Good to Great: Why Some Companies Make the Leap. And Others Don’t is a seminal business book by Jim Collins. Originally published in 2001, the book summarizes several years of research into what separates companies able to break through into greatness from merely good ones. Collins and his team studied a great many organizations and discerned some key principles leading to long-term success. The article below summarizes the key concepts of “Good to Great” and discusses the implications these have for enterprises wanting to raise their game.
The Research Methodology
Collins and his research team needed to find a scientific way of selecting those companies that made the leap from good to great. They started with a large group of good companies, filtering them down to only those that had sustained extraordinary performance for at least fifteen years. They needed an in-depth financial database, company history, and interviews with leaders and employees. The different patterns and principles emerged from those findings that indeed were constant across the successful companies.
Good is the Enemy of Great
“Good is the enemy of great. This is one of the primary reasons we see so little that truly achieves greatness. We lack great schools mainly because we have good schools. Our government is often good rather than great, which holds it back. Many people lead lives that are merely good, largely because it’s all too tempting to settle for that instead of striving for greatness.”
Level 5 Leadership
A very important one of those seminal ideas he introduces is that of the “Level 5 Leadership.” Level 5 leaders have a paradoxical mix of traits: extreme humility yet intense resolve. In contrast to other leadership figures, Level 5 leadership is not characterized by charisma or ego; the Level 5 leader looks for the success of the company, not his or her personal glory. They make difficult choices that help the organization and are very dedicated to the purpose of it. This humility enables them to really build teams and engender a culture of collaboration that often brings better organizational performance.
First Who, Then What
Collins insists that before deciding in which direction to drive the bus, there should be the right people on it. The message is that the most successful enterprises decide who to hire and retain-considering whether or not they will fit with the values of the organization-and then work out how such talent enables them to adapt and overcome obstacles. In contrast, instead of focussing their attention on strategies alone, it lets an organization dynamically respond to the changing market conditions towards greatness.
Confront the Brutal Facts
Perhaps one of the most basic but valuable constituents of great companies is confronting the brutal facts of their reality. As Collins noticed, successful organizations are characterized by the valuation of truthfulness and invitation of honest feedback. This predisposition to confront grim realities, even if highly uncomfortable, allows companies to make more relevant decisions and switch strategies when necessary.
Collins refers to this as the “Stockdale Paradox,” named after Admiral James Stockdale, who had the faith in the end that he would prevail while simultaneously confronting the brutal facts of his reality as a prisoner of war. This is the kind of attitude that has to be in place within an organization for true greatness to make sure bounce-back ability and flexibility are possible.
When… you start with an honest and diligent effort to determine the truth of the situation, the right decisions often become self-evident… And even if all decisions do not become self-evident, one thing is certain: you absolutely cannot make a series of good decisions without first confronting the brutal facts.
The Hedgehog Concept
The fox is a cunning creature and has many tricks to trap the hedgehog, but every time he tries to trap the hedgehog, he turns his hedgehog into a ball full of sharp nails.
In this example, the hedgehog uses a strategy that always wins.
Philosopher Isaiah Berlin, based on the ancient Greek story about the fox and the hedgehog, divided all people into two groups. Foxes see the world in its complexity, while hedgehogs “simplify the complex world into an organizing idea.”
This does not mean that the hedgehog is stupid, but the reason is that there are always simple ways.
A Culture of Discipline
According to Collins, the good-to-great companies are those with a culture of discipline. First, there is the disciplined person who thinks in a disciplined way and acts in a disciplined manner. Great organizations avoid the bureaucracy that comes either from hierarchies or controlling tall organizations. Instead, great organizations provide autonomy to people to operate within a framework. This instills a sense of responsibility among individuals and encourages innovation yet keeps the organization agile with a set direction.
Technology Accelerators
While good-to-great companies make use of technology, the comparisons do it for its own sake. Fearful of being left behind, they did not understand the situation and thus lacked concept because, without concept, it’s hard to achieve anything.
The Flywheel and the Doom Loop
Collins now introduces the Flywheel Effect: repetitive, incremental actions in the right direction produce enormous results with time. While mediocre companies succumb to the Doom Loop-quick yet ineffective responses to external stimuli rather than constant self-improvement-the great companies channel their energies into building and sustaining their flywheel.
The Flywheel Effect illustrates how incremental progress leads to sustained success.
I like to think of Good to Great as providing the core ideas for getting a flywheel turning… while Built to Last outlines the core ideas for keeping a flywheel accelerating long into the future.
Conclusion
Good to Great provides most organizations with that turning point in their quest to achieve long years of excellence.
Jim Collins identifies the underlying principles which account for such success: Level 5 Leadership, the right team, and confrontation of brutal facts-all of which come together in building the foundation upon which success is sustained.
By instilling discipline within the culture and the development of an enormously clear Hedgehog Concept, one can make his or her way with focus through complexities. Besides, judicious use of technology, along with exploitation of the Flywheel Effect, would also facilitate great achievement in organizations.
Lastly, the transformation from good to great requires a relentless journey toward excellence, and unflinching resolve to focus on the big picture rather than inroads toward short-term benefits alone, motivates leaders and teams to be great in all they do.
