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Exploding Creativity

May 29th, 2010 at 10:18 am

Good To Great and Built To Last Book Reviews

Continuing copying my book reviews from my LinkedIn Amazon widget to my blog. I’ve referenced Good To Great in Episode 6: Leadership and Creativity, and referenced Built To Last in Episode 12: Serendipity.

Good to Great: Why Some Companies Make the Leap… and Others Don’t, by Jim Collins

A great book, and very popular. The company where a friend of mine works uses this book as the corporate philosophical guide (their “€œbible”). Collins previously wrote Built To Last about companies which started out and historically remained great. Good To Great describes companies that were historically mediocre or good and which became great, and discusses the commonalities of how they did that:

Leadership: humble, modest, fearless, with extreme professional will, who channel their egos and ambitions to the companies, not themselves; as opposed to a celebrity, larger-than-life type of leader. They train successors, do what needs to be done, give credit, and take responsibility.

Selection: they focused first on getting the right people in the company and then on vision and strategy. This is a common thread in business books: selection is key, as with the right people, you can do anything. Character traits (work ethic, basic intelligence, dedication to commitments, and values) were focused on more than specific knowledge and skills (which are teachable).

Having unwavering faith that they will prevail AND confronting the brutal facts of their situations head-on. This is one reason the right leadership is so important, as people may not give a leader with a coercive or corrosive personality hard facts in fear of being retaliated against or labeled pessimistic. The right leader will confront the hard facts and do what needs to be done.

Working in an area that they are deeply passionate about and that they can be the best in the world at, and knowing exactly what drives cash flow and profitability and maximizing that. Collins calls this the Hedgehog Concept.

Combining a culture of discipline (while avoiding bureaucracy and hierarchy) with an ethic of entrepreneurship. Have a framework with clear constraints consistent with the Hedgehog concept, and give people freedom and responsibility to act within it. As important as knowing what to do, it is also important to know what to stop doing.

Use of carefully selected technologies that support the companies’ Hedgehog concept. Technology by itself cannot create momentum, but the right technology can accelerate it.

Continually, gradually implemented transformations. Sustainable transformations never happened in one big change, but rather by a cumulative, incremental process that added up over time.

Of the 11 good-to-great companies profiled in the book, two have since gone down in flames in the current economic climate: Fannie Mae and Circuit City. I wouldn’t let that discourage reading of the book, though. From looking at long-term stock charts on Yahoo Finance, it looks like most of the other companies, including Wells Fargo, would still fall into Collins’ good-to-great model, and there’s certainly plenty of good take away here.

Built to Last: Successful Habits of Visionary Companies, by Jim Collins and Jerry I. Porras

An excellent book on what Collins calls Visionary Companies, companies that have been around for many decades, and in some cases a couple of centuries, and have been much more successful (over the long term) than companies started around the same time in the same industries. Some of the companies discussed are 3M, Boeing, Ford, Hewlett-Packard, Motorola, Sony, and Walt Disney. The authors describe what these companies did differently than their comparison companies:

They had very strong strategic intent, meaning very strong core values and core purposes (beyond just the making of profit) that were used in guiding them, and built-in many mechanisms into their companies (selection processes, reward systems, etc.) that reinforced their values.

Many of them used Big Hairy Audacious Goals, in some cases betting the entire company on them, to strongly motivate and inspire their people and to continue the company making progress. They would also try a lot of stuff (exemplified by 3M) and keep what worked. In order to keep making progress, these companies would try anything and everything, except those things that would be contrary to their core values.

As a general rule, these companies would grow their management teams, hardly ever hiring anyone from the outside, in order to maintain their core values. And they also built in mechanisms for constant improvement so complacency wouldn’t settle in and they’d lose their competitive edge.

The authors argue that the biggest achievement of these companies were in the architecting and building of the companies themselves in such a way that could endure and prosper for so long, across generations of different leaders, different products & services, and across the many changes in technology and society.

The things the visionary companies did not do as a rule was start with a great idea nor have the larger-than-life charismatic leader. In fact, in the comparison companies, early success and “great” leaders tended to work against the companies in the long run.

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