“Good is the enemy of great”
Jim Collins decided this in eighth grade after his parents divorced and just in time to turn his average school marks into brilliant results, results that scored him a place at Stanford University in 1976 where he majored in mathematical sciences.
Good to Great: Why Some Companies Make the Leap and Others Don’t is Jim Collins’ fourth book from his ongoing, in-depth research into management. His insights, such as the Level 5 Leader and the Hedgehog Concept, created a huge stir in the business world that is beginning to buzz again as the current economic downturn tests his findings afresh.
A Level 5 Leader is, in the words of Collins, a “paradoxical mix of personal humility and professional will.”
He goes on to say: “The most effective leaders of companies in transition are the quiet, unassuming people whose inner wiring is such that the worst circumstances bring out their best.They’re unflappable; they’re ready to die if they have to.
But you can trust that, when bad things are happening, they will become clearheaded and focused.”Characteristics that sound not only great, but necessary in a leader tasked with surviving the recession.
Jim Collins was named after his grandfather, a chief test pilot for the Grumman military aircraft company who died while testing the F3 biplane. His memory has been a constant presence in Collins’ life especially as he inherited his grandfather’s love of risk-taking, adventure and thrill-seeking. While studying at Stanford, Collins ran a rock-climbing school at Yosemite National Park in the US.
“My real education was at Yosemite. As a rock climber, the one thing you learn is that those who panic die on the mountain. You don’t just sit on the mountain.You either go up or go down, but don’t just sit and wait to get clobbered. If you go down and survive, you can come back another day. [In tough times] you have to ask the question, what can we do not just to survive but to turn this into a defining point in history?”
Collins co-authored his third book, Built to Last: Successful Habits of Visionary Companies, with Stanford professor Jerry Porras. It was a management best-seller that researched the key factors responsible for companies living long, robust corporate lives. The book’s success gave Collins the means to set up his own management laboratory with a team of researchers who were put to work on Good to Great soon after.
The Hedgehog Concept put forward in Good to Greatis, according to Professor Porras, “…one of Jim’s most substantial contributions. It’s worth the whole book. Most managers couldn’t tell you what the key denominator, the critical ‘per something’ in their business, would be if you asked.
But having a clear sense of that is super critical.” The term ‘Hedgehog Concept’ comes from the ancient Greek poet Archilochus who said, “The fox knows many things, but the hedgehog knows one big thing.”It’s a seemingly obvious method for greatness, but many companies are unfocused and unclear about their key business ratio which keeps them stuck at good.
Not only has Jim Collins discovered that he can rock-climb (“I was never the best, but if there had been an Olympic climbing team, I probably would have qualified for the American trials”), write best-selling books, consult, speak to large auditoriums of people and manage his wife’s triathlon career, he can also teach.
He returned to Stanford in 1989 to teach a course on entrepreneurship and was an instant natural. He listened to his students, challenged their ideas and thinking, and was passionate about pushing them to do their best. Students who saw entrepreneurship as the ‘get rich quick’ route were not his favourites and he referred to them as “built to flip”.
True entrepreneurial thinking is vital in a recession – the great business leaders are the ones who aren’t frozen by the changing reality but rather keep both eyes open for the opportunities a new system presents. “Today’s business leaders may not have led through a crisis before but the current conditions are not a world first.
History presents cases that show CEOs embracing turbulence as their friend, thinking innovatively and taking their companies from good to great.” One of Collins’ favourite examples is the Hewlett-Packard story.
“If you go back in history, a few companies used difficult times to bolster their legions of talent. After World War II, all the government labs were shutting down, and engineers were streaming out. Hewlett-Packard was actually going through a layoff. But at the same time, Bill Hewlett and Dave Packard said the greatest opportunity they ever got wasn’t technology; it was the opportunity to hire those engineers.Companies that say they can’t afford to hire people in a downturn aren’t thinking long-term enough. To achieve greatness you need to manage for the quarter-century.”
What needs to be remembered is that the great companies Collins researches were all start-ups in the beginning. They all had an entrepreneur at the helm driving the progress and constantly scanning the bigger picture.
According to Collins many of those leaders achieved Level 5 status thanks to the way they responded under pressure. “I don’t know if it can be learned… some of it is just innate.”
Jim Collins was once asked if he considers himself a Level 5 Leader. His response was honest and very personal. “My father was both incompetent and indifferent as a parent. That left me with a tremendous need for attention. To be really Level 5-like, eventually, I will have to overcome that. Am I capable of it? I don’t know. But (after working on Good to Great), I know it’s important to try.”