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Building a G.R.E.A.T
Company
By Vistage speaker Bruce Hodes
For the past 25 years,
I have worked with CEOs, business owners and senior executive teams to help
them design and grow great companies. During that time, I have learned a few
things about the components that make up a great company.
In "Good to Great,"
Jim Collins defined a great company in the following manner:
"The good-to-great
examples that made the final cut into the study attained extraordinary
results, averaging cumulative stock returns 6.9 times the general market in
the fifteen years following their transition points. These are remarkable
numbers, made all the more remarkable when you consider the fact that they
came from companies that had previously been so utterly unremarkable."
A fine definition for
companies that are large enough for you and me to know about and be their
customers. But what about small- to mid-size companies? For this market, I
would add to Collins’ definition by saying that great small- to mid-size
companies are also defined by love, a term I do not use lightly.
In small- to mid-size
companies, the primary stakeholders love a great company. The owners love
the company because of superior financial performance and because they see
their firms as their life’s work. The CEOs love the company because it
enables them to make a difference in the world and leave a powerful and
potent legacy. The vast majority of the customers love a great company
because it provides superior service. And the employees love a great
company, as demonstrated by the performance of the company and employee
retention.
Components of Great
Companies
Now that we have
defined a great middle market company, what are the components that make up
greatness? I believe they can be found in the acronym G.R.E.A.T.
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G: Generous and
Growth.
The dictionary defines generous as "liberal in giving or sharing; not
petty or mean; magnanimous; abundant and ample." These are apt
descriptions of the culture of a great company. Great companies provide
space for people to grow and develop. They accept human foibles and allow
mistakes to be made. Great companies are not mean-spirited or punitive.
They have rules, but only a few. They are willing to give and bend, and
they come from a mindset of abundance while avoiding notions of scarcity.
Growth causes all the
progress and wealth but it also causes all the problems and pain. Without
growth, a company stagnates and becomes internally focused. Great companies
use growth as the engine for their internal and external development
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R: Revenue and
Reflection.
Revenues are central
to any business. The difference with great companies is they generate a
lot more than their competition. Revenue can also mean (although not
necessarily) that they generate profit. For many growing companies, profit
can be elusive during the times when revenue must be put back into
infrastructure and additional resources in order to grow. In great
companies revenue is understood by everyone, not just the top executives.
All employees understand how revenue is generated and consumed. More
important, each individual understands how he or she can increase and
impact revenue.
Reflection is the
planning piece. In great companies, long-term success is supported by some
sort of disciplined planning process that engages the leadership group. The
leadership group regularly assesses where the company is now and what future
they want to design. Leadership also provides a disciplined and focused way
for problems to be solved and the pain of growth to be lessened. Early on,
great companies implement a formal annual process from which to plan and
design their growth. This helps establish and is part of their long-term
success.
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E: Entrepreneurial.
Great
companies engage in proactive and creative actions and activities. They
focus on cutting costs and thinking about ways to improve efficiency. They
create a culture where employees proactively make things happen rather
than standing around waiting for orders. Great companies know that their
destiny is in the hands of their employees, and they get them actively
engaged in creating a bright future.
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A: Attitude.
While "entrepreneurial" and "generous" speak to this type of attitude,
great companies also exhibit plenty of spunk, vim and vigor. They have
attitude with a capital A. This may mean going the extra mile for the
customer. It may mean being on time, no matter what. It may mean that top
executives double up in hotels to cut costs and contribute to their
profit. Whatever the context, great companies exhibit an attitude and view
of the world that clearly sets them apart.
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T: Teamwork and
Transformation.
Great companies are
not groups of individual agents with everyone doing their own thing.
Instead, they are focused places where collaboration and involvement are
the currency. Employees know that customers experience the company as a
whole and that any negative experience from anywhere in the company can
sour the relationship. It takes a whole company to make a customer wildly
loyal.
Transformation means
that the company touches its employees in meaningful ways. People see
themselves differently as a result of their relationship with the company.
Employees are better for having worked there, customers are better for
having bought there, and owners are better for having generated a company
that makes a difference. Great companies do more than just provide a service
and generate a product. There is clearly a much bigger game that molds,
impacts and transforms the lives that they touch.
How many of these
components of greatness does your company possess? More important, what
would your customers and employees say about your firm in relation to this
standard?
For companies of all
sizes, greatness is difficult to obtain. And once there, it is easy to lose
the distinction of "great." However, the journey to greatness is more
important than the destination. In my experience, aspiring to being a great
company is where the true value lies.
Bruce Hodes is
president of CMI, a
consulting firm specializing in strategic planning, high performance team
development and organizational development.
Copyright 2006, Vistage International, Inc.
All rights reserved. |
