Mark Bonham Comments on “Good to Great” by Jim Collins

Monday, June 08, 2009 1:00PM

My Favorite Paragraph From

Good to Great, by Jim Collins

by Mark Bonham, SageCreek Partners 

When I was a teenager, I discussed
the expense of a book with my father. 
At that time, a typical hardbound book cost more than twice as much as going
to a movie, and I thought that the price seemed too high.  My father seldom read novels, but he
read many business, self-improvement and religious books.  His response to me in our discussion
was something like:  “If you got
one really good idea or insight from reading a whole book, how much would that
be worth”?  After a minute, I had
to admit that the price of a book was modest compared to the value of a great
insight or idea.  Perhaps that is
why in my home today we have several bookcases filled with books–including a
few that my father handed down.

While
I endorse all of Jim Collins’ excellent book, Good to Great, and found a number of terrific ideas expressed well
there, I was most powerfully struck by one paragraph that begins on page 121 of
my copy.  The paragraph reads as
follows (emphasis added):

“George Rathmann avoided this entrepreneurial death
spiral.  He understood that the
purpose of bureaucracy is to compensate for incompetence and lack of
discipline–a problem that largely goes away if you have the right people in the
first place.  Most companies build their bureaucratic rules to manage the small
percentage of wrong people on the bus, which in turn drives away the right
people on the bus, which then increases the percentage of wrong people on the
bus, which increases the need for more bureaucracy to compensate for
incompetence and lack of discipline, which then further drives the right people
away, and so forth.  Rathmann
also understood an alternative exists: 
Avoid bureaucracy and hierarchy and instead create a culture of
discipline.  When you put those two
complementary forces together-a culture of discipline with an ethic of
entrepreneurship–you get a magical alchemy of superior performance and
sustained results.”

It
seems straightforward now that Collins has pointed it out, doesn’t it?  And don’t you find yourself thinking “That’s
why the culture at Company X drove me crazy–they had a lot of incompetent
people and so they created a massive amount of bureaucracy to keep the
incompetents in line.  Of course,
many of the bureaucrats were incompetent too, so the whole thing became an
expanding vicious circle.  I’m glad
I left.”  So long as we think of
ourselves and our colleagues as people who are competent and disciplined,
we will believe that less bureaucracy is a good thing and we will seek work
environments that allow competent, disciplined people to work within a “loose”
framework that allows for innovation, entrepreneurial attitudes, flexibility in
methodology and a general trust of colleagues and willingness to let them get good
results their own way.

The
challenge to this approach arises when the “wrong people,” as Collins calls
them, are on the bus.  In a
low-bureaucracy work environment, a person that is incompetent will cause big problems because there is no hierarchy
or strict methodology to keep him “in bounds” and help him succeed.  Further, a person that is undisciplined–even if otherwise
competent–will not make a strong contribution to the company because lack of
discipline will lead to missed deadlines, uncontrolled expenses and pet
projects that are not valued by the company.  A person that is both incompetent
and undisciplined will not be
comfortable in the environment of a low-bureaucracy setting, but he will not be
in a hurry to leave because the “loose” structure lets him get away with
creating chaos without holding him formally accountable.  Only after a wrong person’s
incompetence or lack of discipline becomes quite obvious will others (or even
the wrong person, himself) take the initiative to push him out of the organization.  This is one of the reasons that “wrong
people” persist too long in organizations.

While
“wrong people” may have reasons for staying too long in a strong culture of
competence and discipline, “right people” will be looking for the exits in a
company that goes overboard on bureaucracy.  Simply put, once the culture goes too far into bureaucratic
mode, it becomes self-reinforcing by sheltering the incompetent, hiding (for a  time) their weaknesses and at the same
time creating a strong incentive for the most competent and self-disciplined
employees to leave.  The worse
shape a company is in, the stronger these incentives become.

Only
as a company becomes a finely tuned machine does it reach the point where the
culture is so competent and disciplined that it can make consistent
good decisions about expelling the “wrong people” so as to make life better
for, attract and retain, the “right people.”  Where this works, however, the wording chosen by Collins
seems particularly appropriate:  “a
magical alchemy of superior performance and sustained results.”

The
SageCreek Partners culture expects a high degree of discipline and competence
of the partners.  Each partner
exercises faith in the abilities and commitment of the others, allowing them a
high degree of independence, the flexibility to try experiments and the ability
to commit resources–and thus the chance to demonstrate great results.  This, in turn, makes SageCreek an
enjoyable and interesting place to work, where “results” matter far more than
mere “activity.”  SageCreek has
implemented practices that support these principles and endeavors to teach its
clients how to adapt and implement these same practices in their organizations.