August, 2002

Financial Services Industry Newsletter

Strategies for Success

How Good Companies Become Great

Last week I was in Key West for a seven days of fishing, diving and relaxing. I had my summer reading with me -- an old Ludlam thriller, the latest Elmore Leonard mystery, and Jim Collins' book, Good to Great: Why Some Companies Make the Leap...and Others Don't.

Think about some of the lessons from this book as you start developing your strategic plans for 2003 and beyond.

Collins evaluated the 15 year performance of over 1,400 companies to select those which had grown from average -- or even mediocre -- performance to achieve industry leading growth in revenue and ROE. These were average companies which ended up delivering long term cumulative stock returns 6.9 times the market (that's double the performance of GE under Jack Welch, which many considered to be the best led company in America).

He, and his research team, tried to assess the managerial and leadership criteria that enabled these companies to make the leap from just good, to great performance. Here are just a few of the key findings -- they should not be a surprise to our clients, or readers of past newsletters:

1. Get the right people on the bus. If you don't have the right people (skills, motivation, leadership) to accomplish your objectives, you are bound to fail.
2. Be realistic, or as Collins states, "confront the brutal facts". Then make the changes necessary, or assign the resources required, to accomplish your goal.
3. Focus. This is where we see many institutions fail. Great companies organize around a core competency they can perform better than their competition, which is key to their economic model, and which ignites the passion of their employees. Too many companies try to pursue many ends -- many good ideas -- at the same time, and never become great at any one of them.
4. Build a culture of execution. We've said this before: the best performing organizations implement rapidly and effectively. Good ideas, good intentions, are of no value if they can't be effectively executed.

So...why not be the best. The best division in your company? The best bank in your market? The best mortgage company in the US?

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