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Let me ask you to consider something and it is important. Who is your favourite all-time athlete? It’s not easy to answer, as your view changes as you age.

Switzer favourites

For me, it started with swimmer Michael Wenden, then Mark Spitz and Cassius Clay (as he was first known) and then from St George’s Johnny Raper to rugby’s Mark Ella. In recent times, England’s rugby fly-half, Jonny Wilkinson, has impressed me and, of course, Ian Thorpe is up there with Spitz and [Mohammed] Ali (as he is now known). However, I’ll settle on Rod Laver.

Who’s your favourite?

I think I’ve demonstrated how hard it is to work out who your favourite athlete is, but at least you can engage in a rigorous debate to work it out.

Now answer this one: favourite businessman or woman of all time? Not so easy, is it? And I reckon your confidence in arguing the case and comparing your selections against each other to arrive at a final answer won’t be as ‘authoritative’ as your sporting debate. (For those less enamoured with sport, substitute favourite actor or films!)

Top of the list

The point I’m out to make is that we often haven’t done enough to work out who are the inspirational business leaders who could have a big impact on how you do business. On business, my top performers would be Sam Walton of Wal-Mart, Jack Welch of General Electric (GE) and, of course, Rupert Murdoch — the best Aussie business builder of all time.

I’ll be watching you

However my favourite is Warren Buffet, the famous investor of Berkshire Hathaway who built up an investment company by buying the shares of great companies such as Coca-Cola, American Express and Wells Fargo and simply holding them!

For both investment and business builder purposes, you need to become obsessed with great companies as well as great business leaders. You need to work out what you can learn from them.

On your business

When business guru and author, Michael Gerber, tries to excite the small business audiences who flock to the regular lectures he conducts around the world, he doesn’t talk about small businesses. He draws from the lessons of the great big businesses we all know but, who of course, started small.

Gerber is the author of E-Myth Revisited that has sold over a million copies worldwide and still figures on best-seller lists. “Ray Croc didn’t flip hamburgers at McDonald’s,” he told a Sydney audience a couple of years ago. “He didn’t work in the business, he worked on it.”

It’s all about systems

The same went for the likes of Fred Smith, who was the brains behind parcel delivery giant Fed Ex. Gerber’s central argument is that the big difference between small businesses and big businesses is the systems that are put in place to assist the transition from a tiny operation characterised by chaos, frustrated staff, over-worked owners and the inability to create growth.

Which companies are great?

So big business is the model for small business entrepreneurs determined to turn their good business into a great business. But how can aspiring entrepreneurs identify the companies that should be used as role models?

The formwork has been done

US academic Jim Collins and author of another best-seller Good To Great took two years with a research team of 20 and poured over the top US companies on the major stock exchanges to pinpoint the companies that had gone from good to great.

Not great enough

Some of the big names of US and global corporate history such as GE and McDonald’s did not make the cut, which would surprise many expert observers.

“General Electric (considered by many to be the best-led company in America at the end of the twentieth century) outperformed the market by 2.8 times over the 15 years from 1985 to 2000,” Collins revealed. “The good to great examples that made the final cut into the study attained extraordinary results, averaging cumulative stock returns 6.9 times the general market.”

The 11 companies on Collins’s list include well-known names such as Fannie Mae, Gillette, Kimberly-Clark, Philip Morris and Wells Fargo.
Then there was the little known operation in Australia called Circuit City which was a high-end electrical retailer that beat the market by 18.5 times!

Collins noted that a common characteristic of these companies was a goal to be the “best in the world at your core business”.

Simply the best

Collins was uncompromising on this. “If you cannot be the best in the world at your core business, then your core business absolutely cannot form the basis of a great company,” he insists.
The advice is simple. Whatever strategy you adopt must include your commitment to being the best in the world, like most sporting heroes make.

Circuit City became the best at implementing what it called the ‘4-S model’ made up of service, selection, savings and satisfaction. And while others had similar models Collins says Circuit City devised a business model to make it ‘the McDonald’s’ of big-ticket retailing everywhere it went in the USA. Once again you see the importance of benchmarking a business on the likes of big business success stories such as McDonald’s.

In a nutshell

Collins says there are five prominent characteristics of good to great companies:
1. The right people are recruited first — even if they’re moved within the business to suit the demands of the business
2. The leaders were not celebrities but were determined types, willing to say “I don’t know”, but would move heaven and earth to change that. “They were more like Lincoln and Socrates than Patton and Caesar,” Collins reveals
3. The business aimed to be the best at their core business
4. The culture was defined by disciplined people taking disciplined action based on disciplined thought
5. They used technology to accelerate their growth not to create the business.

It’s about leadership

The unifying concept that ran throughout these businesses was extraordinary leadership and that’s your task ahead — to become a great leader.
 

Published on: Saturday, June 13, 2009

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