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Good to great



Kirjoittanut: Olli Pohjoisvirta - tiimistä Value.

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Jim Collins, together with his team of 20 researches set out to find out why some companies become great and continue to be so, while others never reach the peak, or fall back down after a short period in the spotlight. For several years they studied the data of over a thousand different companies, most of which were mediocre or good but never great. They compared the bulk of the companies to the few companies that did break through and discovered interesting patters that were present in each and every case. It should be noted that they did not simply track companies that were great to begin with because there’s a difference in building a great company from the ground up. They also did not track industries that made the leap but companies that had long track records that somehow, somewhere made the leap into beating the market – by a large marging.

 

Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great. Jim Collins

 

LEVEL 5 LEADERSHIP

 

The first discovery and perhaps the most important one, was the presence of level 5 leadership. Every single one of the good to great companies had leaders who did everything in their power for the greater good of the company. “Self-effacing, quiet, reserved, even shy – these leaders are paradoxical blend of personal humility and professional will.” (Collins, 12-13)

The realization of level 5 leadership’s presence was not an automatic one. In fact, it was quite well hidden. The leaders were not ones to be on the first page of a news paper or the first ones to be interviewed by a talk show host – quite the contrary. Rather they stayed out of the spotlight, putting company first and everything else second. “In contrast to the very I-centric style of the comparison leaders, we were struck by how the good-to-great leaders didnt talk about themselves. During interviews with the good-to-great leaders, they’d talk about the company and contributions of other executives as long as we’d like but would deflect discussion about their own contributions.” (Collins, 27) And it wasn’t just false modesty because the research team also interviewed those who worked with the level 5 leaders and the following adjectives were constantly brought up: quiet, humble, modest, reserved, shy, gracious, mild-mannered, self-effacing, understated and so forth. A level 5 leader never stops working to earn his spot in the company.

Humility and directing credit outwards is just one side of the coin however. The paradox is that the level 5 leader is a strong-willed person, ferocious even, who will fire his own brother – if he deems it necessary for the best of the company. Deeming the humility, quietness and shyness for weakness would be a sorry mistake.

Lesson 1: A leader directs credit outwards. Company first, everything else second.

 

START WITH WHO

 

It turns out that motivating people is a complete waste of time. If you have the right people in your company, they will already be motivated. They will share your vision and they’ll absolutely be able to motivate themselves. The only question you should ask is how not to unmotivate them. “We expected that good-to-great leaders would begin by setting a new vision and strategy. We found instead that they first got the right people on the bus, the wrong people off the bus, and the right people in the right seats – and then they figured out where to drive it.” (Collins, 13)

 

“People are not your most important asset. The right people are.” – Jim Collins

 

Take Wells Fargo for example. When they had to undergo a wrenching change, one that completely turned their company around, they looked for outstanding people and hired them wherever they found them – without a specific job in mind. They realized that it was far more important to find talented, committed people than to fill a specific job position.

Start with who is a simple idea to understand but a difficult one to practice. Take the company of Fannie Mae for example. David Maxwell, the CEO of the company, held off on forming a strategy, even though the company was losing 1 million dollars every day and was 56 billion dollars deep in debts, until he could find the right people and put them on the right seats. That’s what I would call discipline.

“Whether someone is the “right person” has more to do with character traits and innate capabilities than with specific knowledge, background, or skills.” (Collins, 64) It should also be noted that the right people don’t mean a group of same minded people. Heated debates and arguments were a constant theme in the good-to-great companies. This, however, does not mean that they weren’t friends. In fact, in many of the interviews people said that they made long lasting relationships while working in the good-to-great companies.

Lesson 2: People are not the most important asset. The right people are.

 

FACTS ARE BETTER THAN DREAMS

 

Facts are better than dreams and to lead by facts you need to have the humility to grasp that you do not yet understand enough to have the answers yourself and then ask the questions that will lead to the best possible insights.

The truth is never more valuable than when a company is going through a rough patch, changes need to be made or mistakes have happened. This requires a study into what has been done, what could have been done differently etc. but it has to be conducted with an integrity and emphasis on not to blame anyone. It’s very possible that someone somewhere made a mistake but that should be completely irrelevant. The real lesson should always be in the process, not in the person. “When you conduct autopsies without blame, you go a long way toward creating a climate where truth is heard. If you have the right people on the bus, you should almost never need to assign blame but need only to search for understanding and learning.” (Collins, 78) People will realize that they will not be burnt at the stake for telling the truth, even if it’s unbeneficial for themselves.

One important characteristic for the good-to-great companies was that no matter how brutal the facts they had to confront they never gave up faith that they will prevail. But not because they didn’t accept the circumstances but rather despite the circumstances. The best way to de-motivate people is to give them false hope and make them vulnerable for disappointment over and over again.

Lesson 3: You should always lead with questions, not answers.

Lesson 3b: Face the facts but don’t give up faith.

 

HEDHEHOG IS A GENIUS

 

Hedgehogs simplify our complex world into a single idea, a very basic principle that unifies and guides everything. Simply speaking the hedgehog is a genius. It doesn’t matter how complex the world, the hedgehog reduces all challenges and dilemmas into a pattern it knows and understands. For a hedgehog, anything that does not somehow relate to the hedgehog idea is simply not important. A fox attacks the hedgehog, the hedgehog rolls into a ball. An owl attacks the hedgehog, the hedgehog rolls into a ball. The hedgehog constantly faces predators that are seemingly far superior. A fox is faster, cunning, crafty and yet it’s attacks are not effective because the hedgehog knows itself.

 

The good-to-great companies realized that just because they had a core business – something they had been doing for decades in some cases, did not mean they could be the best in the world in it. The Hedgehog Concept is to find the core where you can be the best – and where you can’t. In fact, in many cases it was more beneficial to find out what not to do and then completely redirect all the resources out of that business and reallocate them somewhere else. For example: Wells Fargo realized that it could not be the best superglobal bank in the world, but that it could be the best in the western United States.

It should be noted that on average it took 4 years for the good-to-great companies to refine their hedgehog concept.

In summary:

Lesson 1: A leader directs credit outwards. Company first, everything else second.

Lesson 2: People are not the most important asset. The right people are.

Lesson 3: You should lead with questions rather than answers.

Lesson 4: Face the facts but don’t give up faith.

Lesson 5: The Hedgehog Concept equals understanding. Understand what you can be the best at.  Also, “to do” lists are fine but a “stop doing” list is more important.

 

Lähteet: Collins, Jim (2001): Good To Great Why some companies make the leap and others dont

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