Good to Great: The difference is Organisational Health
Most people have read or heard about Jim Collins’ groundbreaking analysis of the differences between good companies and great companies. In his book, he looks at what companies with good long-term results do to suddenly get onto a path of greatness, lasting 15 years or more. Good companies deliver results in line with the market or even somewhat better. But great companies build value 3 times faster than good companies. Obviously, this is a small group of companies. A group that all companies would like to join. Collins’ work is therefore relevant to the great majority of companies. And it is central to their work. Because isn’t that the purpose of the work we do every day? To turn our company from good to great?
Now and then, it is good to remind ourselves of the learnings on greatness. What are the activities that can lead to greatness? And is that where we are spending most of our time? Are we doing enough of the activities that can lead us to greatness or are we focused elsewhere and just hoping for a miracle to compensate for not working on greatness?
Collins makes an effort to emphasize which of our favourite activities do not lead to greatness. Because he knows that this is where we spend our time. Strategy is one of those. Great companies do not spend more time on strategy than good ones. Technology, surprisingly, is another. There are no examples of technology turning a company from good to great. HR processes around strategy deployment, development plans, internal communication and succession planning is yet another.
Surprising? Maybe not if we then look at the things that do make a difference.
Everything that has the potential to move a company from good to great has to do with people and leadership. He talks about choosing managers with level 5 leadership. Getting the team right before the strategy. Finding the right role for them and getting rid of the people who do not have a role to play. He emphasizes that an atmosphere of trust is necessary to “face the brutal facts” and to be able to work through the issues without regard to departmental turf wars or personal egos (see my blog on the subject called “Turning Disagreements into Competitive Advantage“). He advocates simplicity in everything we do. And discipline and accountability in how we do it (see my blog “Want Results: Fix Accountability”).
All of this is about Organisational Health. But obviously not the way we manage organisational health today. Because then our company would already be a great company. All major companies have fully implemented all the standard leadership processes. The ones that Jim Collins says do not correlate with greatness: talent pipeline, succession planning, a variety of courses, mentoring, HR Business Partners.
To be clear, I am not suggesting to remove all the HR processes. Or that a company does not need to worry about strategy, technology, mergers, or technical expertise. In fact, if a company slips behind competition in these areas, they will most certainly fail. The point is simply that these areas are not the key when going from good to great. They are necessary to become good. But something else is required to become great.
So what is the organisational health that Collins is talking about, and we do not achieve through our HR processes? Jim Collins has already provided the answers. But if I were to point to the driver of most of it, I would point to the way we interact with each other in daily meetings, phone calls and e-mails. Do we voice our disagreements openly? Do we admit when we were wrong and our disagreement was misinformed? Do we call our colleagues out when they don’t deliver on team priorities? And do we take the responsibility when others point out our own short-comings? Do we give feedback immediately on performance and behaviours which are not in line with the company values? Do we make clear decisions that everyone feels accountable for?
When talking to leaders and HR managers across all types of organisations, the answer to the above questions is always “not often enough”. And no amount of standardised HR processes will change that.
A good start is to start raising the standards for ourselves in every interaction with every colleague. And get help? Outsiders are able to much more easily see it, when you get lost in the daily work and forget about what it takes to get to greatness.