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Business Leaders that Facilitate ‘Good to Great’
At Hierarchy of Needs Workshop, we focus experientially on what leaders do to move themselves, a team, or company from being good to being great.
Jim Collins has written some seminal works in:
- Collins, Jim, ‘Good-to-Great: Why Some Companies Make the Leap... and Others Don't’, Random House, London, 2001, and
- Collins, Jim, ‘Level 5 Leadership: The Triumph of Humility and Fierce Resolve’ Harvard Business Review, Jan. 2001
Why is it that a few companies develop from an organisation with good results as measured on the stock market to a great one? Jim Collins and his team selected 11 companies from more than 1400 that had been listed in the Fortune 500 from 1965 to 1995. Each of the selected companies had mediocre results for 15 years and then went through a transition point. From that point they out performed the market by at least 3 to 1 and sustained that performance for at least 15 years. Each of these was compared with companies in the same industry and about the same size.
Using hundreds of interviews, Collins identified the key factors that enable a company to move from mediocre institutions to great institutions. The comparison companies lacked these factors and failed to become great.
Perhaps the most important component of the transition from good-to-great is what he calls ‘Level 5 Leadership’:
Level 5 is the Executive who ‘builds enduring greatness through a paradoxical blend of personal humility and professional will.’
Every one of the good-to-great companies had level 5 leaders in the critical transition phase. None of the comparison companies did. These leaders are described as being timid and ferocious, shy and fearless and modest with a fierce, unwavering commitment to high standards.
Good-to-great leaders have:
- Personal Humility. They are self-effacing, quiet, reserved, and even shy - more like Lincoln and Socrates than Patton or Caesar.
- Inspired Standards to Motivate. They rely on instilling inspired standards and not inspiring charisma to motivate.
- Focus. They consistently adhere to what Collins calls the Hedgehog Concept, the intersection of three circles:
- Brutally and realistically determining what the company can be the best in the world at?
- Deciding the most effective way of generating sustained cash flow and profitability. Then determining the single most important indicator.
- Only do the things they are deeply passionate about. This passion is not stimulated or imposed but discovered.
- The Ability to Put the Ego Aside. Level 5 leaders channel their ego needs away from themselves and toward building a great company or organisation.
- The Ability to Assume Responsibility. When things do not go well Level 5 Leaders take responsibility for the failures and never blame other people, external factors, or bad luck. When they do go well they attribute success of their companies to external factors, their team or luck.
- Ability to Hear the Truth. The good-to-great leaders created a culture wherein people had a tremendous opportunity to be heard and, ultimately, for the truth to be heard.
- Set the Right Standards. All of the good-to-great leaders created standards and doggedly kept to those standards for the years of their tenure. These leaders deliver what they promise. There is no hype, no spin, no excuses; just understated, realistic expectations. The expectations may be challenging but they are met.
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