you cannot easily instill. “Focus on who you are paying, not how,” says Collins. He also recommends carefully analysing someone’s personal character, their work ethic, intelligence and dedication to their own values before deeply analysing their credentials and practical skills.
4. Confront the brutal facts
Many companies (and people) ignore or hide the difficult realities around them. That is an enormous danger. Collins found that companies that made the leap from good to great, had a consistent belief in their ability to succeed in the end. He believes that if companies do their due diligence and gather all of the facts, the right path will often unfold in front of them. He recommends the following four ways to build a culture where the truth is always heard: Lead with questions, not answers. Engage in dialogue and debate, not coercion. Conduct autopsies without blame. Build “red flag” self-analysis mechanisms for turning information into accurate information that cannot be ignored and must be acted upon.
5. The hedgehog concept
Clem Sunter regularly compares successful companies to being like a fox. Not Collins. His success analogy is based on the hedgehog; every morning the fox wakes up and starts crafting elaborate plans on how it will finally catch its nemesis, the hedgehog. It uses creative strategies, combining old ideas and trying to catch the hedgehog off guard. Yet every time the fox approaches the hedgehog, the small and prickly animal simply rolls up into a ball and waits until the fox leaves it alone. It does this on a daily basis, without fail. If it tried to run or use one of the fox’s “smart” tactics it would die, however it can consistently rely on its hedgehog strategy to save its hide and move forward with its life.
Your company’s hedgehog concept is the “one big thing” for your organization to understand and stick to. What does or can your organization do, understand, or use as your core solution to competitive threats and changes in the industry? The concept itself is similar to your core ideology (which never changes), differing only in the sense that it can be slightly less permanent. Your hedgehog concept must be something you are deeply passionate about, very good at (if not the best) and allows you to make a profit. Figure out what falls into all three of these categories and develop an understanding and strategy based on it. Often, like the hedgehog, which is a slow, “unsexy”, hardy and prickly creature, your business strategy can mirror these characteristics and outlast the companies that try 100 things yet achieve little.
6. A culture of discipline
Collins is adamant that companies should hire people who are disciplined in their own right. The second you need to manage someone, you have made a hiring mistake. By confronting the brutal facts (point 4 above) the moment you have identified them, you must then move quickly to get the ill-disciplined off the bus. Ill-disciplined people create an ill disciplined culture, and ultimately, an ill disciplined organisation. So Collins urges companies to manage systems, not people. Collins believes this is superior to managing people because: When you have disciplined people, you do not need hierarchy, or an expensive and cumbersome layer of management. When you have disciplined thought, you do not need bureaucracy or red tape. When you have disciplined action, you do not need excessive controls. This is key to the successful company.
7. The flywheel concept.
A flywheel (in a factory) takes relentless pushing to get it to turn over even once, but after a while of pushing in the same direction it starts to gain momentum until it is a self-sustaining and powerful force. Collins contends that “Good to Great” transformations never happen all at once. They are the result of years of persistence (and many mistakes). Great companies may look dramatic and revolutionary from the outside, but on the inside it is more of an organic and slow development process.
I read “Good to Great” many years ago and one of my biggest mistakes was not reminding myself of Collin’s principles (above). These seven themes above make for great organisations, irrespective of the size of a company or the position of a team member/employee.
This is a fantastic book and a brilliant way to run any business. I highly recommend it. Good is indeed the enemy of great.