Jim Collins is an expert on leadership and what makes a great leader. He’s the author of Good to Great and Jim gave an awesome talk at the Multi Unit Franchising Conference 2016 on his 12 questions great leaders ask and how they apply to franchisees.

What is the difference between good companies and great companies? Good is the mortal enemy of great. Good companies settle, the people in the company say, “it’s good enough.” Great companies however don’t settle for good enough. They strive for greatness. A great organization grows from conscious decisions and discipline on the part of the employees and leadership.

Jim’s research has focused on side-by-side comparisons of good and great companies. His team winds back the clock to the initial conditions and find similar companies who started around the same time, under the same conditions, with the same circumstances. This way they can remove circumstances from the answer to the question, “Why did this company become great, while another settled for good?”

Jim asks 12 questions to explore what separates good companies from great companies and good leaders from great leaders.

1. Are we willing to strive for Level 5 leadership?

Great organizations don’t have leaders who are charismatic with larger than life personalities. It’s not personality, it’s not charisma that makes a great leader.

There are 5 levels of leadership:

  1. Highly capable individual skills
  2. Operate well in a small team
  3. Competent manager
  4. Leader who can scale themselves
  5. Leader who can make the organization truly great

Level 5 great leaders have two core skills: humility, and a strong will. Strong will is ambition that is channeled into something bigger than yourself, and humility is sharing the credit and not ‘talking yourself up’.

Level 5 great leaders lead in a spirit of service.

Dwight D. Eisenhower said, “Motivation is the art of getting people to do what you want them to do because they want to do it.” Level 5 leaders inspire people to commit to a cause. They inspire people to follow them when they have the freedom to not follow.

2. Do we have the right people in the key seats on the bus?

Great leaders ask: Who should be here? Who should be on this bus, and who should be in the key seats?

If there is one single leadership skill that is most important, it’s to hone the skill of making great people decisions. Ensure that 90% of the people on the bus are the right people.

To make a great organization, get good at identifying and developing great leadership at every level of your organization.

This starts with identifying and developing great leaders at the unit level to create pockets of greatness at all levels.

3. What are the brutal facts?

Have the discipline to confront the brutal facts of your position every week. Every Monday, visit the brutal facts of your position – not the opinions – and do something about it!

4. What’s our hedgehog concept?

Building a business is like spinning a large, heavy flywheel. The first time you push, it hardly moves. Keep pushing, keep trying, and each time it moves a little more, a little faster. With the compounding effect of time, you’ll get that flywheel spinning and build momentum.

Besides getting it moving, make sure the flywheel is pointed in the right direction – this is the big thing to focus on. The cumulative effect of all that pushing is for naught if the flywheel isn’t spinning the right way. There’s a venn diagram – 3 circles – that are

  • What you’re truly passionate about
  • What drives your economic engine
  • What you can truly be world class at

The idea of the hedgehog is the big thing you’ll focus on. For example GE had a culture of identifying and growing great executive talent.

5. What’s our 20-mile march?

Two explorers set out on an expedition to the South Pole at the same time. One Norwegian team, one team from England. The Norwegian team committed to marching 20 miles every day regardless of the weather. The English team didn’t set a goal. The English team died. There were other factors, like the amount of supplies each team leader allocated (Rolf Amundsen – a great leader – set aside 3x the provisions he thought he would need)

Setting a regular goal like a ‘20 mile march’ allows you to exert the self control you need if conditions are rough. 10x winner set a 20 mile march and it’s NEVER ok to miss your mark.

Setting a 20 mile march forces you to hit your mark and focus on the long term.

What is your march?

The signature of mediocrity is inconsistency.

6. Where should we make our big bets?

Aka empirical creativity

The big winners scale innovations. Ideas aren’t useful until they are scalable. Start with a small idea, test it, then test it again to sight the guns. Once the guns are sighted, loose the cannonball. If you find a great concept, test it, test it, THEN scale it.

7. Do we have enough to survive?

Aka productive paranoia

Amundsen, when estimating his supplies, multiplied his estimates by 3x – just in case. Jim’s equivalent in business is maintaining a 3:10 cash to assets ratio. $10m in assets, $3m in cash. Just for when bad things happen.

8. Are you a clock-builder or a timekeeper?

The time teller is someone whom nothing happens without. If they’re not there, nothing can happen because they control everything that happens. If they aren’t there to tell the time, nothing happens.

On the other hand (hehe) great leaders are clock builders who build people, culture, mechanisms and systems to allow things to run without them there. The clock tells the time when they’re not there.

9. How do we preserve the core but stimulate progress?

Posing two ideas at the same time and keeping them in balance.

Great leaders ask, “How do we:

  • Manage costs but look after people
  • Stay consistent but delegate
  • Not over-reach but grow.”

Our core values pursue a higher progress and stimulate progress.

10. What is our Big, Hairy, Audacious Goal (BHAG)?

Examples are colonize Mars, put a computer on every desk. It’s a goal that takes over your life. You can liken it to a big climb. The biggest climbs, the hardest climbs, attract the most skilled climbers.

Find the great people

Give them big things to do

Which will attract more great people

So you’ll need to find bigger things for them to do

11. How can we increase the return on luck?

Not – how can we be more lucky, but how can we increase the return on what good luck we will have?

Were the big winners luckier? No – they received a higher return on the luck they did have. The most powerful form of luck is ‘who luck’ or “Wow, I’m glad I met that person.” Luck favors the persistent. What if Steve Jobs had quit in 1988?

See life as a series of hands of cards dealt to you. Play each hand to the best of your ability. That’s how you win.

12. What goes on your ‘stop doing’ list?

You’ve got a to-do list? Time to write a stop doing list. Every time you come across something you know you shouldn’t be doing – that goes on your stop doing list.

Bonus question 13. How will you change the lives of others?

The final question was all about service. How are you giving back to others in the community or others following in your footsteps? Great leaders don’t focus on success – they focus on taking care of people.

Incredible stuff, I learnt so much from Jim’s talk at the Multi Unit Franchising Conference! Now to go out and get a copy of Good to Great!