A Summary and Review of Good to Great by Jim Collins | David Peletz
Good to Great by Jim Collins is a book about why some companies become great while others merely remain good. At its core is the idea of the flywheel:
Flywheel from Good to Great by Jim Collins
The book is broken down into 9 chapters:
Good is the Enemy of Great
Level 5 Leadership
First Who… Then What
Confront the Brutal Facts (Yet Never Lose Faith)
The Hedgehog Concept (Simplicity within the Three Circles)
A Culture of Discipline
Technology Accelerators
The Flywheel and the Doom Loop
From Good to Great to Built to Last
In the opening chapter, Good is the Enemy of Great, Collins discusses the four phases involved in the research for and creation of the book. He gives background information about how they chose the great companies and the comparison companies. Collins also shares summaries of the characteristics that they found consistent in good-to-great companies.
“It [this book] is about one thing: the timeless principles of good to great. It’s about how you take a good organization and turn it into one that produces sustained great results, using whatever definition of results best applies to your organization.”
Leadership Pyramid from Good to Great by Jim Collins
The next chapter on level 5 leadership discusses the leadership pyramid above. There are 5 levels of leadership. All of the good-to-great companies in the study had level 5 leadership. Level 5 leaders are personally humble and professionally willful. They are more focused on their ambitions for their companies rather than their personal ambitions. These level 5 leaders are modest and understated and don’t have massive egos. Level 5 leaders have the drive to produce sustained results and will do whatever it takes to do so. Level 5 leaders hold themselves accountable. When things go well, they credit the team. When things go poorly, they blame themselves.
In many of the comparison companies, larger-than-life, celebrity leaders were brought in to lead companies and make great changes. Often, these charismatic leaders don’t do as well as level 5 leaders. Ten out of eleven of the good-to-great CEOs came from inside the company.
The First Who…Then What chapter revolved around getting the right people in an organization before deciding what the organization should do. In observing the good-to-great leaders, they found that the transformation began by first getting the right people into the company and getting the wrong people out of it. Then, the company could figure out what actions to take from there.
“The key point of this chapter is not just the idea of getting the right people on the team. The key point is that “who” questions come before “what” decisions – before vision, before strategy, before organization structure, before tactics. First who, then what – as a rigorous discipline, consistently applied.”
In the comparison companies, there was often a “genius with a thousand helpers model.” This “genius” leader would set a vision and have helpers make it happen. As soon as the genius leader departed, the model would fail.
There were 3 key practical disciplines that they found for being rigorous in people decisions:
When in doubt, don’t hire – keep looking
When you know you need to make a people change, act
Put your best people on your biggest opportunities, not your biggest problems
“Whether someone is the “right person” has more to do with character traits and innate capabilities than with specific knowledge, background, or skills.”
In the fourth chapter, Collins discussed how good-to-great companies began the process by confronting the brutal facts of their current reality. In good-to-great companies, there was a culture where the truth could be heard. A key paradigm for leading a company from good to great is the Stockdale Paradox. The Stockdale Paradox states that you should “retain absolute faith that you can and will prevail in the end, regardless of difficulties, AND, at the same time confront the most brutal facts of your current reality, whatever they might be.”
Hedgehog Concept from Good to Great by Jim Collins
The fifth chapter revolved around the Hedgehog Concept. The Hedgehog Concept is related to the diagram above. The Hedgehog Concept is an understanding. The good-to-great companies were more like hedgehogs than foxes. They knew one big thing and stuck to it. The comparison companies were like foxes that are strategic and know many things but lack consistency. For the average good-to-great company, it took four years to find the Hedgehog Concept.
In A Culture of Discipline, Jim Collins discusses the culture of good-to-great companies. In these companies, there was a culture made up of self-disciplined people who took disciplined action that was consistent with the three circles of the Hedgehog Concept. A culture of discipline is difficult to create. It requires people who adhere to a consistent system while giving these people the freedom and responsibility they need to thrive within the system. Many of the good-to-great companies appeared boring from the outside but were full of people who were extremely diligent and intense.
The seventh chapter, Technology Accelerators, discussed how good-to-great organizations think about technology and technological change. These organizations avoid fads and bandwagons and become innovators of carefully selected technologies. Good-to-great companies used technology to accelerate momentum, not create it. In analyzing the success of the good-to-great companies as well as the comparison companies, researchers determined that technology by itself was never a primary root cause of greatness or mediocrity.
Flywheel and the Doom Loop discussed the nature of good-to-great transformations. The media often portrays these transformations as dramatic, overnight successes, but in reality, they felt like natural, cumulative processes to people who worked within the companies. There was never one single defining action, grand program, innovation, lucky break, or miracle in any of the good-to-great transformations. Rather, these successes came as a result of a process.
The ninth, and final, chapter discusses how Jim Collins’ earlier book, Built to Last, relates to Good to Great. Collins views Good to Great as a prequel to Built to Last. He believes that organizations should apply the findings in Good to Great to create results and then later apply the findings from Built to Last to build an enduring great company from great results.
Review:
I would give Good to Great a 4 out of 5.
The book contained tons of useful information and I enjoyed learning about companies that were able to make the transformation from good to great.
That said, it wasn’t the most engaging read. I got a bit bored from time to time.
Much of the information felt redundant. I think that this book could’ve been about 80% of its current length and served the reader just as well.
Despite the redundancy and occasional boredom, I got a lot of value from this book. It made me question things I had learned and thought about businesses and helped me understand the importance of having the right people in a value-driven organization.
I would recommend this book to anyone looking to learn more about how good businesses become great ones.
