ABOUT THE BOOK Good To Great: Why Some Companies Make the Leap…And Others Don’t

In this book, Jim Collins uncovers the underlying variables that enable any type of organisation to make the leap from good to great while other organisations remain only good. Rigorously supported by evidence, his findings are surprising – at times even shocking – to the modern mind.

The book highlights seven different characteristics that are inherent qualities of great companies. These include the type of leadership that a company requires, the act of recruiting the right people before proceeding with operations and the use of technology as a factor to stimulate your company’s growth.

About Jim Collins

Jim Collins is an established business writer who has written several successful management books and has also contributed to magazines such as Harvard Business Review, Business Week and Fortune.

The author’s other written and co-authored books include Built to Last: Successful Habits of Visionary Companies, Beyond Entrepreneurship: Turning Your Business into an Enduring Great Company, How The Mighty Fall: And Why Some Companies Never Give In and Great By Choice.

Chapter 1 of Good To Great: : Good Is the Enemy of Great

Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great. And that is one of the key reasons why we have so little that becomes great. We don’t have great schools, principally because we have good schools. We don’t have great government, principally because we have good government.

Few people attain great lives, in large part because it is just so easy to settle for a good life. The vast majority of companies never become great, precisely because the vast majority become quite good-and that is their main problem.

key points

Strategy did not separate the good-to-great companies from the comparison companies. Both sets of companies had well-defined strategies, and there is no evidence that the good-to-great companies –_ spent more time on long-range strategic planning then the comparison’s companies.

The good-to-great companies did not focus principally on what to do to become – great; they focused equally – – on what not to do and what to stop doing.

Technology and technology-driven change has virtually nothing to do with igniting a transformation from good to great. Technology can – accelerate a transformation, but technology cannot cause a transformations.

Mergers and acquisitions play virtually no role in igniting a transformation from good to great; two big mediocrities joined together never make one great company.

The good-to-great companies paid scant attention to managing change, motivating people, or creating alignment. Under the right conditions, the problems of commitment, alignment, motivation, and change largely melt away.

The good-to-great companies had no name, tag line, launch event, or program to signify their transformations. Indeed, some reported being unaware of the magnitude of the transformation at the time; only later, in retrospect, did it become clear. Yes, they produced a truly revolutionary leap in results, but not by a revolutionary process.

The good-to-great companies were not, by and large, in great industries, and some were in terrible industries. In no case do we have a company that just happened to be sitting on the nose cone of a rocket when it took off. Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice.

Good To Great Level 5 Leader

Level 5 Leadership

We were surprised, shocked really, to discover the type of leadership required for turning a good company into a great one. Compared to high-profile leaders with big personalities who make headlines and become celebrities, the good-to-great leaders seem to have come from Mars. Self-effacing, quiet, reserved, even shy-these leaders are a paradoxical blend of personal humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar.

First Who. . . Then What.

We expected that good-to-great leaders would begin by setting a new vision and strategy. We found instead that they first got the right people on the bus, the wrong people off the bus, and the right people in the right seats-and then they figured out where to drive it. The old adage “People are your most important asset” turns out to be wrong. People are not your most important asset. The right people are.

Confront the Brutal Facts (Yet Never Lose Faith)

We learned that a former prisoner of war had more to teach us about what it takes to find a path to greatness than most books on corporate strategy. Every good-to-great 3, company embraced what we came to call the Stockdale Paradox: You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be.

The Hedgehog Concept (Simplicity within the Three Circles)

To go from good to great requires transcending the curse of competence. Just because something is your core business- just because you’ve been doing it for years or perhaps even decades-does not necessarily mean you can be the best in the world at it. And if you cannot be the best in the world at your core business, then your core business absolutely cannot form the basis of a great company. It must be replaced with a simple concept that reflects deep understanding of three intersecting circles.

A Culture of Discipline

All companies have a culture, some companies have discipline, but few companies have a culture of discipline.

When you have disciplined people, you don’t need hierarchy.

When you have disciplined thought, you don’t need bureaucracy.

When you have disciplined action, you don’t need excessive controls.

When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance.

Technology Accelerators

Good-to-great companies think differently about the role of technology. They never use technology as the primary means of igniting a transformation. Yet, paradoxically, they are pioneers in the application of carefully selected technologies. We learned that technology by itself is never a primary, root cause of either greatness or decline.

Chapter 2 to Good To Great: : Level 5 Leadership

NOT WHAT WE EXPECTED

Darwin Smith stands as a classic example of what we came to call a Level i 5 leader-an individual who blends extreme personal humility with intense professional will. We found leaders of this type at the helm of every good-to-great company during the transition era. Like Smith, they were self-effacing individuals who displayed the fierce resolve to do whatever needed to be done to make the company great.

The term Level 5 refers to the highest level in a hierarchy of executive capabilities that we identified in our research. To use an analogy, the “Leadership is the answer to everything7 ‘ perspective is the modern equivalent of the “God is the answer to everything” perspective that held back our scientific understanding of the physical world in the Dark Ages.

HUMILITY + WILL = LEVEL 5

Level 5 leaders are a study in duality: modest and wellful, humble and fearless. To quickly grasp this concept, think of United States President Abraham Lincoln (one of the few Level 5 presidents in United States history), who never let his ego get in the way of his primary ambition for the larger cause of an enduring great nation. Yet those who mistook Mr. Lincoln’s personal modesty, shy nature, and awkward manner as signs of weakness found themselves terribly mistaken, to the scale of 250,000 Confederate and 360,000 Union lives, including Lincoln’s own.

The good-to-great leaders never wanted to become larger-than-life heroes. They never aspired to be put on a pedestal or become unreachable icons. They were seemingly ordinary people quietly producing extraordinary results.

Unwavering Resolve. . . to Do What Must Be Done

It is very important to grasp that Level 5 leadership is not just about humility and modesty. It is equally about ferocious resolve, an almost stoic determination to do whatever needs to be done to make the company great.

Level 5 leaders are fanatically driven, infected with an incurable need to produce results. They will sell the mills or fire their brother, if that’s what it takes to make the company great.

The Window and the Mirror

The comparison leaders did just the opposite. They’d look out the windows for something or someone outside themselves to blame for poor results, but would preen , in front of the mirror and credit themselves when things went well. Strangely, the window and the mirror do not reflect objective reality. Everyone outside the window points inside, directly at the Level 5 leader, saying, “He was the key; without his guidance and leadership, we would not have become a great company.” And the Level 5 leader points right back out the window and says, “Look at all the great people and good fortune that made this possible; I’m a lucky guy.” They’re both right, of course. But the Level 5s would never admit that fact.

Summary: The Two Sides of Level 5 Leadership

Professional Will :-

1 Creates superb results, a clear catalyst in the transition from good to great

2. Demonstrates an unwavering resolve to do whatever must be done to produce the best long-term results, no matter how difficult.

3. Sets the standard of building an enduring great company; will settle for nothing less.

4.Looks in the mirror, not out the window, to apportion responsibility for poor results, never blaming other people, external factors, or bad luck.

Personal Humility:-

1.Demonstrates a compelling modesty, shunning public adulation; never boastful.

2.Acts with quiet, calm determination; relies principally on inspired standards, not inspiring charisma, to motivate.

3. Channels into the company, not the self; sets up successors for even greater success in the next generation.

4.Looks out the window, not in the mirror, to apportion credit for the success of the company-to other people, external factors, and good luck.

Chapter 3 Good To Great : First Who . . . Then What

There are going to be times when we can’t wait for somebody. Now, you’re either on the bus or off the bus.

– K E N K E S E Y , from The Electric Kool-Aid Acid Test by Tom Wolfe

The good-to-great leaders understood three simple truths.

First, if you begin with “who,” rather than “what,” you can more easily adapt to a changing world. If people join the bus primarily because of where it is going, what happens if you get ten miles down the road and you need to change direction? You’ve got a problem. But if people are on the bus because of who else is on the bus, then it’s much easier to change direction: “Hey, I got on this bus because of who else is on it; if we need to change direction to be more successful, fine with me.

Second, if you have the right people on the bus, the problem of how to motivate and manage people largely goes away. The right people don’t need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great.

Third, if you have the wrong people, it doesn’t matter whether you discover the right direction; you still won’t have a great company. Great vision without great people is irrelevant.

NOT A “GENIUS WITH A THOUSAND HELPERS “

Chapter 4 Good To Great : Confront the Brutal Facts (Yet Never Lose Faith)

There is no worse mistake in public leadership than to hold out false hopes soon to be swept away. – WINSTON S. C H U RC H I L L , The Hinge of Fate

FACTS ARE BETTER THAN DREAMS

A CLIMATE WHERE THE TRUTH IS HEARD

key summary of the chapter

Chapter 5 Good To Great : The Hedgehog Concept (Simplicity within the Three Circles)

THE THREE CIRCLES

1. What you can be the best in the world at (and, equally important, what you cannot be the best in the world at). This discerning standard goes far beyond core competence. Just because you possess a core competence doesn’t necessarily mean you can be the best in the world at it. Conversely, what you can be the best at might not even be something in which you are currently engaged.

2. What drives your economic engine. All the good-to-great companies attained piercing insight into how to most effectively generate sustained and robust cash flow and profitability. In particular, they discovered the single denominator-profit per x-that had the greatest impact on their economics.

3. What you are deeply passionate about. The good-to-great companies focused on those activities that ignited their passion. The idea here is not to stimulate passion but to discover what makes you passionate.

UNDERSTANDING WHAT YOU CAN (AND CANNOT) BE THE BEST AT

Key point of the chapter

Chapter 6 Good To Great : A Culture of Discipline

Freedom is only part of the story and half the truth. . . . That is why I recommend that the Statue of Liberty on the East Coast be supplanted by a Statue of Responsibility on the West Coast, -VIKTOR E. F R ANKL, Man’s Search for Meaning

Chapter 7 Good To Great : Technology Accelerators

Chapter 8 Good To Great : The Flywheel and the Doom Loop

THE “FLYWHEEL EFFECT”

The good-to-great companies understood a simple truth: Tremendous power exists in the fact of continued improvement and the delivery of results. Point to tangible accomplishments- however incremental at first and show how these steps fit into the context of an overall concept that will work. When you do this in such a way that people see and feel the build-up of momentum, they will line up with enthusiasm. We came to call this the flywheel effect, and it applies not only to outside investors but also to internal constituent groups.

THE DOOM LOOP

We found a very different pattern at the comparison companies. Instead of a quiet, deliberate process of figuring out what needed to be done and then simply doing it, the comparison companies frequently launched new programs-often with great fanfare and hoopla aimed at “motivating the troops7′-only to see the programs fail to produce sustained results.

They sought the single defining action, the grand program, the one killer innovation, the miracle moment that would allow them to skip the arduous build-up stage and jump right to breakthrough. They would push the flywheel in one direction, then stop, change course, and throw it in a new direction-and then they would stop, change course, and throw it into yet another direction.

After years of lurching back and forth, the comparison companies failed to build sustained momentum and fell instead into what we came to call the doom loop.

Key point of the Chapter

Chapter 9 Good To Great : From Good to Great to Built to Last

Key point of the Chapter

1. Clock Building, Not Time Telling. Build an organization that can endure and adapt through multiple generations of leaders and multiple product life cycles; the exact opposite of being built around a single great leader or a single great idea.

2. Genius of AND. Embrace both extremes on a number of dimensions at the same time. Instead of choosing A OR B, figure out how to have A AND B -purpose AND profit, continuity AND change, freedom AND responsibility, etc.

3. Core Ideology. Instill core values (essential and enduring tenets) and core purpose (fundamental reason for being beyond just making money) as principles to guide decisions and inspire people throughout the organization over a long period of time.

4. Preserve the Corel Stimulate Progress. Preserve the core ideology as an anchor point while stimulating change, improvement, innovation, and renewal in everything else. Change practices and strategies while holding core values and purpose fixed. Set and achieve BHAGs consistent with the core ideology.