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The Secret to Building a Great Business

What is a leader?
Leadership is the most important requirement for business success. In simplest terms, leadership is the willingness to be accountable for results, and then to fulfill that responsibility, no matter what the external situation or pressure.

A leader is someone who is willing to do what it takes to get great things done. It doesn't happen on the first or second try. Leaders expect to fail over and over. They don't like it, but they don't quit when things don't work out. In fact, it is during difficult economic times and major crises that your character as a leader really stands out.

Why? In tough times, your competitors run for safety and survival instead of focusing on their customers. They pay less attention to quality. They slash back service and invest less in innovation. They cut back on staff at all levels. As a result, there are more great people actually available to work with you.

It is usually in a crisis that organizations reconnect with what made them great in the first place. In a crisis, leaders must make bolder decisions that will make them great in the future. It was said that “the North wind made the Vikings.” In times of crisis, you have an opportunity to reignite your spirit and find better ways to delight your customers.

Your leadership matters
Today, more than ever, your leadership is needed. It is now time for you to step up in a new way. It is time for you to counterattack, to move forward, to innovate, to find better, faster, easier, cheaper ways to get results.

What you choose to do today—right now, in this market—can have more of an impact on your company and career than at any other time. Epictetus wrote: “Circumstances do not make the man; they only reveal him to himself.”

Your ability to take charge, make hard decisions, accept responsibility, and lead effectively can have a greater impact on the success of your team or your organization than any other single factor. Everything that you do to become a more effective leader has a multiplication effect on your entire organization.

The best and the worst of times
People often complain about the economy or the competition being tough, but many of the best leaders started their organizations at the worst possible time or steered them through the most difficult circumstances.

The 1970s plunged America into an era of “stagflation,” with a combination of high interest rates, inflated gas prices, and miserable stock and real estate markets. It was considered a lost decade, much like the recent one we just endured.

Yet the 1970s were a time when great entrepreneurs did the unthinkable. Amid terrorist threats, massive bankruptcies, long gas lines, deregulation, and market bubbles, entrepreneurs like Charles Schwab, Steve Jobs, and Herb Kelleher each came to an extraordinary conclusion.

They decided: This is a great time to build a company!

Opportunity in a crisis
Walt Disney, Bill Hewlett and David Packard, Tom Watson (of IBM), and Thomas Edison (when he created his vision for General Electric)—all launched their dreams in miserable markets. FedEx, Sports Illustrated, Hyatt, Wikipedia, MTV, and Trader Joe's opened their doors just in time for awful recessions that defeated many other organizations. Even Google incorporated just in time for the tech bubble to burst at the end of the last century.

Leon Charney bought his first building the night Jimmy Carter lost his reelection bid to Ronald Reagan in 1980. Interest rates were in the double digits, and real estate was a bust. He plowed his rental income into 12 surrounding buildings, investing in 1.4 million square feet in Times Square. It never occurred to him that he'd become a billionaire and, today, one of the newer members of the Forbes 400 list, despite the current epic real estate slump.

Wang Chuanfu started BYD (Build Your Dream) after the dot-com crash to make advanced battery products when no one cared about the ex-professor's fantasy of a green, emission-free, battery-powered electric car. Warren Buffett bought 10% of BYD in 2008, making Chuanfu a billionaire and China's richest person.

Level 5 leadership
Management guru Jim Collins uses the phrase “level 5 leadership” to describe the characteristic of the best leaders, those who build great companies. The most fascinating and distinguishing characteristic of level 5 is an often misunderstood trait: humility.

As it happens, humility doesn't actually mean being humble. People who are crazy enough to launch businesses as the economy is falling apart and then fight Goliath-size adversaries, are not exactly humble. Humility simply means you have a "burning, driving, relentless ambition to serve and to win," Collins told me, “without the arrogance to delude yourself into believing that you are all knowing or always right.”

As a level 5 leader, you don't believe you are perfect. You're just convinced that you have what it takes to succeed and that you can get better. You are always looking for new ways to take your game to the next level.

You can always get better
Jeff Bezos's belief that he could create a new type of “virtual” retail store with a mission so massive as to justify the wildly optimistic metaphor of “Amazon” as his company's name was anything but humble! Yet he had the humility to craft a business plan that focused on the fundamentals of leadership in customer service at a time when it was unpopular and at odds with his dot-com era competitors.

While other Internet companies expanded at the speed of light, Amazon's obsession with organizing its products and getting its services working better than anyone else's ironically resulted in complaints about “slower” growth and unprofitability. When the dot-com bubble burst, Amazon survived and prospered while others imploded. After five years of losses, Bezos produced his first profit. This type of humility, combined with the discipline to commit yourself to continuous personal and organizational improvement, is what gives you the “winning edge” in your position and enables your company to outperform your competition.

The key to winning customers and building businesses has to do with exceeding expectations in comparison with the other alternatives out there. This requires leadership at all levels. Amazon knows how to compete for consumers, and even during the Great Recession, Amazon's net sales soared 28% to more than $24 billion in 2009, and net profits jumped 40% to nearly a billion dollars.

Finding your leadership style
Since every person is different in some way (often in many ways), the very best leaders have the greatest flexibility in their styles of working with other people. Some people respond best to praise; others need different incentives to get things done. Your ability to get the very best out of the people who report to you is a key measure of your effectiveness as a leader.

You perform at your best when you align your personal passions with your purpose at work. Think about it: There are many different things you could do for others, and you have many personal interests. The key is to find where your favorite cause intersects with your favorite passion. When you do that, you won't have a problem converting that experience into great performance. Moreover, when you can find other people for your team whose purpose, passion, and performance match the job, they become unstoppable.

© 2011 Mark Thompson and Brian Tracy. Adapted and excerpted by permission of the publisher from Now…Build a Great Business! 7 Ways to Maximize Your Profits in Any Market, by Mark Thompson and Brian Tracy. Published by AMACOM, a division of American Management Association.

About the Author(s)

Mark Thompson and Brian Tracy are coauthors of Now...Build a Great Business! 7 Ways to Maximize Your Profits in Any Market. Thompson is author of the best-seller Success Built to Last and is a serial entrepreneur who sold his last company for $100 million and today coaches executives on how to grow their companies. Tracy is one of the world’s leading authorities on the development of human potential and personal effectiveness.