Interview: Management Guru Jim Collins on Turning the Possible into the Practical

Business history is littered with great ideas that never crossed paths with great managers and as a result fizzled. Technologies are just so much R&D expense until they’re deployed by those who have the vision to recognize the great ideas and the skill to implement them successfully. That’s why half of the 20/20 Vision honorees were chosen?for their ability to recognize and shepherd great technology ideas through the organizational maze. In other words, they’re great leaders.

But how does one become a great technology implementer? And how big a role does technology play in organizational success, anyway? We consulted management pundit Jim Collins, author of the best-selling books Good to Great: Why Some Companies Make the Leap…and Others Don’t (HarperBusiness, 2001) and Built to Last: Successful Habits of Visionary Companies (HarperBusiness, 1994, coauthored with Jerry Porras), for insights on organizational leadership. Collins, a former Stanford Graduate School of Business faculty member who now runs his own management laboratory at the base of the Flatiron mountains in Boulder, Colo., underscores our point that it’s not just about the technology. He’s uncovered some seeming paradoxes about how great companies use technology:Outstanding organizations are pioneers in IT and other forms of technology?yet technology is a minor contributor to their success.

Early technological leads are an impediment to organizational staying power.

The best leaders are those who focus on a handful of useful technologies and ignore the rest, no matter how exciting the bandwagon looks.

Technology Accelerators

To write Good to Great, Collins and his research team spent five years studying great companies (defined as those generating sustained outstanding stock returns), narrowing down the universe of American business to a mere handful of stars. He then asked executives from this select group to identify the top-five factors that contributed to their success. Most surveyed didn’t mention technology at all. Those who did ranked it fourth out of five factors. “Given that we live in a technology world, this was really surprising,” says Collins. “You could draw the conclusion that technology basically doesn’t play a role in excellence.”

But that would be the wrong conclusion. “Regardless of what they said, every single one of the companies had become a pioneer in the application of technology,” he says. “On the one hand, they hardly place any emphasis on it, yet on the other hand, there is no question they were pioneers in the application of technology.”

When Collins set out to explain this, he discovered that organizational greatness always came first. “If you’re fundamentally mediocre going to worse,” he says, “other people applying technology can be a further accelerator of your own demise. If you’re a good company going to great and want to stay there, technology can become an accelerator once you’ve made that leap, but it cannot cause it by itself.”

Among our 20/20 honorees, Hal Rosenbluth used IT to become a leader in the corporate travel management business?but his source for innovative ideas is customer experiences rather than new offerings from technology vendors. When Meg Whitman took the reins at eBay, her first concern was to prove that a dotcom could be financially disciplined. Only then did she concentrate on getting her IT knowledge up to speed.

The Dark Side of Bright Ideas

It’s appealing to think that the best implementers built their companies around inspired ideas. But it’s wrong, Collins says. In researching Built to Last, he found that an early technological lead can actually hinder long-range success as managers focus on the technology to the detriment of the organization.

In comparing 18 exceptional, long-lived companies with their competitors, Collins found “in case after case that the early leaders in specific technologies did not end up becoming the enduring, great companies. We saw in a lot of [the short-lived] companies people who were not great company builders, but they had a great idea that was right for the time. But once the product runs out of steam, there is no great company behind it to be able to have a dynamic process.”

For example, Westinghouse’s technology gave it a transient lead over General Electric in electricity transmission. “George Westinghouse came up with the AC electrical system; Charles Coffin at GE came up with the idea of systematic management development. Which is a more important breakthrough?” asks Collins. “They are both significant, but from the standpoint of a company, I’ll take management development any day.”

Collins believes the idea of a first-mover advantage to be a chimera: “Technological leads never last more than a few years.”

The Implementation TRIO

One distinguishing characteristic of great leaders, Collins has found, is an intense focus on what their organization needs to do well?and what it shouldn’t be doing at all. In keeping with this single-mindedness, outstanding leaders implement technology at three levels.

The first level is those technologies directly relevant to a company’s mission. For any organization, a few technologies hold the potential of substantially improving operations and results. “If you get very clear about what are the few things you ought to be doing, it is not going to be a whole lot of things,” Collins says. “On the other hand, there are going to be two or three where it’s your responsibility to ensure that the organization invests in them.” Those two or three technologies are of the highest priority for leaders. “You must become a pioneer in their application. If you really want to be great, it’s not good enough to be at the threshold.”

The 20/20 honorees provide several examples. Michael Prince has a reputation of being the first CIO on the block to try out new technologies. Yet he implements only those systems directly applicable to the discount retailing business. The result is that where his company, Burlington Coat Factory, goes, industry standards often follow. David Kepler of Dow Chemical and Don Schneider of Schneider National trucking each spend heavily on leading-edge IT implementations, but their (very different) investments are focused squarely on their industry needs.

A second type of technologies are those that lack revolutionary potential but that organizations need anyway. For some companies, websites fall in this category. “In a Web world, you’ve got to at least have a passably usable website, because there are certain expectations that people have come to have,” says Collins.

Finally, there are some technologies that are nothing more than a distraction. “If you don’t have to have them, and they don’t tie directly to your [mission,] then the point is to have those on your ’stop-doing’ list, even if the whole world is heading toward that.”

In sum, good technology implementation is important for a company, but being a good company first is even more important. The best technology implementers are executives above all.