Good to Great
In Good to Great, Jim Collins sets forth a model for leadership that many spa professionals feel makes sense for the culture in which they operate. Collins studied great companies with an eye to discovering what made them great. Specifically, he looked for those companies that started out as merely good and became great.
The good-to-great companies were those that:
- Had a transition point from good results to great results.
- Maintained the results for at least 15 years.
- Averaged cumulative stock returns that were 6.9 times the general market for those 15 years.5
When Collins started, he wasn’t looking for leadership traits. In fact, as he gathered data, he was convinced that it wasn’t the leadership that was going to be the key element, but the data kept pointing him in that direction.
He reported that his research team was surprised at the type of leadership necessary to take a company from good to great. “Compared to high-profile leaders with big personalities who make headlines and become celebrities, the good-to-great leaders seem to have come from Mars. Self-effacing, quiet, reserved, even shy—these leaders are a paradoxical blend of personal humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar.”6
Levels of Leadership
After conducting his research, Collins sketched out five levels of leadership:
- Level One: A highly capable individual makes productive contributions through talent, knowledge, skills, and good work habits.
- Level Two: A contributing team member contributes individual capabilities to the achievement of group objectives and works effectively with others in a group setting.
- Level Three: A competent manager organizes people and resources toward the effective and efficient pursuit of predetermined objectives.
- Level Four: An effective leader catalyzes commitment to and vigorous pursuit of a clear and compelling vision, stimulating higher performance standards.
- Level Five: This type of executive builds enduring greatness through a paradoxical blend of personal humility and professional will.
Collins found Level Five leaders at the helm of every company during the period in which it advanced from good to great. He wrote:
“Level Five leaders channel their ego needs away from themselves and into the large goal of building a great company. It’s not that Level Five leaders have no ego or self-interest. Indeed, they are incredibly ambitious—but their ambition is first and foremost for the institution and not themselves.”7
If a spa is going to make the move from good to great, it must have leadership throughout the spa from people who are able to turn the focus of their ambition away from themselves and onto the goals of the spa. It isn’t ensuring that there is a snazzy design on the spa’s private label body lotion or the lush towels used in the grooming area that make a spa great, though both of those are elements of management. What makes a spa great is the experience it creates for the guest.
To successfully lead a spa, individuals must not rely on personal charisma and ability alone, but on the ability and soul of the entire staff to deliver a quality guest experience. Many of the spa greats do have tremendous charisma and it is their charisma that allows them to spread their message beyond their individual spas. However, it is not charisma alone that defines leadership.
One of the contributing factors to the maturation of the spa industry has been the increase in leaders who practice sound business skills. Level Five leadership is not about ignoring fiscal responsibility or disregarding the basics of management and business.
Spas, like other businesses, have to measure their success in part by the revenue they generate and their profitability. Spa leadership must respond to this challenge with a delicate balance that focuses on both financial results and the guest experience. Ultimately, it is this balance that will ensure the health of both. If a spa leader focuses only on costs at the expense of the guest experience, it leads to the commoditization of the spa. Once that happens, guests are unlikely to pay higher prices for service they could get in a spa that keeps the guest experience as its central focus.
True leadership is the ability to look beyond short-term financial gain. A person possessing the heart and soul of a leader is able to articulate the importance of a long-term vision and convince everyone working in the spa to work toward the spa’s best interest. This isn’t to say that a spa leader can afford to ignore short-term financial success. Many leaders are required to submit monthly financial reports. However, the spa leader will need to be able to eloquently articulate why the finances are where they are and why the decisions made are fiscally sound for the spa.
The quick and easy path to profitability includes such things as working short-staffed, buying fewer professional products, and extending the life of linens beyond their comfort. These things can tempt a spa manager who searches for financial answers by cutting expenses. Cutting expenses can improve the bottom line in the short term, but operating with minimal staffing and worn-out linens will not sustain profitability.
The more desirable approach to increasing the profitability of a spa is to increase revenue rather than reduce expenses.
The focus on the spa’s long-term good does not mean that a spa leader is able to ignore basic management functions. Rather, it is assumed that a spa leader already possesses these skills or is committed to learning such essential managerial requirements as:
- Analyzing financial statements
- Forecasting and budgeting
- Practicing revenue management
- Creating marketing and public relations initiatives
- Developing a compensation program
- Managing retail inventory
- Maintaining a customer feedback system
- Practicing strong human resources skills
- Developing a sense of place and design
- Organizing the workplace and attaining efficiency
- Controlling risks in the workplace
Becoming a Leader
A Level Five leader embodies the skills needed to take a spa from good to great. This type of leadership can distinguish a spa from its competitors and make the spa a unique place that transforms the lives of its guests.
It would be unrealistic to expect that every spa leader would possess Level Five leadership abilities or that there would be a team of Level Five leaders. Rather, it is the job of spa directors to develop themselves and their spa teams in reaching their potential.
The real mission for senior management isn’t the acquiring of management skills but of mentoring their supervisors and managers in these skills to prepare them for senior leadership. The same goes for students who are considering a career in spas—the earlier they learn the skills to manage a spa, the better their chances of advancing to senior management.
Jim Collins was asked whether it is possible to learn to become a Level Five leader. His response was that he believed there were two types of people: those who could never become a Level Five leader because they are too egocentric and measure everything by what their personal gain will be, and those who have the potential to grow into Level Five leaders. It is his belief that the latter group is larger and that they can become Level Five leaders through self-reflection, conscious personal development, a mentor, a great teacher, loving parents, a significant life experience, a Level Five boss, or any number of other factors. They are people who are concerned not with fame, fortune, adulation, or power, but with what they build, create, and contribute.
The traits necessary for a Level Five leader—personal humility and professional will—are those that many spa leaders will be more comfortable with than the traditional celebrity-style leadership. Celebrity-style leadership is one in which a leader is expected to be highly charismatic or a celebrity savior who will turn the company around through sheer force of will and their unique vision. Rather, successful spa leaders are those who are determined and committed to their ideals. They are quick to give credit to their team members while taking personal responsibility for things that go wrong.
Collins divides the leadership circle into three main concepts: disciplined people, disciplined thought, and disciplined action.
New leaders often make the current spa team nervous. For decades, management theory attributed the nervousness of an old team to a new leader as resistance to change. However, much of the nervousness may be attributed to concern about whether the leader would first get to know the organization before making changes.
One precarious model for taking over a new spa is to charge in with a new direction or a vision developed by that leader alone. Under that model, the leader might even commit the cardinal sin of telling everyone on the spa team, “This is how we did it at my old spa”—a statement that begs the question, “If it was so great at your old spa, why did you leave?”
Spa leadership isn’t about changing everything, nor is it about arriving with a briefcase of strategies. Rather, it is about the people. Collins says it is not the “what” that matters, it is the “who.” He uses the analogy of a bus in taking a business from good to great, and getting the right people on your bus (and in the right seats) and the wrong people off the bus. It is then important to decide where to drive the bus .
What is new about the notion of assembling a great team? The idea of surrounding yourself with good people is an old and useful one. Although the idea is easy to grasp, it is a very difficult thing to do, and most companies do not do it well. This may be especially true in the spa world as the explosive growth has made it difficult to attract and keep qualified employees. Spa leaders must be extremely disciplined to ensure that only the right people are hired—not just those who will fill the empty job quickest.
It takes tremendous discipline in decisions regarding employee selection to take a spa from good to great. Twenty years ago, hiring decisions were principally based on skills, education, and experience, but not so today. Great companies are now placing more weight on character attributes, giving rise to an increasing use of behavioral assessment tools in the hiring process.
Skills and traits may be learned, but character, passion, ethics, and values are ingrained.
Once the right people are on the bus, the next step is for a spa to face the brutal facts. This step leapfrogs the conventional wisdom that the management team should be gathered in a conference room to brainstorm the spa’s direction with a hope that a lightning bolt of inspiration will stimulate the creation of a vision for the business.
According to Collins, the process does not start with a dream of what the team would hope the spa might be, but with a disciplined analysis of the facts of the spa’s current operations and place within the market. It is a process that requires the spa team to accept the facts rather than to put the most positive or comfortable spin on them.
The Level Five leader creates an environment where the truth is openly stated without fear of blame. The truth is welcomed as important to the process of introspection and identifying the best answers. There are many ways to cultivate this type of environment. One way is to hold no-agenda meetings with groups of employees or managers, opening with a “what’s on your mind?” or “what is happening in the spa?” These non-agenda meetings often result in healthy debate and a surfacing of the truth of the business situation.
It is natural for leaders in an organization to believe that they were selected because they have the answers. However, in the same way spa leaders seek to engage the spa’s guest in the spa experience, it is a characteristic of good leadership to engage the team in the process of dealing with the facts of exactly how things are in the current moment.
A Level Five leader is able to take all of the complex facts and ideas and bring them into one unifying, simple driving vision that can be communicated to everyone. It is a vision to which everyone in the spa can stay committed over the long term. Collins said companies that achieve greatness can articulate simple answers to the following questions:
- What are you deeply passionate about?
- What can you be best in the world at?
- What drives your economic engine?
Collins also addresses a culture of discipline. When a spa’s leader takes disciplined action, hierarchy, bureaucracy, and excessive controls are not needed. “When you combine discipline with an ethic of entrepreneurship,” Collins wrote, “you get the alchemy of great performance.”
Bureaucracy is often created as a response to a few people who are doing things counter to an organization’s mission. When policies and procedures are adopted to prevent such behavior, the creative spirit gets sapped.
For years, companies have invested thousands of hours developing job breakdowns or detailed standard operating procedure manuals for every function of the business that specify exactly how each function was to be conducted. Highly successful companies such as Nordstroms didn’t have those standard operating procedures, but did have a standard statement that their employees would use their best judgment at all times. This creates disciplined action within a framework of intention, and employees do their jobs to accomplish the shared, driving vision.
Most standard operating procedures are designed to instruct employees on “what to do.” Likewise, most training focuses on what or how to do something. Think of the difference that could be made if leadership focused on why something is done. This would provide the discipline to accomplish the basic service intention while creating a culture of freedom and responsibility within the spa. As Collins suggests, by getting the right people on the bus and the wrong people off, an organization doesn’t need to create those rules that kill success.
All of this is not to say that all standard operating procedures should be thrown out. There are some that are necessary in order to create a framework for the overall experience at the spa. However, standard operating procedures should be used to communicate the spa’s vision and a good leader is able to foster a balance between the procedures and the service intent that each staff member should bring to work each day.
Level Five leaders create a culture of discipline without being tyrants. They are not the ones who discipline, but rather they set an example of extreme self-discipline in which the spa is committed to sustained results, not responses to strong personalities.
Finally, Collins addresses technology as a factor in the success of great companies. Technology must be used to accelerate a company’s momentum, not to create it. A spa can’t adopt a new technology with the idea that the technology will create its success. Rather, it must know the direction it is headed in and use whatever technology is necessary to get it where it wants to go. If the technology fits immediately into what the spa is passionate about, what it can be best at, and what drives its economic engine, then the spa needs to adopt the technology or be a pioneer in implementing it. If it does not fit within those three circles, then the technology may not add value to the spa.