Should “Good to Great” have been “Good to Grave?” In 2001, Jim Collins wrote this book about why some companies achieve greatness, but most do not.  He listed 11 companies that were all GREAT….at the time.  How have they faired since then?

https://www.linkedin.com/pulse/what-happened-worlds-greatest-companies-chris-bradley/

Listen to the podcast here:

“GOOD TO GREAT”

Karla Nelson:  Welcome to the People Catalyst Podcast, Allen Fahden.

Allen Fahden:  Hello, Karla. How are you doing?

Karla Nelson:  I’m doing fantastic today. How are you, my friend?

Allen Fahden:  Couldn’t be better.

Karla Nelson:  I’m pretty excited about today’s podcast, because we’re going to be talking about a book. We’ve got this series coming up. We’re identifying all these great books that we read over the years and really overlaying what was awesome about them and then potentially what was missing, so that we can help others and assist others in how to overcome those bottlenecks associated a lot of times the business books that we read. They tend to be a little bit big picture, so it’s not that it’s not correct and great information. So, that’s what we’re going to be talking about today.

Karla Nelson:  The book that we’ve decided to talk about is Good to Great, a book by Jim Collins. He talks about why some companies make the leap and others don’t. It’s a management book that describes how companies transition from being good companies to great companies and then how most companies fail to make that transition. Then he goes in and identifies companies that he believes are good companies and great companies. What kind of brought this up is we found this really great article about what happened with these companies. And I also want to add in, the book did sell over 4 million copies, so that’s pretty incredible.

Karla Nelson:  He identified 11 companies, and out of those 11 companies two beat the average S&P by five points or more, two were slightly better than the S&P, I think it was like two points, four were equal to the S&P, and three of them completely failed and went belly up. So, not terribly good stats there. Right? Especially three out of 11 completely failing. We’ll make sure we include that link to that article in the podcast, because I think it’s fantastic too, and it actually looks at two other books that we’re planning on discussing on the podcast as well.

Karla Nelson:  So, within the book, Good to Great, he talks about seven characteristics of companies that did go from good to great. I’ll lay out the seven for the purpose of today’s podcast. We’re going to talk about three of them. First is level five leadership and leaders who are humble, but driven to do what’s best for the company, first who, then what, confronting the brutal facts, the hedgehog concept, culture discipline, technology accelerators, and the flywheel, which is the additive effect of small initiatives. For the purpose of today’s podcast we’re going to be pulling out the first who then what, the hedgehog concept, and then the culture of discipline. With that said, since you did your TEDx talk on this, Allen, I’ll let you go ahead into the first characteristic, which is the first who, then what and why it didn’t necessarily go far enough.

Allen Fahden:  Yeah. Exactly. He used this great metaphor about the bus. People always led with their strategy, where the bus is going. What said is, “No. Don’t do that. It’s much more important to know who is on the bus, and not only who is on the bus, but who is in what seat on the bus.” So, that was a big distinction, probably one of the most quoted things about the-

Karla Nelson:  Mm-hmm (affirmative). I’d agree.

Allen Fahden:  … the book, but … and that’s yours.

Karla Nelson:  Yup. Then do you want to share a little bit about the pitfall with that as well, the pitfall of, yes, it is who’s on the bus, what seat, and then where the bus is going, but the challenge is how do you figure out your who?

Allen Fahden:  Exactly. What he didn’t do is really tell you how to do that and missed a major, major distinction. That is that people have different abilities, and they’re much more powerful and productive during certain phases of the project. He didn’t go into any of that, so you’re sort of left there hanging. “Well, gosh. How do we do this?”

Karla Nelson:  Yeah. What seat are they sitting in?

Allen Fahden:  It turns out it wasn’t enough just to say who’s on the bus.

Karla Nelson:  Yeah. Although I think the great part about that is the fact that people are more important than strategy. I think that’s definitely something over the last 15 to 20 years that has revolutionized cultures in business is valuing people, instead of valuing outcomes or even strategy. Right? Both inputs, outputs, strategy, and the outcome, but saying your people are super important, and that’s the way that you’re going to get to being great is by valuing the who. We’ll get into a little bit more about what we can do to solve the problem, but we really want to lay out what was great about the book and then what’s missing with adopting that.

Karla Nelson:  For instance, I agree with what he’s saying there. It’s just too general. How do you get to the nitty-gritty of it? Right? So, you can identify and say that you need to do this, who, then what seat, and then where you’re going, but how do you make that happen? Right? The idea’s fantastic, but then you get into implementing it, and you’re like, “Well, who should sit where on the bus?” What we typically do is just chuck everybody on the bus. You might have all great whos, but if the whos aren’t working together, it’s just not going to work. So, that’s the first thing.

Karla Nelson:  Then the next thing we want to talk about a little bit is the hedgehog concept. If you look in the book, this identifies three different areas. It’s the center of these three areas, which is what is your passion, what drives your economic engine, and what you can be best in the world at, which I agree with all of those, Allen, but if you’ve got a little bit of input on …? There’s a big challenge associated with that. Even if you identified all of that, it comes back to the who. Right? Me, as an individual, I can say I’m passionate about something, but that doesn’t necessarily mean I can get it done by myself. I’m going to tell you if you try to do it by yourself, that’s 1% of the population, it’s not going to be very fun.

Allen Fahden:  Miserable.

Karla Nelson:  Mm-hmm (affirmative). So, I agree. I think everybody can agree, what is your passion, and you need to identify that. But at the end of the day if you don’t have four core natures of work both in the ideation and implementation stage, it’s like pushing a parked car. You’re so frustrated. You’re wondering why you’re not getting it done. You’re beating yourself up. That’s all the way from a solopreneur to a manager, right, that’s responsible for whatever the project ends up being. So, understanding that, it’s like, “Okay. We all agree. Do what you’re passionate about. Then what?” Right? Then also, what drives your economic engine? Now, I think that one’s actually pretty stable.

Karla Nelson:  Now, the thing is there’s different models. Okay. What is that model? We can go and talk about that forever, and ever, and ever, because driving the economic engine at the end of the day is the process. I think that’s what they forget. That’s that halo effect he talks about in the book, which they think that the success actually is the economic engine. Let me give you an example. You can look up the halo effect. McKenzie did a really good study on it, which basically says when you’re doing well, that people just assume that you’ve got a great strategy, and great leadership, and all these things. That doesn’t necessarily mean that that’s happened, because … And they lay out an example, which is Cisco.

Karla Nelson:  Cisco before the tech boom, “Oh. They’re the greatest thing since sliced bread.” Tech boom hits. Then they drop, and they think because their valuation, because their revenues and all their financial piece went down, that now all of a sudden it’s a crappy company, they’re culture sticks, and they have no strategy. Now, look at them. They adjusted, innovated, and now they’re one of the great tech giants today. So, that halo effect is the biggest thing to pay attention when you’re reading Good to Great about driving economic engine. It’s your people that drive economic engine, not necessarily just your economic status. If you’d like to say anything about that too, Allen.

Allen Fahden:  No. Go ahead.

Karla Nelson:  All right. Then what can you be best in the world at? You can take that one on, because what can who be best in the world at? If you’re a solopreneur, it’s, “What can I lead and be best in the world at?”, but for a company I think that is so general that it would be extremely hard if you don’t know who’s on your team.

Allen Fahden:  Well, exactly. And being best at the world at something assumes starting, middle, and finish. It requires different people for each of those. Again, it’s on a 50,000 foot level. What we’re really talking about is general principles of strategy and general principles of leadership and management. There’s an elephant in the room.

Karla Nelson:  And we all know it. It’s why we become skeptics over time and reading these business books that we agree with. But nobody’s saying it’s not correct. It’s just that they don’t take it far enough, because at the end of the day you look in the mirror, and you go, “Well, what do I do next?” Right? It’s like, “Okay. Well, I agree with it. Well, now let’s implement it.” That comes back to 90% of CEOs are fired, because they can’t get an idea implemented. It could be the best idea in the world, but if you don’t know who’s on your team, how would you even be able to shift?

Karla Nelson:  We’ll talk a little bit in a moment about the ideation, and the implementation, and how those two really contradict each other, and how one of the seven principles completely contradicts it, specifically to that. I think, again, we already talked about first who, then what. It just didn’t go far enough. How do you know your who? You’re dumping everybody on the bus and then saying, “Let’s go,” but at the end of the day the idea is great, but then what do you do? Right?

Allen Fahden:  I think here’s the key, key issue. That is that part of the orthodoxy of management rests on this assumption. Everybody in the room is doing everything together all the time. Those are called meetings. So, what happens is that no attention is paid to the actual fit and sequence, the fit between the people and the sequence in which their talents and their core natures emerge during these phases of the work. That’s missing in most of these management books, and is an answer to who’s in what seat on the bus. But he needed to go deeper than that.

Karla Nelson:  Well, and I think that honestly the answer to all of it is fit and sequence. Right? We’ve identified that with the first who, then what. Then we talked but the hedgehog concept, on the general-ness of what that is. Here’s the funny thing. You look at a company, and I was just looking at the questions, all those three questions with the hedgehog concept, what’s your passion? Well, guess what? Everybody’s passion is different. What if you’re leading a company with 10,000 people? It’s not about what are you passionate about. What part of the work are you passionate about? What are you really great at is a better question than what’s your passion. Right?

Allen Fahden:  I’ll give you an example. I’ve worked with some baseball teams, and I love baseball. I’m passionate about baseball. But put me in the accounting department of the baseball team-

Karla Nelson:  That’s a true story.

Allen Fahden:  … they’re out of business in two weeks, and I’m miserable too.

Karla Nelson:  Yeah. Yeah. It’s because, “Okay. We’ve got a seat available. There you go.” I remember training in a company. Actually you were there. I don’t know if you remember this or not. There was a gentleman in the room, and he had just moved to the area that we were in, and he was in R&D. He did very specific kind of engineering type stuff. I was like, we asked the question, “So, why are you here?” “Well, they had an opening in sales.” Do you remember that?

Allen Fahden:  Yeah. That’s going to go well.

Karla Nelson:  I just laughed. It was like, “Okay. There’s an opening. You’ve got a degree. Let’s slide you on in there.” Then now we’re going to move onto this culture of discipline. I just love this one. Right? It’s essentially the culture of discipline that they talk about in Good to Great is combining that culture of discipline with the ethic of entrepreneurship. I mean, can you get anymore contradicting than that?

Allen Fahden:  Yeah. That’s like an oxymoron, you know, military intelligence.

Karla Nelson:  Yeah. There you go. It almost completely one side speaks to the early adopters, which is the ethic of entrepreneurship, because as an entrepreneur and focusing as an entrepreneur … Actually, if you look at it, most entrepreneurs are movers or shakers, the vast majority. Some of them have the shaker prover, sometimes a prover shaker. However, I would venture to say there’s very few makers and way more movers and shakers that we’ve had assessed. So, the ethic of entrepreneurship is by definition going to have a lot of change associated with it.

Karla Nelson:  Then you’ve got the culture of discipline, which is to do the same thing over and over every day and be happy with that, which there’s your later adopters. That’s gonna be your provers and shakers that are okay with that, because they don’t mind repetition nearly as much, especially the makers. That kind of reminds me, Allen, of the quote we use all the time, which is Warren Buffet’s, “I hate innovation.” Isn’t he like the most successful investor ever or something? I mean, he’s way up there.

Allen Fahden:  Certainly one of them.

Karla Nelson:  And he hates it, because a company has to get to the repetition. So, it kind of reminds me of the story of GM, Allen.

Allen Fahden:  Yes. This is a problem of combining the culture of discipline and the ethic of entrepreneurship. Not only in meetings will people eat each other alive, but on a more specific way it encourages conversations like this. General Motors actually invented the mini van, although Chrysler, through Lee Iacocca, introduced it and made all the money from it, because GM wouldn’t do it. They killed the mini van. Why? Because they said, “The mini van will completely destroy our Station Wagon business.”

Karla Nelson:  So, there you go.

Allen Fahden:  It did, only Chrysler got all the money from the mini van, and it destroyed their Station Wagon business anyway.

Karla Nelson:  I got a visual when you were saying that of the innovation of the creation of the mini van, but then the implementation piece they didn’t do, because it’s like, “Oh. You’re going to mess up our sales with the Station Wagon.” Right? What ends up happening is the idea gets killed, because those two juxtapose each other. They’re completely contradictory, so you have to figure out how to get them to work together, not separately. You know, that’s a really funny one, but Kodak really, really … I mean, GM at least is still around. Kodak really messed up.

Allen Fahden:  Oh, yeah. Kodak, I know some of their people who were in R&D, and they actually invented the digital camera, and it’s the same thing. “This is going to ruin our film business. Look at the investment we’ve got in this thing.”

Karla Nelson:  Yeah. Look at the film business.

Allen Fahden:  “… content in film. We can’t do this.” So, of course somebody else did it, and Kodak went under in 2013.

Karla Nelson:  Yup. There you go. The contradiction of them creating the digital camera, incredible innovation … And that must have cost them a whole bunch of money to invest in R&D. Jeez Louise. So, you get to that point of creating this new innovation, and then, “Oh. Wait a second. We’re going to kill our own business.” That is really interesting, but it’s so true. Right? It’s so blindingly obvious. I think it’s little things like that, and we’re going to talk about how to solve and fix this, because there is …

Karla Nelson:  I agree that you need to combine a culture of discipline with an ethic of entrepreneurship, but not with everybody in the room at every point of every piece of work that they need to do, and that’s what we do. We don’t separate it and individualize who’s your movers, who’s your shakers, who’s your provers, who are your makers, what part of the work are you going to do well, and how you can utilize the relay team aspect of it, where it’s a handoff, and it’s a handoff in two different areas, which is the ideation and implementations. Allen, do you want to talk a little bit about that with the projects and having the right people in the right place at the right time doing the right thing?

Allen Fahden:  Yeah. So, the answer to everybody in the room all the time doing the same thing, and that’s where the culture of discipline and the ethic of entrepreneurship, one will eventually devour the other, and you don’t have that combination that Collins calls for. Instead, what if you put the right people in the right place at the right time doing the right thing? In other words, it’s a handoff. A mediocre relay team will beat the world record for the 400 meter individual dash by two, to four, to six seconds.

Allen Fahden:  What we’re talking about here is simply getting the right people in the room at the right phase, beginning, middle, and end. So, you get the people, the early adopters, the movers and the shakers, in for the beginning. They come up with the ideas and select the right one, take the idea to the prover, who’s going to tell you everything that’s can go wrong. Then go back to the mover and shaker and fix all the flaws, and then get it back to the prover, who ultimately hands it off. That’s the ending. … hands it off to the maker to get a replicable pattern in which you can make money at, Warren Buffet’s desire.

Karla Nelson:  You nailed the head on the big picture there, which is first going through the ideation, “What are we going to do?”, get all the flaws out, and then the shifting gears to the culture of discipline now. Now, we got to implement, command and control. Of course this is built on 110 years of research, the law of diffusion of innovations, and we only talk about it when it comes to customers. I don’t understand why they just completely jump over the team and forget about the same law that we use to communicate, connect, work with our customers, why wouldn’t you do it with your team first?

Karla Nelson:  Then moving to the implementation, which when that command and control … Then we call it leadership. Well, everybody’s a leader. We just lead at different times. You have to shift that gear in implementation stage. It doesn’t matter what your title is. Right? It’s your function. The CEO, that’s when things get blown up. Right? The CEO walks in and goes, “No. Do that,” instead of giving the authority and allowing your team to lead at the point at which they’re going to lead best. Because I’m going to tell you right now, a maker will lead best at eating checklists for breakfast than any CEO on the planet, because it’s so vastly different, the passion for it. Right? You like doing it. It doesn’t bother you. It’s so funny. On our leadership team our maker times herself and will say and be proud of the fact of getting something done in 56 minutes. It’s not an hour. It’s 56 minutes.

Allen Fahden:  Incredible.

Karla Nelson:  You know what I mean?

Allen Fahden:  Yeah.

Karla Nelson:  That’s what they’re passionate about. I think really understanding those two phases, understanding the big picture, and the movers, shakers, provers, makers … And of course we don’t want to forget our oners. We never talk about them, because they’re 1% of the population, and there’s very few. I mean, 99% of the work or 100% of the work is made for 99% of the population.

Allen Fahden:  It’s made for 1% of the population.

Karla Nelson:  1%. That’s what I mean. Yeah. 100% of the work is made for 1% of the population. Thank you. What I was thinking about was that reminds me of the Gallup Poll. 70% of people hate their jobs. We talk about culture. We talk about change management. We talk about all these things. We talk about passion. We talk about all of these things. If you just let people do what they like, revolutionary. Right? You’re just removing the resistance, instead of dumping everybody and expecting them to be the oner and be able to do all parts of the work.

Karla Nelson:  So, I think there’s really a key point too of separating the ideation from the implementation and understand you’re utilizing the core natures of work of all your people, but in each phase it’s different. The ideation phase really lends itself to one, and the implementation phase lends itself to the other.

Allen Fahden:  Absolutely. It’s interesting, because what we’re really proposing here, if you want a handle to put on this, is abandon function management. In other words, just because the guy from R&D now is becoming a sales person, don’t assume that that person is the expert on selling or the high performer on selling, because that’s function management. “Oh. You’re in selling now? Oh. You must be this.” Reverse that. Go the other way and do role management. “Oh. You’re great at this phase? Let’s put you in here.” If you get them in the right place at the right time doing the right thing, then you’re talking about peak work, at the top of their peak performance, handing off to the next person, who’s going to do the next phase at the top of their peak performance.

Karla Nelson:  Mm-hmm (affirmative). And go ahead and share that step too, Allen, about when you spend your time in peak work versus weak work. I know we’ve brought it up before, but I think that’s really important to understand. Everybody knows what’s feeling in the zone. That’s what we’re talking about.

Allen Fahden:  Yeah. It’s another kind of opposite or a contradiction. You would think that if you had 50% of your work as your peak work and 50% as your weak, meaning your weakness, work, that you’d spend 50% on each, but that’s not true. You actually spend only 10% of your time approximately on the peak work, because you’re so good at it you do it really fast, and then you spend 90% of your time on your weak or your weakness work, because you’re so slow at it. So, you’re plodding and plodding.

Allen Fahden:  That’s what’s wrong with the way that we manage people, is that we put them in their weaknesses and expect them to bite the bullet, take one for the team, and do what you hate. Well, it slows them down. They’re not fully present. That’s why we need role management, putting the right people in the right role, the right phase of the work, rather than all of this function management. “Oh. You’re in sales, so you do all this.” “Why are you in sales?” “Oh. Because there was an opening, and you hired me for it.”

Karla Nelson:  When you said that about weak work and peak work-

Allen Fahden:  Good luck with that.

Karla Nelson:  We’ve been teaching this for a very long time, and when I do my weak work, the first thing I do is find every excuse not to do that thing. So, then I know, give it off. Who are you going to hand it off to? Because if it’s sitting on your checklist, and you’re not getting to it, most people just beat themselves up. Go find a who. Find your who to hand that off to. Right?

Allen Fahden:  Absolutely. Everybody’s got to get a who to go to.

Karla Nelson:  There you go.

Allen Fahden:  Who’s your who to go to? Hand it off. When you get back to Collin’s ethic of entrepreneurship, that’s great for the ideation phase with a small part of a culture of discipline, but only at the right time. Then the whole thing reverses, and when you get to implementation, you go for the culture of discipline. That’s the major thing. But to get the implementation done you keep having to go back to the ethic of entrepreneurship. So, it’s just having the right proportions. You can have both, but the key to fixing Collins’ flaw is that you just can’t have them both at the same time.

Karla Nelson:  Yeah. You brought a visual up when you just said that for me, which is ideation on the front end, so spending 80% of your time figuring out and using the method, what you’re going to do, before taking action, so you don’t lose money, time, energy, momentum, all those things that we see constantly when you don’t think about what could go wrong and really leverage what you’re saying, that little bit of discipline, which comes through on the provers and running the process. Then when you shift gears to implementation now, that culture of discipline, the ethic of entrepreneurship is the, “Uh-oh. This isn’t going to work. What are we going to do?”, going back to your shaker … Or actually the prover goes back to the mover, the mover goes back to the shaker. … and figuring out how are we going to overcome that?

Karla Nelson:  It’s like little bursts of the ethic of entrepreneurship within the culture of discipline is how you continue that. You’re still using ideation. It’s just you’re not doing the 80% of your time to solve 20% of the problems. The problems are smaller, because you already figure out where you’re going to go. But then all of a sudden if you realize that … This actually just happened on our team. We utilized a specific program. Then we get into it, and all of a sudden there’s a challenge with that platform that we can’t do some type of automation we want to do. So, what do you do? You stop. The prover goes back to the mover. The mover goes back to the shaker that has technological know-how, and say, “How can we get around this?”, and then run the process. But it’s little bursts as you’re going down implementation versus-

Allen Fahden:  Absolutely.

Karla Nelson:  And I love that, because it’s what you just said. In the ideation you can have a little bit of the culture of discipline, and in the implementation phase you can have a little bit of the entrepreneurship. So, it’s a lot and a little on both sides that are completely different. They’re completely opposite.

Allen Fahden:  There’s a really good visual for that. I thought you were going there. I’ll bring it up. It’s the yin and the yang.

Karla Nelson:  There you go.

Allen Fahden:  In the large area of black there is a small dot of white, and in the large area of white there is a small dot of black. That signifies that everything contains the seeds of its own opposite. So, implementation contains the seeds of ideation, and ideation contains the seeds of implementation. Then how do you work it? If you can visualize like a sin curve or a wave curve, it just goes ideation, ideation, and there’s a little bit of go to the implementers for this, for finding out what’s going to go wrong. So, this is a dance back and forth between the two opposites, but you have to orchestrate it with the right people doing the right thing at the right time.

Karla Nelson:  Love it. Love this. I think we’ll wrap up, unless there’s anything else you’d like to add here, Allen. Feel free to jump in. I love the quote of one of your friends and colleagues, Marshall Thurber, which is, “When everything is you’re on top, you don’t want to shift anything, never ask a king to start a revolution.”

Allen Fahden:  That’s right, because if you do that, instead of going from good to great, you will go from good to grave.

Karla Nelson:  Wonderful. We’ll see you next time on the People Catalyst Podcast, when we’ll be chatting about a book that is very similar to this one, which we have titled Extra Lunch.