"Good is the enemy of great."
This is the first sentence in the book, Good to Great by Jim Collins which offers a brilliant look into how and why companies are able to make that critical leap from just being good companies to great companies that are able to withstand the test of time and outperform the market. Along with his research team, Jim Collins pinpointed eleven companies out of hundreds through strict guidelines that jumped from good to great and stayed there for at least fifteen years. He also picked seventeen comparison companies that failed at one time or another in order to distinguish the great companies against. If you are looking for the answer of whether a good company can truly become a great company, this book is the answer. This five year venture that includes thousands of hours of interviews and research showcasing several distinct qualities that all eleven of the great companies displayed. Collins is able to round up his findings into seven different key areas for becoming a great company. They are noted as the Level 5 Leader, First Who, Then What?, Confront the Brutal Facts, the Hedgehog Concept, Culture of Discipline, Technology Accelerators, and building a company to last.
The first chapter that dives into becoming a great company offers insight on the companies’ leaders, executives, and CEOs. In discussing the Level 5 Leader Collins states,
"Level 5 Leaders are a study in duality: modest and willful, humble and fearless."
A level 5 Leader must care for the success of the business above his/her own personal success within the business. What was found in the comparison companies was just the opposite. They often found 'celebrity CEOs' and leaders who were focused mainly on their own wallet. Many believe that to be great is to personally be great. "After all, what better testament to your own personal greatness than that the place falls apart after you leave?" CEOs and Executives who are effective leaders tend to focus on the I-centric style and the success of the individual and not the company, and in turn focus outward when things go wrong and inward when things work out well. This is a chapter that is intriguing for any leader from the line-level to the CEO who wishes to be the best at what they do.
"We've gotta get the right people on the bus in the right seats," is a phrase that I have heard many times in my own company, and is explained in Chapter 3: First Who...Then What. Collins and his research team have found that it is essential to get the right people for the position. He goes on to explain that the great companies went through massive layoffs and many months without key personnel to find those who were absolutely perfect for the position. He realized that with the right people who are passionate and are willing to do what it takes to do what is right for the company that great results will follow.
"In other words, the good-to-great companies did not churn more, they churned better."
From there Collins moves on to Chapter 4: Confront the Brutal Facts (yet never lose faith) It is here where we realize that a perfect world is non-existent, even in the great companies. What was most interesting about this chapter was the Stockdale Paradox, named for Admiral Jim Stockdale, who spent eight years imprisoned during the height of the Vietnam War. It was found that two key ingredients are needed for success. To retain faith that you will prevail in the end, regardless of the difficulties AND (at the same time) confront the most brutal facts of your current reality, whatever they might be. This is an important chapter for anyone to read because it can relate to everyone, no matter what their walk in life may be.
The Hedgehog Concept (simplicity within the three circles) discusses the hedgehog and the fox. We see that sometimes the simplest ideas can turn into the best and most profitable ones. This chapter is simple enough, however many don't realize that by dipping your hands into too many pots it can lead to a horrible disaster. What is most important to take out of this chapter is to understand what you can (and cannot) be the best at. The Hedgehog Concept is used in the next chapter, A Culture of Discipline. This chapter describes how a company should stay within their three circles once they define them, and offers insight into 'stop doing' lists rather than 'to do' lists.
This book also discusses technology and how it has impacted all companies from the not-so-good ones to the best of the best. An important idea to note from this chapter is that just because something is new and shiny does not mean that you should go out and focus on only that. Collins uses drugstore.com and Walgreens as an excellent example on why it's important to always focus on what you do best as a company and not necessarily on the current trends.
Collins warns companies of the doom loop and to be cautious of the quick steep rise to fame. By falling into this doom loop companies see a cycle of disappointing results, reaction without understanding, new directions, and no buildup and Collins discusses this through the case of Warner-Lambert who was the direct comparison to Gillette.
Finally, Collins begins to explain how the good-to-great companies can become built-to-last companies. In this conclusion chapter Collins puts together all of the previous chapters very nicely and sums it all up. He goes on to say,
"Enduring great companies preserve their core values and purpose while their business strategies and operating practices endlessly adapt to a changing world. This is the magical combination of preserve the core and stimulate progress."
There are four key ideas that built to last companies understand according to the findings of this research project:
1) Clock Building, not time telling
2) Genius of AND
3) Core Ideology
4)Preserve the Core/Stimulate Progress
In the final sentence of this book we can begin to understand the core of what becoming a great company or person really is,
"When all these pieces come together, not only does your work move toward greatness, but so does your life. For, in the end, it is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work."
F. John Reh of about.com has this to say about the book, "If you haven't read it yet, buy, beg, or borrow it. It's that important." If you are in any sort of leadership position or even want to enhance your work or personal life this is the book to read. This is a book that offers many key concepts on becoming a great company that I find in many companies that are considered great today. Now I will say that this book is NOT the business bible and should not be treated as such. However, I believe that this book can help many companies and individuals who are stuck at just being good and can help them to eventually become a great company that is built to last!
Sources:
Reh, F. J. "About.com: Management." About.com. Web. 14 Oct 2009. Retrieved from .
