Taking Your Company from Good to Great

Have you ever read Jim Collins’ book Good To Great? Collins and his team of 20 researchers devoted five years to studying hundreds of publicly held companies to determine what key factors caused the top firms to outperform the stock market’s average percentage growth by at least three times for a period of no less than 15 years. This performance result became their definition of a “good-to-great” company.

Collins concluded that six common factors caused just 11 companies to enjoy a sustained breakthrough in performance to become great. These same six factors should resonate in the kitchen and bath industry as we face the challenges and opportunities of doing business in this recession.

Factor 1: Level 5 Leadership. The research team was surprised to find that all 11 companies were actually led by rather ordinary, understated, modest, self-effacing people with a paradoxical mix of personal humility and professional will. The “Level 5 Leaders” were ambitious men, but ambitious first and foremost for their company, not for themselves. They were fanatically driven to produce sustained results. They displayed a workmanlike diligence…more plow horse than show horse.

Unlike “Level 4 Leaders” with tremendous egos, they set up their successors for even greater success in the next generation. Finally, they gave others credit when things went well and took responsibility when things went poorly.

Faced with the rigors of today’s challenging economy, it might be useful to ask yourself whether you truly possess some, or most, of the qualities found in these executives. Members in our group take a 15-minute online DISC Behavioral Test to learn more about their leadership potential; they receive a 20-page report within minutes that empowers them to make positive changes.

Factor 2: First Who, Then What. The good-to-great leaders began their company transformations by getting the right people on the bus, the wrong people off the bus, and then figured out where to drive it. Level 5 leaders recognized that having the right people on the bus, in the right seats, didn’t require motivating or managing them – the right people were self-starters.

Do you have the right people in place, or are you holding on to underperformers because you have too much time and money invested in them? Collins found that the “right” person has more to do with character traits, work ethic and innate abilities than with specific knowledge, background or skills.

Factor 3: Confront the Brutal Facts. All good-to-great companies began the process of finding the path to greatness by confronting the brutal facts of their current reality. Paramount to discovering the real truths about your company situation is having a culture wherein people have an opportunity to be heard. Creating this climate of truth-seeking, Collins found that Level 5 Leaders followed four practices: (1) led with questions, not answers; (2) engaged in debate, not coercion; (3) conducted autopsies without blame; and (4) built red-flag mechanisms to signal information that could not be ignored.

As you navigate this economic downturn, are you being truthful with yourself and your staff in facing the brutal facts of your reality? Have you made the necessary cuts in overhead to match the current reality of your revenue stream? Have you left enough money in your marketing budget to drive in leads while gaining market share as the competition has trimmed back its advertising? Do you have at least six months of fixed overhead expenses in a liquid portfolio that can be drawn upon as needed to finance operations? Do you have a three-month cash flow forecast in place so you can tell your vendors when they can expect payments?

Factor 4: Hedgehog Concept. According to Collins, going from good to great requires a deep understanding of three intersecting circles translated into a simple concept his team labeled the “Hedgehog Concept.” Circle one asks, what are you deeply passionate about? Circle two asks, what can you be best in the world at? Circle three asks, what drives your economic engine?