Good to great summary

Good to great summary

Welcome to this good to great summary.

Published in 2001, Good to great mobilized a large team of researchers for five years. They analyzed more than 6,000 articles and generated more than 2,000 pages of transcripts. The book ever since has been translated into some 30 languages and has sold nearly 4 million copies.

The objective of this research was to study eleven companies that had average or mediocre performance, and which suddenly propelled themselves to “excellence”, characterized by extremely high results that were sustained over the long term.

The team began its research with the premise that only a “breakthrough discovery” or a major change in operations could lead to the success of the companies they studied. Yet, this “sudden” success and its lasting nature are simply the result of well-thought-out goals and cultures built on iron discipline.

His previous book: built to last

In his first book “Built to Last” Jim Collins talked about starting a company and how to build a sustainable performance firm from scratch.

The book, Built to last, was a landmark work. From performance to excellence, a completely different question arises: why do certain companies in the same sector obtain exceptional results compared to others, often good and reputable, but which then peak with satisfactory results, but nothing more.

The big ideas

What gradually becomes clear when reading good to great is that no secret, “timing” or “chance factor” alone can explain the success of the companies analyzed in this book.

On the contrary, Jim Collins and his team demonstrate, in a very clear and structured manner, that companies that have gone “from good to great” have deliberately followed the right course and have systematically modified their behaviors and activities to conform to their core values. By dint of repetition, these activities have led them to exemplary success. In essence, they have chosen excellence in

1- Defining the goals they fundamentally believed in

2- By working tirelessly to achieve them, while dismissing opportunities that do not correspond to the convictions that led them to adopt these goals in the first place.

 

Good to great summary

 

Chapter 1: The hedgehog concept (simplicity within the three circles)

Whether you are a manager launching a new campaign, a recent graduate looking to launch your career, or an entrepreneur planning to start a new business (or take your business to the next level), understanding the “hedgehog concept” can be incredibly helpful.

To explain this, Collins cites Isaiah Berlin’s The Hedgehog and the Fox (published by Elephant Paperbacks in Chicago in 1993).

Good to great summary: The hedgehog concept explained

The concept is based on the story of a very clever fox that can come up with a thousand and one clever plans to capture and devour a hedgehog. The hedgehog, on the other hand, has only one plan of action (i.e. rolling into a ball) which always proves to be a winner, regardless of the technique used by the fox.  The fox spends precious time and energy developing new strategies, while the hedgehog, having already determined the most appropriate course of action, is free to pursue his activities without worrying about being captured by the fox, no matter how fast and smart he is.

The story may seem childish, but what the hedgehog concept implicitly tells us is that there is an activity or goal for each of us that is wiser than all the others.

Understanding what your hedgehog is all about and following his or her recommendations is absolutely essential to your journey to excellence.

In good to great, here’s how Collins suggests you determine your hedgehog concept:

Ask yourself these three questions:

A Hedgehog Concept is a simple, crystalline concept that flows from deep understanding about the intersection of the following 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. (It would be cash flow per x in the social sector.)

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.

In short, you have to ask yourself:

– What talents or skills do you have that could be considered exceptional? In other words, what do you think you are fundamentally good at?

– Could you make a good living from it?

– Is this the kind of work that makes you want to get up in the morning?

It’s important to realize that you have to work in all three of these circles to reach the top, no matter what the activity. No matter how much income you make from your activity, if you are not passionate about it, you will never excel at it, simply because other activities or aspirations will inevitably distract you.

On the other hand, what you’re good at can make you the most passionate person in the world. If you don’t have any income prospects, you may have a lot of fun, but you’ll never really excel because the financial pressure will inevitably get the better of your enthusiasm.

Chapter 2: Level 5 Leadership

According to the study conducted by Jim Collins, leaders who are driven to transform their companies in a great way are those who combine a form of personal humility with professional ambition. They are the ones who put their egos aside to serve the greater good of the company. Jim Collins has observed that leaders with too much personal ambition usually prevent good companies from making that transition to excellence. On a day-to-day basis, it comes down to being able to take full responsibility when there is a problem, without blaming others or circumstances. Good leaders generally attribute their success to luck, while others give themselves credit only for success.

Leaders with too much personal ambition prevent companies from making the transition to excellence.

Good to great summary: 5 types of leadership

The author defines in his book 5 types of leadership. The 11 companies that created a lasting breakthrough were taken in hand at the time of the transition by level 5 leaders.

The level 5 leaders, in addition to being competent and having the qualities of the leaders of the 4 previous levels, combine great personal humility and unfailing professional determination. They place the interests of the company above all else and in particular their own interests.

As explained in the book, every good-to-great company had Level 5 leadership during the pivotal transition years. For Jim Collins, the leader of an excellent company is rather shy and modest. His self-effacing personality does not prevent him from being ambitious for his company, but rarely for his career or his own ego. He is also very voluntary, even demanding about the results to be achieved. If tenacity is one of his great qualities, it is always by accumulating the steps, with discipline.

 “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.

Level 5 leaders set up their successors for even greater success in the next generation, whereas egocentric Level 4 leaders often set up their successors for failure.

HUMILITY + WILL = LEVEL 5

Chapter 3: First who…then what

Second factor of success, the author notes that level 5 leaders all started by building their team before defining their strategy. They always started by hiring and placing the best profiles in key positions in the company; and this even before defining the company’s strategy.

In the book, Jim Collins says that 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 of this chapter is not just the idea of getting the right people on the team. 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.

Which employees?

As highlighted in good to great, if the leader is important, he is obviously not the only human factor to take into account.

The recruitment of the closest collaborators is an essential element. Indeed, paradoxically, the priority is not to define a trajectory or objectives, but to know how to surround oneself with a valuable team.

Good to great summary: The bus metaphor

The author uses the metaphor of a bus to designate the company. Before knowing where the bus is going, it is necessary to get the useful people on board and get the useless employees off or relegated to the back of the bus, if there are any.

Before considering projects, a vision, a strategy or investments, you need to create an excellent team of determined people who are willing to talk hard, but who, once decisions have been made, are able to rally behind them and apply them with discipline. Team coherence is essential. Avoid a model where the leader is the only one with a vision, where he surrounds himself with a crowd of people who assist him: the day the leader disappears, the whole structure collapses.

Surprising results

In the study conducted, some surprising results emerged. For example, it was found that a good level of compensation served to attract and retain high quality employees. But it was not an effective lever to motivate mediocre teams.

The evaluation of an employee’s qualities should not be based on specific skills and professional experience, but rather on the richness of the personality and its versatile abilities, which will then enable it to adapt to the objectives that will be defined.

This managerial approach often avoids layoffs. This because it will be easy to redeploy an employee of this type to another activity by giving him additional training if necessary. Whereas a professional, specialized in a position or sector, will be more difficult to keep on the staff if his function disappears from the organization chart.

Another unexpected piece of advice: avoid putting the best people in front of the company’s most difficult problems. On the contrary, we must create the best working environment for them to give their full potential.

Last but not least, you should only recruit as much people as you can absorb into the company, and if in doubt, wait.

The author’s recommendation

Thus, the author recommends:

– Do not hire if you have any doubts about a profile and keep looking. It is better not to hire than to make a bad hire.

– Do not prevaricate when it is clear that you have to part with a collaborator.

– Give the best employees the biggest opportunities and not the biggest problems.

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Chapter 4: Confront the brutal facts (yet never lose faith)

All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality.

Once the right team is on the bus (and the wrong one off the bus), the author recommends confronting the reality of the facts and not being satisfied with magical thinking or strategic illusion.

They ask themselves: What is not working well in the company and its organization? What would need to be improved in order to take a step forward? Around these questions, it is important for both a manager and a business leader to create a climate of trust so that employees can take part in the conversation and debate by contributing their remarks and ideas. This can be expressed in different ways in the office: allocating time for dialogue every week or every month, setting up an ideas box, establishing internal communication that encourages exchanges and allows regular updates, etc.

Chapter 5: A culture of discipline

The author recommends setting up a culture of discipline combined with an entrepreneurial spirit.

Based on the hedgehog concept, it is necessary to establish a rigorous discipline within the company so as not to spread out in multiple areas. Companies that seem to be more successful are those that learn to do fewer things at once, while others are constantly afraid of missing an opportunity.

The companies that seem to be more successful are those that are learning to do fewer things at once.

Unexpected findings

The more an organization has the discipline to stay within its three circles, with almost religious consistency, the more it will have opportunities for growth.

The fact that something is a “once-in-a-lifetime opportunity” is irrelevant, unless it fits within the three circles. A great company will have many once-in-a-lifetime opportunities.

Chapter 6: Technology accelerators

Jim Collins notes in his research that mediocre companies tend to regard technology as sacred and rely on it. Conversely, companies that manage to bridge the gap use technology only to accelerate their success, not to create it from scratch.

80% of executives surveyed about the process of transforming their company did not mention technology as a factor, even in the case of pioneering companies like Nucor (a U.S. steel company that has been in business since the 1970s).

On a daily basis, we sometimes tend to imagine that we would perform better if we were equipped with this or that gadget, that the company would get better results if we offered a digital platform or a service at the cutting edge of technology. Jim Collins makes us realize that this is not always the key to success and that we must guard against this lure.

Good to great summary

Good-to-great organizations think differently about technology and technological change than mediocre ones.

Good-to-great organizations 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

Chapter 7: The Flywheel and the Doom Loop

The good to great company must first gather its forces, gain momentum and not venture out without knowing exactly what its potential is.

The author takes the example of a very heavy steering wheel that one would like to turn.

The inertia is such that one must start pushing in the same direction methodically, gathering one’s forces, and little by little, the push will eventually set it in motion. The first laps will be long and tiring, then carried away by the momentum and its own weight, it will end up spinning on its own and faster and faster. It is then impossible to know exactly what has allowed him to gain speed: it is all the combined efforts.

At a certain threshold, a breakthrough is made. The focus should not be on the spectacular side of immediate success, but rather on a lasting breakthrough that will happen anyway if everything is ready for it.

Good to great summary

Good-to-great transformations often look like dramatic, revolutionary events to those observing from the outside. But they feel like organic, cumulative processes to people on the inside. The confusion of end outcomes (dramatic results) with process (organic and cumulative) skews our perception of what really works over the long haul.

No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment

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