At Abbott Laboratories, managers could change their plans during the year. They were still assessed against the objectives they had originally promised. Rewriting those objectives afterward to make performance look better was out. Jim Collins uses this practice in Good to Great to explain how reliability can leave room for initiative. People could choose their methods while remaining answerable for the results.
Abbott's Responsibility Accounting attached each cost, item of income and investment to an identifiable person. Managers had to account for the resources entrusted to them; responsibility could not disappear between departments. The company recruited entrepreneurial people and gave them room to work within that framework. Low administrative costs helped fund creative work. Accountability made freedom workable.
Collins argues that bureaucracy often grows to compensate for weak staffing or unreliable behavior. Added controls frustrate capable people, whose departure can make still more controls seem necessary. His alternative retains a shared operating framework. People need enough self-discipline to carry responsibilities without having every move specified. Responsible leaders assemble people who examine difficult facts and develop a focus where potential excellence, viable economics and genuine care meet. Effective action follows that thought. A tool or management technique cannot replace the combined work.
Daily discipline means willingly attending to the unremarkable details that excellent work requires. That effort serves a direction the team has examined; intensity alone cannot make a bad direction sound. The standards must reach leaders too. At Nucor, workers could receive a contribution toward their children's education, while executives were excluded from that benefit. Its effort to align workers, managers and shareholders appeared in ordinary arrangements. Authority was meant to follow contribution and leadership ability. A declaration of shared responsibility needed practices people could see.
Choose what the technology will improve
New technology tests that judgment. Collins proposes pioneering applications that directly strengthen the chosen focus, reaching adequate parity in other necessary technologies, and ignoring those that are irrelevant and unnecessary. A company can lead where the applications matter while using ordinary tools elsewhere.
Walgreens' existing business joined convenient pharmacies with profitable customer visits. In nineteen ninety-nine, excitement around online pharmacies helped drive down its share price and brought demands for speed. Management experimented and debated how the Internet could strengthen that business. Online prescriptions were connected to pickup at a nearby drive-through or delivery, using the inventory and distribution system behind the stores. The investment could be judged by whether it made that profitable customer business more convenient, using an operating system already in place. Once that fit became clearer, Walgreens committed much more to its website.
Collins calls the sequence crawl, walk, run. Learn, integrate, then scale. In the studied companies, pioneering applications usually arrived late in the transition, often after visible breakthrough. Useful early technology was not forbidden; understanding its role mattered. Technology could accelerate a coherent direction but could not supply leadership, suitable people or honest inquiry. Nor was technological surprise the primary explanation for the comparison companies' decline.
Give the next effort something to build on
The flywheel explains why those foundations matter. A heavy wheel takes repeated pushes to gather speed. Later pushes benefit from earlier ones. In an organization, capable people improve the discussion, understanding improves decisions, and results make further progress possible. Outsiders may see a sudden breakthrough while insiders experience years of accumulated work. Buildup varied in length. A spectacular early rise alone did not establish sustained success.
Concrete accomplishments also give people reasons to commit. Leaders can show what has worked and explain how it serves the larger direction. Confidence then rests on experience, and more ambitious goals become credible. An announcement has less to offer if the team cannot see the work producing results.
The doom loop interrupts that accumulation. A promised transformation disappoints, so another program, reorganization or strategic reversal takes its place. Effort keeps starting over without a deeper understanding of the business. Changing a mistaken plan in response to evidence remains necessary. The problem is replacing learning with another promise of instant improvement.
Acquisitions follow the same distinction. The transition companies' major purchases generally came after they understood their focus and had substantial momentum, principally after breakthrough. A fitting purchase could accelerate an already coherent business. Buying a company as a cure for unclear direction offered no comparable foundation. More time spent on long-range strategic planning did not distinguish the transitions either. That finding did not make planning useless; its quantity was not the explanation.
Patient buildup still has to deliver now. Collins' companies faced investor pressure while developing their businesses. In his account, they explained the work, produced results and met commitments, often exceeding them. These are patterns in selected historical company comparisons, not guaranteed outcomes for every team. Patience does not excuse repeatedly missing present obligations.
Abbott's Blue Plans gave future initiative a practical source of funding. The company kept a ranked backlog of worthwhile projects awaiting money. Its internal earnings-growth goal exceeded the expectation communicated externally. Near year-end, earnings beyond what was needed to exceed analysts' expectations funded projects on that backlog. The company could surpass its external commitments and invest in further work. Delivering today's result helped pay for the next improvement.
Three things to keep
Give capable people freedom over methods and honest accountability for their commitments.
Learn how technology fits the business before making a major commitment.
Deliver present results that earn confidence and help finance the next improvement.