The DNA of a Great Company

There are a select group of companies that have to bested their competition and peers to become the best-of-breed at what they do. While several companies in a particular industry are all seeing the profits soar, one company is doing business better than the others. This better is what separates good companies from great companies.

It is obvious that more than a great bottom line makes a company great. Their ability to maintain their status as the best-of-breed in their field is just as valuable. Today, Yahoo and Google are heading in completely opposite directions. One company has continued to make the right strategic decisions while the other flounders near the point of being acquired by a larger media company. Three years ago, Google and Yahoo could have been considered identical twins with a bad case of sibling rivalry. Since that time, Google has reached new share price highs while Yahoo's leadership is going through a transition, hoping to energize investors who are concerned that its best days are behind it.

FaceBook and MySpace are waging a similar battle to see which company will be able to best the other at building a social networking community. Whoever wins will ultimately signal the end of the other. With similar offerings and targets, only one of them will be able to reach their goals of subscriber growth. It appears that FaceBook will eventually win this battle as its new innovations draw new subscribers and their existing communities find their virtual experience more fascinating than the one had at MySpace.

The battle between FaceBook and MySpace is the perfect illustration of the pursuit to become a great company. What will shake out between the two social networking titans will be based largely on the DNA of the companies. The DNA of a company is more than its mission and vision statements. It is more than its core values and workflow systems. The real DNA or most fundamental, yet complex origins are its leadership, its people, and its ability to execute. A company that has competent leadership will never reach that status of best-of-breed organization. A company can never outperform its leadership. It will only get as far as its leadership takes them. Yahoo's shakeup in its senior position signaled dissatisfaction with the way Andrew Sobel was leading Yahoo. To replace him with one of the founders is an attempt by Yahoo's board of directors to stop a ship from sinking in the sea of irrelevancy.

The best quality of a strong leadership team is not that they are the smartest, most innovative group. It is that they can adjust to changes in the marketplace while never losing sight of the big picture of who they are. They understand significance as well as consumer branding and they are highly engaged in performing at high levels in both areas. This is not in every group. But the truly great companies have an abundance of dynamic leaders in their group.

The corporate culture of a company is the real drumbeat of a company. Just this year, Google was lauded as the best place to work in America. This designation has nothing to do with a salary and benefits package and everything to do with Google's senior leadership maintaining a culture of fun and innovation, an environment for excellence and execution. A company can hire the best and the brightest at the end of every academic semester but if you do not create a culture of productivity and energy, the amount accomplished will be similar to the divide between the momentums Google has versus that of Yahoo.

With the number of engineers and mba's graduating today, the pool of potential hirers is immense. But every graduate is not a fit for the culture of a company. People that want a stodgy, conforming environment will not do well in the super-trendy, hip and relaxed atmosphere of Silicon Valley where many tech companies are based. Culture is about an environment, from top to bottom that oozes greatness even when greatness is not currently being produced. The culture of a great company reflects the core dynamics of the people who make up that company who are only content when they can pursue greatness and be challenged by mediocrity and competition. They are not satisfied with being number two. Losing is an unacceptable position that keeps them awake at night architecting the newest, best-of-breed products.

Execution is typically attached to getting things done. However, in today's marketplace it is as much about what you do not do as what you do. Ensuring that every new investment is in line with the company's goals and heartbeat is essential for success. In the case of FaceBook and MySpace, FaceBook has moved into application services in a way that MySpace has not. Thinking that connecting people is enough for continued growth, MySpace has focused on subscriber growth and advertising together. On the other hand FaceBook has sought to build value by adding an application platform for its users.

In the early 90s, the question of greatness was between Microsoft, Oracle, and Novell. Each of them had strong products and goals for continued growth. Microsoft saw itself as a software company just like its peers. But it also saw this new opportunity called the Internet as a new frontier to be conquered. Today, Microsoft is the third largest company in the world. Its peers are just making software.

What business leaders can learn from the Microsoft effect is that greatness is a byproduct of all three DNA pieces working together. Microsoft did not launch the first web browser, but its Internet Explorer is installed on every desktop computer because it does one thing more effectively than anyone else. It leverages its new technologies on the backs of its established brands making integration seamless for consumers. This eliminates any market anxiety or gaps for them. It is a great strategy that has worked for them since they began bundling products in the early 90s.

FaceBook's executives seem to have taken a page from the Microsoft operating plan. The moves they are making today are eerily similar to the things Microsoft did in the past. Truly great companies never take the market and the consumer for granted. That mistake may ultimately lead to Yahoo's downfall and Google's continued growth. The companies that desire to be great are never satisfied with the way things are in the market and marketplace. Great companies were once good companies that did the right things at the right time with the right group of people.