Obviously I’ve been doing a lot of reading lately. Turn off the TV for an hour every night and you could easily have read the same three books I read in the last two weeks. Good to Great was a really good book that got me thinking quite a bit. I also liked The Long Tail and Freakonomics, but this one is the best of the three. That’s just my opinion of course. You may disagree.

The author, Jim Collins, set out to answer the question why some companies went from good to great while others only remained good. There were several pairs of companies studied over a long period of time (at least 15 years). Each pair of companies was in the same industry and in each case one of them went from good to great while the other did not. In fact in many cases, the other company went from good to terrible. The measurement of performance had to do with the companies stock price relative to the greater market.

There were several traits identified that the good to great companies had in common. And of course, the other companies that did not go from good to great did not share these traits.

Before I even get into a few of the factors, I liked the first chapter of the book which is titled “Good is the Enemy of Great.” Collins says, “Few people attain great lives, in large part because it is just so easy to settle for a good life.” As far as I’m concerned he’s dead on. And the same applies to companies.

The first common trait of the good to great companies was the leadership of a Level 5 CEO. I don’t follow business like a hawk but I went to business school and I read business books, magazines, and newspapers and I had never even heard of any of the CEOs of the good to great companies. I had heard of the companies, but not these CEOs.

The book says Humility + Will = a Level 5 leader. Level 5 leaders are “a study in duality: modest and willful, humble and fearless.” Collins compared them to Abraham Lincoln in that these Level 5 leaders never let their egos get in the way of their primary goal to create a great company. These leaders may have been modest and humble but anyone who mistook these qualities for weakness quickly discovered the enormous mistake in judgment they had made. Despite any outward appearances to the contrary, these Level 5 leaders were dead serious and focused on building a great company.

When things were going well, these Level 5 leaders almost refused to take any credit whatsoever saying it was luck or passing the credit on to their management teams. But when times were tough, these CEOs stepped up and took personal responsibility for their mistakes and set out to right the ship with an unwavering resolve to do what must be done.

The goal of a Level 5 leader was to create a great company…period.  It was a long-term goal, not a short-term flash-in-the-pan, get-rich-quick scheme.  The goal was not to become famous and write a book or to create the most personal wealth in the shortest period of time.  Certainly these Level 5 leaders were multi-millionaires but that was a by-product of building a great company.

By contrast, I had heard of many of the CEOs of the companies that did not go from good to great. Perhaps you’ve heard of “Chainsaw” Al Dunlap who was famous for coming in and slashing costs mostly by cutting the workforce and implementing short-term strategies in response to long-term challenges; band-aids to temporarily stop the bleeding and give the appearance that the issues had been fixed.

“Chainsaw” Al was never out to create a great company. His goal was to enrich himself by making the company an attractive takeover target as quickly as possible. He stood to make millions when the company was sold. Then he would beat his chest and tell the world how great he was. He was constantly in the news, on the covers of business magazines, and writing books about himself. He called himself “Rambo in pinstripes.” Of course, he’s a very wealthy man but he never built a great company. And he didn’t seem to give a damn about all the people he left unemployed.

The other CEO you’ve probably heard of is Lee Iacocca. To be fair, he did lead one of the greatest turnarounds in business history during the first half of his tenure at Chrysler and he deserves credit for that but with that accomplished, he changed focus. Instead of building a great company, he focused on promoting himself. He went on the talk show circuit and wrote a book about himself and even considered running for President. Meanwhile, as he took his eye off the ball, Chrysler stock underperformed the general market by over 30% during the second half of his reign as CEO. Eventually Chrysler was bought out by Daimler-Benz.

These CEOs were almost the antithesis of the Level 5 CEOs. They wanted the spotlight, it was all about them, it was all about making themselves rich.  And that’s what drove many of their decisions.  Their decisions likely would have been much different if they had any intention of building a great company.  They took all the credit when things were going good. But in bad times nothing was their fault. It was bad luck or there were external factors beyond their control. There was always an excuse and they refused to take personal responsibility.

But good to great companies were operating in exactly the same environment and still were wildly successful often outperforming the general market by a factor of 10, 20, or more while the good-to-not-so-good companies were underperforming relative to the general market - in some cases massively underperforming.

Here is yet another of the seemingly endless examples of where reality is exactly the opposite of conventional wisdom. Every single one of the good to great companies had Level 5 leadership. And the absence of Level 5 leadership was consistent in the other companies. Collins himself even says that “Level 5 leadership cuts against the grain of conventional wisdom, especially the belief that we need larger-than-life saviors with big personalities to transform companies.”

There were several other interesting commonalities that good to great companies shared and I could go on but this is already a long post. Perhaps I’ll cover them in future posts. In the meantime, you can read the book if you’re interested in learning some proven strategies for going from good to great. But before I go, let me try to tie this in to making money online. After all, I’m not shy about my disdain for corporate America and I’ve mentioned it several times in this blog. So why would I even read a book focused on corporate America? And how can these lessons be applied to making money online?

Certainly there are a lot of people making a fortune online. But the number of yahoos who make $1,000, $10,000, or even $100,000 one month and then the very next month are shouting from the mountain tops about how great they are and how they’ll share their “secrets” with you in any number of ways - whether it’s a $97 ebook, a $997 physical information product, or a $197/month membership site - is enough to make me projectile vomit to the moon.

These guys are one-hit wonders who are quickly making more money selling “how to make money” information than they are actually practicing what they preach. One month doesn’t mean squat. Remember all the AdSense guys who went bankrupt? Just like “Chainsaw” Al Dunlap, these guys don’t give a damn about you. It’s all about making money promoting the next get-rich-quick scheme.

And when you don’t make money with their systems, it’s your fault not theirs. You’re doing something wrong or you don’t have the proper attitude. To be fair that is the case with a lot of people who have don’t have the drive and determination to succeed. But more often the programs being sold are what worked last month or there is some vital information being withheld. Not to worry, they’ll be promoting “the real secret” to making money online next week. In any event, these are not Level 5 guys.

On the other hand, there definitely are others who shun the spotlight and quietly make millions behind the scenes. They don’t want to be famous. They want to build a successful business. They are more focused on executing their plans, adjusting to the constant changes happening online, and focusing on the endless opportunities available. These guys are too busy actually making money online and have been doing it successfully for years. They know there are only so many hours in a day and there are much better opportunities than selling shovels to the “how to make money online” crowd. These are the Level 5 guys (and girls).

Fortunately, a few of the Level 5 guys like to teach and share. They get some enjoyment and satisfaction out of helping others succeed. Your mission, should you choose to accept it, is to seek out and find these Level 5 people and learn what works now and what will work long-term from them as opposed to learning what worked last month or last year from all these other wannabes. And when you figure it all out, become a Level 5 person yourself.

That’s what I think. What do you think of that? I’d like to hear your opinion.

Tags: Create Your Own Products, Copywriting

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