Go for Greatness
The enemy of the best is the good. I like some of the principles outlined in the Jim Collins book Good to Great and it is one of my favorite business books. Yes it is a book defining what makes a company move from good to great but it also has lessons for individuals that can be applied.
The important principles I found useful are
Level 5 Leadership
This is the type of leader who has professional will but at the same time displays utmost humility. Level 5 leaders have a ferocious resolve and determination to produce results while at the same time showing compelling modesty. The Level 5 leaders put the organizations success before their personal success.
They also leave behind an organization which will still perform at the highest level even when the Level 5 leader leaves. The author calls these clock builders instead of time builders. There is a lot to learn from this lesson that having humility is a great characteristic to possess and constantly keeping your ego in check helps drive out vanity. Going for an outside change agent to run the company is not the answer and promoting a leader from within the company is a better bet for sustained organizational success.
The leaders he has researched are not always the flashiest but they are the most effective and selfless. Level 5 leaders look out the window to apportion credit to factors outside themselves and if they can’t find someone to give credit to ‐ they credit luck, and look in the mirror to apportion responsibility, never blaming bad luck when things go poorly.
One example of a Level 5 leader is that of Darwin Smith CEO of Kimberly Clark during the transition period of the company from Good to Great. He made the gutsy decision to sell the mills and move the company into new product lines. He said reflecting on his success "I never stopped trying to become qualified for the job."
The next principle is to get the right people on the bus, the wrong people off the bus, get the right people in the right seats and then figure out where to drive the bus. The author argues that motivating people is generally a waste of time. Instead find the right people who are self-motivated and get them on the team. He goes on to say that vision is not the first thing you need instead you need to have the right people and then the vision forms. Great vision without great people is irrelevant. Also the key role of leadership lies in not motivating but actually in ensuring that you don’t de-motivate the employees.
One of the examples provided is Wells Fargo under Dick Cooley where he went to on to build one of the most talented teams in the banking industry. The banking industry would undergo wrenching change but he didn't know what that would mean. Instead he decided to bring in the best team so that when the change does happen the best team is already in place to overcome all the challenges the bank would face. Another example is David Maxwell of Fannie Mae who first focused on getting the right people on the management team before setting a vision despite the company losing millions of dollars every day when he arrived at the company.
Other gems from this principle are
· When in doubt don’t hire, keep looking.
· When you know you need to make a people change, ACT.
· Put your best people on your biggest opportunities, not your biggest problems.
Confront the Brutal Facts
Confront the brutal facts while maintaining an unwavering commitment that you will succeed in the end. Jim Collins coined the term Stockdale Paradox which is about the prisoner of war (James Stockdale) in Vietnam. He was one of the most decorated officers in the history of the U.S. Navy and how he dealt with the unimaginable period of 8 years as a prisoner of war was termed by Jim Collins as the Stockdale Paradox.
An example provided is A&P in 1950 was the largest retailing organization in the world in contrast to Kroger at that time. Then in the 1960’s, A&P began to falter while Kroger began to transition into a great company. Over the next 25 years from the 1970's Kroger generated cumulative returns 80 times better than A&P. A&P had a better model for the first half of the century but they couldn't match the changes in consumer choice over the next half of the century who wanted super stores with everything under one roof. Only one of the companies confronted the brutal facts and took action which was Kroger changing its entire system in response becoming the Number 1 grocery chain in America a position it attained in 1999.
4 things to remember to get this principle ingrained
1. Lead with questions not answers
2. Engage in dialogue and debate, not coercion
3. Conduct autopsies without blame which means if a failure has happened look for the reasons without blaming any individual or team
4. Build Red Flag mechanisms
The Hedgehog concept
This concept was developed based on an essay by philosopher Isaiah Berlin. Berlin expands upon this idea to divide writers and thinkers into two categories hedgehogs, who view the world through the lens of a single defining idea and foxes who draw on a wide variety of experiences and for whom the world cannot be boiled down to a single idea.
Back to the book and Jim Collins says that all the good to great companies had a single idea which they executed vigorously similar to the hedgehog described above. I believe it can be applied to individuals as well. This consists of three circles which are
1. Find out what you can be the best in world at
2. Find out what provides an economic denominator
3. Find out what you are deeply passionate about
For example the hedgehog concept of Walgreens was "Increase Profit per customer visit."
A culture of discipline
All companies which moved from good to great were fanatical about discipline, and they ensured that they were always focused on the three circles described above. They built a culture of discipline within the organization and ensured that they focused only on what they can best at and ignored everything else. Here are some great points on this principle
1. Build a culture around the idea of freedom and responsibility, within a framework.
2. Fill that culture with self‐disciplined people who are willing to go to extreme lengths to fulfill their responsibility.
3. Don’t confuse a culture of discipline with a tyrannical disciplinarian.
4. Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection of the three circles. Equally important, create a stop doing list.
The fly wheel effect
Transformation does not happen in one single run of the fly wheel. Instead it is a constant process of turning the wheel over and over till at one point breakthrough happens. An example he provides is Wal-Mart. Wal-Mart founder Sam Walton started a single dime store in 1945. His next store was opened after 7 years and the real growth started happening after nearly 20 years when breakthrough happened. Again it can be linked with the metaphor of chopping the tree. Taking a daily swing at chopping a tree will eventually bring it down but it is not easy to point out which hit made the tree fall. Similarly consistently performing every day in small increments is the key to greatness. There is no single action that brings greatness but rather it is a series of small acts that eventually builds so much momentum at which point the public acclaim is attained.
From Good to Great to Built to Last
The author mentions that he actually sees Good to Great as a prequel to Built to Last. He compares the concepts provided in both the books and one important concept which can be taken from Built to Last is the concept of setting BHAG’s. BHAG’s are Big Hairy Audacious goals and these are goals that will be a quantum leap from where you are now. Again he says there are good BHAG’s and bad BHAG’s. For example I have run 5 half marathons so running a marathon would be a good BHAG for me. However swimming across the Atlantic would be a bad BHAG for me since I have no experience that would help me achieve that and it would be dangerous.
I hope you enjoyed this review. A lot of business books are written every year but a few have timeless principles that can be applied at any time. My view is this is one of those books that have stood the test of time despite some of the companies identified as great falling off the wagon.