The tortoise and the hare: A business parable

Everyone knows the tale of the tortoise and the hare. But this simple parable has some real world business implications.

In a recent study called "Good to Great" by Jim Collins, the same one who brought you "Build to Last: Successful Habits of Visionary Companies," the author demonstrates why some businesses sustain greatness while others simply fade away.

The answers may surprise you. In a five-year study, the Stanford professor studied businesses that were No. 1 in their market as well as the runner up. What he found called into question many of the basic assumptions entrepreneurs have.

First, great companies, those defined as growing over the long term, are not headed up by charismatic founders. In fact, charisma can actually become a liability in the organization because a charismatic founder will tend to attract those employees who need to be around a hero. And when that leader eventually leaves, they will continue to act on his or her legacy, even if it runs counter to the good of the organization.

Great companies also live their organization's values day in and day out. Collins cites one company who's sales staff was required to tell a client that a competitor's product or service would better fit their needs if that was true. If they didn't tell the truth they ran the risk of being fired on the spot.

Another success story, a rock quarry in Watsonville, California, adds "it's OK to pay short if you're not completely satisfied" to the bottom of their invoices. Clients don't have to call the company. They don't have to return the product. They have complete control over the situation with that simple statement. More important, it leaves no doubt that customer service is a core value of the company.

Is your company living its values?

Perhaps one of the great surprises is that a brilliant strategy is not always a fundamental part of the company's success or operations. While strategic thinking needs to be done, brilliant strategy runs a distant second to brilliant execution. Successful firms try lots of stuff and see what works. Then they do it better than anyone else day in and day out.

One is reminded of the rumor attributed to Gen. Dwight D. Eisenhower, says Collins. When troops landed at Normandy Beach on D-Day, Eisenhower is said to have thrown his plans in the wastebasket, saying, 'Planning is priceless, but now that we're moving, plans are worthless.'

Effective executives make short-term decisions that lay the foundations for the long term. The central idea is to make effective decisions that address short-term realities while keeping an eye on the long term.

Even if resources are scarce, Collins encourages managers to ask themselves, "What are the most important things we can do that will allow us to make the most distinctive contribution that makes economic sense and fits with our values?" Only those with the best potential are pursued, and everything else is cut out to stretch resources.

Finally, Collins points to self-improvement as an essential trait. To be successful, one constantly needs to challenge the status quo, explore new avenues, test the waters, make mistakes and learn the lessons that are there for the taking.

For more information on Jim Collins and his work, visit jimcollins.com.