P55 Innovation and Good to Great Part One.

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  • In this and the next podcast I discuss the major points in Jim Collins best-selling book Good to Great and how the elements of great companies relate to innovation. Looked at in one way, this book is about best practices needed to make a company great. What I’m doing in this podcast is directly addressing innovation best practices as they relate to the overall best practices.
  • As you know, this podcast series is completely based upon innovation best practices. When it comes to taking a good company to a great company, the insights from Jim Collins definitely fall into the category of best practices.
  • In this part one podcast, I address level 5 leadership, first who then what, and confront the brutal facts – yet never lose faith. In the part two podcast, I address most of the other elements associated with making a company go from good to great.
  • As background, Collins addresses the transformation process of a company going from good to great as a “build up followed by breakthrough.” He identified three broad stages that he calls disciplined people, disciplined thought, and disciplined action. The buildup stage includes the three elements being covered in this podcast.
  • Let’s start with the level 5 leadership. The author describes this kind of leader as “self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar.” This kind of leader was associated with every one of their good to great company examples.
  • Here are a few more direct quotes from the author describing this kind of leader.
    • They are “a study in duality: modest and willful, humble and fearless.”
    • People in the companies that went from good to great described their leaders with words like “quiet, humble, modest, reserved, shy, gracious, mild-mannered, self-effacing, understated, does not believe his own clippings.” They also point out that the modesty was in no way a false modesty.
    • Lastly, “it’s equally about ferocious resolve, and almost stoic determination to do whatever needs to be done to make the company great.”
  • On the flipside, the author found that about two thirds of the companies that went from great to horrible had leaders that “we noted the presence of a gargantuan personal ego that contributed to the demise or continued mediocrity of the company.”
  • I strongly applaud this level 5 leadership as the type of leadership that helps facilitate high levels of successful innovation.
  • You will recall from quantum idea generation that I made several points about what it takes to have successful big ideas.
    • First, I spoke at some length about the power of and high need for diversity of thought in the idea generation process. Your chances for successful innovation go up dramatically when you add people to the creative process who have diverse experiences and capabilities. It is the combustible mixture of these experiences and capabilities that produces a high quantity and quality of ideas.
    • Second, I talked about the need in a creative process to reduce fear. I specifically talked about the steps I take to have a one-on-one conversation with senior managers that are in a creative session. In the session, I need these managers to abdicate their judging and evaluation roles and become peer idea generators.
  • A level 5 leader has all of the qualities necessary to create a culture where people feel free to contribute ideas with a leader who is open to learning and knows that innovation success is a team sport.
  • The second element he calls first who….then what. In describing the good to great companies, the author says, “they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.” The importance of this is that when you begin with who instead of what “you can more easily adapt to a changing world.” The author adds two more points. “If you have the right people on the bus, the problem of how to motivate and manage people largely goes away. The right people don’t need to be tightly managed or fired up; they are self-motivated by the inner drive to produce the best results and to be part of creating something great.” In addressing the risk of having the wrong people, the author says “if you have the wrong people, it doesn’t matter whether you discover the right direction; you still won’t have a great company. Great vision without great people is irrelevant.”
  • Again, when it comes to innovation this is a point that I strongly applaud and support. In describing the right people, especially from an innovation perspective, you need a mix of diversity and commonalities.
  • Diversity: skills, capabilities, experiences, left and right brain ways of thinking, age and gender. The importance of this diversity is important to understanding the context of quantum idea generation. You need this internal mix of differences to tap into the depth and breadth of innovative possibilities.
  • Commonalities: core values and associated behaviors – like respect for others and the Golden rule, goals – team/company goals and noble purpose. The commonalities tend to be relatively more important than the diversity, but you need both. The author states, “in determining the right people the good to great companies placed greater weight on character attributes than on specific educational background, practical skills, specialized knowledge or work experience…… They believed dimensions like character, work ethic, basic intelligence, dedication to fulfilling commitments, and values are more ingrained.”
  • The third element of a good to great company covered in this podcast the author calls “confront the brutal facts (yet never lose faith)”. In introducing this element the author says, “you must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be”
  • Here are a few key headline points that he makes that I think are relevant to innovation.
  • First, “facts are better than dreams.” In working with clients in my innovation business, I often hear at least some leaders dwelling on their dreams or vision of the future. Unfortunately, when I dig deeper into their business facts, I see little basis for their ability to achieve their dreams and in some cases even the desirability of achieving the dream.
  • Second, “a climate where the truth is heard.” Most of us have heard stories – even horror stories – of shooting the messenger or, put another way, the manager who delivered the straightforward truth that a senior leader found highly objectionable. To avoid this situation, the author makes a couple of key points. First, leaders should ask questions in a genuine search for truth. Leaders should avoid pronouncements of wishful thinking that make sharing the truth an act of courage on the part of another person. Leaders should engage in dialogue and debate, not coercion. When there is a failure, conduct an investigation to learn what can be done better the next time while avoiding placing blame.
  • In my innovation work with clients, some of the most difficult situations have been working with leaders who hang on to unrealistic visions and, maybe even more importantly, the absolutely most optimistic interpretation of a set of facts and conditions. Much of this is driven by ego and some of it by pride. Both of these can be highly toxic for innovation to be nurtured and prosper.
  • Once a company has confronted and accepted a brutal truth, it needs the boldness and courage to stay connected with that truth as it moves forward. A company does not waver in its effort to overcome bad news.
  • Innovation is often called upon to deal with some of these brutal truths. Brutal truths usually have a negative impact on the business. It can be the entry into your market of an unexpected competitor with a much lower profit margin business model. It can be an existing major competitor that suddenly becomes much more aggressive by introducing a disruptive innovation whose benefits are all superior to the ones your products deliver.
  • Innovation is often about the necessity for a company to survive. In earlier podcasts, I talked about successful company turnarounds and the role innovation played in those turnarounds. The very nature of a turnaround company is one that is in some level of distress when it calls upon innovation to reverse their fortunes – to take a company from good or struggling to a great company.
  • The three elements of a good to great company covered so far in this part one podcast, are all directly relevant to virtually any business leader listening to this podcast. You need a culture of level 5 leadership at every level in the company, but especially in the president/CEO office. Getting the right people into your company is critical for successful innovation. Having the courage to boldly face unpleasant truths is critical for a company needing to reverse negative business conditions.

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