Good to Great
This month, we summarise and discuss one of the current 'business books of the year' - Good to Great. It is written by Jim Collins, who is also author of Built to Last.
At the start of the book, Collins notes that being good can lead to a complacency that prevents the move onwards to being great. The implication is that either a company starts out and continues as great, or it has to put in considerable effort to make the transition to great. Collins and his research team examined companies that could be described as having made the transition to great. ('Great' was defined as having a stock return of three times the market average for fifteen years after the transition. 'Good' was defined as a return no better than 1.25 times the market average for the fifteen years before the transition).
There are eight broad conclusions, each of which is given a separate chapter. Some are more relevant than others to the HR practitioner. They are as follows:
1. Leaders with modesty and will
Great companies tend not be led by a CEO with a puffed up ego and hubris. Collins gives the term Level 5 Leadership to the more modest but highly willed individual at the helm of great companies. It is a description that we should all be stressing on leadership training. The leaders of great companies are not larger than life and highly charismatic. They have leadership qualities that Collins believes are highly prevalent in potential form. This also has implications for the HR director who should ensure his fellow directors are aware of Collins findings when they are searching for a new CEO.
2. Choosing the right people
Collins says that the great companies worry more about getting the right people and then deciding what to do (e.g. vision, direction) than the other way around. This is an interesting idea and relates clearly to the quest for talented people. The practical implication is that companies should enable themselves to be open-minded to considering applications from a wide range of people with talent. This means not being hide-bound by a set of competencies that are so tightly constrained that good but unusual people are filtered out. Equally, it means ensuring that only truly outstanding people are taken on and that they are given the best opportunities not the greatest problems. These are clearly ideas to be taken extremely seriously by those responsible for choosing and developing the future leadership of their organisations.
3. Confronting corporate weaknesses
Before their transition, organisations that will become great confront the facts about their current weaknesses, rather than solely congratulating themselves on their strengths. The implication is that everyone from HR must take on board criticisms of their function rather than playing political games and/or making it clear that they only want good news. All of HR's offerings should be properly evaluated. Equally, HR directors must ensure that they and their fellow directors confront and deal with weaknesses in the organisation. At the same time, Collins observes, we should maintain an unwavering belief that we will attain greatness.
4. Unifying idea
Great companies pursue a relatively simple, single idea that organises the world for them. This unifying idea must be based on a deep understanding of three things: a) What you can be best at, b) what is your economic driver (i.e., what is the key ratio) c) what you care about with passion. HR directors can play their part on the Board by identifying this core idea. They can also apply the concept to their own function by asking what, fundamentally, is all of HR in their organisation about.
5. Culture of discipline
Collins describes great companies as having a culture of discipline. He describes two aspects of discipline. First, great companies employ disciplined people who are then given the freedom to act within a framework. Second, great companies stick to their unifying idea rather than picking up on opportunities in an ad hoc way. For the HR function, the implication is the need to take on and reward disciplined people and to ensure they are given the freedom by their managers. This freedom will motivate and retain them.
6. Technology to achieve mission
Great companies pioneer the use of technology once it is clear that it will contribute to their core idea. They do not buy technology, expecting it to create greatness for them. This is highly relevant to HR functions, some of which have wasted vast sums on inappropriate HR software. The correct approach is to be crystal clear on what you are trying to achieve and then use technology to help you. The danger is buying the technology and then trying to find a way to use it.
7. Consistent effort towards the goal
Greatness comes about gradually with the consistent application of effort towards a clear goal. This leads Collins to the flywheel analogy of achieving a gradual build up in momentum by consistently applying effort in one direction. He contrasts this with the chop and change that characterises the approach of companies that do not make it to greatness. Again, this can be extended to HR functions. Great functions have a clear idea that they put effort into over a considerable period. They do not change from one trendy concept to its opposite and then back again.
Having achieved greatness, companies need to stay at that level. They need to be built to last. This requires the identification of core values and purpose. It also requires the preservation of the core values and purpose while stimulating progress by engaging with change.
Human Assets' General Comments
Good to Great might strike some as somewhat wordy and, at times, folksy. Some of the ideas need tightening after first glance. For example, using Collins analogy, getting the right people on the bus and then figuring out where to drive it is on first sight appealing. However, the notion of 'right' needs to be defined properly, and the idea that everyone sits on the bus until the requisite number of right people have boarded before setting off is absurd. Nevertheless, the broad thrust of the eight cannons of greatness can be applied both to HR functions and what they offer. They should also be applied by HR Directors in their dealing with fellow board members.
Human Assets can help you in a variety of ways to apply the principles of Good to Great so that the HR function makes a lasting contribution to the organisation's success. As examples, and taking the conclusions in turn:
1. Leaders with modesty and will.
We can help you define what qualities leaders need at different levels in your organisation. We will challenge the assumption that you need a company of Winston Churchill clones. Having defined leadership, we can help design and run the development of leaders through coaching, 360-degree feedback, development workshops etc.
2. Choosing the right people.
We will specify what 'right' means for you and design ways of assessing it. We will help you decide the proportions of people you need with different levels of potential.
3. Confronting weaknesses.
We can help you audit the effectiveness of current HR processes (e.g., evaluate your assessment centre or appraisal process) and the impact they are having on your internal customers. We can then develop a blueprint for enhancements.
4. Unifying idea.
We can help you by defining a HR strategy which is clear, agreed, and pursued with vigour in a way that everything done by HR obviously contributes to the success of the organisation in achieving its core purpose.
5. Culture of discipline
Being able to operate in an empowered way should be one of the qualities you seek at recruitment and it should be discussed with people at performance reviews.
6. Technology.
We can help ensure that you invest in technology that will help HR achieve its core purpose, and avoid technology that can be a hindrance.
7. Consistent effort
We will work to build upon and enhance current processes rather than always seeking revolutionary change.
8. Built to last.
Core values need to be implicit in HR processes. We will help identify what those values are and ensure they are properly represented in all that HR does.
To buy Good to Great from Amazon, please click here
Newsletter: 2003