Good to Great: Why Some Companies Make the Leap… And Others Don’t by Jim Collins
Good to Great is a management book that reveals the formula responsible for companies’ success and their transition from average to unwavering financial performance.
Jim Collins is an American business consultant and author. He’s authored six books based on extensive research, including the classic Built to Last.
THE LEAP TO SUCCESS / GOOD TO GREAT
“The only way to remain great is to keep applying the fundamental principles that made you great.”
Collins considers Good to Great as a prequel to Built to Last, after noticing that leaders followed the principle of ‘Good to Great’. That’s why they built companies that last.
He shows us the processes these great companies went through and, on the other hand, we also witness how companies that did not take that leap failed to maintain steady growth.
So how did these companies go from good to great?
Jim Collins identifies eleven great companies and compares them to other similar companies which failed to attain great growth.
Collins introduces new management concepts, such as Level 5 Leaders, the Hedgehog Concept, and the Culture of Discipline, which are essential to the success of good-to-great companies.
Good to Great is divided into 9 chapters, which represent the key elements of the book:
Chapter 1 – Good is the Enemy of Great.
Chapter 2 – Level 5 Leadership
Chapter 3 – First Who… Then What
Chapter 4 – Confront The Brutal Facts (Yet Never Lose Faith)
Chapter 5 – The Hedgehog Concept (Simplicity within the Three Circles)
Chapter 6 – A Culture of Discipline
Chapter 7 – Technology Accelerators
Chapter 8 – The Flywheel and The Doom Loop
Chapter 9 – From Good To Great To Built To Last
Let’s start with the very first chapter, which is organized around the idea of Good vs. Great. It seems that:
According to Jim Collins, most people prefer to settle for good instead of wanting to become great, simply because it’s easier. As long as you don’t want to push your limits, you’ll never discover what you’re truly capable of, and you may never discover your great qualities.
Good is indeed the enemy of most companies. They’re so used to being good that they don’t even try to become great, to excel in their industry. And this is when other companies take over. Why? Because they want to be the best in the industry.
Being the best means that there won’t be any room left for mediocre thinking. Why settle for good when you can become great?
Collins introduces a new concept, Level 5 Leadership. During a five-year study, he and his team noticed that every single great company had the same type of leader.
“Level 5 leaders are a study in duality: modest and willful, humble and fearless.”
Modesty and ambition play a great role in the Level 5 leader’s life. All the Level 5 leaders Collins studied were modest. They never said that company’s success was due to them, but to their employees and good luck. As leaders they were focused on producing results, doing everything within their power for the greater good of the company, with stoic determination.
They also cared about the future of the company, even after they were no longer in charge. They made sure to train their successor, ensuring that the company will survive even after they’ll be long gone.
So how do you recognize a Level 5 leader?
What I liked about this book is the fact that it gives practical advice. It teaches us how to become Level 5 leaders if we’re Level 4 leaders. This is very useful for leaders who wish to become great leaders.
First Who… Then What is a great way to talk about the people that you want in your life and at work. These Good-to-Great companies followed this principle.
In order to have a successful business, you must decide who you wish to be surrounded by, and which people should no longer be present in your company. Then you can decide the direction in which you’ll be heading.
The Good-to-Great companies first decided which people should be on board and which not.
According to Collins, as long as you have the right people with you, you will be more successful as a company as you won’t waste time and energy motivating people. Good employees don’t need motivation. They know how to do their tasks and they don’t need somebody to push them in the right direction.
Do you have the right people on the bus?
Another essential concept that I found in Good to Great is confronting the most brutal facts of your current reality. It’s something you have to do If you wish to be successful. What does this mean?
You must acknowledge the reality that surrounds you and face the facts. Be honest. Take a closer look and make the right decision, without ever losing hope. Take a look at the companies that are the best in your field, and see if you can overtake them. If you can’t, find something else you can be the best at.
The Hedgehog Concept refers to seeing what is essential and ignoring the rest. All Level 5 Leaders created a Hedgehog concept for their companies. All their decisions were based on simple concepts.
The Hedgehog Concept consists of three overlapping circles, in the form of questions:
What can you be the best in the world at?
What drives your economic engine?
What are you deeply passionate about?
In order to succeed, you need all these overlapping circles. It may be a bit uncomfortable to ask yourself what can I be the best at and what I can’t be best at in this world, but it helps in the long run.
This concept can be applied in our everyday life. In order to succeed in any industry you have to be the best at it, but you also need to be passionate about it, otherwise you won’t be able to stay on top. If it doesn’t make economic sense, you won’t produce great results.
Discipline is another key element found in all good-to-great companies. As long as you have self-disciplined people, they will do everything possible to accomplish the company’s goal. This may be true, but I believe that nowadays it can be difficult to find self-disciplined people. Let’s face it, the world is changing rapidly and we tend to lose focus; distractions seem to appear out of nowhere.
Think about the people you work with. Are they disciplined?
Technology Accelerators is new technology that is used within good-to-great companies. These good-to-great companies used new technology within the three circles of the Hedgehog Concept. Technology by itself cannot stimulate performance growth.
“Good to great comes about by a cumulative process— step by step, action by action, decision by decision, turn by turn of the flywheel— that adds up to sustained and spectacular results.”
The last chapter, “From Good to Great to Built to Last”, tells us that if the advice in Good to Great is followed we can build something to last. As mentioned at the beginning of this article, this book is a prequel to Built to Last.
Care to read it?
The real performance of a company can only be seen over time, when its first leader, the one responsible for its success, is long gone but the company maintains its success. That means that the Level 5 leaders have passed on their knowledge in a remarkable way.
Good to Great helped me realize that we don’t have to settle for less. We don’t have to be just “good” when we can become “great”.
“Remember, it is much easier to become great than to remain great.”
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