What separates small and mid-sized businesses (SMBs) that scale successfully from those that hit a ceiling? Many companies start with strong momentum but eventually struggle with inefficiencies, leadership bottlenecks, or a lack of alignment. Others, despite their size, build a foundation that allows them to grow, adapt, and compete with much larger players.
Jim Collins’ Good to Great highlights that truly great companies exhibit disciplined people, thought, and action. But what does that mean for SMBs? In my experience, the businesses that thrive have clarity in their vision, a culture of accountability, the right operational discipline to scale effectively, and are laser focused or their ability to execute. Those that stall often lack one or more of these key ingredients.
Early in my career, I found myself in a meeting room observing two very different leadership teams tackling the same market challenge. The first team spent hours debating who was responsible for the problem, why their current approach should work in theory, and ultimately left without clear action items. The second team quickly aligned on the reality of the situation, assigned clear ownership for solutions, adapted their strategy based on market feedback, and left with specific execution plans. That stark contrast was my first real glimpse into what separates merely good companies from truly exceptional ones.
In today’s business landscape, this distinction matters more than ever. With shortened business cycles, rapid technological disruption, and increasing customer expectations, organizations must possess certain fundamental traits to thrive. But what exactly separates the great from the merely good? What DNA elements allow some organizations to break through their growth barriers and consistently outperform their peers year after year?
The Four Pillars of High-Performance
After decades of studying organizational excellence, experts have identified four core pillars that consistently appear in high-performing companies. These aren’t just nice-to-have attributes – they form the essential foundation upon which sustainable growth is built.
Clarity
High-performing organizations demonstrate exceptional clarity at all levels. Jim Collins, in his landmark study “Good to Great,” found that exceptional companies possess what he calls a “Hedgehog Concept” – a deep understanding of what they can be the best at, what drives their economic engine, and what their people are deeply passionate about.
“Clarity about what is core and what is not creates the conditions for coherent, consistent action throughout the organization,” Collins writes. This clarity manifests in:
- A compelling vision that guides decision-making
- Well-defined values that aren’t just wall art but lived daily
- Clear strategic priorities understood by everyone
- Unambiguous expectations for performance and behavior
I experienced the transformative power of clarity firsthand while working at an IT services organization providing technology solutions to global enterprises and mid-market companies. Despite having over $150 million in annual revenue, a highly qualified team of developers and engineers, well-connected sales associates, and experienced leadership, we struggled for three years to meet our targets.
Every year followed a similar pattern: we’d set revenue forecasts only to miss them consistently. A blame cycle emerged – sales would point to delivery issues or talent acquisition challenges, delivery would argue that scopes were unrealistic or that we were trying to service too many different types of clients, and marketing searched for direction on where to focus their efforts. The root cause? A fundamental lack of clarity around our vision, purpose, and core focus.
The turning point came when we took the leadership team to a four-day offsite retreat. We implemented a comprehensive corporate strategy utilizing industry best practices including Rockefeller Habits and the 7-Strata approach to strategy. The following year, we witnessed remarkable cohesion between previously siloed teams. While the transformation was still ongoing, the foundational clarity we established drove a stark difference in corporate behavior and energy that propelled the company forward. This experience showed me that clarity isn’t just a theoretical concept – it’s the practical foundation upon which successful execution is built.
Accountability
Gino Wickman, in his book “Traction,” introduces the concept of the Accountability Chart as a cornerstone of organizational health. Unlike traditional org charts that simply show reporting relationships, Wickman’s Accountability Chart clearly defines not just who reports to whom, but what each person is responsible for and what results they own.
“For your organization to be healthy, you need to remove any and all confusion by designing a crystal-clear structure where everyone is truly accountable for a handful of roles and responsibilities,” Wickman writes.
Accountability in exceptional organizations operates with several key principles:
- Empathetic Approach: Listening comes before judgment, creating psychological safety for honest discussion
- Crystal Clear Expectations: Simplicity and specificity in what success looks like, removing ambiguity
- Objective Measurement: Data-driven assessment rather than emotional decision-making
- Paired with Empowerment: Authority given alongside responsibility to drive ownership
- Ownership Mindset: Creating conditions where people choose to own outcomes rather than feeling assigned blame
I worked for a company that prided itself on having a strong culture of acceptance and individual respect. Many of the executives had risen together from individual contributor roles in other companies to build and lead this organization. They were colleagues, friends, and lifelong partners in the business’s success.
Yet beneath this positive culture, cracks were forming. Acquisitions struggled to show results, global expansion created cultural conflicts, and communication challenges multiplied. Management implemented various initiatives to address these normal growth issues but could never seem to find the right formula or achieve desired outcomes. When targets weren’t met, the goalposts would shift. The leadership team’s long history together made it difficult for them to hold each other accountable, and this pattern gradually permeated the entire organizational culture.
This experience taught me that accountability must be woven into the very DNA of an organization. True accountability isn’t about questioning someone’s worth or passing judgment. Quite the opposite – it gives people clarity about expectations and the ability to manage their future. When we make accountability part of how we operate rather than an occasional intervention, people understand how they’ll be measured and can take ownership of their results.
Accountability only exists where there lies leadership that sets the tone. Leadership is the foundation upon which great companies are built. The best leaders don’t just manage —they inspire, enable, and empower. Great leaders create cultures where teams take ownership and accountability. They don’t dictate from the top down; they set the vision and empower others to execute it.
As David Marquet, former submarine commander and author of “Turn the Ship Around,” notes: “Leadership is communicating to people their worth and potential so clearly that they are inspired to see it in themselves.” This perspective on accountability as a positive force shows how it contributes to both individual growth and organizational excellence.
Adaptability
Clayton Christensen’s research on disruptive innovation highlights why adaptability is non-negotiable. Great companies balance consistency with the capacity to evolve as circumstances change.
“The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption,” Christensen observes.
Exceptional organizations build adaptability through:
- Regular assumption testing and market sensing
- Decentralized decision-making where appropriate
- Learning systems that capture and distribute insights
- Resources allocated to experimentation
Remember the clarity experience I shared earlier? During that same leadership offsite where we developed our corporate strategy, we confronted another critical reality: to remain relevant, we needed to incorporate AI into our core services. This wasn’t just about creating new external service offerings – it was about fundamentally improving our own ability to serve customers and enhance their experience.
We recognized that AI represented an existential threat if not addressed proactively. Despite being a traditional IT services company, we dove headfirst into adapting to these external forces. The clarity we established during that offsite event enabled us to identify the threat, but it was our organizational adaptability that allowed us to respond effectively. We reallocated resources, developed new capabilities, and started integrating AI into our delivery methodologies. This adaptability didn’t just help us survive – it positioned us to thrive in a rapidly evolving technology landscape.
This experience reinforced my belief that adaptability isn’t just about responding to change – it’s about anticipating it and moving decisively before disruption forces your hand. The most adaptable organizations don’t wait for perfect information; they create learning systems that help them move faster than competitors when market shifts occur.
Execution
As Larry Bossidy and Ram Charan emphasize in “Execution: The Discipline of Getting Things Done,” execution is not simply tactics but “a specific set of behaviors and techniques that companies need to master in order to have competitive advantage.”
Execution excellence in great companies means:
- Rigorous follow-through on strategic priorities
- Disciplined operational cadences and rhythms
- Talent development aligned with strategic needs
- Candid dialogue about progress and barriers
Companies that have transformed their performance by focusing on execution demonstrate the power of this pillar. Consider Honeywell, which under CEO David Cote implemented a rigorous execution-focused system between 2002-2017 that delivered 250% total shareholder returns, outperforming the S&P 500 by nearly 2:1. Their implementation of the Honeywell Operating System brought disciplined execution to every operational unit, resulting in significant margin improvements and market share gains.
Similarly, Alan Mulally’s implementation of the “Business Plan Review” process at Ford Motor Company from 2006-2014 created a cadence of weekly data-driven meetings that helped Ford avoid bankruptcy during the financial crisis when competitors required government bailouts. The company’s focus on disciplined execution around the “One Ford” plan delivered 22 consecutive profitable quarters and a stock price increase from $1.01 in 2008 to over $17 by 2014. These examples demonstrate that when execution becomes engrained in organizational DNA, it creates measurable, sustained performance advantages that competitors struggle to replicate.
The Performance Gap: Good vs. Great
What truly separates exceptional organizations from merely good ones? Jim Collins’ research found that great companies delivered cumulative stock returns that beat the general market by an average of seven times over fifteen years. But the difference isn’t just financial performance – it’s sustainability.
For small and mid-sized businesses (SMBs), breaking through growth barriers presents unique challenges that larger enterprises often don’t face. Many SMBs hit revenue plateaus between $10-50 million, struggling with resource constraints, limited access to capital, difficulty attracting top talent, and operational systems that can’t scale. The companies that successfully break through these barriers are those that transform their fundamental operating model – they shift from founder-dependent organizations to systematized businesses with professional management structures, scalable processes, and strategic focus that allows them to maximize organic growth while positioning for potential inorganic growth opportunities.
In the SMB market, companies that successfully scale beyond growth barriers share a common approach – they invest in building institutional capabilities that position them for both organic and inorganic growth. Unlike struggling peers that remain overly dependent on the founder’s personal relationships and decision-making, these companies systematically document their processes, create scalable operational frameworks, and develop strong middle management benches. This preparation creates options – with a solid operational foundation, these companies become attractive acquisition targets, potential acquirers themselves, or ideal candidates for private equity investment.
For SMB leaders contemplating their growth strategy, this distinction is critical. Building your organizational DNA around these four pillars isn’t just about improving current performance – it’s about creating strategic optionality for future growth. When your company demonstrates excellence in clarity, accountability, adaptability and execution, you create a foundation that supports significant scale. Whether your ultimate goal is to build a self-sustaining business, prepare for acquisition, or position to acquire competitors, strengthening these foundational elements is essential preparation for breaking through your current growth ceiling.
Assessing Your Organization: The Great Company Diagnostic
How do you know if your organization is on the path to greatness? Patrick Lencioni, in “The Advantage,” argues that organizational health – the integration of management, operations, strategy, and culture – is the greatest competitive advantage and predictor of success.
Consider these diagnostic questions to assess your company’s foundation:
- Clarity Check: Can everyone in your organization, regardless of level, articulate your strategic priorities in the same way? Would their answers align?
- Accountability Test: How quickly does your organization address uncomfortable realities versus ignoring them? Do people make and keep meaningful commitments?
- Adaptability Measure: How often do you test core assumptions? Can your organization pivot resources to address market shifts faster than competitors? How effectively do you evaluate your services portfolio and expand with client/market demand to capture new opportunities?
- Execution Evaluation: Do you consistently deliver on strategic priorities? How effectively do you translate big-picture goals into day-to-day actions?
- Talent Truth: Does your organization attract and retain the best people in your industry? Are your development systems growing the capabilities you need most?
- Culture Calibration: Do your stated values match the behaviors that actually get rewarded? Is your culture an accelerant or impediment to results?
As Peter Drucker famously noted, “What gets measured gets managed.” This assessment provides a starting point for honest organizational evaluation. I’ve seen leadership teams transformed by simply committing to quarterly reviews of these fundamental questions.
[The four pillars of organizational excellence form the DNA of high-performing companies]
Building Your Path to Greatness
Becoming a great company doesn’t happen overnight or through a single initiative. It requires intentional focus on strengthening your organizational DNA across all four pillars.
“The most dangerous kind of waste is the waste we do not recognize.” – Shigeo Shingo
This insight from the architect of the Toyota Production System applies beyond manufacturing. Many organizations waste potential by failing to recognize gaps in their fundamental capabilities. By honestly assessing where you stand on each pillar and systematically strengthening weaknesses, you create the conditions for sustainable excellence.
In the next article in this series, we’ll explore how to build a resilient and scalable operating model that can sustain growth. Because while great DNA provides the foundation, the ability to scale effectively determines how far and fast your organization can grow.
What pillar in your organization needs the most attention? I’d welcome hearing your thoughts and experiences in the comments below.
