Pushing Flywheels and building Great Companies

Several months ago a friend of mine, Scott Robeson from Michigan, recommended I read the book Good to Great by Jim Collins. I thought, just what I need, another business book to read.more ideas. Well I went ahead and put it on my PDA on my "books to buy" list where there are currently 17 other books to buy and read in my spare time.

Scott mentioned the book again a few times and seemed very animated about it. So I bought it and found some concepts that I think you will also benefit from. I want to give you a brief overview of the most important concepts in the book, and then really hone in on what was the most important idea to me.

The Question posed by the book:

Can a good company evolve into a great one, effectively re- jiggering the culture and direction of a company once set? Author Jim Collins concludes that average companies can indeed morph into great ones.

How do average companies morph into great ones?

1. Their leaders are less differentiated by charisma or brilliant vision and more by humility and unrelenting will.
2. Their focus is first on WHO (i.e., getting the right people through the door and in the right position, and the wrong people out door), then WHAT (i.e., figuring out and building the strategy)-- not the other way around.
3. They confront the brutal facts and deal with them directly and decisively by "shining a light" on the key issues impacting the business and taking a "need to know" perspective at all times to reality as it really exists. At the same time, this pragmatism is counterbalanced by an unrelenting guttural belief that they will prevail in the end (called the Stockdale Paradox).
4. They build their strategy around three core circles: (A) A target markets they realistically believe they can dominate. (B) Markets with compelling economics. (C) Markets they can be truly passionate about. They then come up with a crystallizing concept (called the Hedgehog) that flows from a deep understanding of the dynamics of the three circles.
5. The hedgehog concept's power is less a function of one big transformation and more a product of many incremental improvements, culminating in the breakout success (debunking the myth of the overnight success).
6. They depend on building a culture of self-disciplined team members around the three circles (disciplined people, practicing disciplined thought and translating that into disciplined action) to the point of avoiding any "once in a lifetime opportunities" that fall outside the hedgehog concept. Also, as a result, they are able to avoid bureaucratic corporate structures.
7. They embrace new technologies solely as accelerators of the three circles and not creators of them, and avoid investments that don't specifically feed the three circles. The most important idea in the book to me.

Author Jim Collin's uses the analogy between building a great company and pushing a flywheel. Picture a huge, heavy flywheel- a massive metal disk mounted horizontally on an axle, about 30 feet in diameter, 2 feet thick, and weighing about 5,000 pounds. Now imagine that your task is to get the flywheel rotating on the axle as fast and long as possible.

Pushing with great effort, you get the flywheel to inch forward, moving almost imperceptibly at first. You keep pushing, and the flywheel begins to move a bit faster. You keep pushing in a consistent direction..then at some point- breakthrough! The momentum of the thing kicks in your favor, hurling the flywheel forward, turn after turn. its own heavy weight working for you. Each turn of the flywheel builds upon work done earlier.

The flywheel image captures the overall feel of what it is like inside the Good to Great company. There is no single defining action, no grand program, no one killer innovation. Good to Great comes about by a cumulative process, step-by-step, action-by-action, decision-by-decision, and turn-by-turn of the flywheel. This can add up to spectacular results.

So go out there, get the right people on your team. Identify what you can be the very best at, what you are passionate about, and what you can make a profit at. Then start pushing that flywheel. It might move inch by inch at first. There is no magic- just keep pushing.

I invite you to read our Industry Leader articles on leaders such as Francis Sullivan, Ted Deason, Rod and Gerry Sadleir, Joe Nasvik, and Barbara Sargent. None became overnight successes- they have been pushing for a long time!

Order Good to Great: Why Some Companies Make the Leap... and Others Don't, by James C. Collins
Price: $19.25