CEO-approved for over a decade.
Good to Great: Why Some Companies Make the Leap… and Others Don’t is a book by Jim Collins which has been getting a ton of attention in the business community since its initial publication in 2001.
A few months ago, back in January, we shared a Manitoba Mentoring Moments video where a handful of CEOs shared their recommendations for the #1 business book, which happened to be Good to Great. In this article, we’ll dive into the book in more detail and explore what its findings mean for you and your business, and how you can apply its findings to your business model for greater success.
Before we begin, let me just say that the amount of information and research put into this book is staggering: Jim Collins and a team of over 25 people spent 5 years accumulating data, reviewing revenue statements, stock value and doing interviews to determine the traits that differentiate an average company from an exceptional one.
Over the course of the book the researchers present examples from the eleven companies that they studied, all of whom started out as “good” companies and then proceeded to become “great” ones (greatness is defined by sustained periods during which their stock drastically outperformed their competitors and the market in general).
The 7 Factors of Greatness
Some of the companies featured in the book are familiar names: Kimberly-Clark, Walgreens, Pitney-Bowes and Scott Paper Company, as well as a handful of conglomerate corporations and banks.
Though the companies featured in the book tend to vary in their services or products, according to Collins they all share similar features which made them “built to last” (which is the title of an earlier Collins book, as well).
The seven key factors are:
1. Level 5 Executive Leadership and Personal Humility. Your top-level staff have almost fanatical diligence and commitment to seeing the company succeed, and are more invested in the company’s success than their own.
2. First Who, Then What. These companies brought the right team of committed individuals together before focusing on vision, strategy, and tactics. These companies got rid of the wrong people, hired the right people, and had their best people concentrate on creating the biggest opportunities.
3. Confront the Brutal Facts (But Never Lose Faith in the Potential for Greatness). Be honest with yourself and your company and create a culture where your employees and management feel comfortable addressing issues and challenges. Don’t waste time trying to motivate lazy employees; find motivated ones instead.
4. The Hedgehog Concept. The Hedgehog Concept is an understanding that great companies have from the start: they set goals based on strategy and an understanding of what they can be great at, make money doing, and have a passion for doing. Hedgehog companies are simple ones who know one big thing and stick to it.
5. A Culture of Discipline. The only way to achieve true greatness and the best results is to create a culture of discipline, and find people who are willing to work hard and can be critical of time-wasting activities and endeavours. Collins suggests that making “Stop Doing” lists is a more valuable exercise than making “To Do” lists.
6. Technology Accelerators. Great companies don’t fall into technology fads, but rather find ways to become pioneers in specific technological areas. Ask yourself: does the technology you’re working with fit into your Hedgehog Concept? If yes, then applying your efforts to become a technology pioneer will help you become a great company.
7. The Flywheel and the Doom Loop. While good-to-great transformations may look revolutionary to outside observers, inside the company in question they are in fact totally organic and natural. There’s no “lucky break” or miracle; just a predictable pattern of buildup and breakthrough, similar to pushing on a giant flywheel (hence the name). Less-than-great businesses follow the “doom loop” instead, and try to sidestep the buildup stage and jump directly to breakthrough, with disastrous results.
What Do These Factors Mean for Your Business?
What’s most interesting about this book, in my opinion, isn’t the seven factors (though of course they are fascinating and worth applying to your business model) but rather the perception of the “breakthroughs” these companies had.
The timespan to reach “greatness” ranged from 2 years to 25 years, even though these companies only began to become notable and featured in the press after they had gone from good-to-great. While the narratives told by the media seemed to indicate that there were these big, sudden transformations which happened within these companies (the media does like a good story, after all) what really matters, and what Good to Great really showcases, is that doing something with passion and total commitment is what helped these businesses be successful.
The seven factors Collins’ outlines in Good to Great are things that every business, no matter what their aspirations are, should apply because they are simply good business practices. Finding the right people, working tirelessly, focusing on your strengths as a business rather than trying to be a jack of all trades… these are all things that any budding business owner should learn, and which they should start applying as soon as possible.
Should You Read Good to Great?
I’d say that Good to Great: Why Some Companies Make the Leap… and Others Don’t is a worthwhile read for businesspeople and entrepreneurs at any level. The book combines anecdotes, intensive research and facts about “good” companies who stagnated.
Plus you’ll also learn about “great” companies who succeeded to present a variety of learning opportunities and chances to reflect on where your own business is headed.
Building healthy businesses from day one, allowing growth to happen organically, and not trying to skip over the buildup stage and jump right to a breakthrough is what helped these companies go from good-to-great. Ultimately, that’s the message behind the book, and one which every business owner should remember.
Good to Great: Why Some Companies Make the Leap… and Others Don’t is available on Amazon.
Watch the original Business Hub video featuring Manitoba CEOs who also recommend this top business book.