Good to Great: Some Lessons for Government
Edwin C. Thomas, M.Ed., MPA Ed Thomas/Leadership, LLC
The Research Companies that had fifteen-year cumulative stock returns at or below the general market average A transition point Followed by cumulative returns at least three times the market over fifteen years Pattern independent of its industry
The Research Good-to-Great Companies Abbott Circuit City Fannie Mae Gillette Kimberly-Clark Kroger Nucor Philip Morris Pitney Bowes Walgreens Wells Fargo
Direct Comparisons Upjohn Silo Great Western Warner-Lambert Scott Paper A&P Bethlehem Steel R.J. Reynolds Addressograph Eckerd Bank of America
The Research The crucial question was not “What did the good-to-great companies share in common? Rather, the crucial question was “What did the good-to-great companies share in common that distinguished them from the comparison companies.
What is Greatness? A great organization is one that delivers superior performance and makes a distinctive impact over a long period of time. In government and the social sector, the critical question is not “How much money did we make per dollar of invested capital?” but “How effectively do we deliver on our mission and make a distinctive impact relative to resources?”
The Findings Celebrity CEO’s brought in from the outside were negatively correlated with taking a company from good to great. Virtually all the great companies found their CEO’s from within their own ranks. There was no systematic pattern linking specific forms of executive compensation to the process of going from good to great. Strategy per se did not separate good-to-great companies from the rest. There was no evidence that good-to-great companies spent more time on strategic planning than the other companies. Good-to-great companies did not focus principally on what to do to become great; they focused equally on what not to do and what to stop doing.
The Findings Technology and technology-driven change has virtually nothing to do with igniting a transformation from good to great. The study found that technology can accelerate a transformation, but it did not cause a transformation. Mergers and acquisitions play virtually no role in igniting a transformation from good to great. Putting two mediocre companies (or agencies) together never makes a great company.
The Findings Good-to-great companies paid scant attention to managing change, motivating people, or creating alignment. Under the right conditions, the problems of commitment, alignment, motivation, and change largely melt away.
Sidebar… This is consistent with numerous studies of workplace motivation. Most of us strive for excellence and derive satisfaction from membership in great and enduring organizations that have important purposes and that make significant contributions to society. Those who are fortunate enough to work for great organizations do not need to be motivated.
The Findings The good-to-great companies had no name, tag line, launch event, or program signifying their transformation. Indeed some reported being unaware of the magnitude of the transformation at the time. Only later, in retrospect, did it become clear. They produced a revolutionary leap in results, but not by a revolutionary process. The good-to-great companies were not in great industries. Greatness was not a function of circumstance. Greatness, it turned out, was largely a matter of conscious choice.
Key Concepts Level 5 Leadership First Who…Then What Confronting the Brutal Facts (Yet Never Lose Faith) The Hedgehog Concept A Culture of Discipline Technology Accelerators The Flywheel and the Doom Loop
Level 5 Leadership The study found that companies that recruited “star” CEO’s may have performed better during their tenure, but did not sustain this performance after they left the company. Star CEO’s were typically much more interested in the perks and trappings of office, pay packages, stock options, airplanes, limousines, country club memberships, and perhaps writing books about their success than they were about building great companies.
Level 5 Leadership By contrast, Level 5 leaders were described as having a combination of personal humility and professional will. They were passionate and driven, but it was for the company and what it stands for rather than their personal success. They were relentless in the pursuit of tangible results and achievement. It is not that they thought less of themselves, it is that they thought of themselves less.
Sidebar… Level 5 leadership is similar to Servant Leadership and Collaborative Leadership Can a Level 5 leader be successful in the fragmented, shared-power environment in which public sector leaders must function?
First Who, Then What Leaders of good-to-great companies did not begin by setting a new vision and strategy. First they got the right people in the organization, and the wrong people out of the organization. They focused on building a superior executive team. Once they got the right people, they then figured out where to go. Indeed the great companies refused to fill a position until they found the right person in terms of skill and experience and in terms of fit with the culture, core values and purpose of the organization.
Small Group Discussion: First Who, Then What Given our human resources policies, procedures, and constraints, can we really get the “right people on the bus and the wrong people off the bus? How can this concept be applied in government?
Confronting the Brutal Facts Great companies were distinguished by their ability to confront honestly the brutal facts about their current environment and situation. They managed to create a culture where people could be heard. They asked questions, engaged in dialogue and debate, analyzed failures without blame, and kept in touch with their environment. And along with the ability to confront the brutal facts of their current reality, they maintained an absolute belief that they could and would prevail in the end. They believed they were great.
Sidebar: Some Brutal Facts About SC
Teen Pregnancy Life Expectancy Infant Mortality Death from Stroke Unemployment Per Capita Income Violent Crime Rate Property Crime Mileage Fatality Rate Graduation Rate
10th 48th 3rd 1st 4th 45th 1st 3rd 3rd 49th
Source: South Carolina Indicators Project (www.ipspr.sc.edu/scip)
Sidebar: On Our Lack of BHAG’s A BHAG (big, hairy, audacious goal) is clear and compelling and serves as a unifying focal point of effort – often creating immense team spirit. It has a clear finish line, so the organization can know when it has achieved the goal
What Are the Brutal Facts in Your City or County?
The Hedgehog Concept
Small Group Discussion: The Hedgehog Concept How would you answer the questions in the three circles for your organization?
A Culture of Discipline The great companies in the study were characterized by disciplined people, disciplined thought, and disciplined action. They had, first and foremost, the discipline to stay within the three circles as described above. While there was great discipline, this does not imply a rigid system run by a strict disciplinarian. It requires that people have the discipline to adhere to a consistent system, but it allows them freedom and responsibility within the framework of that system.
A Culture of Discipline As government, like business, seeks to remove nonvalue adding layers of bureaucratic oversight, it is critical that we have a culture of discipline in place. The study found that bureaucratic cultures arise to compensate for incompetence and a lack of discipline. In part, this relates back to the concept of getting the right people in the organization.
Technology Accelerators The study found that the great companies thought about technology differently than the comparison companies. They adapt to changes in technology over time. They didn’t implement the latest technology just for the sake of being state-of-the-art or out of fear of being left behind. The great companies understand that “mediocrity results first and foremost from management failure, not technological failure.” (Collins, 2001, p. 156.)
The Flywheel and the Doom Loop The study found that those companies that launch revolutions, dramatic change programs, and wrenching restructurings will almost certainly fail to make the leap from good to great. No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no killer innovation, no solitary lucky break and no miracle moment. Rather, the process resembled relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough and beyond.
The Flywheel and the Doom Loop This stands in stark contrast to the government environment with its constant changes in direction, leadership, philosophy about the mission and scope of government, and the endless calls for reform.
The Flywheel and the Doom Loop How can we avoid the “doom loop” in government?
Some Lessons for Government Conditions for greatness: Servant leaders who are genuinely concerned with South Carolina’s (your county’s) future rather than their own. Getting and keeping the right people working in government (dedicated, skilled, talented, innovative public servants). A positive attitude and unwavering belief that we are a great state (and a great county) and that by working together (all parties, all branches, all levels of government, in partnership with other sectors) we can overcome any obstacles we may face.
Some Lessons for Government Conditions for greatness: The will and courage to make the hard choices and investments required to focus the mission of government on those programs that can move us toward those things we are passionate about (a statewide vision and goals for education, economic development, public safety, health, and the environment for example); that we can do better than anyone else (eliminating or privatizing the rest); and that drive our economic engine (thought of in terms of return on investment). Appropriate investments in technology to facilitate the achievement of our goals. Patience, persistence and a long-term view that will enable us to pursue our statewide (and county) vision consistently in a manner that transcends changes in leadership.
References Jim Collins. Good to great: Why some companies make the leap…and others don’t. New York, NY: Harper Collins Publishers, 2001. Jim Collins and Jerry Porras. Build to last: Some successful habits of visionary companies. New York, NY: Harper Business Essentials, 2002. Jim Collins. Good to Great and the Social Sectors: Why Business Thinking is not the Answer. Jim Collins, 2005. Edwin C. Thomas. Good to Great: Some Lessons for Government. Public Policy and Practice, Vol. 2, No.4, November 2004. www.ipspr.sc.edu/ejournal
