What Makes a Great Company Tick and What Marks the People That Lead Them

Jim CollinsDriven by relentless curiosity for more than 25 years, Jim Collins has been researching what makes great companies tick. He has authored or co-authored several books that have sold in total more than ten million copies worldwide, including business classics such as Good to Great and Built to Last. It is with this lens that he expounds, “Building a great enterprise is not a matter of circumstance. It is a matter of conscience choice and discipline.” To guide those choices and discipline, he shared with the attendees of the 2015 World Business Forum in New York City 12 questions. He advised business leaders to keep asking themselves these questions as they lead their business.

Are we willing to strive for Level 5 Leadership? The great leaders are cut from a different cloth. Humility is the X factor of great leadership, not personality, experience, intelligence or ambition. They do not need to be larger-than-life, and usually are not. The Level 5 leader has ambition for the cause, not for themselves. They blend genuine personal humility with intense professional will and possess ambition that is driven outward. Leaders at the other four levels can produce success but not sustained excellence.

Do we practice the principle of First Who? Do we have the right people on the bus in the right seats? Get the right people in the right roles before figuring out where to drive the bus. “First who then what. Life is people. The number one most important executive decisions are people decisions,” said Collins. Start with people, then consider vision and strategy.

Are we living the Stockdale Paradox? Named after Admiral James Stockdale, who survived seven years in a Viet Cong POW camp. Stockdale believed life could not get worse, but it would someday get better. Don’t hold false hopes and accept the brutal facts. Never lose faith that you will prevail, but always accept the bare brutal facts.

What’s our Hedgehog Concept? A complex creature, the fox knows a little about many things, but the hedgehog is a simpler creature who knows one thing very well. For leaders, the hedgehog concept wins because those who follow it understand the world is complicated and boil things down to what’s simple. An example of discipline, these leaders focus on a simple big idea that they believe is essentially right and start to slowly gain people and momentum. They collect passion for the cause and are very clear what they as a company can be the best at. It is necessary to know who would miss your company if it disappeared – those are your core consumers. They match the people and what they are best at with an economic engine and have a business.

How can we accelerate “clicks on the flywheel” by committing to a 20 Mile March? Consider a journey… a long march. When the weather is poor the pace could go down with hopes of making it up on a better day. Compare that philosophy to marching 20 miles each day no matter the conditions. Pixar makes three films every two years. There is a new version of the iPhone each year. These are examples of relentless, long-term sustained marches. “The true signature of mediocrity is not unwillingness to change. It’s chronic inconsistency,” said Collins. A good 20 Mile March has clear self-imposed performance markers that are within the company’s control to achieve. The marchers do not overextend in good times. The 20 Mile March allows a company to demonstrate self-control and achieve in all environments.

Where should we place our really Big Bets? First fire bullets then cannon balls. Scaled innovation is important – the ability to prove something on a small basis and then bet big to make it huge. Hedge against uncertainty with small probing attempts to find new things that will work: bullets. Then go big with a cannon ball. In attempt to look innovative wrong companies fire big cannon balls before they have calibrated with small bullets. Occasionally, this works by luck, but luck is not a strategy and will lead to decline.

Do we have enough productive paranoia to stay above the Death Line? Can you recognize when the company is failing? Power is not excellence, and past success does not entitle future success. Just because one’s intentions are noble does not mean one’s decisions are wise.

Are we Clock-Building or Time-Telling? “Companies that are built to last put less emphasis on building a brilliant strategy and more on building a great culture,” said Collins. Great leaders, rather than being a genius with a thousand helpers, want to build a clock that will tell the time even if they weren’t there. “Culture is not in support of strategy. Culture is strategy. We succeed at our best when we help others succeed.”

Do we embrace the Principle: Preserve the Core and Stimulate Progress? The core is values that define why you exist beyond making money. The core is what you are built around even while progress is being made. It is worth cost and pain to you. Progress is made to enable the core.

What is your Big, Hairy, Audacious, Goal (BHAG)? Giving yourself over to the BHAG is how you stimulate progress and attract the best people. “If you know with a 100% certainty that you can do it, it’s not a BHAG.” BHAGS make you grow. They make you stronger, and make all the little challenges look easy. Even if you never achieve your BHAG, you’ll be the better for trying.

How can we increase our Return on Luck? We all get good and bad luck. The key is what you do with luck. Success in any area is born from maximizing the unexpected and succeeding when presented with an opportunity. “Luck favors the persistent. You stay on the march. Even when knocked on your back, you stay in the game,” said Collins.

What should be on your “Stop Doing” List?  True discipline begins with what we choose not to do.

Collins closed by telling attendees fanatic discipline, empirical creativity and productive paranoia will likely lead to survival and success. Along the way, make sure you remember to focus on being useful. “The greatest leaders make an impact on people. How will you change the lives of others? How will some people’s lives be better and different because you were here on this planet?”

 



William Flamme

William Flamme

William Flamme is ExecuNet's Marketing Content Manager, where he is responsible for developing engaging career, job search, and leadership insight and delivering executive-level content across the various properties under the ExecuNet brand. Prior to joining ExecuNet in 2008, Will earned a master's degree in education and taught fifth grade and sixth grade. As a teacher, he deepened his appreciation for the written word and mastered skills necessary for managing writers who sometimes view deadlines as homework.

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