How excellent companies get that way
HARRY S. DENNIS III, for SBT
Recently I had a chance to review a study done by Jim Collins about what makes good companies become great companies (see “Built to Flip,” in the March 2000 issue of Fast Company magazine). I was intrigued by the fact that a similar survey we completed in TEC produced parallel findings. I would like to share these observations with you as we approach the end of a difficult and challenging 2001.
Collins and his group looked at 1,435 established companies. We looked at fewer than 100. Notably, we were both interested in learning something about the change process because that’s what “from good to great” is obviously all about.
The first significant observation that we both made is that change in this process is not a eureka or explosive happening. The transformation is slow, often painful, but deliberate. Take the example of a humidifier company in TEC. Their results consistently outpace GE’s. And they do a lot of small things right. In the current recession, they are enjoying the best year in their more than 70 years.
The firm’s chairman would tell you that since the late 1970s, the firm has focused intensely on improving operational efficiencies and building market share. The company is in the Oscar category in both areas!
As Collins put it, referring to the companies they examined: “There was no miracle moment. Instead, a down-to-earth, pragmatic, committed-to-excellence process – a framework – kept each company, its leaders, and its people on track for the long haul.” (See page 92 of the Fast Company article.)
Now another thing we have observed in TEC is that successful companies embrace change step by step. That way, employees can see tangible and identifiable results. For example, several TEC companies have increased their Internet business from zero sales to 20% or more of total sales within the past 15 months. There were no easy formulas and few roadmaps. Trial and error. Failure, then success.
If change is attempted at the universal as opposed to the molecular level, it is difficult to assign accountability. The “big picture” is simply too hard to measure. Credibility of management is easily challenged, i.e., “Oh, here we go again ….” Collins calls it the “doom loop.” The troops recognize it immediately. And they know if they go through the motion, it will soon go away, to be replaced by yet another “doom loop” change effort.
Here’s an interesting observation. Both the Collins research and our TEC experience show that companies going from good to truly great needed at least 15 years to really get to a “sustainable” great point. The dot.coms really never had a chance, folks. They thought they could get there overnight and, unfortunately, the public and too many so-called savvy investment advisors bought it.
Some claim this illusion of great, quick achievement is what has really spiraled us into the economic quagmire we find ourselves in as we close out 2001. Let’s face it. Real people in real companies want to be part of a winning team. I’m a Packer fan. When they lose, it takes me a day to recover, and I’m just an onlooker. In our companies, a “loss” can have the same effect, but more protracted.
Collins notes that great companies somehow get the right people on the bus, the wrong people off the bus, and the right people in the right seats. I have echoed that over and over again in these columns. Why is this so important? Because, as we have found in TEC, you really can’t motivate people when you get down to it. They motivate themselves. They are the reason why the bus gets to where it needs to go.
As the leader of your company, can you face the brutal – I mean the really brutal – facts. Here are three to consider:
As leader, can you get the people who are really passionate about your company to share, digest, and act upon those brutal facts – in small, definitive, measurable, accountable ways? If you can’t, as “Ernie” might say, “Who do you know who wants to be brutal?”
As per usual, I’m running out of space before I want to. Let me summarize some of what we know about going “from good to great.”
First, tomorrow morning take a look at what’s on your desk, in your e-mails, in your organizer. I would bet that 80% of what you will be doing will produce less than a 20% impact on your company’s ability to move from good to great. Sad but true, unless you are a one-person band!
Second, if you are in the “change” driver’s seat, think molecular when you think “brutal.” Think long-term, with accountability. Think about how you can celebrate and reinforce little successes. Think about instilling the notion with your passionately committed people that going from good to great can be done (e.g., we all know of them: Abbott Labs, Kroger, Nucor, Walgreen’s, Pitney Bowes, Kimberly-Clark, Fannie Mae – cited in the Collins research).
Until next month, good bussing!
Harry S. Dennis III is the president of The Executive Committee in Wisconsin and Michigan. TEC is a professional development group for CEOs, presidents and business owners. He can be reached at 262-821-3340 or at hiduke@aol.com.
Dec. 21, 2001 Small Business Times, Milwaukee
