Just finished Jim Collins’ latest work, Great by Choice. Astounding! I love his work, and this is sure to engage you as well. I just finished the audiobook version, and his narration is the best of any business book I’ve listened to.

The book challenges assumptions about how great companies operate in chaos. What he calls 10X companies (those that deliver much greater returns than competitors) have several characteristics that fly in the face of conventional wisdom:

10X companies don’t always make faster decisions. Sometimes they let events unfold to gain more clarity IF waiting will not cause undue risk.

10X companies are relentless in their paranoia (see Andy Grove’s book, Only the Paranoid Survive). Yet they also are creative in approaching markets.

10X companies are not necessarily more innovative than their comparison firms. They are more disciplined in execution.

10X companies don’t have better luck, they have better Return on Luck, defined as the ability to capitalize upon whatever luck (good or bad) that they receive. You can’t control luck, but you can prepare yourself – and your company – for it.

Many other great insights. A must read for any business leader.

For a more complete review, go to Leading Blog.

(Photo by Charles Gupton)

I am constantly humbled by the energy, passion, and drive that people with ideas can muster. I saw half-baked ideas turned into viable concepts in a matter of seven weeks, with the final being a 10-minute venture pitch to judges and fellow classmates.

I just finished teaching an entrepreneurship course at UNC’s Kenan-Flagler Business School. The students were a combination of MBA students and cross-campus students, faculty, and staff with ideas they wanted to check for feasibility.

What Leads to Entrepreneurial Success

What really makes the class stand out is a combination of three things:

1) Students had to pass a basic filter before getting into the class, and brought their passion and thirst for learning. They were teachable, and they made tremendous progress and effort during the class.

2) Experienced entrepreneurs served as coaches and provided focused, one-on-one guidance to each team. The level of experience in the coaching cadre keeps me coming back because I love being around these folks. One of the coaches, for example, is listed in the Inc. 500 for the third year in a row with more than 100% growth each year. With guidance from such high-caliber coaches, students are bound to improve their concepts.

3) The instructors had real-world experience that they brought out in the teaching. I taught with two others – Patrick Vernon, who’s been teaching at UNC for several years, and Kevin Bowles, who is also a new instructor and a serial entrepreneur.

As I look through the lens of experience, I realize that only a handful of the companies will make it. But they all learned critical thinking skills to assess their ideas, their markets, and the willingness of customers to pay for their solutions. These are all aspects of what each innovator must learn and apply.

When companies get bigger, say around 100+ people, the day-to-day interaction between staff and the senior leadership begins to decrease, and many ideas get squashed in the trenches or at the first level of management. It’s no longer okay to let that happen. With companies in trouble all over the world, NOW is the time to kick up the innovation. To seek out new ideas for new and expanded revenue streams.

When companies settle for small or no growth, the CEO is always to blame. It is his or her job to use the available resources to make their companies thrive. Creating an innovative culture is not easy, but it is possible. Moving from a curmudgeonly culture to an innovative culture is harder than starting from scratch to build an innovative culture. You must overcome inertia and staff that may not be prone to innovation.

Keys to Business Transformation

The keys to transformation are similar to those found in the classroom:

1) You must have people who are willing to move the ball forward. To take bold actions and challenge ideas. Even their own.

2) You need coaches who can guide innovators to morph their ideas and build commercial viability from a kernel of thought.

3) You need champions who will spearhead the innovation within your company to see that ideas get developed and presented to senior management.

Senior managers are the ones who need to see the ideas because they have the broader perspective of how business opportunities can connect to other initiatives and ideas.

(image by Seth1492)

In working with PeopleFit, one of my clients, I have come to learn about Requisite Organization, a body of knowledge that every manager needs to know about.

The basics of Requisite Organization (RO):

1. Work occurs in distinct layers of complexity.
2. The capacity of people to deal with complexity can also be stratified. (This is separate from knowledge, skills, experience, or personality preferences.)
3. There is a one-for-one relationship between the layers of work and the capacity of people.

Why some people fail

Now that we have the definitions out of the way, the key take-away from this is that peoples’ capability must be matched to the needs of their role, or they will fail. If a person is less capable than what a role demands, they will not be able to do the work, no matter how much training and time you give them.

What drives execution

When people are properly “fit” to their role in terms of capability, they are more engaged, and can do the work effectively. This is the essence of building a high-performing organization.

What drives innovation

People who have capability above the needs of their role can innovate. Innovation requires a broader perspective, and more complex thinking. The person who designs a course, for example, needs to have greater intellectual capability than the person just delivering the content. Operating a division and positioning a division for transformative change to be a market leader in several years require different levels of thought.

How can I apply this?

Getting to know Requisite Organization is the first step. Once you understand the basic building blocks of organizational design, you can then fine-tune your organization So that it can execute your strategy. You can define which roles require execution and which ones require innovation, and then fill the roles accordingly using RO principles.

A great way to learn about Requisite Organization is to view the articles on the PeopleFit website, and take their course in Managerial Diagnostics, which is the introductory course for RO.

Happy Innovating!

I was thinking about the state of American business owners yesterday and came to the conclusion that there is a general paradigm that business owners seem to have fallen into that I call the 50 x 5 Trap.

Here it is:

• We work 50 hours per week
• For 50 weeks a year
• For 50 years
• We’re only 50% engaged in our work, and
• When we’re 50, we look back and wonder how we didn’t achieve what we set out to

This is a sad state. Business owners usually start their businesses for one of 5 reasons:

• To make a difference
• To create a better life for themselves and their families
• To make more money
• To have more free time
• To avoid working for someone else

Unfortunately, many entrepreneurs end up creating jobs rather than lives. There is so much we can do to create the kind of results we want to achieve, but we often get stuck in BAU thinking: Business As Usual. When we accept that what we’re doing is the way it needs to be done, but we aren’t achieving the results we want, we should seek out new opportunities for changing our businesses.

If you want more income, more time, and a better quality of life, here is my prescription for you:

1. Get clear about what you want from your life. Forget about the business you’re in right now. Think long-term about the kind of life you want and how much time and money you will need to have that life.
2. Look objectively at your business. Can it help you reach your life goals? Will it – by itself – get you to your ultimate destination? Or is your current business just one piece in your long-term plan to get you there? Do you need to sell your business and start something else?
3. Optimize your performance. Get a coach. Lance Armstrong has a whole team that helps him stay on track. He knows how to eat and workout, but he has a nutritionist and personal trainer to keep him on track and focused. We all need help. Get it. Few of us can do it all on our own. We need coaches, mentors, and mastermind groups to keep us focused, accountable, and in action.
4. Optimize your business. Make the business you have all it can be. You probably think you have done this already, but I challenge you to look again. If you are working in your business instead of on it, you’re not maximizing your value. Streamline, automate, eliminate, and refine processes and activities in your business so that it can run on auto-pilot (or at least with much less hands-on control). This will give you the time you want, and enables you to scale your business to achieve the income you want. It also maximizes the sale value.
5. Focus on what you do best and love most. What do you do better than anyone in your company? If it’s everything, then you stink at hiring. If it’s nothing, then take an extended vacation – and retire. Chances are though, there are a few things you do really well. Out of those, what one or two do you most enjoy doing? Focus there and delegate and outsource the rest.

When you set your destination, get a coach to help you get there, do the work you love, and get the income and free time you want, THEN you are living the dream.

BHAGs. Sounds nasty. But it’s a great way to get your thinking out of yourself and into a compelling vision. Jim Collins talked about Big Hairy Audacious Goals in his book Good to Great. This can also be part or all of your vision for your life and company.

Here is a great slide show that communicates what BHAGs are quite well:

Big Hairy Audacious Goals, by Ysobel Hamidjojo