Going Good to Great...!

Ever wondered why certain organizations reach the zenith while others struggle to make a leap or sustain? What makes organizations reach certain height? How do they transit from 'good to great'. Is it the strategies they choose, or their visionary leader, or is it the team team they employ? Read along to find out the essential ingredients on the incredible transformation.

Good is the enemy of Great!

On contrary to the popular belief the transition does not happen due to larger-than-life charismatic persona of the leader but it is due to systematic process that an organization undergoes. Author Jim Collins, in his book Good To Great: Why Some Companies Make the Leap...And Others Don't, outlines a framework of this based on his research.

The framework has three components, namely,

1. Process: This involves taking the first step towards greatness and continuing in the same direction (indicated by build up in the above diagram) till you reach an inflection point that takes you to the Greatness (i.e. the breakthrough)

2. Phase: The whole process of going from good to great involves three phases; namely, disciplined people (getting the right leader and right mix of people in team), disciplined thought (understanding the brutal facts and establishing set of ore values), and disciplined action (creating a robust work culture wherein right people will work abiding to the core values yet having appropriate freedom).

3. Flywheel: The process of figuring out what course of action to be taken for the best future results and taking the steps one by one to push the flywheel in consistent direction till the breakthrough point is reached.

Diving deeper into the framework, we would discuss here, the sub-components of the framework.

1. Level 5 Leadership  (Disciplined People Phase in the Process of Build Up)
The research has shown that the leaders who are responsible for the good to great transformations are the one who have the right mix of modesty and steely resolve. The organizations that strive to become great must have a Level 5 Leader.
The author discusses five levels of leadership outlined in the diagram below. Level 5 leader being the highest in the hierarchy. The traits that these leaders exhibit can be outlines as follows:

a. They put organization before self-interests.
b. They exhibit impressive blend of self-effacing humility and fierce resolve to achieve the nothing short of perfection.
c. They plan their succession and make sure that the worthy successor would further the organization's achievements.
d. They exhibit modesty and humility; and practice 'the window and the mirror' phenomenon. That is they attribute success to their colleagues and luck (look at the window) while in case of failure the take up the responsibility (look at the mirror).

2. First Who... Then What... (Disciplined People Phase in the Process of Build Up)
The good-to-great leaders hire the best people who are self-motivated towards greatness and would embrace change. But, 'getting wrong people off the bus' is equally important as to getting right ones on the bus.
The 'a genius with thousand helpers' model leads to the decline of the organization once the genius departs and is more likely to fail to create a sustainable great company. The great companies hire right people based on their character attributes rather than the skills that can be learnt.
Practical way to make right people decisions can be achieved by:
a. When in doubt, do not hire! The right people may debate for perfect solution yet they unify behind a decision, that establishes mutual respect.
b. When you know you need to make people change, Act!
c. Best people must be engaged in harnessing opportunities rather than tackling problems.

3. Confront the brutal facts (Disciplined Thoughts Phase in the Process of Build Up)
Series of good decisions is the key to take the leap and sustain; and they are not possible without confronting the brutal facts in the first place. This is possible by inculcating the 'culture of truth'. The companies should strive to create a culture where truth is heard! And to achieve that, following steps need to be taken:
a. Lead through questions, rather than predetermined answers. Constantly probe till you get a clear understanding of basic facts. It can be achieved practically by having atmosphere of healthy debates and informal meetings.
b. Engage in debates and intense discussions rather than coercion as it has potential of providing best answers.
c. Critical Analysis without blaming! Analyse the situations before making disastrous decisions to gain better understanding without attributing blame. Consider debacles to be learning; learn from them, devise a system to not repeat the same, and move on.
d. Establish red flag mechanisms to deal with problematic situations/information immediately.

4. Hedgehog Concept (Disciplined Thoughts Phase in the Process of Breakthrough)

The essential strategic difference between good and great companies is the implementation of hedgehog concept across their decision making process. The concept has three main components represented by the circles in the above diagram.
a. What we can be best at: Here the company needs to identify its core competency (core business). At the same time, the company also needs to be aware of the things it cannot be best at and get rid of those. Thus, only the things that organization be truly best at, gets entry into this concept.
b. What drives our resource engine: The company needs to know its economic denominator. It needs to determine the single most important ratio that has the greatest impact on it. This is very essential to make better decisions.
c. The last component of the concept requires the organization to know its passion, it is the area where they can produce results beyond expectation.

5. Culture of Discipline (Disciplined Actions Phase in the Process of Breakthrough)
A culture of discipline can be established and sustained by encouraging the self-disciplined people to assume freedom and responsibility within a framework diligently adhering to the Hedgehog concept.
The good-to-great transited companies perfected the 'not to do' lists and systematically removed the items of portfolio that were extraneous to their Hedgehog concept.

6. Technology Accelerators (Disciplined Actions Phase in the Process of Breakthrough)

The good-to-great companies harness the carefully selected technology as an accelerator by aligning it with their Hedgehog concept. However, the technology itself is never the primary source of motivation to becoming great, it only accelerates the momentum.

Thus, unlike what appears from outside to be a sudden drastic change; the transition of the good to great follows a mechanism of flywheel - accumulated effort applied in consistent direction that results in breakthrough.