There are many good companies in the World today, they produce adequate goods and consumables and they will continue to make products people buy and make money selling ordinary stuff. They are not very adventurous and don’t take any unnecessary risks they also tend to not see the future so well and prefer to let things drift along producing average stuff like they always have. The problem with good companies are they are easy to tip over into struggling companies that suddenly look lost and scrabbling for something new or profitable that can make them once again good. The battle becomes harder and in too many cases these good companies either slow down and lose profits or disappear altogether. So what does it take to make a adequate company into a great company that rises from the average heap, well Jim Collins in his latest book “Good to Great” seems to believe he has an insight that will help companies grow into great companies that stand the test of time and become dominant leaders in their domain space.
After lots of research and evaluation of some of the best companies in the World that were selected on some strict criteria about sustained profits with his team he boils the great companies down to the all having the following traits.
1. Level 5 Leadership
This is a first requirement, having a leader that isn’t thinking only about himself. Values his teams, and recognizes performance. Has a clear vision and willing to admit mistakes and inadequate knowledge. This is rare individual and is contrasted against a Level 4 leader who mostly wants the spot light and won’t admit their short comings.
2. First who, then what.
Get the right people on the bus and the wrong people off. Only then can you drive the bus on the right road to success and direction that will succeed. The right people are self motivated and believe in the direction, they don’t need so much pushing and hand holding. They also are experts in their domains and open to ideas.
3.Confront the brutal facts.
Part of being a level 5 leader is the ability to hand a paradox that Jim refers to as the “Stockdale Paradox”, where you at the same time, have absolute faith in what you are doing, regardless of difficulties, but are also able to confront those hard facts about your current reality.
4. Hedgehog concept
The only way to get where you are going is to stick to what you can be best at. There is a reference to 3 circles overlapped, that reminds me of the power of branding. Do what you are passionate about, Do what drives your economic engine, and Do what you can be the best in the World at. This is focus, of the hedgehog concept that has to be understood at all levels of the company, and guide all decisions.
5. Culture of discipline
This is the focus of the company on the hedgehog concept, learning to say “No” to the wrong ideas. Not being swayed by tangential ideas and possibilities. This comes back to having the right people on the bus in the first place. Stop doing lists are as important as to do lists.
6. Technology Accelerators
New Technology is very attractive and shiny, but the goal should be to adopt technology not as a passionate interest but as something that supports the Hedgehog concept and drive the innovations and performance towards that goal. Don’t adopt technology for technologies sake, make it work for you and the company goal. Start with the hedgehog concept then add technology not the other way round.