As the date for this year’s Chick-fil-A Leadercast approaches in a couple of months I am re-posting some of the previous years highlights to provide a taste of what you might expect at this year’s event.

Jim Collins
Author of Good to Great, How the Mighty Fall, and co-author of Built to Last.

Building Pocket of Greatness

Good is enemy of great!

  • Failure always teaches us more than just studying success.
  • When you contrast those who become great to those that are also rans in very similar circumstances you discover what does and does not impact outcomes.
  • If you hold circumstances fairly constant and the outcomes are different, then outcomes can’t be tied to circumstances.
  • Outcomes/Results are not tied to circumstances.
  • We then realize we are not imprisoned by circumstances, mistakes, the cards we are dealt, defeat, economy or even huge setbacks.
  • Outcomes are based on our choices.

What is it about great enterprises that fell apart?

  • Discovered it is a 5 Stage process.
  • Similar to cancer when you can look healthy on outside but can be unhealthy on inside. Many companies have this problem.
  • One difference is that cancer is not self-inflicted, in companies the 5 stages of downfall are self-inflicted.
  • You can fall a very long way and still come back.
  • Success doesn’t cause failure!
  • Success doesn’t cause failure!
  • Some companies have been successful over 150 years.
  • Research team (Good to Great)great companies had a different type of leader, Level 5 Leader, what was the difference, empirical data driven study showed that leadership of greatest execs we study was their humility!
  • Humility is the defining characteristic of Level 5 Leaders!

How the Mighty Fall

Stage 1: Hubris (outrageous arrogance) born of success is first step to down fall.

  • I came at leadership as a skeptic. It seemed leadership was the answer to everything at one time, I thought it had too much weight, influence and blurred the issues surrounding the real issues.
  • Many have concluded that if something succeeds it must be good leadership, if something fails must be poor leadership, no one ever  really looked at facts to determine what actual causes of each are, it is often more than just a leadership issue, it is a part of answer, but not the whole answer, more to story.

The Leadership Question: Level 5 Leaders display opposite characteristic of the companies that fall, humility contrasting arrogance!

  • Humility does not=weakness!
  • Not about personality
  • Many more leaders displayed plow horse than show horse characteristics.
  • Xerox CEO, Great leader because she realized it was not about her, the 1st year on  job could only find 5 articles about her, large number of articles focused on company not CEO. This is common of Level 5 leaders.
  • You can even be a weird leader.
  • Not a matter whether you are charismatic or not.
  • Critical question: what are you in it for?

Stage 2: Undisciplined pursuit of more: precursor for big fall, overreaching, going too far.

  • Packard’s Law: if exceed you ability to fill all your key positions with the right people you have went too far.

It all begins with the right people!

  • Right people on bus, in right seats and then figure out where to drive bus. (Good to Great)
  • Illustration of wife’s cancer diagnosis-getting the right people, doctors, then what, solution comes after finding the right doctors.
  • Key lesson his wife learned during cancer battle. Life is people.
  • Look and smell good, look successful, but in trouble on inside. Many companies had this appearance before their fall. Not good at confronting brutal facts beneath the good looking surface.

Stage 3: Denial of Risk and Peril

  • Warning signs of fall are ignored, risk are not working out as planned, numbers not coming out as projected, evidence is there, but is being ignored, underestimated or overlooked due to Stage #1, arrogance.
  • Discipline to confront the most brutal facts, mission and vision come later, must identify brutal facts first.
  • Needs to be a marriage of faith and facts-Stockdale Paradox-we will succeed any way, not ignoring facts and thinking you will succeed. (Good to Great)

Stage 4: When they respond to falling by grasping for salvation:

  • Many in this situation try to call in outside savior, usually a charismatic leader with promises of turning troubled company around.
  • Most good to great companies are in contrast led by a CEO that came from within the company.
  • These saviors bring in new programs, new technology, try to find a  silver bullet to rescue company, some try to exercise a type of cultural revolution and numerous other desperate activities that usually fail at this point.
  • This may provide burst of hope, momentary improvements, but they don’t rescue the company, just slightly prolong the fall.
  • They fail to address the real core issues and only attack surface symptoms in most cases.
  • Exercise lots of false promises and let people down time after time.
  • You see that these companies erode cultural capital. People eventually loose all confidence that things can get better.
  • False hope dashed by event and reality over and over again erodes all the cultural capital of the company.
  • Greatness never gets built by a single event, person, product, technology etc., It is instead lots of little things contributed over long periods of time in consistent and persistent manner. (Fly Wheel Effect, Good to Great)
  • Flywheel-takes a lot of different factors, events etc, pushing over long periods of time.
  • Sam Walton didn’t add 2nd store after 7 years of opening his first one.
  • Starbucks only had 5 store 13 years into existence.
  • Most overnight success stories take 20 years or more.
  • Failing companies erode financial capital, cultural capital and have nothing left to tap. They begin to run out of options which takes them to the death trap of Stage 5.

Stage 5: Capitulation to irrelevance or death

  • Not much to say about this stage, It’s over! They die, pretty much self-explanatory!

Jerry Porrus co-author-Built to Last

  • Companies examined for Built to Last, all 18 are stand-alone companies, independent companies.
  • Most are still very strong and doing very well.
  • 1989-when these companies were selected, nearly impossible to of selected companies that would have been that successful all these years later, statistically impossible, look at all the companies that many thought were strong that have fallen since 1989.
  • You have to have a reason to be in existence beyond financial.
  • Disney had troubles—almost takeng over at one point, but because of their core purpose they fought off take over bids that would have likely broke the company into multiple pieces.
  • Storming the Magic Kingdom(Book) From their point of view, Disney is not just another company, if you lose Disney it will not be replaced, it is unique, special, one of kind. This drove their leaders to save the company and they were successful, bringing it back better, bigger and stronger than ever.

Ask yourself these questions about your organization

  • What will be lost if we disappear?
  • Would it matter if we disappeared?

All great institutions are built on a purpose beyond making money that are built on a set of core purposes that sustain you during the ups and downs.

  • If we lose or values we lose our soul, if we lose our soul we lose it all.
  • Dealing with hard circumstances with very soft thing, their values, hard=soft.
  • Chick-fil-A=will expand only consistent with our values!
  • Preserve core and stimulate progress!
  • Practices change and expand over time, but core values must remain the same.
  • Find people who already share the values.
  • People who share values are the changes agents
  • People who don’t share values feel uncomfortable and leave, weeded out by power of having enough of the right people in place who embody the core values
  • Values and BHAGS-must have both to be great
  • Don’t let anybody ever convince you that you must inevitably fall!

Taking  It Home: 10 To Dos

1. Build a pocket of greatness: what ever you have responsibility for take my minibus a pocket of greatness, and one day it became whole company
2. Do your diagnostics: at Jim Collins website, use it free!
3. People: What are you key seats on bus? Are they filled with the right people in the right seats?
4. Build a Personal Board of Directors
5. Turn off electronic gadgets: create white spaces of quiet, zoom out and think, get away and be quiet, refresh, renew, time to think.
6. What is your question to statements ratio? Can you double in next 6 months?
7. Disciplined Action: Start a Stop doing list
8. Experiment with removing titles: right people understand they don’t have job, they have responsibilities.

“spend less time trying to be interesting and more time trying to be interested”

9. Core Values Clarification:

These Values will sustain you during turbulent times, they must be rock solid, unwavering.

10. Marry values to BHAGS: how do we stay on the balls of feet?

Parting Thoughts:

Peter Drucker 1/3 of his books was written after he was 65, which book is your favorite? “the next one”

  • Think about how to be useful? (learned from Drucker)
  • Go out and make yourself useful
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