February 9, 2007
Have you ever wondered why Google is trading 5 times its initial IPO? How is Cisco maintaining its leadership in the networking industry in spite of tough competition? Why do some companies make the leap and others don’t?
Jim Collins, in his book “Good to Great” explains how “Great” companies evolve. There are a number of traits that differentiate a great company from a good company. Today, I am going to share 3 important traits of “Great” companies.
Level 5 Leadership
Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious – but their ambition is first and foremost for the institution, not themselves.
Take for example Google. Larry Page was the CEO for the company until 2001. However, he knew that it would not be in the best interest of the company and its investors. So, Larry & Sergey Brin recruited Eric Schmidt from Novell. Eric Schmidt had a good knowledge from running Internet businesses in Sun & Novell. The founders of Google didn’t want to disappoint their investors. Hence, they decided to stick on to their technical roles.
Level 5 leaders also set up successors for continued success of the company. Like a sea that pushes constant waves to the shore, Level 5 leaders create successors who make sure that the company continues its journey of excellence.
First Who Then What?
Collins says that you have to get the right people on the bus (& the wrong people off the bus) before you figure out where to drive it. The people whom you hire decide your destiny. When you have the right people in the bus, you always have the flexibility of changing your course of action anytime during the journey.
When you have disciplined people you don’t need hierarchy. The right people will do the right things and deliver the best results they are capable of, regardless of the incentive system. You don’t have to spend all your time and efforts in managing or motivating the employees to get the work done.
Collins says that “the purpose of compensation should not be to get the right behaviors from the wrong people, but to get the right people on the bus in the first place, and to keep them there”.
I couldn’t refrain from quoting Google again. Their recruitment process is stringent enough to identify the right people. One of the Google’s executives mentioned in an interview that they have around 20 – 30 people report to a manager. This would force the manager from not doing micro management. Also, this would let employee’s to use their creativity at work.
I was working as a manager for a start up company previously. I had both right and wrong people in my bus. I spend majority of my time in managing and getting the work done from the ‘wrong guys'. The right people are highly active, accountable and accomplishing.
Confront the brutal facts
When you start with a honest and diligent effort to determine the truth of the situation, the right decisions often become self-evident. You absolutely cannot make a series of good decisions without confronting the brutal facts.
Leadership is also equally about creating a climate where truth is heard. They create a culture wherein people had a tremendous opportunity to be heard and ultimately, for the truth to be heard.
I worked for a company called HCL technologies. They introduced annual employee survey for the first time. They had asked for feedback about immediate supervisors, management executives, HR, operations and all the different groups in the organization. All of us were so motivated to give honest feedback hoping that actions will be taken against improvement areas. However, there was no response to it. There was no task force formed to address the issues. There was no action plan. The employees were disappointed, dejected and depressed. We were thinking that the survey feedback will create ripples like a stone thrown into a pool of water. However, the survey feedback was lost like a stone thrown into a deep valley. One year passed... they sent out the survey forms again... but this time, they got only a lukewarm response.
10 years from now, most of us will be in executive positions. If you want to be a successful executive - you should practice “Level 5 leadership”. You should get the right people in to the bus (& get the wrong people off the bus). When things are not going on well, we should face the brutal facts and take bold actions.
Fellow toastmasters, "You don't have to be great to start... but you've to start to be great"