What does it take for leaders to build companies that remain successful for generations?
Uncovering the answers to this question has been the driving force of the Socratic business adviser Jim Collins's career. But what about now, as we emerge from the Covid-19 crisis, in a business landscape that is best summed up by the word disruption? I got on a call recently with Jim to discuss.
For more than a quarter century, Jim's been obsessed with studying what makes great companies tick. Jim is an inquisitive fellow. He jumped right into our conversation, curious to know about me and asking the most brilliant questions, though we were there so I could interview him.
But I loved and appreciated Jim's appetite for understanding people and business, and how the two fit together. It's no surprise his books Good to Great and Built to Last are bestsellers and business classics. Both books have inspired generations of business leaders. Me included.
On our call, Jim acknowledged that he and I are on the same team. We're devoted to the same mission, to share the most effective strategies and tools that take leaders and teams from average (or seriously dysfunctional) to high-performance cultures where work is play.
Jim said most people think of him as "a big-company guy," but the heart of his research began with small businesses and entrepreneurs. Thirty years ago, Jim and his mentor Bill Lazier taught a course at the Stanford Graduate School of Business that ultimately became their book Beyond Entrepreneurship. Decades of continued research have given Jim much more insight into what it takes to sustain high-performing businesses. So, in December 2020, Jim published BE 2.0, an "upgraded" version of Beyond Entrepreneurship for a post-pandemic world.
On our call, we talked about what it takes for business leaders to build companies that thrive today where business is asymmetrical warfare, caused by social movements, the acceleration of technology, and now, global pandemics.
Our research efforts through Go Forward to Work,in partnership with Harvard Business School, have shown there's a new paradigm of work emerging. Companies today must adopt a new mentality to succeed. We call it radical adaptability.
Business is no longer about developing systems and running the same processes over and over. To win today, companies must be powered by teams that move fast, have the foresight to see how the world around them is impacting their business, and shift quickly and constantly, iterating to keep up with the changing times.
Jim said there are five shifts leaders need to make to succeed in the business landscape of 2021 and beyond. The sooner business leaders rethink these fundamental priorities, the sooner they'll exponentially boost the results they and their teams produce.
1. Shift from "what" to "who"
Too many leaders and their teams approach business hurdles with "what" questions: What are we going to do about cybersecurity? What are we going to do about strategy? What are we going to do about subcontracting?
While problem-solving is important, Jim explained that it should always be the second part of the equation. Instead of asking "what," leaders should frame every question with "who." Who is going to tackle those issues? Then, and only then, can you start finding the best answers and getting best results.
Many leaders recognize the importance of good hiring, but they fail to understand what it means to put people at the center of their mission. "If you're building a business, I want to see how many hours you spend on people," Jim told me. "Putting people in key seats, investing in team-building, developing people--I want to see the amount of time invested there double, and I want to see it above 50 percent."
When leaders focus on "who," the "what" falls into place. I've seen this firsthand at Ferrazzi Greenlight, where we've spent the past 20 years defining the practices of optimal teams, a practice we call co-elevation.
When teams are committed to the company mission and are willing to be candid and share with each other what their personal mission is, they can get invested in one another; they quickly learn that they go higher together. The right investment in your "who" will elevate everyone within your organization and prepare them to handle whatever "what" is thrown at them.
Our research at Go Forward to Work showed that companies, like our client Verizon, that focused on strengthening communication at all levels and tightening teams during the pandemic produced explosive results that they once believed were impossible. This only happened because they worked on the "who" and nurtured their people, so they had the tools they needed to strengthen resiliency and succeed amid crises.
2. Shift from time-telling to clock-building
One of the most pervasive myths in business is that there's an entrepreneurial "type." Jim refers to this figure as the "time-teller"--a creative individual who looks at the sky, discerns what time it is, and astounds people with their brilliance. Time-tellers often have great ideas, assemble a company to put the idea into the world, and then hand the company over to people who can grow it.
There's nothing wrong with being a time-teller, but Jim balks at the idea that this is the natural state of great business. In fact, Jim revealed that the people who build the best companies are often the early architects of those companies.
"Never accept that you cannot be to your company what Jeff Bezos was to Amazon and Steve Jobs was to Apple," Jim insists. "You can choose to be that kind of leader. That's a conscious decision, not a function of your genetics or makeup." But here's the caveat: That decision requires leaders to move away from the visionary time-teller role and, instead, build businesses like clocks, which can run without a visionary at the helm.
We revere the time-teller, but wouldn't it be even more impressive to build a clock that can tell the time without depending on the visionary genius of a single individual? The greatest entrepreneurial step is to transition from being a company with a visionary leader into being a truly visionary company.
Like Jim, I've seen how growth and innovation happen more readily when leaders define teams to include the most inspiring experts, advisers, and multidisciplinary colleagues. Leaders should see themselves not as solitary geniuses but as part of a knowledgeable network.
Everyone at every level is a leader. At Ferrazzi Greenlight, much of the training work we do with teams is to have team members shift from following to leading without authority. It's so critical today that my last book's title was Leading Without Authority. The idea is, it doesn't matter your title, you are a leader. Every member of a team is. The challenge is often to get people to accept that of themselves, but when they do the team dynamic shifts.
3. Shift from exercising power to being a level-five leader
After working with thousands of leaders, Jim and I have both seen the same mistake: People confuse leadership and power. Power is a coercive tool. The best leaders are co-creative. They engage with teammates from a place of value exchange. The most exceptional leaders tend to use very little power.
Jim spent two years as the class of 1951 chair for the study of leadership at the United States Military Academy at West Point, so he knows what he's talking about. "People think great military leaders order people around," he told me, "but the great ones don't." They're what Jim calls "level-five leaders"--leaders whose ambition is for an organization and its purpose, not for themselves.
In my own research, I've found that the most thoughtful leaders recognize that their long-term success depends on everyone around them. That means, if you want to be a level-five leader, you orient your team around a cause. Your team will follow you, not because you're the boss but because they believe in what they're doing. You must also get deeply interested in their mission and supporting them to achieve the company's goals.
4. Stop thinking in terms of pivot and start thinking in terms of a flywheel
In today's volatile business world, the word disruption is often met with its partner pivot. But Jim warns that pivoting isn't always your best tactic for facing change. After all, when you pivot, you have no traction.
Great companies never result from one lucky stroke or one perfect pivot. Instead, Jim argues that cumulative success results from "the flywheel effect." Building an enduring company is an ongoing process, like pushing a heavy flywheel. At first, the task is slow-going, but as you build momentum, operations move faster and faster until you eventually reach a breakthrough. If you're constantly pivoting, you'll never attain that type of compound effect. The greatest entrepreneurial companies didn't destroy their flywheels in response to a turbulent world; they disrupted the world around them by compounding momentum in their flywheels--turn upon turn, decision upon decision, action upon action--over a long period of time.
The urgency of change is real, but it requires a proactive mindset, not the reactivity that defines most pivots. That's why in the middle of the pandemic my team created our Go Forward to Work research team--so we can stay ahead and always be at the forefront of the future of work by developing conscientious, proactive responses to change that help companies maintain their momentum.
5. Assume catastrophe is imminent
As part of my Go Forward to Work research, I've become interested in how executives can protect themselves from unforeseen attacks from competitors, their environment, and our fast-changing times shaped predominantly by the acceleration of technology. Jim suggests that leaders should assume catastrophe is imminent.
"I know it may sound crazy," he laughs, "but if you think about the way luck plays out, it's asymmetric." Good luck cannot make a great company, and bad luck can kill one. Consequently, businesses are best served by having what Jim calls "productive paranoia." Building buffers, reserves, and contingencies for unanticipated events will protect your company.
My research has shown that the best leaders promote resilience and develop foresight, which allows them to avoid risk, find unexpected growth, and bounce forward in the face of setbacks. Foresight strategies are so critical today and into the future of work that I tackle the topic in the first chapter of my next book.
This matches Jim's findings completely. "Most people think entrepreneurs are risk-takers," he confided, "but the great entrepreneurs aren't. They place judicious big bets, and they protect their flanks with extra buffers."
Jim and I agree that for any leader today to build an enduring business, they must think ahead, as far out as a 20-year time frame. Ultimately, they must shift into a new gear of operation altogether, becoming radically adaptive. Only this way can any leader be an example for their teammates, who will also then become industry change agents, so together everyone wins from each person to the team and the company, at large.