In defining greatness, I think it’s important to differentiate between inputs and outputs. People sometimes confuse the two. There are a lot of important inputs, but greatness is in the outputs. So what are the outputs? I would say there are three. The first is truly superior performance in the arena in which you operate. In sports, your team has to win championships, or it really can’t be called a great team. In business, the measure is financial—return on invested capital. I think that, to be considered great, a company must have sustained returns on invested capital substantially in excess of other companies in its industry. But that’s not enough, in my view. To be great, a company also has to make a distinctive impact. I define that by a test: If your company disappeared, would it leave a gaping hole that could not easily be filled by any other enterprise on the planet? The third factor is endurance. A truly great enterprise has the capacity to last beyond any product cycle, any founder, any individual leader, and still maintain superior performance and distinctive impact.
Those are, in my view, the three outputs that define greatness: superior performance, a distinctive impact, and endurance. If you fail in any one of those three, you may have done fine. You may have built a good business that’s made a real contribution. But I would not use the word great to describe it.
Author: Jim Collins
Source: Inc. Magazine
Subjects: Management, Success / Failure
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