Good to Great by Jim Collins

Main lesson of the book: How a company can grow into becoming great.

This was a very entertaining and insightful book. It had some key points that enlightened me on how one should go about conducting business and growing it. The book is mainly made for a business that has already reached a certain level but the concepts and theories can still be applied to small companies as well as your personal life. There are basically 6 key points that can help a company grow from Good to Great.

  1. Level 5 leadership.
  2. First “Who” then “What”.
  3. Confront the facts.
  4. Hedgehog concept.
  5. Culture of disciple.
  6. Technology Accelerator.

In no way shape or form does the book state that you can grow into a company that can be considered great. Because a great company is built over years not put together in a few days. And to build a great company you first need a great leader. The best possible leader to have is a level 5 leader which is defined as the following:

“Level 5 leadership is a concept developed in the book Good to Great. Level 5 leaders display a powerful mixture of personal humility and indomitable will. They’re incredibly ambitious, but their ambition is first and foremost for the cause, for the organization and its purpose, not themselves.”

This might sound simple as if it should speak for itself, but many a company will have a leader at the helm who craves praise and acknowledgement for their deeds and successes. Its these kinds of leaders who can possibly bring the company to great heights, but once they leave the company will plummet back down to mediocrity. A level 5 leader will make sure that the company is great with or without them.

The next point is that you will have to make sure the right people are on the bus. After which you will have to ensure that the wrong people are off the bus and then the most important thing is that the right people need to be in the right seat. Some people might be amazing but be in the wrong position to show their full ability. By having the right people on the bus and in the right place, they will motivate themselves. You will no longer have to manage them as you would with the wrong people. You can diminish if not let go of bureaucracy because it is a system that one would use to make sure the wrong people are motivated and make less mistakes. But if you were to over manage the right people, you will only hinder their growth and frustrate their natural curiosity and entrepreneurship.

Confront the facts with honesty and bravery. Don’t try to make the world fit into what you want it to be, but instead look at your position in the market and see how you can grow from there. Don’t think that everything will be ok, just because you want it to be, or because in the past everything always went your way. Change is the name of the game, so be honest with yourself when said change confronts you.

The next point is perhaps my favorite point in the book, which is the Hedgehog concept. A hedgehog knows exactly one great thing and sticks to it. There is no need to have your finger in every pie there is. Instead Good To Great tells you to ask yourself these 3 questions:

  • What can you be the best at?
  • What drives profitability in your business model?
  • What are you passionate about?

Think of these as three circles and at the intersection of all 3 that is where your hedgehog concept lies. By focusing on that and improving it to the best of your capabilities, you will gain insight on how your company can become great. A lot of companies make the mistake of thinking that they can do whatever they want, because they have the money. But you will never see a great company like Coca Cola suddenly start making luxury cars. But a lot of companies love to go into a business that is outside of their hedgehog concept.

A Culture of Discipline will completely take away the need for hierarchy. Which I am personally a huge fan of. It will also make sure that bureaucracy is no longer needed because every will do what needs to be done without being asked or told to do so. This in turn will create an amazing culture of freedom within the allowed framework. And that is the power a company needs to go from good to great.

And last but not least is Technology Accelerators. This is not to be confused with acceleration through technology. The difference lies in the fact that by using technology to grow your company, you can easily get lost in trying to play catchup with the market. But Good to Great shows us that a company should always try to link technology to their hedgehog concept. By doing this, the technology that will spring forth isn’t the latest gadget on the market, but rather a piece of tech that will improve your company’s performance.

Another great concept that is often used throughout the book is the Flywheel Effect. If the first three key points are in effect, they will create momentum similar to pushing a heavy flywheel into rotating. The first push will seem fruitless and it will take a lot of effort to actually make the wheel go around once. But then you do it again, and again. With each turn the wheel starts picking up speed until it reaches a point where it moves on its own. And that’s the point where you company will reach breakthrough and become a great company. Other companies tend to start spinning the wheel but see no direct results and thus give up and move the flywheel in a totally different direction. This is called the doom loop, because it’s a waste of energy every time they turn the wheel.

This is a great book for everyone interested in improving their own business or learning how to become an effective leader.