JIM COLLINS: Good to Great

Greatness, as it turns out, is a matter of conscious choice and circumstances.

Why do leaders Fall? Anyone can. The mighty fall through a series of stages.

STAGE ONE: Hubris born of success

First, remember, you don’t fall until stage four. You still look healthy and strong on the outside through three stages.

And it isn’t a disease. These are choices more than “what happens to you.”

Hubris is the outrageous arrogance that inflicts suffering on the innocents. Neglect of the flywheel, the life-calling, the passion with which we first began.  Don’t believe that your success is derived from your own doing.

Just because our intentions are good and our purpose is noble doesn’t mean our decisions are good.

THE FIX

Darwin smith took Kimberly Clarke from good to great, a man with a charisma bypass. He sold the mills and went to retail consumer side—and admitted that he was trying to become qualified for the job.

Ann Mulcahey saved Xerox from chapter 11. She was accidental in the job, but the results weren’t. They came from a deep sense of responsibility to save the company.

Herb Callahern, Southwest Airlines, is very weird—an iconoclast of sorts. He resolved a trademark dispute, not with a court battle, but by renting a stadium, riding in on a motorcycle, and beating the other CEO in an arm-wrestling match.

They are Level V leaders. They were committed to that which was larger than them. The good to great leaders were different. They were cut from a different cloth. The signature of what separated the V from the IV was HUMILITY.

This was EMPIRICAL data, not subjective assessment.

STAGE TWO: OVERREACHING

Going too far. Too much adventure. Too much expansion. Undisciplined pursuit of more.

Big bets and risks expose the entire enterprise. Packard’s Law states that if you allow growth to exceed the ability to have fantastic people in the key seats on the bus, you will fall.

“No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth and still become a great company. [And] If a company consistently grows revenue faster than its ability to get enough of the right people to implement that growth, it will not simply stagnate; it will fall.”

THE FIX

Keep the right people coming on board as leaders and steadily regulate growth with serious planning to accommodate the growth you expect.

STAGE THREE: Denial of Risk and peril

Warning signs going past unattended are among the key signs of Stage Three. The creation of systems to analyze the situations and issues that are dangerous, risky, and perilous.

Belief that it will all work out in the end on its own is the craziest notion in organizational thinking. It is the abdication of authority and responsibility.

THE FIX

Never give up, but don’t fool yourself that your problem, your torture, your nightmare will fix itself. Optimism will kill you with a broken heart. Learn the lesson of Admiral Stockdale from the Hanoi Hilton.

Stage Four: Grasping for Salvation

The game is up. The risk you’ve denied has thrown you over the edge of the precipice. There’s no more denying. Companies that fell at this point went for a silver bullet, a mega-merger, or a giant radical revolutionary sort of thing. Or a charismatic leader who would save the day. Not true.

It is rare to the point of non-existence to pull out of the nose dive with a jump through a flaming hoop.

THE FIX

Greatness is more pedestrian than that. It is the flywheel effect. You keep pushing in disciplined manner, and eventually you get a slow creaky turn on the wheel until you get a turn on the flywheel. When the big flywheel gets spinning, that’s when the potential can be unleashed again. Cumulative momentum is the daily, weekly, and monthly effort to get 5% to 10% better every year. Beat it down daily.

Stage Five: Capitulation

Its really over at this point. Technically, there is no fix. If you fix it at this point, you were actually still in stage four. Stage Five is the death knell. Your capital is gone. Cultural, reputational, financial—everything.

The Total Antithesis

How, in the face of all the financial demise, are the 18 companies of BUILT TO LAST still standing? Because they had a reason to endure. A reason for continuing. A reason for lasting.

If you measure your success by money, you lose every time.

“What happens if we disappear?” What would be lost? If we can answer that with a statement of any significance, then there is a reason to endure.

Embrace the genius of the AND.

Courageous Ambition or Cautious Constancy? IT IS BOTH.

Consistency of Values or Response to Change? IT IS BOTH.

Preserve the Core or Stimulate Progress? IT IS BOTH!

TO DO LIST

1. Do your diagnostics. www.jimcollins.com and self assess.
2. Count your blessings. Literally. Count them in a spreadsheet. Don’t stop until you have 100. In the process you will see all the success that we did not cause. THIS IS HUMBLING.
3. Another counting exercise. What is your question to statement ratio? You don’t have all the answers. Ask more questions.
4. How many key seats are there on the bus?
5. Do the diagnostic in the Summit Notebook (Ask, I’ll share) to determine who is on the bus and if they are right.
6. In your next meeting, create an inventory of the brutal facts.
7. Culture of disciplined folks begins with what we have the discipline to stop doing.
8. Define results and show clicks on the flywheel, milestones, goals achieved.
9. Double your reach to young people by changing your practices without changing your core values.
10. Set a Big Hairy Audacious Goal. Or three.