In his new book, Great by Choice, Jim Collins describes some of the leadership characteristics necessary for companies to survive and thrive in the extreme environments of the “new normal.”
Collins believes that the “unbroken rising prosperity” of the last 50 years was probably an aberration, and that we are now returning to a period of turbulence, uncertainty, and chaos which have characterized most of history.
Collins’ leadership qualities include:
- the “20-Mile March approach” - this is about establishing and maintaining a daily/weekly/monthly/annual performance standard which the organization commits to achieving continuously. Be it “zero manufacturing defects” or generating 20% return on equity every year, the goal is to establish a performance discipline which paces the organization for continuous success while also avoiding risky over extensions. Stretch in tough times while holding back in good times - steady wins the race.
- productive paranoia - this is about channeling the fear which arises in a scary world. One way to do this is to maintain a “conservative financial position” - clean balance sheets with very little debt while holding lots of cash for emergencies and opportunities. Many companies have recently been accused of hoarding cash. More likely, they are adapting to the higher levels of uncertainty of the “new normal.”
- empirical creativity - Direct marketers spend a lot of time testing mailing pieces before committing large sums of money to a campaign. The same principle should apply to all large initiatives and expenditures. Make sure the evidence is on your side before placing those big bets. Big gains require big bets, but all big bets do not result in big gains. Do the math and homework first.