The best answer I can give is that it was an iterative process of looping back and forth, developing ideas and testing them against the data, revising the ideas, building a framework, seeing it break under the weight of evidence, and rebuilding it yet again. That process was repeated over and over, until everything hung together in a coherent framework of concepts.
That good is the enemy of great is not just a business problem. It is a human problem. If we have cracked the code on the question of good to great, we should have something of value to any type of organization. Good schools might become great schools. Good newspapers might become great newspapers. Good churches might become great churches. Good government agencies might become great agencies. And good companies might become great companies. So, I invite you to join me on an intellectual adventure to discover what it takes to turn good into great.
The business media called the move stupid and Wall Street analysts downgraded the stock. Smith never wavered. Twenty-five years later, Kimberly-Clark owned Scott Paper outright and beat Procter & Gamble in six of eight product categories. In retirement, Smith reflected on his exceptional performance, saying simply, “I never stopped trying to become qualified for the job.”
Level 5 leaders are a study in duality: modest and willful, humble and fearless. To quickly grasp this concept, think of United States president Abraham Lincoln (one of the few Level 5 presidents in United States history), who never let his ego get in the way of his primary ambition for the larger cause of an enduring great nation. Yet those who mistook Mr. Lincoln’s personal modesty, shy nature, and awkward manner as signs of weakness found themselves terribly mistaken, to the scale of 250,000 Confederate and 360,000 Union lives, including Lincoln’s own. While it might be a bit of a stretch to compare the good-to-great CEOs to Abraham Lincoln, they did display the same duality.
Level 5 Leaders look out the window to apportion credit to factors outside themselves when things go well (and if they cannot find a specific person or event to give credit to, they credit good luck). At the same time, they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly.
Maxwell made it absolutely clear that there would only be seats for A players who were going to put forth an A+ effort, and if you weren’t up for it, you had better get off the bus, and get off now. One executive who had just uprooted his life and career to join Fannie Mae came to Maxwell and said, “I listened to you very carefully, and I don’t want to do this.” He left and went back to where he came from. In all, fourteen of twenty-six executives left the company, replaced by some of the best, smartest, and hardest-working executives in the entire world of finance.
If you have the right executives on the bus, they will do everything in their power to build a great company, not because of what they will “get” for it, but because they simply cannot imagine settling for anything less. Their moral code requires excellence for its own sake, and you’re no more likely to change that with a compensation package than you’re likely to affect whether they breathe. The good-to-great companies understood a simple truth: The right people will do the right things and deliver the best results they’re capable of, regardless of the incentive system.
Members of the good-to-great teams tended to become and remain friends for life. In many cases, they are still in close contact with each other years or decades after working together. It was striking to hear them talk about the transition era, for no matter how dark the days or how big the tasks, these people had fun! They enjoyed each other’s company and actually looked forward to meetings. A number of the executives characterized their years on the good-to-great teams as the high point of their lives. Their experiences went beyond just mutual respect (which they certainly had), to lasting comradeship.
A&P then began a pattern of lurching from one strategy to another, always looking for a single-stroke solution to its problems. It held pep rallies, launched programs, grabbed fads, fired CEOs, hired CEOs, and fired them yet again. It launched what one industry observer called a “scorched earth policy,” a radical price-cutting strategy to build market share, but never dealt with the basic fact that customers wanted not lower prices, but different stores.
The moment a leader allows himself to become the primary reality people worry about, rather then reality being the primary reality, you have a recipe for mediocrity, or worse. This is one of the key reasons why less charismatic leaders often produce better long-term results than their more charismatic counterparts.
I asked, “Who didn’t make it out?”
“Oh, that’s easy,” he said. “The optimists.”
“The optimists? I don’t understand,” I said, now completely confused, given what he’d said a hundred meters earlier.
“The optimists. Oh, they were the ones who said, ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go. Then they’d say, ‘We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart.”
Putting aside their egos, the Wells Fargo team pulled the plug on the vast majority of its international operations, accepting the truth that it could not be better than Citicorp in global banking. Wells Fargo then turned its attention to what it could be the best in the world at: running a bank like a business, with a focus on the western United States. That’s it. That was the essence of the Hedgehog Concept that turned Wells Fargo from a mediocre Citicorp wanna-be to one of the best-performing banks in the world.
It may seem odd to talk about something as soft and fuzzy as “passion” as an integral part of a strategic framework. But throughout the good-to-great companies, passion became a key part of the Hedgehog Concept. You can’t manufacture passion or “motivate” people to feel passionate. You can only discover what ignites your passion and the passions of those around you.
Does every organization have a Hedgehog Concept to discover? What if you wake up, look around with brutal honesty, and conclude: “We’re not the best at anything, and we never have been.” Therein lies one of the most exciting aspects of the entire study. In the majority of cases, the good-to-great companies were not the best in the world at anything and showed no prospects of becoming so. Infused with the Stockdale Paradox … every good-to-great company, no matter how awful at the start of the process, prevailed in its search for a Hedgehog Concept.
This creative duality ran through every aspect of Abbott during the transition era, woven into the very fabric of the corporate culture. On the one hand, Abbott recruited entrepreneurial leaders and gave them the freedom to determine the best path to achieving their objectives. On the other hand, individuals had to commit fully to the Abbott system and were held rigorously accountable for their objectives. They had freedom, but within a framework.
I realize that it’s a bizarre analogy. But in a sense, the good-to-great companies became like David Scott. Much of the answer to the question of “good to great” lies in the discipline to do whatever it takes to become the best within carefully selected arenas and then to seek continual improvement from there. It’s really just that simple. And it’s really just that difficult.
Inequality still runs rampant in most business corporations. I’m referring now to the hierarchical inequality which legitimizes and institutionalizes the principle of “We” vs. “They.” … The people at the top of the corporate hierarchy grant themselves privilege after privilege, flaunt those privileges before the men and women who do the real work, then wonder why employees are unmoved by management’s invocations to cut costs and boost profitability … When I think of the millions of dollars spent by people at the top of the management hierarchy on efforts to motivate people who are continually put down by that hierarchy, I can only shake my head in wonder.
Walgreens didn’t adopt all of this advanced technology just for the sake of advanced technology or in fearful reaction to falling behind. No, it used technology as a tool to accelerate momentum after hitting breakthrough, and tied technology directly to its Hedgehog Concept of convenient drugstores increasing profit per customer visit.
Indeed, the big point of this chapter is not about technology per se. No technology, no matter how amazing—not computers, not telecommunications, not robotics, not the Internet—can by itself ignite a shift from good to great.
But the good-to-great executives simply could not pinpoint a single key event or moment in time that exemplified the transition. Frequently, they chafed against the whole idea of allocating points and prioritizing factors. In every good-to-great company, at least one of the interviewees gave an unprompted admonishment, saying something along the lines of, “Look, you can’t dissect this thing into a series of nice little boxes and factors, or identify the moment of ‘Aha!’ or the ‘one big thing.’ It was a whole bunch of interlocking pieces that built one upon another.”
Although it may have looked like a single-stroke breakthrough to those peering in from the outside, it was anything but that to the people experiencing the transformation from within. Rather, it was a quiet, deliberate process of figuring out what needed to be done to create the best future results and then simply taking those steps, one after the other, turn by turn of the flywheel. After pushing on that flywheel in a consistent direction over an extended period of time, they’d inevitably hit a point of breakthrough.
Consider Kroger. How do you get a company of over 50,000 people—cashiers, baggers, shelf stockers, produce washers, and so forth—to embrace a radical new strategy that will eventually change virtually every aspect of how the company builds and runs grocery stores? The answer is that you don’t. Not in one big event or program, anyway.
The point of this story is that these ideas work. When you apply them in any situation, they make your life and your experience better, while improving results. And along the way, you just might make what you’re building great. So, I ask again: If it’s no harder (given these ideas), the results better, and the process so much more fun—well, why wouldn’t you go for greatness?
Perhaps your quest to be part of building something great will not fall in your business life. But find it somewhere. If not in corporate life, then perhaps in making your church great. If not there, then perhaps a nonprofit, or a community organization, or a class you teach. Get involved in something that you care so much about that you want to make it the greatest it can possibly be, not because of what you will get, but just because it can be done.