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President's Viewpoint

Good to Great

by Victor Deyglio

Opportunities. The Logistics Institute is highly entrepreneurial. Opportunistic is the key characteristic; “building the business” is the primary directive.

Staff are encouraged to be self-directed opportunists, dedicated to the success of the Institute. Personal achievement involves accepting risk, and satisfaction comes from winning in the end, despite the odds. We continue to earn our place in the world through skill, knowledge, character – and luck.

Luck was once described to me as “an opportunity that comes our way.” Good luck is “opportunity grasped.” As indicated in the last letter, the Institute has the good fortune of facing several significant opportunities to realize its mandate of professional certification in logistics throughout the world.

In all honesty, these opportunities are daunting, even a bit frightening. We are a “small operation” of five people, but we have an immensely powerful Gateway. Going “dot com” in 2000 has brought the world to us in 2002. The challenge is living up to the expectation.

Most of these opportunities came to us. We do not advertise; nor do we solicit. Members and directors, recognizing the value of their profession, speak with pride of their Institute whenever and wherever possible. As a result, people from far-flung places knock on our door.

One such opportunity launches the Institute into the meta-world of Peace, Prosperity and Productivity. We have been invited onto the board of directors of the World Confederation of Productivity Science (WCPS), and we thank David Poirier, our “chair emeritus,” for opening this door.

This WCPS is a “non-government organization” (NGO) with UN status. It sponsors a world congress every two or three years focused on building peace through prosperity by implementing productivity values and principles. In the context of global trade, logistics/supply chain are core to productivity.

As part of the WCPS, the Institute enters the mainstream of global awareness. We will help organize World Congress XIII, and develop several conference tracks. This is our opportunity to stand before the world’s leaders and speak about

• the strategic importance of logistics to building prosperity (wealth creation),

• the need for professionalism in developing productive and skilled practitioners,

• the role of the Logistics Institute as a model to be emulated in terms of labour market development, professional development, and leadership accountability.

Good to Great. The benefits of this new association with the WCPS are even now being realized. At the board meeting in New York City on February 14-15, WCPS President, Scott Sink, gave the directors a copy of the book Good to Great (Harper Collins, 2001), by Jim Collins. The insights in this book are worthy of consideration. This is the first in a series of my reflections on Good to Great.

As many of you know, I do not particularly like “management books.” For entertainment, I’d rather read the chapter in Heidegger’s Sein und Zeit titled “Preliminary Sketch of the Existential-Ontological Structure of Death,” in the original German, than read “yet another great” management book.

For instance, Collins’ first book Built to Last has no appeal for me. Billed as the “defining management study of the nineties,” it showed how great companies triumph and how sustained performance can be engineered into the DNA of an enterprise. To quote my nephew, “Who gives!”

I consider Good to Great a “counter-culture book.” It was born out of criticism lobbed at the first book: Built to Last is useless. “The companies you wrote about were, for the most part, always great. They never had to turn themselves from good companies into great companies…What about the vast majority of companies that wake up partway through life and realize that they’re good, but not great?”

Using tough benchmarks, Collins and his research team identified 11 companies that made the leap to great results and sustained those results for 15 years. How great is great? After the leap, the good-to-great companies generated stock returns that beat the general stock market by an average of seven times in 15 years. This is better than twice the results delivered by a composite index of the world’s greatest companies, including Coca Cola, Intel, General Electric and Merck. Few of these 11 companies are household names; none was led by a “larger than life” leader.

Pearls of wisdom pervade Good to Great. It is not a “how to” book; there are no formulas. There are surprises, however, and the challenge to any reader of this book is to be open to the unexpected.

Good is the Enemy of Great. We don’t have great schools, principally because we have good schools. We don’t have great government, principally because we have good government. Few people attain great lives, in large part because it is just so easy to settle for a good life. The vast majority of companies never become great, precisely because the vast majority become quite good – and that is their main problem.

That good is the enemy of great is not just a business problem. It is a human problem. What does it take to turn good to great?

What’s Different? Sifting through mountains of data over five years, Collins and his team kept asking, “What’s different about these 11 good-to-great companies, compared to others in their field?”
The first insights were the “witness of silence,” or as Collins puts it the “dogs that did not bark,” alluding to the Sherlock Holmes story The Adventure of Silver Blaze. What the researchers did not find provided the best clues to the inner workings of good-to-great:

• larger-than-life, celebrity leaders who ride in from the outside are negatively correlated with taking a company from good to great
• there is no systematic link between executive compensation and going from good to great
• strategy per se does not play a significant role; there was no evidence that these companies spent a lot of time on long-range planning
• good-to-great companies focus equally on what not to do and on what to stop doing, as on what to do
• technology has virtually nothing to do with igniting a transformation from good to great; technology can accelerate the process but cannot cause the transformation
• mergers and acquisitions play virtually no role; two mediocrities joined together do not make one great company
• good-to-great companies do not focus on managing change, motivating people or creating alignment; under the right conditions, the “problems” of commitment, alignment, motivation and change are not really “problems;” they are the way of doing business successfully
• good-to-great companies had no name, tag line, launch event or program to signify their transformation; some were even unaware of the magnitude of the transformations while doing them; they produced revolutionary leaps in results, but not by a revolutionary process
• good-to-great companies are not generally in great industries; greatness is not a function of circumstance (right place-right time), but largely a conscious choice.
The Framework. The transformation from good to great is a process of buildup followed by breakthrough. This process entails three stages, and for each stage there are two key indicators:

Level 5 Leadership: Compared with high-profile leaders with big personalities who make headlines and become celebrities, the good-to-great leaders seem to have come from Mars. 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 Paton or Caesar. Ultimately, leadership is about character, as well as skill and tenacity.

First Who…Then What: Good-to-great leaders first got the right people on the bus, the wrong people off the bus, and the right people in the right seats – and then they figured out where to drive it. The right people are our greatest assets.

Confront the Brutal Facts (Yet Never Lose Faith): The Stockdale Paradox – 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. The greatest fear we face is ourselves: our lack of self-confidence, and our lack of honesty about ourselves to ourselves.

Hedgehog Concept: Just because something is your core business…does not necessarily mean you can be the best in the world at it. And if you cannot be the best in the world at your core business, then your core business absolutely cannot form the basis of a great company. We must transcend the curse of competence – personal, intellectual, corporate, social and otherwise.

A Culture of Discipline: When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls. When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance. Discipline + risk + opportunity = success.

Technology Accelerators: Technology is never the primary means of igniting transformation. Technology is never the root cause of greatness or failure. Good to great leaders are pioneers in the application of carefully selected technologies. Technology does nothing; it only enables us to do what we should be doing anyway.

Read On. Those who launch revolutions, dramatic change programs, and wrenching restructurings will almost certainly fail to make the leap from good to great. No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. Rather, the process resembled relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough and beyond.

Nothing beats the satisfaction of succeeding through relentless hard work. Next time: Level 5 Leadership.