Let me just preface this post by saying that I hate management books, business theory books, success coaching and nearly everything that starts with the phrase “The XYZ Habits of Highly Effective…” That said, I got so many recommendations to read Jim Collins’ book, Good to Great, that I couldn’t resist. In particular, two people that I trust intensely – Gillian and Avinash Kaushik – said that they too, had a distaste for management theory diatribes, but loved this one. And now that I’ve finished it, I find myself thinking about it almost daily.
Good to Great: Why Some Companies Make the Leap… and Others Don’t
To me, the compelling part isn’t the advice, but the research itself. Collins and Co. started with 1400+ companies, whittled them down to a list of only 11 “great” companies, based on long term financial performance in the American stock markets. The research team Collins assembled basically looked at this equation:
Good Company + X = Great Company
The chapters of the book detail their attempts to solve for “X.” I’ve tried to paraphrase their 6 primary points below:
- Level 5 Leadership – the leaders at each of the “great” companies, when compared to leaders at merely “good” (or not so good) companies each had unexpected traits. These included humility + will, ambition for the company (rather than themselves as individuals), compelling modesty, strong resolve to confront tough problems and make hard decisions, and, finally, a consistency in praising others for the company’s successes and blaming themselves for its failures.
- First Who, Then What – Although hiring great people may seem like a natural move, the book actually detailed a remarkably unique process. The “great” companies all appeared to hire “great” people without specific roles. That is, they did not create positions, then fill them, they found great people and asked them to stumble around the organization until they found the best use of their skills.
- Confronting Brutal Facts – Each of the “great” companies faced serious challenges and threats, and when compared to the “not-so-great” companies, they used a completely different approach to the harsh realities of their market. Lofty ideals were replaced by hard statistics and “bullshit” (to use the phrase I could feel Collins was dying to employ) was outlawed. Managers didn’t inflate numbers, employees didn’t boast, and the top brass was always extremely well informed about the exact predicament of their large organizations. Despite this, however, Collins noted that all of these companies faced these “brutal facts” with nearly unwavering faith.
- The Hedgehog Concept – Perhaps the most important guiding principal, the hedgehog concept was used by every one of the businesses to find their area of focus and apply a laser-beam like precision to their goals. They ignored what other companies might see as exceptional opportunities because these projects did not fit with the one thing they did best. Although some of the “great” companies stumbled, each was able to find a single competency that defined them and refine it over time to produce extraordinary results.
- A Culture of Discipline – The devotion of employees, from executives to middle management to entry-level people at each of the “great” companies epitomized their success. This was not just about great hiring, but about producing motivated, committed people who cared not just for their paycheck, but for the success of the company as a whole. The stories in this chapter comparing workers and managers from “great” and “not-so-great” companies is remarkable – the great companies always found ways to build inspirational cultures, where oversight , despite being rigid, became merely a formality as every person in the organization exceeded expectations on a regular basis.
- The Flywheel – One of the more difficult to describe elements of “greatness,” the Flywheel nevertheless appeared in each of the “great” companies. The analogy is of a “massive metal flywheel, mounted horizontally on an axle…” being pushed, slowly, ever faster towards an eventual point when momentum makes up the bulk of the work. I think Collins best described it here:
…Then it began to dawn on us: There was no miracle moment. Although it may have looked like a single-stroke breakthrough to those peering in from the outside, it was anything but that to people experiencing the transformation from within. Rather, it was a quiet, deliberate process of figuring out what needed to be done to create the best future results and then simply taking those steps, one after the other, turn by turn of the flywheel.
Obviously, the book does a far better job of explaining the research and providing examples than I have here, but these are the basics. To follow in the path of greatness, a business should consider taking these findings to heart.
When I first finished the book, I admit that I still had trouble thinking about how to apply many of the lessons to a company like SEOmoz – with our 7-person team and eclectic industry focus, we would seem to be a far cry from the Krogers, Circuit Citys, Walmarts, and Fannie Maes of the world. But, I did something I rarely ever do – I went back and re-read. I think I’ve probably read each chapter at least twice in the past 75 days. And, finally, it started to sink in. I wanted to apply these lessons and ask these tough questions about SEOmoz.
So, in typical “share-way-way-way-too-much,” SEOmoz fashion, here’s what I came up with. It’s not the be-all, end-all of a company evaluation, but maybe it’s a start and hopefully, it’s something you’ll find applicable to your own work.
Does SEOmoz Have Level 5 Leadership?
No. I think we have half the equation right with Gillian, my mom, who co-founded the company and devotes endless hours of effort on everything from customer service to financial management to strategic direction. However, I know that I, myself, am almost an anti-hero here, embodying qualities that are at complete odds with Level 5 leadership. I have far too much pride embedded in our work, and probably, if anything, hurt the company reputation by, at times, overshadowing it with personality. Working on that is going to be very hard, and it may not even be possible. It may be that at some point in the future, SEOmoz will need a different CEO and I’ll be relegated to the role of evangelist. Or, in a more hopeful future, Gillian can continue to steer us in the right direction, while I work hard to curtail my anti-Level 5 attributes and become the leader the company needs.
Do We Have the Right People in the Right Seats?
Maybe. We’ve struggled to put people in the right seats – particularly with Scott, when he first joined us. He was clearly a “right person,” but it took us many months to find the “right seat” for him. Currently he’s doing business development and I think it’s a role he was born to fulfill, but time will tell. Rebecca, too, has struggled recently with her position and she and I have tried to talk about her ideal role. I hope that she, too, will find the right seat, soon – currently she has such a hodgepodge of tasks, she’s more like our go-to person for those “Help! I need someone competent to pick up the pieces” situations, in addition to blogging, managing the UGC on SEOmoz, and being a public face for the company. Jane, Jeff, Mel, Gillian & myself are more defined and more comfortable in our roles (I think), but we may struggle and stumble more before we find the perfect places.
Do We Confront the Brutal Facts?
Not really… I think? I’m not sure what the “brutal facts” are for us. Perhaps we haven’t yet encountered our big challenges (at least, in our current form). It may be the limited size of the search marketing industry and the fact that our current crop of ~47,000 members (registered, not premium) is near the limit of the industry’s size (and we’ll need to explore new avenues to reach new people). It could be competing products and services – there’s at least a couple launching in the next few months. It might even be a massive shift in the operations of search engines or a change in how people use the web that forces us to change direction. This is the toughest one for me to answer.
What is Our Hedgehog Concept?
Premium content. Seriously – we love to create guides, answer questions, build valuable tools, provide resources, and help make search marketers better at their jobs, and that’s what we’re going to be spending 95% of our energy on for the foreseeable future. It took us a long, long time to find this niche (Gillian founded her first marketing firm back in 1981 and SEOmoz has formally been around since 2003), but I really believe we’re on the right path at last.
Have We Created a Culture of Discipline?
I think so. The people who work at SEOmoz email each other late at night, delete spam from the blog whenever they see it, share a culture of passion for the subject matter and the brand, represent us well publicly, and have exceptional commitment (as epitomized by Rebecca’s ceaseless declining of better-paying jobs elsewhere). We probably have more work to do here, but we’re going to keep at it, and I think that if we can maintain our commitment and our passion, we’ll be in good shape for the long run.
Are We Turning the Flywheel?
Yeah – I think we are. Every week or two, we launch something new in premium content, whether it’s partnerships with companies to provide discounts to our members or a list of valuable link sources or new tools and services, it’s my feeling that there hasn’t been a “breakthrough” moment for us and there isn’t likely to be one – we just keep growing by a few new members every day and a few new services each month. Maybe in some far distant point, when we hit 5,000 or 10,000 members, someone externally will point back to an event (like the funding) to say “That was the breakthrough.” But, for all of us on the inside, it just feels like we’re doing our job – grinding out content and tools and services and making a better and better product.
Overall, we’re probably at about a C or C+ in our Good to Great grade, but we’re still small, still nimble, and we’ve got time on our side and a big boost from the overall positive growth of search marketing. At least we’re firing on some of the cylinders
So, now that we’ve completed that exercise, I want to ask if others in the search community would be willing to do the same thing – talk about their companies and how they might fit in with the principles of Good to Great. I’ll ask a few people in particular who I’d personally be fascinated to hear from:
Obviously, this is a big, big favor to ask, but hopefully it’s an exercise that will be as valuable to you as it will to the community at large (and my own rabid curiosity). Also – for everyone – Collins put together a terrific questionnaire/quiz on his site that helps to determine if your company fits the Good to Great principals (the only downside is that it’s PDF).
One last thing – Andy Beard recently pointed out that I often forget to link to alternative points of view (an excellent critique). For a much less positive (but well-written and engaging) perspective on Good to Great and the ideas within, read Why Good to Great Isn’t Very Good from BusinessPundit.
BTW – One company in the search space really struck me as hitting on all cylinders with this methodology and getting fantastic returns as a result…
UPDATE FROM RAND: OK – I figured everyone would know I was talking about Google – who has something close to Level 5 leadership (at least, they appear to from the outside), brings in great people and lets them stumble around until they find the right home, confronted the brutal fact that they had no revenue model and faced up to it early in their growth, has a relatively strong hedgehog concept (search – although 20% time and other projects have shown they make mistakes here, too), has a fantastic culture of discipline – employees are so dedicated, it’s almost scary, and certainly turn the flywheel with every update – making search a better experience for users and gaining ground in market share almost every quarter.
