This week Kristian talks about the difference between a bad and good company and what makes a company great. He explores the areas that he commonly sees being the real underlying causes of success or failure.
Stay on to the end and Kristian will let you in on a secret about how great companies think and behave differently!
How Great Companies Think and Behave Differently: The Path to Excellence
What truly separates good companies from great ones? As Jim Collins famously stated, “Good is the enemy of great.” Instead of being mere money-generating machines, truly great companies combine financial and social logic to build enduring success. This comprehensive guide explores the fundamental differences that set great companies apart and provides actionable insights for business transformation.
The Three Pillars of Business Excellence
Through extensive experience working with over 500 companies across 18 countries, three critical areas emerge that differentiate good companies from bad ones:
1. Stakeholder Management
Stakeholder management is the systematic identification, analysis, planning, and implementation of actions designed to engage with stakeholders effectively. This involves:
- Identifying key stakeholders (owners, customers, employees, and regulatory bodies)
- Assessing their interests and influence
- Developing comprehensive communication management plans
- Engaging and influencing stakeholders through research and dialogue
2. Strategic Thinking and Planning
Strategic thinking is about envisaging new solutions to old problems and constantly reinventing views in unique ways. It requires:
- Taking a helicopter view of the business
- Building curiosity and exposure to new ideas
- Valuing diversity in thought and approach
- Practising different ways of approaching challenges
- Being open to creative and innovative solutions
3. Disciplined Action
As Jack Canfield notes, “The universe rewards action, not thought.” Successful companies understand that:
- Action generates feedback for course correction
- Failure is an essential part of the learning process
- Progress requires “failing forward”
- Consistent action separates high achievers from others
The Seven Elements of Great Companies
Based on extensive research and real-world experience, great companies exhibit seven crucial characteristics:
1. Level 5 Leadership
Great leaders combine personal humility with professional will, channelling their ego needs into building exceptional organisations rather than personal gain.
2. First Who, Then What
Excellence begins with getting the right people in the right positions before determining direction. This ensures the organisation has the capability to execute whatever strategy emerges.
3. Confront Brutal Facts
Great companies maintain unwavering faith while confronting the harsh realities of their current situation. This “Stockdale Paradox” enables resilient progress through adversity.
4. The Hedgehog Concept
Success lies at the intersection of:
- Deep passion
- World-class capability
- Strong economic drivers
5. Culture of Discipline
When you combine disciplined people with disciplined thought and disciplined action, hierarchy and bureaucracy become unnecessary.
6. Technology Accelerators
Great companies view technology not as the primary driver of transformation but as a carefully selected tool to accelerate progress.
7. The Flywheel Effect
Success comes from building momentum through consistent, aligned action rather than dramatic transformations.
Six Distinctive Behaviours of Great Companies
What truly sets great companies apart is how they think and behave:
- Common Purpose: They maintain a coherent identity that provides stability during uncertainty and change.
- Long-term Focus: They willingly make short-term sacrifices to achieve enduring success.
- Emotional Engagement: They transform company values into positive emotions that drive motivation and self-regulation.
- Public Partnership: They actively engage with public issues beyond their immediate business boundaries.
- Innovation Focus: They articulate a purpose broader than profit that guides strategy and action.
- Self-organisation: They build trust-based relationships rather than relying solely on structures and rules.
Moving from Good to Great
The journey from good to great requires deliberate focus and sustained effort. Consider these practical steps:
- Regularly assess your stakeholder management practices
- Dedicate time for strategic thinking and planning
- Build a culture that embraces disciplined action
- Invest in developing Level 5 leadership capabilities
- Create systems that support long-term thinking
- Foster emotional engagement throughout the organisation
- Strengthen public partnerships and community engagement
The difference between good and great companies isn’t just about strategy or execution—it’s about fundamental ways of thinking and behaving. By understanding and implementing these principles, organisations can create sustainable excellence that transcends market cycles and competitive pressures.
Remember, transformation doesn’t happen overnight. It requires consistent application of these principles, unwavering commitment to excellence, and the courage to think differently. The path from good to great is challenging, but the rewards—both financial and social—make it worth the journey.
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Live with purpose,