Good to Great By Jim Collins

Good to Great is a colossal business classic.  It came about as a challenge about the usefulness of Built to Last, another business classic that Jim Collins co-wrote with Jerry I. Porras – a question that moved the author so much he decided to conduct a study, which would last five years, to answer that particular question.  The answers of the Good-to-Great research project were subdivided into three broad categories: Disciplined people, disciplined thought, and disciplined action.  Within each of these categories, there are two key concepts to take note of.  Wrapping around this entire framework is a concept the Good-to-Great research team came to call the “Flywheel concept.”

In the next few paragraphs I will summarize these findings

as best as I can.  Feel free to add your comments and questions

in the comments section below.

Level 5 is a combination of humility and strength of character.  These leaders are a study in duality: they are modest yet wilful, they are humble yet fearless.

A key trait of Level 5 leaders is that they are ambitious first and foremost for the company, they are concerned more about the company’s success rather than their own personal ambitions.  Jim Collins warns though, that the humility of Level 5 leaders should not be mistaken for weakness.  These leaders have a sheer intensity and dedication to their demeanour that makes them want to turn everything they touch into the best it can possibly be.  The author claims, “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… even if it means firing their own brother.”

In contrast, the comparison leaders who failed to build great companies were concerned more with their own reputation for personal greatness, and often failed to set up the company for success in the next generation.  The author writes, “Some had the ‘biggest dog’ syndrome – they didn’t mind other dogs in the kennel, as long as they remained the biggest one.”  It appears their personal ambition was more important to them than the enduring success of the companies they were building.

Level 5 leadership, by itself, is not enough to build a great company.  Transforming a company from good to great requires a team of smart, dedicated and hardworking executives.

Jim Collins’ research revealed that the good to great companies first got the right executives into the company, they got rid of the wrong people, and they got the right people in the right positions before taking off into greatness.

The author believes that if you begin with the question of “who” rather than “what” you can more easily adapt to a changing world.  And if you have the right people on your team, the problem of motivating and managing people largely goes away.

Only A-Players who were ready and willing to bring forth an A+ performance were accepted into key positions in the Good-to-Great companies.

Jim Collins says, “Good-to-Great companies placed greater weight on character attributes than on specific educational background, practical skills, specialised knowledge, or work experience.  Not that knowledge or skills are not important, but they viewed these traits more as teachable and learnable.”

The aim of the First Who… Then What concept is not to turn lazy people into hard workers, but to create an environment where hard working people will thrive.

 “Facts are better than dreams,” writes Jim, “breakthrough results came about by a series of good decisions, diligently executed and accumulated one on top of another… when you start with an honest and diligent effort to determine the truth of the situation, the right decisions become obvious.”

The Good-to-Great companies never let success go to their heads.  They never became complacent.  These companies embraced what Jim Collins calls The Stockdale Paradox.

“On the one hand they stoically accepted the brutal facts of reality.  On the other hand, they maintained an unwavering faith in the endgame, a commitment to prevail as a great company despite the brutal facts.”

What separates people or companies is not the absence or presence of difficulty, but how they deal with the inevitable difficulties of life.

Leadership at the Good-to-Great companies didn’t begin just with a great vision.  They began with getting people to confront the brutal facts and acting on the implications.

Here are four suggestions for creating a climate where the truth is heard, and the brutal facts are confronted successfully:

Jim Collins tells the story of the hedgehog and the fox, in which the foxes are smart and cunning creatures, able to pursue many ends at the same time.  They are multi-skilled and see the world in all its complexity.  Foxes are scattered and diffused, moving on many levels, never integrating their thinking into one overall concept or vision.  The hedgehogs, on the other hand, simplify a complex world into a single organising idea, a basic principle that unifies and guides everything.

Jim Collins insists that the comparison companies behaved much more like foxes, while the Good-to-Great companies behaved more like hedgehogs.  Hence the term: “The Hedgehog Concept.”

A hedgehog concept “is a simple crystalline concept that flows from deep understanding about the intersection of the following three circles:

The Good-to-Great companies stuck with what they understood and let their abilities, not their egos, determine what they attempted, whereas the comparison companies set their goals and strategies more from bravado than from understanding.

In order to avoid bureaucracy and hierarchy, in order to create a culture of discipline in which the company would continue to thrive and trip over its own success, the Good-to-Great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of the system.  They hired self-disciplined people who didn’t need to be managed, and then managed the system, not the people.

Jim Collins says that we should not confuse a culture of discipline with a tyrant who disciplines people.  He claims, “They are very different concepts, one highly functional, and the other highly dysfunctional.  CEOs who personally discipline, through the sheer force of personality, usually fail to produce sustained results.”

Comparison companies failed, in the author’s viewpoint, because they were cultures wherein executives focused their efforts on negotiating the nuances of an intricate social hierarchy, not on customers, competitors, or changes in the external world.

He believes that bureaucratic cultures arise to compensate for incompetence and lack of discipline, which arise from having the wrong people on the bus in the first place.

A culture of discipline creates coherence and focus.  The Good-to-Great companies channeled their resources into a few areas of focus, guided by their hedgehog concept.  They not only did the right things that moved them towards greatness, but they also stopped doing the wrong things that would perpetuate mediocrity.

Technology was not a creator of neither greatness nor mediocrity.  Not to say that technology was irrelevant to a company’s performance, but by itself, technology was never a primary cause of neither greatness nor decline.  Technology can’t turn a good enterprise into a great one, nor by itself prevent disaster.

Good to Great warns, “Thoughtless reliance on technology is a liability, not an asset.  When used right – when limited to a simple, clear and coherent concept rooted in deep understanding – technology is an essential driver in accelerating forward momentum.  But when used wrong – when grasped as an easy solution, without deep understanding of how it links to a clear and coherent concept – technology simply accelerates your own self-created demise.”

The hedgehog concept of the Good-to-Great companies drove its use of technology, not the other way around.

The Good-to-Great companies were driven by their own ambition and desire for excellence.  They employed technology in moving towards greatness, not in reaction to what the competition was doing. Jim Collins says “Those who turn good into great are motivated by a deep creative urge and an inner compulsion for sheer unadulterated excellence for its own sake.  Those who build and perpetuate mediocrity, in contrast, are motivated more by the fear of being left behind.”

The good to great transformations happened gradually – over time.  There was no miraculous event that turned everything on its head.  It was all a cumulative process of disciplined thought and disciplined actions consistently over time.  Jim Collins dubbed this phenomenon “The Flywheel Concept.”  He writes, “The good to great companies tended not to publicly proclaim big goals at the outset.  Rather they began to spin the flywheel – understanding to action, step after step, and turn after turn.  After the flywheel built up momentum, they’d look and say, ‘Hey, if we just keep pushing on this thing, there’s no reason we can’t accomplish X.”

Ultimately, the flywheel concept relies heavily on consistency and coherence.  Each turn of the wheel builds upon work done earlier.   Although some pushes on the flywheel may have been bigger than others, no single push was entirely responsible for the sustained great results of these companies.  Each push reflects a small fraction of the entire cumulative effect upon the flywheel.

Comparison companies, in contrast, practiced what the Jim calls “The Doom Loop”. He says, “Comparisons 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 in yet another direction.  After years of lurching back and forth, the comparison companies failed to build momentum and fell instead into what we call the doom loop.”

The flywheel concept wraps around all the previous concepts discussed here: Level 5 Leadership, First Who… Then What, Confronting The Brutal Facts Without Losing Faith, Discovering and Following The Hedgehog Concept, Creating a Culture of Discipline, and Using Technology as an Accelerator to Greatness.

How many do you practice in your own enterprise?

Have you articulated your hedgehog concept yet?

Are you spinning the flywheel towards greatness or simply lurching back and forth in the doom loop?

Let’s discuss these findings in the comments section below: