All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality. When we start with an honest and diligent effort to determine the truth of our situation, the right decisions often become self-evident. It is impossible to make good decisions without infusing the entire process with an honest confrontation of the brutal facts.

In short, the good-to-great companies displayed two distintive forms of disciplined thought to increase the likelihood of making the right decisions.

1. They infused the entire process with the brutal facts of reality.
2. They developed a simple, yet deeply insightful, frame of reference for all decisions. We will discuss this frame in the next chapter.

Charisma

The moment a leader allows himself to become the primary reality people worry about, rather than reality being the primary reality, we have a recipe for mediocrity, or worse. This is one of the key reasons why less charismatic leaders often produce better long-term results than their more charismatic counterparts.

Indeed, for those of you with a strong, charismatic personality, it is worthwhile to consider the idea that charisma can be as much a liability as an asset. Your strength of personality can sow the seeds of problems when people filter the brutal facts from you. You can overcome the liabilities of having charisma, but it does require conscious attention.

Motivate people with brutal facts

How do we motivate people with brutal facts? Doesn't motivation flow chiefly from a compelling vision? The answer surprisingly is "No". Not because vision is unimportant, but because expending energy trying to motivate people is largely a waste of time. As discussed in the previous chapter, if you have the right people on the bus, they will be self-motivated. The real question then becomes How do you manage in such a way as not to de-motivate people?. One of the single most de-motivating actions you can take is to hold out false hopes, soon to be swept away by events.

Leadership is about vision, but leadership is equally about creating a climate where the truth is heard and the brutal facts confronted. The good-to-great leaders create a culture wherein people had a tremendous opportunity to be heard and, ultimately, for the truth to be heard. There are four basic practices to create a climate where the truth is heard.

1. Lead with questions, not answers.
2. Engage in dialogue and debate, not coercion.
3. Conduct autopsies, without blame.
4. Build "red flag" mechanisms.

Lead with questions, not answers

Leaders in each of the good-to-great transitions operated with a somewhat Socratic style. They used questions for one and only one reason: to gain understanding. They didn't use questions as a form of manipulation ("Don't you agree with me on that?...") or as a way to blame or put down others ("Why did you mess this up?...").

The good-to-great leaders made particularly good use of informal meetings where they'd meet with groups of managers and employees with no script, agenda, or set of action items to discuss. Instead, they would start with questions like: "So, what's on your mind?", "Can you tell me about that?", "Can you help me understand?", "What would we be worried about?". These non-agenda meetings became a forum where current realities tended to bubble to the surface.

Leading from good to great doesn't mean coming up with the answers and then motivating everyone to follow your messianic vision. It means having the humility to grasp the fact that you do not yet understand enough to have the answers and then to ask the questions that will lead to the best possible insights.

Engage in dialogue and debate, not coercion

All the good-to-great companies had a penchant for intense dialogue. We can describe those dialogues like "loud debate", "heated discussions", and "healthy conflict". They didn't use discussion as a sham process to let people "have their say" so that they could "buy in" to a predetermined decision. The process was more like a heated scientific debate, with people engaged in a search for the best answers.

Conduct autopsies, without blame

In an era when leaders go to great lengths to preserve the image of their own track record - stepping forth to claim credit about how they were visionary when their colleagues were not, but finding others to blame when their decisions go awry - it is quite refreshing to come across a leader when she says: "I will take responsiblity for this bad decision. But we will all take responsibility for extracting the maximum learning from the tuition we've paid."

When you conduct autopsies without blame, you go a long way toward creating a climate where the truth is heard. If you have the right people on the bus, you should almost never need to assign blame but need only to search for understanding and learning.

Build "red flag" mechanisms

There's no evidence that the good-to-great companies had more or better information than the comparision companies. Both sets of companies had virtually identical access to good information. They key, then, lies not in better information, but in turning information into information that cannot be ignored.

One powerful way to accomplish this is through red flag mechanisms. For example, in a class, the teacher issued to each student a red sheet of paper with the following instructions: "This is your red flag for the quarter. If you raise your hand with your red flag, the classroom will stop for you. There're no restrictions on when and how to use your red flag; the decision rests entirely in your hands. You can use it to voice an observation, share a personal experience, present an analysis, disagree with the professor, challenge a CEO guest, respond to a fellow student, ask a question, make a suggestion, or whatever. There will be no penalty whatsoever for any use of a red flag. Your red flag can be used only once during the quarter. Your red flag is nontransferable; you cannot give or sell it to another student."

One day, a student used her red flag to state, "Professor, I think you are doing an ineffective job of running class today. You are leading too much with your questions and stifling our independent thinking. Let us think for ourselves." The red flag turned information about the short-comings of the class into information that the professor absolutely could not ignore.

Another example is that, a company issued short pay to the customer. Short pay gives the customer full discretionary power to decide whether and how much to pay on an invoice based upon his own subjective evaluation of how satisfied he feels with a product or service. Short pay is not a refund policy. The customer doesn't need to return the product, nor does he need to call the company for permission. He simply circles the offending item on the invoice, deducts it from the total, and sends a check for the balance. We can get a lot of information from customer surveys, but there are always ways of explaining away the data. With short pay, we absolutely have to pay attention to the data. We often don't know that a customer is upset until we loos that customer entirely. Short pay acts as an early warning system that forces us to adjust quickly, long before we would lose that customer.

If you're a fully developed Leve 5 leader, you might not need red flag mechanisms. But if you are not yet a Level 5 leader, or if you suffer the liability of charisma, red flag mechanisms give you a practical and usefull tool for turning information into information that cannot be ignored and for creating a climate where the truth is heard.

Unwavering faith amid the brutal facts

There were research studies done by the International Committee for the Study of Victimization. These studies looked at people who had suffered serious adversity - cancer patients, prisoners of war, accident victims, and so forth - and survived. They found that people fell generally into three categories: those who were permanently dispirited by the event, those who got their life back to normal, and those who used the experience as a defining event that made them stronger. The good-to-great companies were like those in the third group, with the "hardiness factor".

The good-to-great companies never wavered in their faith. They never had the goal to merely survive but to prevail in the end as a great company. Yes, the interest spread was a brutal fact that was not going to magically disappear.

The good-to-great companies didn't use the fact that they were bleeding and near death as a pretext to merely restructure the company. They used it as an opportunity to create something much stronger and more powerful.

The Stockdale paradox

In every case, the good-to-great management team responded with a powerful psychological duality. On the one hand, they stoically accepted the brutal facts of reality, whatever they might be. On the other hand, they maintained an unwavering faith in the endgame, and a commitment to prevail as a great company despite the brutal facts, regardless of the difficulties. This duality is called the Stockdale paradox.

If you can adopt this dual pattern, you will dramatically increase the odds of making a series of good decisions and ultimately discovering a simple, yet deeply insightful, concept for making the really big choices. And once you have that simple, unifying concept, you will be very close to making a sustained transition to breakthrough results.