Jim Collins’ classic Good to Great is in my all time Top 5!
1) Good is the Enemy of Great
Research showed that remarkable numbers came from companies that had previously been so utterly unremarkable
Great companies showed undaunted curiosity: Lewis and Clark quote “We don’t know what we’ll find when we get there, but we’ll be sure to let you know when we get back”
Recognized only companies with 15-year cumulative stock returns that beat the market returns for widely acknowledged great companies
Home-grown CEO’s – no hired-gun celebrities
Success had no relation to executive compensation
Success was not from some brilliant and superior “strategy”. Did not just focus on what TO do – focused equally on what NOT to do.
Was NOT technology “driven”
NOT a result of mergers and/or acquisitions
Did not focus on orchestrating/managing change, motivating people or creating alignment – created the right “conditions”
Did not start out with a bunch of “fanfare” about what they were going to do – in fact, they were unaware of the magnitude of the transformation at the time
Not in great industries
Greatness was a function of “conscious choice”
2) Level 5 Leadership
Blend of personal humility and professional will – More like Lincoln than Patton
Have the long view
Making the hand-off to the NEXT generation – Legacy building
Channel their ego needs away from themselves and toward the company – “More of a plow horse than a show horse”
Credit for the “good” goes to others; Responsibility for the “bad” stays with the Level 5 leader
Only a small percentage of people can’t set aside ego and be a Level 5 Leader; Most have the seed and can develop it
3) Focus First on Who…Then What
Get the right people on the bus
Get the wrong people off the bus
Get the right people in the right seats
Then, they figured out where to drive it
It’s WHO you pay, NOT how you pay them – Compensation is not for getting the right behavior out of the wrong people…it is to get the right people on the bus in the first place
Place greater weight on character
People are not your greatest asset; the RIGHT people are – when in doubt, don’t hire…wait.
If you have to tightly manage, you have made a hiring mistake
Put your best people on your best opportunities NOT your biggest problems.
Hive rigorous cultures – NOT ruthless. Sacrifice starts at the top not the bottom.
No beating around the bush OR death by a thousand cuts…Value people, praise effort, reward performance
4) Confront the Brutal facts (Yet Never Lose faith)
Greatness stemmed from a series of good decisions, diligently executed, and accumulated one on top of another.
Lead with questions not answers
Encourage dialogue and debate
Autopsy issues without blame
Do not ignore the red flags
It was not the absence of difficulty but rather how they dealt with the inevitable difficulties
Maintained an unwavering faith that they would not only survive, but prevail as a great company
5) The Hedgehog Concept (Simplicity within the Three Circles)
The essence of profound insight is simplicity – able to simplify a complex world into a single organizing idea. The piercing insight to see beyond the complexity and discern underlying patterns. See what is essential and ignore the rest.
Simple Concept that encapsulates “three circles”
What can you be the best in the world at?
What drives the economic engine – most effective means for generating cash flow and profitability. (compounding through the power of multiplication)
What are you deeply passionate about?
Anything that does not somehow relate to the “hedgehog” idea holds no relevance
Breaking the curse of competency
Passion is “discovered” NOT “manufactured”
Confront what you can not be “the best in the world at”
When you realize what you can be “the best in the world at”, stating so will come across as an observation – not a boast.
For great companies It took an average of 4 years
6) Culture of Discipline
Would anyone but a serious training athlete rinse their cottage cheese – extreme measures…a little bit more a little more often
Had enduring culture – not sheer force from leadership
Built with the ethic of entrepreneurship
Stay within the three circles – “once in a life time opportunities” are irrelevant if they are outside the circles
Align worker interests with management – eliminate “class” distinctions
Create a “stop doing” list
Had the guts to make huge investments once they understood their three circles
Act from “understanding” not “bravado”
7) Technology (As an Accelerator)
“Most men would rather die than think. Many Do.” Bertrand Russell
Stare down the pressure to react. “Let’s quietly go about doing what we need to do, and it’ll become clear soon enough that they just pulled the tail of the wrong dog” ~Walgreen’s executive
Technology was not even one of the top 5 factors contributing to greatness
CEO’s talked in terms of what they were trying to create
8) The Flywheel and the Doom Loop
Take the long view
No single defining action
Sum of several small consecutive actions
Hold on until you reach the tipping point
Believe in the Power of Momentum
Problems can naturally just melt away
Let the Flywheel do the talking
Doom loop starts with “reaction without understanding” – momentum in the wrong direction