Today’s Corporate Lesson: It’s All about the Tortoise, Not the Hare

I recently had the opportunity to spend time with the expert on the golden rules of transforming good organizations into great ones. As a man who can see around corners, Jim Collins’ most recent research and wise words are about how greatness can be attained in environments characterized by immense turbulence. Considering that Warren Buffet, the Oracle of Omaha whose financial acumen is undisputed recently commented that the economy “has fallen off a cliff”, Jim’s words are especially timely, so I will share my take-aways in a series of blogs.

Jim’s headline is that true leaders are able to build something great even amid periods of great turbulence. Reassuring words, considering every day seems to be plagued by unprecedented financial news. Jim is a great believer in the philosophy that “a crisis is a terrible thing to waste” and that the companies that not only survive but are also positioned to thrive coming out of a downturn are those companies with a strong sense of values, people and process.  Similar to Aesop’s fable about the tortoise and the hare, Jim believes that strategic consistency, rather than the exuberant inconsistency exhibited by companies chasing steroid-type growth, determines a company’s long-term success. In Jim’s words, “a great company is more likely to die of indigestion from too much opportunity than starve from a lack of opportunity.”  Jim also expanded quite a bit on his 20-mile march philosophy: this is about the company that executes with reliable consistency on a 20 mile march across the country will always outpace  the company that sprints out of the gate and quickly into major troubles. In summary, if a company’s growth accelerates faster than its people’s ability to successfully execute across the longer term, it will fail.

In essence, turbulence is a lens through which we get the best optics on the true measure of a company. It amplifies the deficiencies of weak organizations and seemingly infuses great ones with the uncanny ability to gain market share. We see this evidenced acutely by those companies who manage with great rigor and discipline during normal business cycles – they are frequently among the rare organizations who excel in truly challenging times  Key to their success is the discipline that must be consistently applied to talent acquisition, to securing only top quality personnel and not diluting the corporate gene pool with mediocre talent when money and growth opportunity mean anybody becomes the right body. This irresponsible hiring practice is usually driven by the objective of achieving headline-making hockey stick growth, rather than a relentless focus on the 20 mile march through consistent financial performance. Like Goldilocks, companies successful over the long term look for growth that is not too big and not too little, but measured and balanced against realistic forecasts and viable business objectives. Based on Jim’s research, companies who are more consistent with their strategy over time are always more successful than those who weren’t. And for those Silicon Valley companies who believe they are immune to such discipline due to the power of innovation, Jim’s research indicates that innovation will never compensate for a lack of discipline.

Most telling, there are 5 key elements that separate those companies that will do well during turbulent times from those that will become an asterisk in financial history. For that and more stay tuned to my next blog….

Susan Butenhoff