BOOK OF THE WEEK: GOOD TO GREAT by Jim Collins

Hello, people.

In my experience, many business or leadership books usually teach principles for growing a successful business or organization; however, the book, Good to Great takes it a step further. With research done on eleven companies that made the transition from being good companies to being great companies, author Jim Collins compares these companies to other companies within the same industry that failed to make or sustain the transition from good to great. He then goes on to describe, from his findings, the principles for transforming a good company into a great one. 

One good thing about this book is the fact that the principles contained therein are applicable not only to companies but to individuals as well. Anyone wishing to become outstanding at  what he or she does will find that the book is a must-have, and a must-keep.

Enjoy, and do have a lovely week.

Good to Great was written by Jim Collins in 2001 and published by HarperCollins. In the book, Jim lists his findings on how to transform a company from good to great after he, with a team of researchers, carried out research on great companies[as at 2001] such as Gillette, Fannie Mae and Walgreens  and compared them with other companies like Chrysler et al which were not doing so well at the time. Jim and his fellow researchers came up with certain surprising and not-so-surprising findings:

FIRST FINDING: LEVEL 5 LEADERSHIP

In this chapter, Jim observed that the successful companies described in the book have Level 5 leaders who are more concerned with the progress of the company than with their own egotistical needs. He notes that the opposite is the case in the comparison companies, many of whom had leaders with the “biggest dog syndrome” – they didn’t mind other dogs in the kernel as long as they remained the biggest one. Jim also points out the damaging tendency of companies to appoint leaders based on charisma and larger than life personas, stating that such leaders are usually negatively correlated with going from good to great. He finally admonishes companies to look out for character traits like humility and self determination in a would-be leader as opposed to personality traits like charisma.

SECOND FINDING: FIRST WHO…. THEN WHAT

Based on his research findings, Jim proposes in this chapter that to get a company from good to great, first get the right people on the bus before figuring out where to take it. He states that having the right people in a company drastically reduces the problem of micromanagement and motivation as such people can't settle for anything less than excellence in their work. If the wrong people are working in a company, however, it doesn't matter if the leader is a great visionary, it still won't be a great company. Jim advises managers looking to hire that when in doubt about a prospective hire, don’t hire, rather, keep looking. He points out that when a company wishes to transition from good to great, people are not the most important asset; the right people are.

THIRD FINDING: CONFRONT THE BRUTAL FACTS, YET NEVER LOSE FAITH

Jim observed that in the good to great companies, the CEOs exhibited the Stockdale Paradox in spite of the crises the company may have been going through at the time: they retained faith that they would prevail in the end regardless of the circumstances while at the same time confronting the brutal facts of the current reality. This was in contrast to the comparison companies whose CEOs insisted on dishing out false hope without acknowledging the brutal reality staring them in the face. Jim maintains that spending time and energy trying to ‘motivate’ people is a waste of effort especially since the right people are already self-motivated. He points out that the key consideration should be how not to de-motivate people and states that refusing to confront the brutal facts is a primary de-motivator of workers.

FOURTH FINDING: HEDGEHOG CONCEPT

Jim describes the parable of the hedgehog and the fox in this chapter and states that for a company to go from good to great, it must develop its Hedgehog Concept. The Hedgehog Concept, according to Jim, is made up of three intersecting circles comprising of :

1.    An understanding of what a company can be the best at.

2.    An understanding of what drives a company’s economic engine.

3.   An understanding of what a company is deeply passionate about.

Jim suggests that one reason why companies don’t make the transition from good to great is that they diversify into portfolios that are not within their Hedgehog Concept, pointing out that this makes a recipe for disaster. He states that companies must understand what they can be the best at; as well as what they cannot be the best at, and attributes the success of the great companies to their ability to identify their Hedgehog Concept and stick to it. Finally, he notes that the great companies set their goals and strategies based on understanding while the comparison companies set theirs based on bravado.

FIFTH FINDING: A CULTURE OF DISCIPLINE

Jim maintains in this chapter that the good to great transition begins by getting the right, self disciplined people on the bus. Then a culture of disciplined thought is needed. He points out that the great companies in the research study followed a simple mantra:

“Anything that does not fit into our Hedgehog Concept, we will not do. We will not launch unrelated businesses. We will not make unrelated acquisitions. We will not do unrelated joint ventures,” etc.

On the other hand, Jim points out that a lack of discipline to stay within the three circles was a major factor that led to the demise of nearly all the comparison companies. 

SIXTH FINDING: TECHNOLOGICAL ACCELERATORS

Jim proposes here that technology should accelerate momentum in a company, not build it. This, according to him, is because a company cannot make good use of technology until it knows which technologies are relevant to it and link directly to the three intersecting circles of its Hedgehog Concept. Jim lists questions companies should ask when considering a particular technology and points out that technology without the discipline to stay within the three circles in the Hedgehog Concept cannot make a company great. He states that mediocrity results first and foremost from management failure, not technological failure.

One thing I love about this book is its use of research findings and empirical data. It's not necessarily a book of ideas or ideologies as much as it is a book whose salient findings were made by researching various successful and not-so-successful companies. For those who are yet to read the book, I encourage you to go out and get it, it definitely is worth the buy.