Good To Great

Copyright (c) 2012 Scott F Paradis

Profit in NOT the fundamental goal of a great company. Going from good to great is all about the people - the right people doing the right things, consistently and effectively.

Jim Collins, coauthor of "Built To Last", took on the task of trying to understand how good, mediocre, or even bad companies achieve enduring greatness. For five years Collins' 21-person research team scoured the financial documents, interviewed the executives and employees, and examined the results of 11 publically traded companies.

Of 1,435 public companies, Collins chose only those that performed at or below market for 15 years, then made a leap, outperforming the market (returns 6.9 times the benchmark) for 15 years.

While not all 11 companies are still high flyers (some having stumbled and fallen in the intervening years) the insights Collins' team gained and recorded in "Good To Great" are still extremely valuable.

Good is the enemy of great. This reality is not just a business problem: it is a human problem.

"Great" is a matter of conscious choice - a choice leaders make and the rank and file embody.

"Enduring great companies don't exist merely to deliver returns. In truly great companies, profits and cash flow become like blood and water to a healthy body: essential for life, but not the point of life."

"Good To Great" offers seven specific findings:

Leadership is Key. Though Collins resisted this discovery, he validated the cliché. The difference Collins found, however, was a specific type of leadership set the companies that made the leap from good to great apart. These leaders were what he called "Level 5 Leaders" - a blend of humility and professional will. Great executives channel ego needs into corporate goals. They exhibit unwavering resolve and take full responsibility for results.

The Right People. Having the right people is the hallmark of organizational success. First who, then what; means great organizations get the right people on the bus and the wrong people off. Executives and managers at all levels make personnel decisions with a high degree of rigor. Focusing people on the biggest opportunities, not the biggest problems, allows teams to flourish.

Confront the Brutal Facts. The entire organization, from the CEO to rank and file put forth honest, diligent effort to ascertain the true situation. Often great companies employ the Socratic method - questioning and debating every facet of operations. The team must know where they are to determine which way to go. Great companies focus on the few things with the most impact, and despite challenges, never lose faith.

Hedgehog Concept. More important than competing to be the best, is understanding what the organization can be the best at. Great companies operate around a single, simple organizing idea. To excel they aim for the sweet spot - the intersection of passion, ability, and profitability (economic engine). Great companies determine what to do and what not to do (or what to stop doing) - focusing only on essentials permits the team to ignore the rest.

Culture of Discipline. Starting at the top, building on a solid foundation, thought and action are disciplined. People commit and results have impact. Enthusiasm combines with an ethic of entrepreneurship producing a valuable blend of freedom and responsibility. Goal setting, planning and follow through are core drivers maintaining mission focus.

Leverage Technology to Accelerate Progress. Employees of great companies think differently about the role of technology. Technological innovations are not crutches to rely on, rather they are tools, carefully applied, to build momentum.

The Flywheel and Doom Loop Effect. Progress (productivity improvements, customer satisfaction) generates visible results, further energizing the organization. As a company begins to build momentum great teams reinforce success; continually pushing the flywheel. Failing companies, on the other hand, get disappointing results and react - moving in new directions, appointing new leaders, executing events, embracing fads, or acquiring new subsidiaries. With no momentum results further erode.

In a world where conformity and mediocrity are often the standard, great companies break new ground.

Opposed to what Bertrand Russell once observed, "Most men would rather die, than think. Many do." great companies assemble teams of deep thinkers and disciplined doers. They eliminate incompetence and devote energy and talent to achieving a solitary, worthwhile purpose. By focusing effort, great companies produce extraordinary results.


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Scott F. Paradis, author of "Promise and Potential: A Life of Wisdom, Courage, Strength and Will" publishes "Insights" available for free at http://www.c-achieve.com