Tuesday, 2 September 2014

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What-We-Have-to-Learn-from-the-Excellent-Companies-and-the-Great-CompaniesJim Collins and Morten T. Hansen, in their 2011 book Great by Choice, dramatically mention what leaders of great companies are NOT. They are not more creative, more visionary, more charismatic, more ambitious, more blessed by luck, more risk seeking, more heroic, more prone to making big, bold decisions
than others. In other words, leaders of great companies are not conjurers of greatness through their esoteric magic powers as most of us may, in our folly, imagine.

Managers in search of leadership ideas and who do not fail to read any new book on excellence cannot be faulted for wondering if this is all what Collins and Hansen had to unravel after their heroic work of wading through “six thousand years of corporate history across all our research”! And, does one have to read through 300 pages to get this insight?

Oh, we are getting ahead of ourselves! Collins and Hansen have much more to tell us than what leaders of great company are not. They have a lot to tell us how they made their companies great, not by freaks but by choice

If managers of great companies or more clearly CEOs who made their companies great by choice are not more creative, more visionary etc. than others, what are they? What qualities of these leaders made their companies great? These CEOs made their organizations great because they had the qualities of –
a. Fanatic discipline: “Discipline, in essence, is consistency of action”. Consistency with their professed values, long term goals, performance standards, method, over a period of time. Collins and Hansen call this the 20-Mile March. No matter how adverse the market is or how tempting the short-term opportunities are, these leaders are committed to maintaining steady growth of about 20% annually. Financial markets, customers, earthquakes, global competition, technological changes and most of everything are out of your control. “But when you 20 Mile March, you have a tangible point of focus that keeps you and your team moving forward, despite confusion, uncertainty, and even chaos”.
b. Empirical creativity: Creativity needs to be tested empirically before the company commits itself to the new idea. You fire with bullets, and when you see that the bullets strike, fire a few more. Once you are convinced the strikes are consistent and not scatter-guns, fire with cannonballs. Every failed bullet gives an opportunity to learn from one’s follies.  
c. Productive paranoia: These leaders are cognizant of lurking dangers and vigilant about possible disruptions. This is in contrast to taking quick and immediate decisions to unburden oneself of the anxiety and uncertainty. “Uncertainty will never go away, no matter what decisions we make or actions we take.  So, if we have time to let the situation unfold, giving us more clarity before we act, we take that time”.
d. All the above animated by a central motivating force: Level 5 ambition.

If we compare this newly minted wisdom to the 1982 best seller In Search of Excellence by Tom Peters and Robert Waterman, some interesting revelations can be noticed.
a. Only one of the Excellent companies of In Search of Excellence, the venerable Intel, finds place amongst the great organizations in Great by Choice.
b. Peters and Waterman list seven characteristics of Excellent companies. None of them find place as characteristics of the leaders of great companies. However, commitment to values which is part of discipline of leaders of great companies is a characteristic of excellent companies as well.

Does this mean that great companies need not be excellent companies? Or if they have to be, how did they miss those characteristics of excellent companies? It is not that these great companies moved forward towards greatness, because except one of them the others did not find themselves in the list of excellent companies in 1982.

Both the books claim to be based on empirically researched findings. How then need we reconcile the missing links?

Yet another question is, what is the difference between greatness and excellence, if indeed, there is difference?

By V.K.Talithaya (vktalithaya@managementmasala.com)
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On 9/02/2014

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