To Learn from the Best, Watch Them While They Exceed the Competition

Competitive advantage is based not on doing what others already do well, but on doing what others cannot do well.

--John Kay

Most studies of competitive advantage begin more than 20 years after the leadership activity they want to measure. That's like trying to measure the snow fall at the South Pole after the fact. It can't be done accurately. Yet academics like to do these studies because they are cheap and easy. Most readers are happy with whatever is served up, even if it is fictional.

Let's look at a better way to conduct such studies by taking a look at one I conducted. When I started my tracking study of CEO best practices in 1992, I was interested in seeing which characteristics of successful leaders best stood the test of time.

That approach goes against the grain. Most people focus on what worked best last week, hoping to copy it for use this week and next. The typical short-term approach is exciting because you are always charging off in a new direction.

Many organizational leaders seem to be afflicted with some kind of adult ADD (attention deficit disorder) that causes them to flit from one thing to another almost as fast as a butterfly does. Organizations, meanwhile, have a hard time adjusting to change. Most of the flitting leads to action without consequences as last week's orders are countermanded by this week's new directives.

This study defined success in a very extreme way: You had to outperform virtually every other medium- and large-size company publicly traded in the United States in terms of stock-price growth over a three year period while you were CEO . . . and keep up that level of success for at least a decade. Wall Street is traditionally fickle, so this was a tough test.

In addition, such high-profile success was bound to attract tough competitors who wanted to ride the same gravy train. To last for a long time at the top in such an environment would require leadership skills in overcoming competitors that few have.

My study was unique in my spending time with the executives while they achieved the success. CEOs told me what they were trying to do, what they expected to happen next, and later filled me in on how the results turned out differently than they expected. Every other study of CEOs' long-term effectiveness that I'm aware of was done after the fact, drawing on interviews of people who provided their opinions afterward about what had happened.

Those backward-looking studies were suspect because memory is selective and credit is often appropriated for things that were the result of chance or the actions of others.

Another great benefit of following these CEOs as they and their companies achieved was that I could measure more things. Surveys and in-depth questions probed both for what the CEOs thought worked for them as well as what else they were doing that they didn't normally talk about.

Publishing the results in a well-known CEO magazine helped me to get much better access to the CEOs. Almost all of the CEOs seemed to hope I would write a profile in the magazine about them. I let them know that to be considered for a profile, they had to fill out my latest survey and be available for an interview.

Where I sensed that something special might be going on in a company, I arranged for a personal visit to meet the CEO and his staff (all of the CEO top performers during those years were men). During those visits, unscheduled activities would often be more revealing than what was planned.

For instance, during one visit to Rochester, New York, to interview Tom Golisano, CEO of Paychex, I received an impromptu invitation to an employment anniversary party for one of the first three people in the company. During the party, I had a chance to talk to employees at all levels within Paychex about their relationships, how the company had evolved, and what they felt about Tom. The party was quite revealing in ways that I didn't expect about how Tom had gathered top people together to do hard tasks and helped everyone be eager to succeed.

So study success while it is happening from as many angles as possible and you'll have a fighting chance of capturing what's important that others should be doing.

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