Top cannabis companies are making decisions that mirror greatness
Spring is a good time to brush off the dust on many of the cannabis business lessons we’ve learned that may need a bit of polishing to keep them a part of our daily business practice. I recently came across a book I read in B-School, Good to Great, by Jim Collins (another fellow Coloradan). Collins studied how great companies triumph over time, and how long-term sustained performance can be engineered into the DNA of an enterprise from the very beginning. Since many cannabis companies are “newish,” Collins’ lessons are especially pertinent. But even the veterans among us have a few lessons to learn, so we’ve distilled Collins’ concepts into three core values that resonate with the cannabis industry.
Cannabis Business Lesson #1: Get Disciplined People
Collins uses an analogy of a business leader as a bus driver, and the business as the bus. Most would assume that the bus driver’s first job is to know where they are going and how to get there. Instead, Collins’ belief is that the bus driver’s primary job is not the “where” or the “how” but the “who”— getting the right people on the bus and the wrong people off the bus. He cites three reasons for this:
- If you begin with “who,” your cannabis company can more easily adapt to a fast-changing world. If people get on your bus because of where they think it’s going, you’ll be in trouble when you get 10 miles down the road and discover that the market is changing.
- The right people are self-motivated and want to be part of a team that is expected to produce great results.
- If you have the wrong people on the bus, even if you’re headed in the right direction, you still won’t achieve greatness. Great vision with mediocre people still produces mediocre results.
Leaders aren’t exempt from this either. While cannabis leaders are often given the spotlight in the industry, Collins reminds us that Great companies have “Level 5 Leadership.” These leaders have a blend of humility and professional will to put the company’s ambitions first—not their own. So, getting the right team starts at the top and ensures that the bus has the best people on board to achieve the company’s mission.
Cannabis Business Lesson #2: Have Disciplined Thought
Great companies are like hedgehogs. Really. The noted essay by Isaiah Berlin, “The Hedgehog and the Fox,” depicts people as one of two types: foxes or hedgehogs. The fox knows many things, but can be scattered, diffused and inefficient. The hedgehog, on the other hand, knows one big thing: rolling up into a little ball of sharp spikes, pointing outward in all directions. But it does that one thing really well.
For cannabis businesses, the hedgehog analogy’s power lies in the intersection of three circles (think Venn diagram):
- What are you passionate about?
- What can you be the best at?
- What drives your economic engine?
Find the intersection of these three and stick to it. That’s your one big thing.
In the cannabis industry, it’s easy to lose direction. Our “new frontier” mentality has companies wanting to be great at everything (wanting to be foxes) but lacking the discipline and resources to succeed with such a broad objective. Great cannabis companies will emerge—those that show the discipline and focus to gain sustainable market share and operational excellence by focusing on giving customers the very best product and the very best value proposition.
Cannabis Business Lesson #3: Make Disciplined Action
Great, lasting results depend on building a culture of disciplined action. You must be willing to turn away opportunities that fall outside of the three circles, knowing that it will lead to more successful opportunities down the road. This includes technology as well. Great companies think differently about technology and how it’s used. They avoid technology fads, but are pioneers in applying technology that is carefully selected. They use technology as an accelerator of momentum—not a creator of it. Too often, companies are looking for technology to be the answer to problems, but good-to-great companies use technologies to support their existing operational excellence.
True to form, Collins has an analogy for this disciplined attitude: The Flywheel vs. the Doom Loop. A flywheel is large, heavy and creaky. It takes effort to move, but as it starts moving, the continuous effort builds momentum and eventually is moving under its own weight—that’s the point of breakthrough. Sustainably great cannabis companies follow a predictable pattern from build-up to breakthrough. Great companies realize that there is no one single event that catapults the company into greatness. Rather, it’s a series of cumulative actions that add up to sustained results.
Getting the flywheel to move in the right direction takes more than just an initial company meeting and a huge kick-off party. Instead, companies must have clear vision and utilize a hedgehog mentality to get started, accumulating visible results to build momentum.
The opposite is the “Doom Loop.” Companies that follow the “Doom Loop” try to skip the build-up, and in doing so fail to maintain a consistent direction. They lack accountability, they fail to achieve credibility, and they have no authenticity. While these companies may genuinely want to effect change, they lack the discipline that produces the Flywheel Effect. Instead, they launch change programs with huge fanfare, hoping to “enlist the troops” as they go. Or, they start down one path, only to change direction later. They fail to build singularly-focused momentum.
In cannabis, people are in a rush to grow and proclaim success. They promote themselves and their superiority in an industry that has been legal for less than a decade. Disciplined strategies and mission take time. Great cannabis companies understand this.
Cannabis Business Lessons Conclusion
The cannabis industry is still young, and building a great company takes a long time. Great companies can take years to achieve true greatness (I’ve seen studies that say upwards of seven years), and there are many lessons to learn along the way. However, we are just starting to see companies emerge with the operational excellence to move that flywheel toward long-term success. I’ve been fortunate enough to work with a few and am excited to watch them—and others—undertake the journey from good to great.