Good to Great: How To Take Your Small Business To Greatness - Part One

There are two options in life: greatness or mediocrity. But greatness seems so elusive, even so pompous. How do you call your work "great"? How do you even know or benchmark "greatness?". And can a small business achieve greatness or do you have to be a dominant player like Apple, Disney and Walmart. In this episode we get right to the root of greatness and how the book "Good to Great" by Jim Collins changed my life. But instead of the massive journey to greatness, this episode shows you a tiny path. A path most of us can manage with just a little bit of effort.

A life of mediocrity is hardly worth living. Here's the pathway to greatness.

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Useful Resources / To access this audio + transcript: http://www.psychotactics.com/79 / / Email me at: sean@psychotactics.com / / Twitter/Facebook: seandsouza / / Magic? Yes, magic: http://www.psychotactics.com/magic

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Part 1: The Hedgehog Principle Part 2: Preserving the Core + Stimulating Progress Part 3: Big, Hairy Audacious Goal—The BHAG Right click here and 'save as' to download this episode to your computer.

Useful Resources

5000bc: How to get reliable answers to your complex marketing problems Why Happiness Eludes You: 3 Obstacles That We Need To Overcome Find out: Do We Really Need To Start With Why?

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The Transcript

"This transcript hasn't been checked for typos, so you may well find some. If you do, let us know and we'll be sure to fix them."

Around the autumn of 1890, Daniel Burnham was given a project.

Burnham was an architect—an extremely well known architect—in Chicago. And he'd been given a job like no other. He was expected to turn a boggy square mile into what would be the spotlight of the world. He was put in charge of the World's Columbian Exposition.

He just had one tiny problem—the Eiffel Tower. On March 31, 1889, Paris had had it's own Exposition. And it quickly surpassed the Washington Monument to become the then tallest man-made structure in the world. Burhnam had the unenviable job of surpassing the hoopla around the Eiffel Tower, but no one had a clue what to do.

"Make no little plans", he said to his team of engineers, but they could come up with little to rival the magnificence of the Eiffel Tower. Of course there were proposals: a tower garlanded with rails to distant cities, another tower from whose top guests would be pushed off in chairs (pretty much like today's bungee jumping). And Eiffel himself proposed an idea for the Chicago exposition—a bigger tower than the one in Paris. How could the Chicago Exposition outshine the now most famous monument in the world—the Eiffel Tower? It seemed almost impossible to come up with something that would rival the French monument. An engineer called Ferris has the answer.

The ideas were going nowhere and the Chicagoans were pulling their hair out, when a 33 year old engineer from Pittsburgh came up with an idea: how about a huge revolving steel wheel? He came up with sketches, added additional specifications and then shared the idea with Burnham.

But Burnham was not impressed. The slender rods of the wheel were too fragile. It would be madness to carry people to a height taller than the Statue of Liberty in such a fragile wheel. But Burnham wasn't just dealing with any ol' engineer. He was dealing with George Washington Gale Ferris Jr—who would forever be associated with the Ferris wheel. Ferris was so convinced his idea would work that he spent $25,000 of his own money, hired more engineers and recruited investors. And consider that $25,000 would be worth over $650,000 in today's money.

Over a 100,000 parts went into the Ferris wheel. And an 89,320 pound axle had to be hoisted onto two towers 140 feet in the air. On June 21, 1893 when it was launched, it was a stunning success. As the exposition went through the next three week, more than 1.4 million paid 50 cents for a 20-minute ride.

George Washington Gale Ferris had literally reinvented the wheel.

The year we moved to New Zealand, I had to reinvent my own wheel. You see, I wasn't in marketing. I had no plans of being in marketing. I was already an established cartoonist back in Mumbai, India and when I moved to New Zealand I pretty much expected to continue to draw cartoons. In fact I was so determined to take that cartoon career forward, that when we moved I had over 100 kilos worth of books shipped. These were no ordinary books. These were the books on graphic design and cartooning that I'd accumulated over the years. Plus, there were brochures. Before I left India, I had no idea what New Zealand held for me.

So I printed business cards—as you do But also lavish four colour brochures, postcards and yes, stationery that I could use when I got to New Zealand. All of this material had to be shipped by air—not by sea—because I was in a big hurry to get going in this new country.

Yet, almost a year later, I had to reinvent what I was doing—and it was all because of one book. That book, "Good to Great" has sold over 2.5 million hardcover copies. But more importantly, it was the catalyst in my own reinvention. In 2000 as I got on a plane back to India (I had to go back and tidy up things I'd left undone), I had loads of time to read the book and mull over the ideas. And as I've mentioned before in articles and podcasts, I realised that I would never reach my greatness in cartooning. To me, the pinnacle of cartooning was the comic strip, "Calvin and Hobbes" by Bill Watterson. If I couldn't get up to those lofty heights, it wasn't feeding my greatness appetite. And so I turned to something I was getting exceedingly good at doing—creating taglines for small businesses. Without realising it, I was wandering down the aisle of marketing. The book—and that 19 hour flight—it did it for me. It put me on my quest for what I'd consider my "greatness journey".

But just as it set the benchmarks, it also raised a ton of questions. Are there benchmarks to know that you're moving from good to great? How do you know what you're choosing will end up being great? With all the stories of greatness bouncing around Apple, Boeing, Disney and Walmart, how can a small business owner get to greatness, without becoming big and dominant?

Big questions—and it's best to keep the answers simple. Deep, yet simple. Let's take a trip and explore the three core elements required to get your own Ferris wheel going—even when the odds seem stacked against you.

The three elements we'll cover are:

The Hedgehog Principle Preserving the Core + Stimulating Progress Big, Hairy Audacious Goal—The BHAG.

Avis—the car rental company—was pretty much in the doldrums.

Back in 1961, it was losing $3.2 million a year and there seemed to be no way to beat the domination of their biggest rival—Hertz. And the two companies had been at each others throats since the mid-1940s, when Air Force officer, Warren Avis created a niche out of thin air. As he travelled around, Warren Avis realized that most car companies were downtown—not a very convenient place to get a car if you just flew into a city. Business travel was growing steadily and many executives would touch down, rent a car, drive to their meetings and drop the car back at the airport on the very same day.

Hertz was not impressed They continued to run their rental car business downtown, as if Avis didn't exist. Yet, over time, they found Avis gobbling up chunks of their business. It seemed logical to simply replicate what Avis had done. With this move, Hertz signalled the start of the rivalry that exists to this day. But then, along came 1962 and an creative agency called Doyle Dane Bernbach (DDB). The copywriter team of Paula Greene and Helmut Krone created an advertising campaign that would take Avis from losing $3.2 million to earning $1.2 million. What's more, it would rock Hertz' smugness to its very core.

From 1963 to 1966, Hertz smug look turned to paralysis The market share percentage gap between the two car companies shrunk from 61-29 to 49-36. The "We're only No.2. We try Harder" immediately captured the attention of the public. But why did this "We try harder" campaign really work? When we look at the Hedgehog Concept outlined in "Good to Great", the answer is more than apparent.

The Hedgehog principle consists of three pertinent questions: – What can you be the best in the world at? – What drives your economic engine? – What are you deeply passionate about?

Avis could easily answer those questions—but only once it had the new ad campaign going It was the best in the world at "bending over backwards" to make car customers happy. After all it was only No.2, and couldn't afford to rest on its laurels. This concept of "trying harder" got the entire company to indeed try harder. And yes, we all know how their bleeding balance sheet made a sharp U-turn into decent profitability. They got the "best in the world" covered, the "economic engine" was purring away. Only one thing remained—the passion. The "we try harder" might have been just a slogan, but it was a slogan that drove the passion—and if the slogan is right, it often does drive the passion! Avis ticked all the three boxes, and they were well on their way to scaring the heebie-jeebies out of Hertz.

Notice how money—or the economic engine—isn't really the focus of greatness? Money is important, that's for sure. A company gasps and coughs it's way into oblivion if it can't fire up that economic engine. And yet, it's more than clear that for most of us, at least, money is not the driving factor. All those website owners that show you how their income doubled and quintupled are still sitting on the same sofa; they're still typing on that same yellowed keyboard. Yes, they may have doubled or quintupled the size of their house or boat, but when money becomes the only focus, there's no time to enjoy the good stuff in life. Which is why the "best in the world" journey needs to start with what makes you deliriously happy. It's the stuff that wakes you up and keeps you going, no matter what. Your work becomes your passion and the complete opposite of trying to outsource everything and doing as little as possible. Money helps enormously in getting you to your goal, but the passion and desire is what's behind the wheel.

And this is where confusion comes bouncing through the door When I quit my career in cartooning, I was doing very well indeed. I'd moved to New Zealand and despite being in a brand new market, the profit for the first year was $75,000. Picture me sitting at my computer, drawing cartoons, listening to music and then taking a nap and you get the idea. It wasn't exactly like I was struggling to put food on the table. Still, the moment you decide you want to change things—the moment I decided I couldn't beat "Calvin and Hobbes", I was in trouble.

I'm good at a lot of things. I whizz my way around Photoshop, I can cook exceedingly well, you've probably seen my food and travel photos on Facebook—and you're getting an idea of the looming problem, aren't you? The moment you can do more than one thing, you're not sure where to go. The journey to greatness seems to run right into a pool of quicksand.

So how do you get yourself out of this mess and back on track? I'd decided I didn't want to do cartooning—at least at that point in time—and I wanted to take this leap into marketing. I didn't know much about marketing, but that minor detail wasn't keeping me up at night. Still, I was in a fog—after all marketing is this big, nameless, faceless profession and I hadn't a clue what the journey to greatness was going to look like, or whether one existed at all.

And that's when I ran into a subset of marketing.

A subset is what starts the journey to greatness My story was quite accidental—as yours may well be. I joined this networking group called BNI. We'd meet every Friday, enjoy breakfast and hand out referrals. And crucial as all this referral giving was to me at the time, one factor was even more pivotal to help me on my journey. BNI has this strange custom called "the dance"—as in "dancing with a partner". In this so-called "dance", you go across to visit another of the members. For instance, I might go and meet the real estate agent at her office. Or another week I might end up talking to the financial planner in the group.

Being new and enjoying this extroverted behaviour, I binged on the "dance" I started meeting several members of the BNI group in relatively quick succession. They'd tell me what they did—often spending between 10-20 minutes explaining the details. Then I'd ponder over what they just said, and boil it down to a single line. In effect, I'd given them a tagline—a working tagline that would elicit curiosity and get their prospects interested.

The first time I encapsulated their 20 minute speech into a single line, I wasn't aware of what I was doing. Twenty or thirty tagline later, with everyone telling me how "great" I was at taglines, I decided to make that my entry point into marketing. I wasn't going to be the best in the world at marketing—and no one can ever take such a title. But I could create a subset. And that's because a subset is simpler than a well-laid out, world domination plan. Which means that you're going to make a career out of teaching a program like InDesign, don't take on every tool bar in the program. Just teach clients how to create an amazing e-book in under an hour.

The Hedgehog Concept

If you're going to be the best in the world at WordPress sites, you're headed for chaos. But take on a subset and you could be the designer that gets clients to their destination in just three steps. Even the all-time greats in the history of mankind—take Michelangelo for instance—he made the statue of David his subset. He was headed towards the magnificence of the Sistine Chapel in time, but to start on that journey of greatness, he had to take on carving just the statue of David.

Once you deal with a subset, passion almost force-feeds you with energy Avis found its passion once it had the subset of "trying harder" instead of the grand scheme of "trying to do everything". I found my subset quite by accident while taking on taglines. And the moment you streamline your idea into one tiny bit, you'll get enormous control over that bit—and the passion faucet will begin to flow. You'll read more about the subset, practice it longer and harder and it will take over your life. Which effectively means you're done with two elements of the Hedgehog principle all at once. You have your passion—thanks to your subset—and it's put you well and truly on the road to personal and professional greatness.

That leaves just the looming question. Will it drive your economic engine? Will it pay the bills? And how soon?

I didn't know the answer to that question of the economic engine In fact, I did something very silly in my quest for "being the best in the world". I quit cartooning—yup, just like that. One fine day, I decided I wasn't going to do any cartoons. And then something extremely strange happened. No one called me for a cartoon project any more. Right until that moment I'd been filling that balance sheet with a decent profit, and suddenly I didn't get a single call or e-mail for another cartoon project.

Be aware that I was drawing stuff for ad agencies, magazine covers, local councils and private clients. And yet, it stopped almost as if I had taken a full page ad in the newspaper that said, "Sean D'Souza doesn't want to draw cartoons any more. Stop bugging him."

My dream had come true, but I didn't have a buffer.

The buffer isn't just money It's also the buffer of knowledge and of confidence. Remember, I wasn't a marketing guy, I was a cartoonist. That thought stays in your head and seriously undermines your confidence. Getting to the library, stacking up 30 books at a time was top priority. We're talking about economic engines here, and knowledge plays a big role in how you get paid. Having the skills to run a business is what allows you to make that engine vroom. I had to teach myself how to write great articles, how to create compelling copy—and yes, how to speak. That buffer was important for my economic engine, but money played its role too.

I jumped right into marketing and out of a business I'd spend a chunk of time beefing up on the learning and the skills. But I hadn't considered the factor that everything takes time to turnaround. It was a rash move, and luckily Renuka had a decent job. That paid the bills, the mortgage and let me fumble forward toward this "greatest in the world" dream.

Um, Renuka also quit her job and joined Psychotactics a few months later, but that buffer was all we needed. We were now on a trajectory to align ourselves with the Hedgehog Principle. Like Michelangelo, we had to carve one David at a time. Like Avis, we had to "try harder" one car at a time. We were passionate about what we did. And the clients started to trickle in.

But the Hedgehog principle itself, isn't enough Jim Collins stresses a second more important factor. In fact, he considers this second factor to be the most important of all the material he's written over the years. It's called: Preserving the core AND stimulating progress.

Let's find out just what this means for you and your small business.

Preserve the Core AND Stimulate Progress

Recently a client called Rosa wrote to us with a request.

"I would have preferred to read the series on Dartboard Pricing in ePub," she said. She made it clear it was a request, not a demand. Which brings up a whole new set of problems for us at Psychotactics. Most business books are designed with text in mind and may contain a few graphics. Our books aren't designed that way at all. They have dozens of cartoons and under every cartoon is a caption. In The Brain Audit alone there are almost 100 cartoons and corresponding captions. In a PDF, this layout is easy-peasy. Create the book in InDesign and export it as a PDF and it maintains its design integrity. Try to do the same thing for an ePub and it's like stepping in poo.

It's a tedious, frustrating process to get all the graphics to align the way they should The easier way is to just make a quick excuse, apologies and move on. After all, it isn't like 90% of our audience is asking for an ePub. It's just a stray request, isn't it? It's simple to ignore the request and get on with the important task of doing whatever it is we do. But that's where the problem lies, doesn't it? We've ignored the concept of progress. Almost all of us today read on a tablet or our phones. I know I do, my wife does, even my mother in law who ranted and raved about computers—she now loves her iPad. And PDFs work on tablet devices and phones, but they're super clunky.

Sadly that's not the only problem Jim Collins talks about two elements: preserving the core and stimulating progress. And he goes to great lengths to stress the AND in between both of them. So all of us have to stand back and ask ourselves: What's our core? The core of Psychotactics has been the factor of "consumption". Any one can create attraction and conversion. It's super-hard to get clients to consume what they've bought from you. Books, courses, workshops—we spend hours, days and weeks trying to figure out how to achieve a skill.

The cartoons, the captions in the book—they're not just a design concept. They're placed there as memory hooks; as a method of summary. They need to be exactly where they are in the books and courses. We could remove them and easily create an ePub like most ePubs, but that would fit in with our core. Collins says it has to be an AND. We have to preserve the core AND stimulate progress.

This principle is clearly frustrating and pulls in opposite directions. When you're starting out, you don't have any legacy issues in place. You create a business the way you want to shape it. And the core and the progress moves along nicely. It's when you "grow up" that you have to worry about how all the past has to fit in with the future. The longer you've been in business, the greater the past, and the more the past has to merge with an ever changing future.

Take Nokia for instance You can almost hear the sound of the Nokia ring, can't you? In the early 2000s, all of us would have at one point in time run into, or owned a Nokia. Nokia was no slouch in realm of being super-progresssive. They were into paper, then electricity and bounced from there to rubber, galoshes and finally were the most dominant phone manufacturer on the planet. In the early 1990's they had a clear and accurate vision of the future. They saw the coming of the cell phone, dumped all their businesses and stuck with the cell phone. And then, just for good measure, they invented the first smart phone. That amazing device you take photos with, use to find your way around and yes, make phone calls—Nokia was on the ball way back in 1996. They even built a prototype of an Internet-enabled phone at the end of the 90's.

And then they got stuck in a loop They failed to see the link between their core—which was to make really simple phones—and the future. The future was software. The core of their legacy was hardware. They spent millions of dollars turning out failure after failure. They believed so much in their hardware that they just couldn't figure out the software issues. And down they went, ring and all, finally selling their company to Microsoft.

To go from good to great we have to ask ourselves What's the core of our business. What do we stand for? What will we never change, never compromise on—and yet how will we step into the future when it presents itself to us. Most of us rarely have a problem with core values. Once we've spent enough time in our business, we know what we stand for, but what we fail to prepare ourselves for is the oncoming storm. We keep doing things the way we've always done.

The worst three words we repeat over and over, when faced with change is: I know that, I know that, I know that.

I thought I knew a lot about podcasts After all I'd rode the early wave of podcasts when Apple first introduced them. And then in 2008/09 we decided to pull the plug on the podcast. When clients—and one client in particular—kept asking me to create a podcast, I'd ignore the comment. As far as I was concerned, podcasts were a thing of the past. I wasn't ready to listen and the years ticked away while we busied ourselves with the core of what we'd always done.

Today, the "Three Month Vacation" podcast is one of the biggest joys in my day I love writing, I love presentations, but it's the podcast that connects me to a medium I love. And in turn the podcast connects us to our clients in ways that not possible on paper, or through books. The podcast is the closest we come to an offline workshop. But I wasn't interested in the "future". As far as I was concerned, podcasts were the distant past. And today we know those thoughts, that strategy was wrong. We see the enormous number of clients who find the podcast, then sign up to the newsletter. At our offline workshops over 50% of the audience listens religiously to the podcast. The podcast fit in so nicely with our core. And was the medium of the future.

Even so, it's not possible to chase every rainbow Technology moves ahead at a blinding pace. You can't play with every new phenomenon. Which is why we have to go back to the Hedgehog principle. What can you be the best in the world in? What are you deeply passionate about? What drives your economic engine? In the subset of podcasting, we achieve all three.

And this is what you'll have to do as well. Find your core AND stimulate progress, with your eye always on the passion. The passion is what drives your business today and will continue to do so in the future. If you don't wake up crazy with happiness, then you're not headed towards greatness. It's the reason I moved on from cartooning back in the early 2000s. I wasn't waking up happy as a lark—and so I had to find something else.

Which, interestingly, takes us to our third element: The hairy, audacious goal—oh, it's big too. That makes it the BHAG (pronounced: bee-hag).

The BHAG

Until the moment Greig Bebner set to work on his kitchen table with a glue gun and some kite material, the basic design of the modern umbrella hadn't changed since 1928. They come in all sorts of colours, shapes and fancy gizmos, but the core elements of the umbrella are the same—and they don't work. The moment a gust of wind comes along, you hear cursing, then more cursing and finally the umbrella being thrown on the pavement.

So Greg set about on a big, hairy, audacious goal—a BHAG.

He wanted an umbrella that would stand up to the crazy wind and rain on One Tree Hill. Now if you've ever visited Auckland, New Zealand, you're likely to have your hair tossed around wildly on a windy One Tree Hill day. It's certainly no place to open an umbrella. Then to push that BHAG even further, he tested the Blunt at Force 12 (117 km/h) which is the maximum setting of the test wind tunnel. The umbrella stood up to the punishment with ease.

But why did the umbrella work so flawlessly? It starts with the BHAG. It's almost a Star Trek kind of goal—to go where no man gone before. It's not a namby-pamby set of goals. It's one overarching factor that scares the heebie-jeebies out of you as a business owner. A windy day on One Tree Hill in the middle of a storm. That's a good testing ground for an umbrella.

Sometimes this goal is restricted to your product, sometimes it's a lot bigger. Like Akio Morita, the co-founder and former chairman of Sony Corporation. He was working on a revolutionary product called the Walkman. Until the Walkman was introduced on July 1, 1979. Until the Walkman showed up, portable music players were non-existent. Even though the Walkman stuttered with disappointing sales in the first month, it went on to sell over 400 million units.

But Morita's goal wasn't just to sell a ton of Walkmans His goal was a lot loftier. Before Sony introduced a ton of extremely sophisticated equipment, Japan was considered to be a backward country. It was associated with paper parasols and shoddy imitations. Akio Morita wanted to turn that perception around so that "Made in Japan" commanded respect and was associated with high quality. And he succeeded, with Sony at the forefront of his BHAG. In 2014, A Harris poll showed Sony was the No. 1 brand name among American consumers, ahead of American companies like General Electric and Coca-Cola.

At Psychotactics, we have a BHAG too The goal is to get rid of information for information sake and replace it with skill, instead. We're drowning in information, and yet every book, every course brings even more information to the table. But is that what we really want? Or do we want the skill instead. We want to write articles, create sales pages, be able to sell at higher prices. We want to learn to cook, draw, paint or acquire skills that make us look, feel and be smarter. A BHAG has to be hairy, audacious, and bigger than anyone thinks possible.

Starbucks had a BHAG too It was to open up a new Starbucks cafe every single day of the year. But soon enough, Starbucks was running into trouble. Can you see why? It's big, hairy and audacious to open up a Starbucks every single day, but does it inspire any passion? Does it feel like you're somehow changing the world you live in, let alone the world around you? The BHAG wasn't to make Sony the star, but instead to make Japan and Japanese products top-notch once again.

Every business should have a BHAG. Something that sits there in the corner challenging you to become better—not necessarily bigger—than you are. To create a Ferris Wheel or an Eiffel Tower. To create artworks of enduring magnificence as Michelangelo, Leonardo da Vinci and Rembrandt did. And the way to create that BHAG is to scare yourself. To know that everyone says there are things you're not supposed to achieve. That these things are impossible.

And yet, you do it, because it's the most inspiring thing to do! Combined with the Hedgehog principle, preserving the core and stimulating progress, you have a system in place that can take your business from good to great. And even as you embark on this journey, you know that you will forever be on the road to making things better, not necessarily bigger, but always better.

Better—it's a great place to be!

The action plan and summary coming in the next episode.

Click here to listen to part 2: Good to Great: How To Escalate The Path To Greatness http://www.psychotactics.com/path-to-greatness/