Since we’re talking about “Good to Great” …

Good to Great: Why Some Companies Make the Leap… and Others Don’t
by Jim Collins

How did the selected good-to-great companies like Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and Wells Fargo produced sustained great results and achieved enduring greatness, evolving into companies that were indeed ‘Built to Last’.

Some key learnings:

  • Most good-to-great company leaders or CEOs came from the inside. They were not outsiders hired in to ‘save’ the company. They were either people who worked many years at the company or were members of the family that owned the company.
  • Strategy per se did not separate the good to great companies from the comparison groups.
  • Good-to-great companies focus on what NOT to do and what they should stop doing.
  • Technology has nothing to do with the transformation from good to great. It may help accelerate it but is not the cause of it.
  • Mergers and acquisitions do not cause a transformation from good to great.
  • Good-to-great companies paid little attention to managing change or motivating people. Under the right conditions, these problems naturally go away.
  • Good-to-great transformations did not need any new name, tagline, or launch program. The leap was in the performance results, not a revolutionary process.
  • Greatness is not a function of circumstance; it is clearly a matter of conscious choice.
  • Every good-to-great company had “Level 5” leadership during pivotal transition years, where Level 1 is a Highly Capable Individual, Level 2 is a Contributing Team Member, Level 3 is the Competent Manager, Level 4 is an Effective Leader, and Level 5 is the Executive who builds enduring greatness through a paradoxical blend of personal humility and professional will.
  • Level 5 leaders display a compelling modesty, are self-effacing and understated.
  • Level 5 leaders are fanatically driven, infected with an incurable need to produce sustained results. They are resolved to do whatever it takes to make the company great, no matter how big or hard the decisions.
  • One of the most damaging trends in recent history is the tendency (especially of boards of directors) to select dazzling, celebrity leaders and to de-select potential Level 5 leaders.
  • Potential Level 5 leaders exist all around us, we just have to know what to look for.
  • The research team was not looking for Level 5 leadership, but the data was overwhelming and convincing. The Level 5 discovery is an empirical, not ideological, finding.
  • Before answering the “what” questions of vision and strategy, ask first “who” are the right people for the team.
  • Comparison companies used layoffs much more than the good-to-great companies. Although rigorous, the good-to-great companies were never ruthless and did not rely on layoffs or restructuring to improve performance.
  • Good-to-great management teams consist of people who debate vigorously in search of the best answers, yet who unify behind decisions, regardless of parochial interests.
  • There is no link between executive compensation and the shift from good to great. The purpose of compensation is not to ‘motivate’ the right behaviors from the wrong people, but to get and keep the right people in the first place.
  • The old adage “People are your most important asset” is wrong. People are not your most important asset. The right people are.
  • Whether someone is the right person has more to do with character and innate capabilities than specific knowledge, skills or experience.

The Hedgehog Concept is a concept that flows from the deep understanding about the intersection of the following three circles:

  • What you can be best in the world at, realistically, and what you cannot be best in the world at
  • What drives your economic engine
  • What you are deeply passionate about

Discover your core values and purpose beyond simply making money and combine this
with the dynamic of preserve the core values – stimulate progress, as shown for
example by Disney. They have evolved from making short animated films, to feature
length films, to theme parks, to cruises, but their core values of providing
happiness to young and old, and not succumbing to cynicism remains strong.
w. Enduring great companies don’t exist merely to deliver returns to shareholders.
In a truly great company, profits and cash flow are absolutely essential for life,
but they are not the very point of life.

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Personal Interaction, according to Dilbert creator Scott Adams

Scott Adams’ theory is that a typical human understands only three ways to interact with another person.
  • Pushover: I’ll do whatever you want.
  • Negotiator: I’ll do this if you do that.
  • Bully: Do what I want or there will be consequences

The value of the Adams Model of Personal Interaction is in understanding what modes of interaction are likely to work together. Obviously two Bullies will make bad partners. Two Pushovers will get nothing done. A Negotiator won’t do well with either a Pushover or a Bully, because neither will negotiate.

How to soar like an eagle (in a world full of turkeys)

Technically, tonight’s video presentation was entitled “Beyond Excellence,” a very well done 1-hour (plus) seminar by Rob Stevenson. Mr. Stevenson also happens to be the author of “How to Soar Like an Eagle,” ergo the blog title for what will probably be the last entry for this class, Organizational Behavior.

He began his presentation with the story of Larry Walters, known in some circles as “Lawnchair Larry” because in 1992 he took flight over Los Angeles in a lawn chair, with the help of 45 weather balloons. He was determined to fly. He was determined to constantly improve. Well … he was determined.

When asked by a reporter why he had done it, Walters replied, “A man can’t just sit around.”

Maybe that’s what inspired the Disney Pixar movie, “Up” …

Speaking of Disney, Stevenson talked about how at Disney, it’s always “showtime” and all members of the Disney team are cast members who are always on stage. He talked about how in our professional lives we always need to be on stage, because you really never know who it is that you’re dealing with. He shared the example of a commercial real estate agent who was asked for help leasing a 500 square foot space, and because he handled it so well he ended up winning the business for Coca-Cola and ultimately a commitment to lease about a million square feet of space.

Speaking of Coca-Cola, Stevenson then shared the story of how a company lost a 100-truck order that they had “in the bag” with Coca-Cola, right up until the moment that the truck driver rolled up at the Atlanta headquarters and the senior Coke executive saw a Pepsi can on the dashboard. Oops. The company lost the order for the other 99 trucks.

He recommended reading the book, “Good to Great,” and reinforced the point of getting the right people on the bus, and the wrong people off … he also alluded to the possibility of how some people end up in organizations having something to do with the timing of when they were hired. A strong culture will work to get rid of the people who don’t belong there.

How do you create the WOW effect? Astonish people, have a great reputation. Hire for excellence. Example of WOW, Harley Davidson tattoos on the human body.

Stevenson shared the “8/16 rule,” where if you do a good job people will tell 8 others, if you do a bad job people will warn 16 others

MOT = moment of truth. (every point where you come in contact with a customer)

At the beginning and the end of the presentation, Stevenson talked about the importance of a FUBAR list … a list maintained by the company that has the mistakes people have made so others can avoid repeating the same mistakes.

Control, cope or capitalize – CHANGE

CARE trumps everything … care more about the customer than about the sale, commission, etc.

Cat-sees-lion-in-mirror

Stevenson used the image above to reinforce the point, “We are what we perceive ourselves to be.”

From “star system” to “goat pen” …

Tonight, Shelton led our “Ropes” discussion, which was essentially a number of chapters discussing power, formal and informal, within an organization. Shelton described upward mobility in the terms of a marathon versus a tennis tournament; in a marathon, as long as you can finish, your successful in completing the marathon. In a tennis tournament, once you lose, you’re out. He then shared with us a number of examples where he had watched people that had been identified as stars in organization, but then, as things do, something happened in the organization that tarnished the star and put them in the “goat pen.”

We spent some time discussing the different sources of power, including examples of the informal power, such as an administrative assistant who, because of proximity to leadership, has access to information, gatekeeper authority, and a perceived level of power.

One of the examples, in chapter 47, talks about how people’s reputations can be placed in the balance when they’ve recommended someone for a job and that person is not performing to expectations.

In another example, in chapter 48, the author discusses the perils of working in an organization where a family calls the shots, and people who are related to the leaders get the choice jobs.

Shelton shared with us the example of a manager in an organization who is no longer on the career ladder, and therefore can take a stance were in the past they would have been forced to be compliant. In this instance, in chapter 50, Ben Franklyn simply refuses to attend and 8 o’clock meeting on a Friday night and knows that there will be no repercussions.

In chapter 52, people at The Company simply cannot bring themselves to ask Mr. Marsh what he meant by this statement ” exercise on this” … consequently, the staff go through unnecessary turmoil trying to make their best guess as to what Mr. Marsh actually needed.

Zero sum game!

Tonight, we had two negotiation role-play exercises, both with dramatically different outcomes.

The first exercise, called Campus Travel Agency: a negotiation role play, involved a travel agency and an airline called Midwest Airlines. The purpose of the first exercise was to explore the dynamics of interpersonal negotiation, and to experiment with negotiating strategy and tactics.

Our teams objective was to try to maximize profitability through a commission on the airline seats. Our lead negotiator decided to push for a 20% commission rate when the airline was only willing to offer around 8%. It ended with the airline’s lead negotiator abruptly ending the meeting, and our negotiator spending the next 45 minutes explaining why he wouldn’t budge from his 20% commission demand.

Because of our teams fixation on the commission and profitability of the sale, which was written into the script, we never had any substantive conversation about other areas where Midwest Airlines could potentially sweeten the deal with other incentives and goodies.

We then moved into the second exercise, the Ugli Orange Case. Now that we had softened up the other team, we had them right where we wanted them and we were able to get them to work with us on what could have been a very difficult negotiation to secure a very rare orange of which there were only 3000 available in the world. We were able to agree to work together to offer $90,000 for the Ugli oranges, of which our team only needed the juice, and that they are team needed the rinds.

All this CHANGE is stressin’ me out, Doc!!!

Tonight we watched the video “Managing Change and Transition,” featuring Dr. Ben Bissell and his guidance on the physical and emotional toll of change.  He explained the two categories of a so-called Significant Emotional Event (SEE):

  • Professional, such as a reorganization, layoffs, relocation, or
  • Personal, such as marriage, the birth of a child, illness, loss, divorce

Upon experiencing a SEE everyone will go through five stages:

  • Shock or denial—the “I can’t believe it” phase
  • Emotional reaction—predominantly anger
  • A bargaining period—the change is sinking in but you are trying to alter its effects
  • Depression (clinically known as “grief”) because all change produces loss and all loss must be grieved
  • Acceptance, both emotional and intellectual, of the change

On average, one should expect it to take up to 1 1/2 years to work through these five stages.

Dr. Bissell shared the four signs of trouble that could have life-threatening implications:

  1. troublesome body part,
  2. short breathing,
  3. faster eating pace, or
  4. poor sleeping pattern

So, to stave off this outcome, it is vital for organizations to recognize that employees need to “go through” the stages without, however, sacrificing job performance.

Some other insights from the video include:

  • employees will mirror the behaviors of their managers
  • all low morale is really unresolved anger
  • information is minimized and perceptions get distorted during a SEE
  • an organization should keep as much of the familiar as possible during a SEE

I found this interesting graphic that shows what happens next after people move through the five stages … with the goal of moving on to new beginnings. In any case, “moving through” is important!

Guidelines for communicating with remote and virtual teams

Image: Make Something Cool Every Day

Here is the full list of guidelines, as cited in my research paper and as originally published by Melcrum Publishing as part of their report, “Building a Strategy for Remote Communications.”

  • Create opportunities for people to get to know each other on a personal level. Create a closed website that introduces members and their families. Have photographs that are not just of head and shoulders, but of them with their normal work team, their family, or playing their favorite sport. Make the interactions human and personal.
  • Have a clear system for recognizing and managing misunderstandings. Make it a part of the rubric that anyone who feels upset or uncomfortable about e-communications from other virtual team members has a responsibility to share that concern openly, with a view to building greater understanding.
  • Have clear rules about when and how to contact colleagues out of (normal working) hours.
  • Keep the team relatively small — no more than eight to 10 people. The larger the virtual team, the more likely it is to fragment into uncoordinated smaller groups.
  • Have clear and frequent processes for reflection and review. Ask what they have learned as a group and what individuals have learned, achieved, and struggled with over the past weeks.
  • Be very clear about the team purpose. Review activity together frequently according to this purpose and the team values.
  • Be very clear about what roles each member of the team should play and why. Be prepared to exchange roles.
  • Have a clear policy about how the virtual team will capture its learning and share it, with new members, and with other teams. Maintain an electronic record of the team’s learning.
  • Value differences of opinion within the team as an opportunity to explore issues in more depth.
  • Hold virtual team meetings on a regular basis, just as you would with a face-to-face team.
  • Maintain a team diary.
  • Do not overly rely on e-mail. Expect people to talk in person, by telephone or video conference, at least once every few weeks.