Creating A “Great” Business
One of the books I have added to my pandemic lockdown reading list is Jim Collins #1 Bestseller, ‘Good to Great’, which has sold over three million copies. He promotes it as a prequel to his other bestseller ‘Built to Last’. It is the result of over 15,000 hours of research on what it takes to build a good company into a great company.
One of the characteristics of these bestselling business books is they are based on large companies in large markets. Our biggest companies can be classified as small and our small as micro. Therefore, the challenge is interpreting the insights of the research into what is applicable to our market. In this article I will try and summarise the key insight in a way that is relevant to our companies.
The key finding is great companies evolve through three broad sequential stages: 1) Disciplined People, 2) Disciplined Thinking, 3) Disciplined Action. He likens these three stages as ‘timeless laws’ in building a great company.
The first stage is the unique characteristic of the leader and people onboard the company bus. He describes leaders of great companies as surprisingly: self-effacing, quiet, reserved with personal humility and professional will. He then goes on to say that these leaders spend a considerable part of their time getting the ‘right’ people in the ‘right’ seats (roles) while getting the ‘wrong’ people off the bus. In this stage the leader is building a culture. I may add that this assumes the company is in a profitable market segment with value added products and services.
The second stage is confronting the facts, the numbers of the business. This is the stage, that having the right people on board the company bus, then clearly defining the direction the company will take. This requires analysing the market segment numbers, is this a growing segment, what is the rate of growth, what is the profitability of this business model, where will the growth come from? This is not about competence, what you are good at doing or what you like doing, but finding the intersection for your company, between profitability, a passion for an industry and what you can become great at doing.
The third stage is the lift-off to greatness stage. Maintaining unwavering faith in the direction of the company, regardless of difficulties. Developing a culture of discipline, not getting ‘side-tracked’ with any new fads or new technologies but innovating within the direction charted out. A disciplined culture leads to great performance. Choosing carefully selected technology to accelerate growth in the direction. Then relentlessly pushing in one direction, building momentum until a point of breakthrough, and beyond.
The author ends with saying that their research points to these as timeless principles of how to take a good organization and turn it into one that produces sustained great results.