Tag Archives: Jim Collins

Setting the path for Greatness

Have you ever thought about the stories behind the great retail businesses you see? Many people think great organisations are often overnight successes with outstanding facilities and teams to make it happen. I can assure you that very few great retail businesses get to where they are now without persistence. Their transformations come from persistently and consistently building their retail empires for many years.

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With so many Australian retail companies clueless to the fact that fads and gimmicks rarely work to jump-start their success, it’s no wonder they fail miserably in business. If you aren’t prepared to put in the time and effort it takes to go from good to great, then you’ll just end up in a cul-de-sac.

Don’t be a doom loop fool

Author on the subject of company growth, Jim Collins discovered during research that good to great transformations never happen in one fell swoop. So why are an alarming number of retail companies taking all kinds of detours in the hope of reaching their desired destination? It makes no sense to me. However, there are a few things that you need to look at.

The doom loop is a concept created by Collins that involves reaction without understanding, new direction, no build-up of momentum, and disappointing results that lead back to reaction without understanding. Think of it as a vicious cycle. You frequently attempt to launch new promotions with great fanfare to motivate your team and fail to produce sustained results because of the underlying problems. Waste of time, right? You bet your last dollar it is – and there’s your doom loop.

When you combine superficial solutions (such as promotions) with no understanding of your underlying issues, the doom loop occurs. Often, short-term solutions that have a temporary impact just end up making the primary problem worse. Don’t be a doom loop fool.

Be a persistent flywheel

Collins uses the metaphor of a flywheel to represent great companies that have momentum. A flywheel requires many small pushes to get it running in the beginning, and with every push, it gradually increases in speed. The breakthrough moment is when the speed begins to work for the organisation. No significant push can be identified as the one big push that makes a good company launch into greatness. Instead, it takes daily persistence and discipline.

The flywheel will only continue to move when your retail company:

  • Recruits the right people to help keep pushing
  • Engages in Level 5 Leadership
  • Understands your Hedgehog Concept
  • Stays focused on a disciplined culture
  • Faces the brutal facts
  • Provokes thought and action
  • Refuses to stop the momentum from building slowly

It’s all about every member of your organisation wanting to be on a winning team while contributing to producing sustainable results that keep them motivated and excited because their hard efforts pay off. When your co-workers see that you have a plan developed from understanding, they’re more likely to want to be involved and help you achieve great things over time.

Companies that fall into the doom loop try and skip all the key steps to achieving the breakthrough moment and jump in blind. All quick fixes result in is a forward and backward movement that can’t deliver and last. Ultimately, you need the right people on your bus to begin with and the discipline to follow the flywheel approach to set a path for greatness – and stay on the right track.

The Retail Technology Trap

Never Succumb To the Technology Trap

The experience most consumers will have with a digital retail service is a self-service check-out (like many major supermarkets); however, over the past couple of years, there have been a number of amazing technologies for retail businesses. This could include anything from the collaboration of Myer and eBay to launch the first virtual reality department store, Neiman Marcus’ “Memory Mirror”, Afterpay’s online payment instalments or Temando’s intelligent fulfilment solutions.

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That said, when you hear about a new technology that claims to be the latest and greatest ever made, do you rush out and invest in it in the hope that it may add value to your retail business? If you’re the type of company with a habit of investing in technology for the sake of it, then you need a reality check. It’s time to turn your back on the technology trap and start using your common sense.

In his book Good to Great, Jim Collins it wasn’t a surprise that more than 80% of great companies do not rank technology as one of their top five reasons for making a great company. So, unless a technology fits squarely in with your Hedgehog Concept, you should ignore it.

Does the technology you use fit in with your Hedgehog concept?

Good retail companies often look to technologies to help take them to the next level, whereas great companies always use technologies as an accelerator to enhance their Hedgehog Concept. When a technology aligns with your Hedgehog Concept, you need to act like a great company and become a pioneer of it. If your Hedgehog Concept doesn’t drive the use of a technology, you either have to settle for parity or ignore it completely.

I’ve seen leading edge technologies that have been pioneered by great companies. However, I’ve also seen the same technologies in “comparison organisations” and witnessed them fail to produce the same results.

Before jumping on the technology bandwagon, you need to ask yourself:

  • How does this technology connect with our Hedgehog Concept?
  • Can we be pioneers in the technology?

If you answered no to both questions, just forget the bloody technology and move on. It’s so easy to panic in fear of being left behind, but you need to stop worrying about what technologies your competitors may or may not be using, as they will never be the answer to making you great.

The bottom line

Technology should only be used as an accelerator, rather than a creator of momentum. While I understand that it can be hard to dismiss the hype of current technologies, you need to have absolute discipline and steer clear of any technology trends that don’t support your Hedgehog Concept.

As Norwegian politician, Christian Lous Lange once said, “Technology is a useful servant, but a dangerous master.” Never use technology as a primary means of igniting transformation – but if you can, always become a pioneer in the application of carefully selected technologies.

The Hedgehog Concept

What really is The Hedgehog Concept all about?

That’s a very good question, and one I often get asked. The Hedgehog Concept comes from the book Good to Great, by Jim Collins, and it outlines three questions for organisations to ask themselves.

From understanding what drives your business, what you’re great at and where your passion lies, the Hedgehog Concept should be used to help keep everyone on your business focused and grounded. I also use the same principle to simplify my very challenging and complex work life.

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Like the philosopher, Isaiah Berlin, Collins sees the world’s leaders as either hedgehogs or foxes. Hedgehogs only know how to roll up into a spikey ball – and do so without fail time and time again. Foxes try all sorts of tricks to attack hedgehogs, without success – meaning hedgehogs always come out on top. Let’s take a look at the traits of foxes and hedgehogs in more detail.

Foxes vs. hedgehogs

Firstly, you need to ask yourself if your company is a hedgehog or a fox. For example, a retail enterprise that is like a fox tends to pursue many things at the same time, try to be all things to all people and view the world as a complex place. Conversely, businesses that resemble a hedgehog focus on the one thing they are great at and simplify the world’s complexities into a basic concept to ensure they achieve the desired results.

Which one do you think makes you a great retail business? I really hoped you guessed the hedgehog. It’s ok if you’re a fox, though, as every good retail organisation has the ability to become a great business.

The three circles

By now, you’re probably wondering what differentiates a good hedgehog and a great one. The quick answer – a fully developed Hedgehog Concept. Every company has a strategy – but you should focus your efforts on one thing and doing that one thing well to increase your chances of success.

Let’s take a look at the questions from the three circles of the Hedgehog Concept and see how you can apply them to your retail business.

  1. What can you be the best at?

When it comes to the retail industry, everyone wants their products to be the very best of their kind. The truth is that there’s a huge difference in wanting to be great at something and actually being great at it. Remember, you’re not going to offer things that appeal to every individual – and that’s perfectly fine. It’s about defining the areas that aren’t working well and have little success, as well as understanding what makes your business thrive.

  1. What drives your economic engine?

You have to determine the single denominator such as profit or robust cash flow and pick the one thing that has the most sustainable impact on your economic engine. I’m not talking about quick profit or fast cash here. You need to identify the bread-and-butter of your business and make it as solid and sustainable as possible and keep it that way in the long-term to ensure you stay truly great.

  1. What are you deeply passionate about?

Without passion, you will not last in the retail industry, nor will you make a great retail company. Ask yourself if you would still go to work where you are now if you had already earned all the money you need to live till your dying day. If you answered yes because you think of yourself as the luckiest person in the world to do what you do and believe you have something that’s the best it can possibly be (and greater than your competitors), then you have winning passion.

Your Hedgehog Concept

Once you’ve answered all three questions, you need to turn your attention to where your answers overlap. Two out of three isn’t enough. Perhaps you are passionate about your business and your company is the best in what it does but you aren’t making any money from what you sell. Maybe you make lots of money from delivering great products but feel your passion lies elsewhere. Either way, it’s not worth it.

In the business, all three circles have to intersect if you want to succeed in being great. Take note of the great success of top retailer, Lululemon. Not only are they passionate about fitnesswear and make money at it, but they are also the best they can be in it.

You’ve got to have it all – including something you can be great at, the right fuel to drive your economic engine and passion about your work. Your Hedgehog Concept lies at the intersection of the three circles and fulfils all three principles. It may take some time and research, but I can assure you that greatness is only achieved by being consistent and taking a disciplined,  yet simple approach.

 

Get the right people on the bus!

Only Hire People Who Fit Your Business and Culture For A Smooth Ride

If you’re a leader of a retail company that’s at a standstill, you should focus your attention on the people around you – and especially those with the right talent. It’s a harsh fact of life that most companies hire individuals without the abilities and strengths to make a great impact on their business strategy. The most important question to ask yourself is “are you struggling with teamwork and results?”

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By comparing companies to buses and the leaders to bus drivers, Jim Collins found that those who hire people for experience and qualifications over talent just end up with a bus full of underperforming staff.

In my experience, people truly are your best asset. All great leaders of retail businesses ask: “first who and then what?” Here’s how to ensure you adopt great hiring decisions and retain the right people on your bus for the long-term.

  1. Fill your bus with the right people

As a retail leader, it’s your job to be extremely careful when selecting the right people for your team. Thorough evaluations are key, so make sure you invest plenty of time in interviews, evaluating references and making background checks on each candidate. After all, you don’t want to end up in the same boat as Myer back in 2014 when they discovered that the man they hired as their General Manager of Strategy and Business Development had faked his resume. If you have any doubts about a potential employee, don’t hand them a golden ticket onto your bus.

Unless you’re confident that you’ve found the right people to take your company from good to great performance, let the seats go unfilled. It’s always better to take on extra work if necessary until you have found exceptional talent that can take your bus further on down the successful retail road.

  1. Get the right people in the right seats

Every bus will have key seats that represent the biggest opportunities, and yours is no exception. You can’t just overcrowd your bus with superior talent and wait for the magic to happen. You need to be sure that you give the right people the right seats and only keep them there if they prove they are going to drive your business in the right direction.

If at any time you feel someone isn’t pulling their weight in a key spot on the bus, give them the chance to prove themselves in a back seat. It’s perfectly ok to give them the boot from a prime seat if they are underachieving – or even a one-way ticket off the bus if they don’t appear to be great in any specific role.

  1. Kick the wrong people off the bus

Harsh, but true. At the end of the day, you want a highly successful team and business – without the hassle of babysitting and tightly managing the wrong people. You don’t have to be ruthless in chucking individuals off your bus, though. Try to be rigorous in the decision and implementation to ensure any of those who have left your bus can exit with dignity and still feel positive about your company.

When you eliminate the wrong people and have a bus filled with the right potential, it will become less a question of where you are headed – and more of how far your team can take your business. Plus, you’ll learn not to make the same hiring mistakes in the future.

  1. Maintain the right people on the bus

It’s crucial to give your hand-picked bus crew the opportunity to shine and exercise their talent and skills. The right people need to be self-motivated by an inner drive to produce great results and be part of a great team, which comes only with having the right people aboard. You also need to put your best people on your biggest opportunities, rather than on your biggest problems.

Regardless of where the bus goes, Jim Collins says that those who build and maintain a great company can also build a great life. For this to happen, you must build respect and empower your team by making sure they receive the recognition and rewards they deserve.

 

 

 

Why It’s Important to Ask the Right Questions

The problem with many business leaders is not that they don’t know the answer; it’s that they don’t know the problem. When solving a problem, you need to listen to everyone and ask the probing (and often uncomfortable) questions. You’ll know when you’ve hit on a hot topic by the reactions.

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The best leaders are curious and are never ones to accept things just the way they are. You may think you ask a lot of questions, but when I ask executives how they know which ones to ask, they look back at me with a blank face. If this sounds like you, then it’s time to change – fast.

How well do you ask questions?

It’s a major part of your job that requires guts and skill. Most of us fall into bad habits from time to time, but excellent leaders are always asking what can be done differently and better. You also need to find the best time to ask probing questions to ensure frank and constructive responses from your team. Knowing how to ask questions that generate thought, focus and action will make a real difference to your success.

Seek out problems

“We keep looking for change in the wrong places, asking the wrong questions, and making the wrong assumptions.” Jim Collins is right. Rather than assume you know the answers and wait for problems to come to you, seek them out for yourself. Change is impossible if you are a rubbish questioner that doesn’t pay careful attention to a candid culture. A vital lesson I learned early on in my career was to seek out problems by asking the right questions. It’s that simple.

Listen and learn

Just because you have experience and a fancy title, it doesn’t mean that you know everything. It especially doesn’t mean that your only job is to boss people around and tell them what to do. When you go about asking questions, you must also genuinely listen to your workers. You’ll find questions thrown back at you. After learning a thing or two, you may even change your mind as to how you answer them.

Practice makes perfect

Always practice asking questions about yourself, projects, plans, and your company. Build relationships and ask what you could do better, how to improve a project and why your organisation does things in a certain way. Having the ability to ask questions that do not trigger a defensive response is a valuable management skill. Think about how you frame your questions in a way that can not only help to improve your success but also your workers’ motivation.

Do Australian retailers practice great leadership?

Written by Mike Holtzer for Inside Retail

Do Australian retailers practice great leadership? By ‘great leadership’, I’m referring to the concepts from one of my favourite books, Good To Great by US business consultant and lecturer, Jim Collins. Collins describes a level five leader as, “Self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will”.

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This says a lot in a few words, but using this definition of a great leader, I don’t believe there are currently many great leaders in retail in Australia.

In addition to the various other stages of taking a good company and making it great, Collins defines what level five leadership is and why it is so important. He uses detailed in-depth analysis of companies that transformed from ‘good’ to ‘great’ over a 15-year period. The list of companies analysed is very impressive.

A level five leader never lets their ego get in the way of successfully transforming a business. They put the long-term success of the business ahead of their own achievement. A proper leader makes decisions that benefit the long-term transformation of the company, instead of short-term decisions that have a short-lived benefit and the glory that goes with it. This can be an issue with Australian retail leaders that is sometimes exacerbated by private equity firms and public companies.

The mirror/window notion is a key concept for level five leaders. They look in the mirror, at themselves, when something goes wrong and blame themselves. When things go right, they look out the window and credit other people for the success. They do not crave the attention and the celebrity status of success.

Often times, people outside the company or industry don’t even know their names. Think of the most successful companies and see if their leaders are front and centre, or if they put the company front and centre. Look at some of the troubled or failed retailers and see if there was finger pointing at who was at fault.

The willingness to set up a proper succession plan and understanding when the business would be better served by a successor is an important aspect of a great leader. The best ones don’t care that they get credit for the success; whereas lesser leaders actually take pride in the fact that the company would fall apart without them.

Level four leaders are effective leaders who push towards a clear and convincing vision, but they lack the humility needed to achieve true greatness. Their egos get in the way of transforming a business. They typically have short-term success and even some great transformation triumphs, but fail to transform companies in the long run. Think Al Dunlap (Scott Paper) and Lee Iacocca (Chrysler). Collins’ Good To Great outlines many examples of these types of leaders.

There are five levels of leader in all. A level five leader is a combination of all of the levels. With stoic resolve, they do whatever it takes to make a company great. As an apt description, a level five leader is referred to as a ‘plough horse’ and a level four leader a ‘show pony’.

It is no small irony that the determination and motivation that gets people into positions of authority often conflicts with the modesty that is required to be a great leader. Many business owners and boards mistakenly believe that they need a CEO who is larger than life.

You will find a potential level five leader where you find extraordinary results and no person is singled out taking all of the glory. As former US President, Harry S. Truman, put it, “You can accomplish anything in life, provided that you do not mind who gets the credit”.

A level five leader has a blend of personal humility and professional will, where they channel ambition into the organisation, not the self. They are not high flyers or larger than life. They look in the mirror when something goes wrong and look out the window when giving credit.

Now, based on this definition, do we have great leaders in retail in Australia?