Why do some companies make it and others don’t? Jim Collins & his research team explored the answer to this question during a thorough research study of eleven companies that made it from "good to great.” Here’s what I took away from the book:
Great companies hire the right people and hire them early on. Other companies just... hire people.
Great companies create an environment where they hear the truth and confront adversity. Other companies ignore the tough facts and crumble in the face of setbacks.
Great companies change and adapt, but only if it’s in line with their core ideology. Other companies lack a core ideology and fall for any opportunity.
These things set apart mediocre companies from great ones.
1.) Get the right people on the bus (and the wrong people off)
2.) Create a climate where truth is heard
3.) Stick to your core ideology & values
Hire the right people. Great companies place much higher value on character attributes than anything else. Educational background, business skills, specialized knowledge, or even work experience come second (or third, or might not even be relevant at all). Those things can be taught, but the way someone thinks, speaks, and perceives the world around them should be in line with the purpose and aspirations of the company. Great companies care most about someone’s character, work ethic, dedication to fulfilling commitments and their values. Nine times out of ten these are the things that will determine if someone will be successful, and in turn push the company to be successful too.
Let the truth be heard. Yes, it’s important to have a vision. But it’s equally important to create an environment where the truth is heard and brutal facts are confronted. Great company leaders don’t come up with answers and motivate everyone to follow a vision. They express their vulnerability of not knowing enough of the answers and asking questions to discover the most compelling insights. Company leaders should be having frequent informal meetings with teams where they simply show up and ask “What’s on your mind?” “What are people feeling?” “What should we be worried about?” If the right people were hired (see above), then they should be self-motivated. The company needs to focus on how to not de-motivate them. And to do that, they need to understand the truth, confront the brutal facts, and act on those implications.
Stick to your core ideology & values. Introducing: The Hedgehog Concept - a simple, crystalline concept at the intersection of these three business factors:
1.) Define what you’re truly passionate about
2.) Figure out what you think you can be the best at in the world
3.) Determine what drives your economic engine
Great companies want to preserve their core purpose (the fundamental reason for being beyond just making money) and values. But business strategies and operations should be ever evolving with the changing world. Change, adapt, grow. If the right people on board, and they’re being listened to, a change in direction of the company should be nothing more than a nod of the head. This is the reason for establishing a core ideology, that fundamental reason for being. Having this purpose keeps the company grounded and not tempted to fall for that “once in a lifetime opportunity” that might not actually be in line with their reason for existing.
Want your company to be great? Hire the right people. Listen to them. Stick to your passion.