Good to Great, Why Some Companies Make the Leap … and Others Don’t is a book that resulted from a study done by Professor Jim Collins and a group of graduate students at Stanford University’s Business School. The study aimed to discover what highly successful publicly traded companies did that enabled them to outperform their competitors and sustain those superior results over time. What makes the book so compelling is that its findings are based upon empirical evidence, unlike so many other management books that are based upon theory.
Summarizing the book’s seven major principles:
“Level 5 Leadership: Every good-to-great company had Level 5 Leadership during the pivotal transition years. “Level 5” refers to a five-level hierarchy of executive capabilities, with Level 5 at the top. Level 5 leaders embody a paradoxical mix of personal humility and professional will. They are ambitious, to be sure, but ambitious first and foremost for the company, not themselves. They are fanatically driven, infected with an incurable need to produce sustained results. They display workmanlike diligence – more plow horse than show horse.”
“First Who, Then What: The good-to-great leaders began the transformation by first getting the right people on the bus (and the wrong people off the bus) and then figured out where to drive it. 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.”
“Confront the Brutal Facts: “All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts or their current reality. When you start with an honest and diligent effort to determine the truth of your situation, the right decisions often become self-evident. It is impossible to make good decisions without infusing the entire process with an honest confrontation of the brutal facts. A key psychology for leading from good to great is the Stockdale Paradox: Retain absolute faith that you can and 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.”
“Hedgehog Concept: To go from good to great requires a deep understanding of three intersecting circles representing “What you are deeply passionate about,” “What you can be the best in the world at,” and “What drives your economic engine,” translated into a simple, crystalline concept:
- The key is to understand what your organization can be the best in the world at, and equally important what it cannot be the best at – not what it “wants” to be the best at.
- The Hedgehog Concept is not a goal, strategy, or intention; it is an understanding.”
“Culture of Discipline: Sustained results depend upon building a culture full of self-disciplined people who take disciplined action, fanatically consistent with the three circles. A culture of discipline involves a duality. On the one hand, it requires people who adhere to a consistent system; yet, on the other hand, it gives people freedom and responsibility within the framework of that system. A culture of discipline is not just about action. It is about getting disciplined people who engage in disciplined thought and who then take disciplined action.”
“Technology Accelerators: Good to great companies avoid technology fads and bandwagons, yet they become pioneers in the application of carefully selected technologies. The key question about any technology is ‘Does the technology fit directly with your Hedgehog Concept?’ If yes, then you need to become a pioneer in the application of that technology. If no, then you can settle for parity or ignore it entirely. The good-to-great companies used technology as an accelerator of momentum, not a creator of it.”
“The Flywheel and Doom Loop: Sustainable transformations follow a predictable pattern of buildup and breakthrough. Like pushing on a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough. The comparison companies followed a different pattern, the doom loop. Rather than accumulating momentum – turn by turn of the flywheel – they tried to skip buildup and jump immediately to breakthrough. Then, with disappointing results, they’d lurch back and forth, failing to maintain consistent direction.”
Good to Great is the most interesting and compelling business book of all the many that I’ve read. It presents a model for any company or organization that aspires to success. If I were to recommend only one business book to others, this would be the one!
The book is: Good to Great, Why Some Companies Make the Leap … and Others Don’t, Jim Collins, HarperCollins, New York, 2001
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