Building a G.R.E.A.T. Company

Components of a G.R.E.A.T. Company III

E: Entrepreneurial. Great companies engage in proactive and creative actions and activities. They focus on cutting costs and thinking about ways to improve efficiency. They create a culture where employees proactively make things happen rather than standing around waiting for orders. Great companies know their destiny is in the hands of their employees, and they get them actively engaged in creating a bright future.

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Building a G.R.E.A.T. Company

Components of Great Companies II

R: Revenue and Reflection. Revenues are central to any business. The reason great companies stand out is they generate a lot more revenue than their competition. Revenue can also mean (although not necessarily) that they generate profit. For many growing companies, profit can be elusive during the times when revenue must be put back into infrastructure and additional resources in order to grow. In great companies, revenue is understood by everyone, not just the top executives. All employees understand how revenue is generated and consumed. More important, each individual understands how he or she can increase and impact revenue.
Reflection is the planning piece. In great companies, long-term success is supported by some sort of disciplined business planning process that engages the leadership group. The leadership group regularly assesses where the company stands and what future they want to design. The leadership also provides an organized and focused way for problem solving and lessening the pain of growth. Early on, great companies establish and implement a formal annual planning process from which to design their growth. In other words, Reflection can lead to Revenue and long term success.

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Building a G.R.E.A.T. Company

Components of Great Companies
Now that we have defined a great middle market company, what components make up greatness? They can simply be found in the acronym G.R.E.A.T.

G: Generous and Growth. The dictionary defines generous as “liberal in giving or sharing; not petty or mean; magnanimous; abundant and ample”. These are also apt descriptions of a great company’s culture. Great companies provide space for people to grow and develop. They accept human foibles and allow mistakes to be made. Great companies are not mean-spirited or punitive. They have rules, but only a few. They are willing to give and bend, and they come from a mindset of abundance while avoiding notions of scarcity.

Generosity enables Growth. Growth causes all the progress and wealth of a company but it also causes all the problems and pain. Without growth, a company stagnates and becomes internally focused. Great companies use growth as the engine for their internal and external development.  
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Building a G.R.E.A.T. Company

Defining a Great Company
In the article “Good to Great,” Jim Collins defined a great company in the following manner: "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 in the fifteen years following their transition points. These are remarkable numbers, made all the more remarkable when you consider the fact that they came from companies that had previously been so utterly unremarkable.”

This is a fine definition for companies which are large enough for you and me to know about and be their customers; but what about small- to mid-size companies? For this market, I would add to Collins’ definition by saying that great small to mid-size companies are also defined by LOVE, a term I do not use lightly.

In small to mid-size companies, the primary stakeholders LOVE a great company. The owners LOVE the company because of superior financial performance and because they see their firms as their life’s work. The CEOs LOVE the company because it enables them to make a difference in the world and leave a powerful and potent legacy. The customers LOVE a great company because it provides superior service. And the employees LOVE a great company, as demonstrated by the performance of the company and employee retention.

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Building a G.R.E.A.T. Company

Over the past 30 years of working with CEOs, business owners and senior executive teams, I have learned the key components to design and grow great small- to mid-sized companies. Follow my posts over the next couple weeks to learn all about how to make your company a G.R.E.A.T. one.