Every few months at onefinestay NYC we have a book club, and the most recent book we discussed was Good to Great. If you haven’t read it and only can read one business book this year, this would be my pick - its foundational and many other business books describe different versions of similar concepts. I actually listened to the audiobook, read enthusiastically by author Jim Collins himself (who spent 5 years with a team of researchers compiling the data for Good to Great) - in this case, listening was a great way to consume this book and make it stick.
Our discussion centered around a few specific ideas from the book - this is part book summary, and part summary of our discussion. Here were the key points:
Good is the enemy of great
In many ways, truly understanding the meaning of this line is the most important lesson in the book. It’s all about the power opportunity cost: businesses don’t become great not because they are bad businesses, but because they are above average businesses - and this prevents greatness. Being ‘good’ is probably worse than being ‘bad’ - as good is insidious & results in complacency. As J.K. Simmons says in Whiplash, there are no more dangerous words in the English language than ‘well done’.
This concept can be applied to most areas of an organization - here’s a few that we thought were relevant to us:
- ‘Good’ employees prevent companies from hiring 'great’ employees. It’s critical to think carefully about every seat in the company as an opportunity to bring someone in to the organization that can be transformational and help shape the future. It’s fine if not every employee falls into the ‘great’ category today - but it should be a conscious decision if they aren’t. The construct I personally use is: are they great, or do they have the potential to become great? If neither, that seat should be freed up for someone with that potential. No matter how big the company, most of the available game-changing talent is still on the outside of the organization.
- ‘Good’ customer experiences prevent ‘great’ customer experiences. New brands are built from evangelists, not averagely satisfied customers. If the phone isn’t ringing or you aren’t hearing from customers, that doesn’t mean that everything is going as it should be. There may be (much) more that you can do to create a world-class customer experience.
First who, then what
‘Great’ companies featured in the book all took talent very seriously - more seriously than company strategy, at least in the beginning. And not just getting the right people ‘on the bus’, but getting the wrong people ‘off the bus’. Part of the power of getting the right talent mix in an organization is the leverage it creates, as the ‘right’ people are self-motivated and mostly self-sufficient, so staff management challenges are reduced or eliminated. As Jack Welch says, 'I hire people brighter than me and get out of their way’.
Some other features of this philosophy:
- Specific knowledge and skills are teachable traits - the right attitude, work ethic & dedication are much harder to come by.
- Don’t weigh down ‘achievers’ with underachievers. Good employees prevent great employees.
- Non-negotiable hiring rule: avoid selfish, negative or egotistical people.
- Bias is: promote from within, which reinforces core company values.
- When in doubt, don’t hire
The onefinestay team thought the following characteristics meant we had the right person on the bus:
- Have an opinion. This specific lesson was ingrained in me from my first job as an investment banker, where one of the MDs after each meeting would turn to the most junior person in the room and ask them ‘how do you think it went?’. Many times when I am asked what I think about something, I’ll respond with: ‘what do you think?’. It’s critical to have thinkers at every level of an organization who don’t outsource the brain to the boss, otherwise everything ends up flowing through the boss which results in not enough organizational leverage. With the right people on the bus, its as simple as setting the right behaviors around asking questions and options. Don’t ask for help if you could reasonably figure it out for yourself.
- Bring excellence to daily tasks - regardless of circumstances. A good example is our photographers - bringing the same a-game to every shoot, not just the magazine covers.
- Seize opportunities above and beyond the ‘day job’. The job you are given is nothing more than a platform to expand your circle of influence.
- Have a positive attitude and spirit of joy and contribution.
Confronting the brutal facts
This is all about creating a culture of transparency, so that information (and problems) flows freely through an organization. Charismatic, or overly strong-willed leaders are often the biggest culprits when there’s a lack of transparency in a company. Here’s how to do it:
- As a leader: lead with questions rather than answers, rather than having the answer and spending time motivating everyone else to follow you. Part of ‘leading with questions’ can be implemented with one-on-one meetings with direct reports. I think Ben Horowitz has the best guidelines to how to run a one-on-one meeting, here
- If you do have the answer or a non-negotiable opinion: be clear about it. Otherwise, engage in honest debate
- Clinically analyze mistakes, but do so without blame
- Build in ‘red flag’ mechanisms. Everyone in the company should be able to pull the andon cord
Companies that achieved greatness in Good to Great did so by simplifying their business to 'one big thing’, and organizing all of their entire business around delivering that big thing. Having a hedgehog concept is all about creating singular focus and not getting distracted by initiatives unless they reinforce that focus. Arriving at this concept is often a multi-year journey and starts with figuring out what you can be best in the world at, what you are deeply passionate about as an organization, and what creates economic value. Critically, Good to Great companies did not say 'lets get passionate about what we do’ - rather 'we should only do things we are passionate about’.
It’s hard to figure out what your company’s hedgehog concept should be - we certainly didn’t solve it in an evening. But a lot of the power of hedgehog concepts for me is not necessarily figuring out exactly what the big thing is - but bringing a natural focus to business building decisions. For example, at onefinestay we’ve chosen to focus on certain types of homes with in certain neighborhoods in the city. Having a clear idea on what we’re looking for has enabled us to get tightly focused on sales and marketing strategy, messaging & hiring decisions in our home teams.
There’s a lot more in the book that’s beyond the scope of this post. Beyond the book itself, Jim Collins maintains an online knowledge base that expands on some of his key ideas from this book and his others.