Good to Great

Jim Collins’ classic Good to Great is in my all time Top 5!

Good to Great

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
  • Trademarks
    • 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
  • Fierce Resolve
  • 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)

  • Carefully selected
  • “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
  • Streamline!
  • 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

9)  Going from “Good the Great” to “Built to Last”

  • Do NOT tolerate negativity – Abhor cynicism
  • Bring on talent
  • Make it fun
  • Set BIG goals

Investment House Made Easy for the Risk Averse!

House the day after closing

I will admit that as a real estate professional I should be bolder when it comes to using my insider advantage.  However for most of my first 15 years in this business, I have worked with what I would call “lifestyle” clients.  People who are moving for lifestyle reasons (new job, new marriage, new baby, new promotion, new town, etc.)  In those cases we were either trying to be the best house or find the best house for the money.  We were dealing with the prettiest homes in the best locations and most of the “work” was mental.  If the real estate world had “white-collar” sales, those would have been them.


On the other side of the coin would be the “blue-collar” sales.  Homes that required work.  This is where the investors play.  Where someone has to get their hands dirty and surprises are normal.  These homes were NOT the “cream of the crop”… But, could generate some exciting cash flow.  Well, I finally got fed up hearing about people buying these inexpensive properties and building up recurring rental income.  So here is my story.


I contacted an investor group I know who is working full-time to get homes under contract at great discounts.  The day I called, they had 3 homes under contract for me to consider.  They emailed me the information and I set out to take a look.  One home clearly stood out to me as my favorite so we explored that opportunity.  Leave it to me to pick the house with more neighborhood than condition.

Kitchen Before

The kitchen had to be gutted, the copper plumbing had been stolen, one of the HVAC condensers had been stolen and it had some roof leaks.  But I loved the lot, the size and the neighborhood for the price – $28,000!  Ok, this I can do. Time for me to wire the money.  Were you expecting that?  With ALL those issues, all I had to do was work up a partnership agreement and wire money.  In fact, 65 days and $37k later the house looks amazing and we have a tenant paying $1,150 per month.

 

Kitchen After

Seriously, this was hands off – not hands on. ALL I did was wire money, take some photos, review a kitchen layout, make a few suggestions, talk on the phone a couple of times and live my life.  My partners at Real Property Management Group, Inc. did the rest.  Their crew was onsite the day after the closing and in 30 days the work was done.  Items identified, designed, bought, completed and painted… in a month!  Stain grade cabinetry, real tile floors, restoration style hardware throughout, pleasant decor… none of which I had to even think about.  After that, their marketing staff immediately got the house advertised for lease and a tenant was secured in just over 30 days. I know that because I got a text message from RPMG – NOT because I interviewed tenants and negotiated the lease terms.
Here are a few more photos of how it turned out.

 

Back Porch View

Master Bath

Open Living Areas

Hall Bath