Good to Great: Why Some Companies Make the Leap… and Others Don’t

“infobox Book “

name	Good to Great: Why Some Companies Make the Leap… and Others Don’t
image
image caption	Cover of Good to Great
author	Jim Collins
country	America
language	English language
genre(s)	Business
publisher	Harper Business
release date	2001
media type	Paperback
pages	300
isbn	0066620996

Jim Collins, already established as one of the most influential management consultants, further established his credibility with the wildly popular Good to Great: Why Some Companies Make the Leap… and Others Don’t, originally published in 2001. The book went on to be one of the bestsellers in the genre, and it is now widely regarded as a modern classic of management theory.
Jim Collins, already established as one of the most influential management consultants, far established his credibility with the wildly democratic Good to Great : Why Some Companies Make the Leap … and Others Don ’ thyroxine, originally published in 2001. The book went on to be one of the bestsellers in the writing style, and it is now widely regarded as a modern classic of management theory. Collins takes up a daunt challenge in the script : identify and evaluating the factors and variables that allow a small divide of companies to make the passage from merely good to sincerely big. ‘ Great, ’ an true immanent term, is operationally defined according to a number of metrics, including, specifically, fiscal performance that exceeded the commercialize median by respective orders of magnitude over a sustain time period of prison term. Using these criteria, Collins and his research team thoroughly catalogued the business literature, identifying a handful of companies that fulfilled their bias criteria for enormousness. then, the defining characteristics that differentiated these ‘ great ’ firms from their competitors were quantified and analyzed.

The resulting data are presented in Good to Great in compelling detail. Over the course of 9 chapters, Collins addresses a number of management, personnel, and operational practices, behaviors, and attitudes that are both conducive and antithetical to the good-to-great transition. One overarching theme that links together virtually all of Collins’ arguments is the need to define a narrowly focused objective and field of competency and then focus all of the company’s resources toward that area of strength. Repeatedly, Collins warns that straying too far from a company’s established strengths is inimical to the attainment of greatness.
The resulting data are presented in good to Great in compelling detail. Over the course of 9 chapters, Collins addresses a issue of management, personnel, and functional practices, behaviors, and attitudes that are both conducive and antithetic to the good-to-great conversion. One overarching theme that links together about all of Collins ’ arguments is the indigence to define a narrowly focused aim and field of competence and then focus all of the company ’ randomness resources toward that area of persuasiveness. repeatedly, Collins warns that straying besides far from a company ’ south established strengths is unfriendly to the attainment of greatness. Finally, Collins links the findings of Good to Great to the conclusions he reached in his previous book, Built to Last, which focused on the factors that define companies that survive in the long-term, meshing both sets of results into an overarching framework for enduring success.

Chapter Summaries

Chapter One: Good is the Enemy of Great

last, Collins links the findings of estimable to Great to the conclusions he reached in his former koran, Built to last, which focused on the factors that define companies that survive in the long-run, meshing both sets of results into an overarch framework for enduring success. The beginning chapter of the book lays out the criteria that Collins and his research team used in selecting the companies that served as the footing of the meta-analysis that provided the findings set forth in the book. The most important factor in the choice procedure was a menstruation of growth and sustained success that far outpaced the commercialize or industry average. Based on the stated criteria, the companies that were selected for inclusion were Abbott, Fannie Mae, Circuit City, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and Wells Fargo. Collins also offers a few of the most significant findings gleaned from the study. Of particular note are the many indications that factors such as CEO compensation, technology, mergers and acquisitions, and change management initiatives played relatively minor roles in fostering the Good to Great process. Instead, Collins found that successes in three main areas, which he terms disciplined people, disciplined thought, and disciplined action, were likely the most significant factors in determining a company’s ability to achieve greatness.

Chapter Two: Level 5 Leadership

Collins besides offers a few of the most significant findings gleaned from the study. Of particular note are the many indications that factors such as CEO compensation, engineering, mergers and acquisitions, and change management initiatives played relatively minor roles in fostering the good to Great work. rather, Collins found that successes in three main areas, which he terms disciplined people, disciplined thought, and disciplined action, were likely the most significant factors in determining a caller ’ mho ability to achieve greatness. In this chapter, Collins begins the process of identify and further explicating the unique factors and variables that differentiate estimable and great companies. One of the most significant differences, he asserts, is the quality and nature of leadership in the tauten. Collins goes on to identify “ Level 5 leadership ” as a coarse feature of the great companies assessed in the report. This type of leadership forms the peak degree of a 5-level hierarchy that ranges from merely competent supervision to strategic administrator decision-making. By further studying the behaviors and attitudes of so-called Level 5 leaders, Collins found that many of those classified in this group displayed an unusual mix of intense determination and profound humility. These leaders often have a long-term personal sense of investment in the company and its success, often cultivated through a career-spanning climb up the company’s ranks. The personal ego and individual financial gain are not as important as the long-term benefit of the team and the company to true Level 5 leaders. As such, Collins asserts that the much-touted trend of bringing in a celebrity CEO to turn around a flailing firm is usually not conducive to fostering the transition from Good to Great.

Chapter Three: First Who, Then What

The next factor that Collins identifies as part of the Good to Great process is the nature of the leadership team. Specifically, Collins advances the concept that the process of securing high-quality, high-talent individuals with Level 5 leadership abilities must be undertaken before an overarching strategy can be developed. With the right people in the right positions, Collins contends that many of the management problems that plague companies and sap valuable resources will automatically dissipate. As such, he argues, firms seeking to make the Good to Great transition may find it worthwhile to expend extra energy and time on personnel searches and decision-making.
By promote studying the behaviors and attitudes of alleged Level 5 leaders, Collins found that many of those classified in this group displayed an unusual mix of intense determination and heavy humility. These leaders much have a long-run personal smell of investment in the caller and its success, frequently cultivated through a career-spanning climb up the ship’s company ’ sulfur ranks. The personal ego and individual fiscal advance are not ampere important as the long-run benefit of the team and the company to true Level 5 leaders. As such, Collins asserts that the much-touted swerve of bringing in a fame CEO to turn around a flail tauten is normally not conducive to fostering the transition from good to Great.The future component that Collins identifies as function of the Good to Great procedure is the nature of the leadership team. specifically, Collins advances the concept that the process of securing high-quality, high-talent individuals with Level 5 leadership abilities must be undertaken before an overarching scheme can be developed. With the justly people in the properly positions, Collins contends that many of the management problems that plague companies and sap valuable resources will mechanically dissipate. As such, he argues, firms seeking to make the Good to Great transition may find it worthwhile to expend supernumerary energy and fourth dimension on personnel searches and decision-making. Collins besides underscores the importance of maintaining asperity in all personnel decisions. He recommends moving potentially failing employees and managers to modern positions, but not hesitating to remove personnel who are not actively contributing. He besides recommends that hiring should be delayed until an absolutely desirable candidate has been identified. Hewing to both of these guidelines, Collins claims, will likely save prison term, attempt, and resources in the long-run .

Chapter Four: Confront the Brutal Facts (Yet Never Lose Faith)

Another key element of some companies’ unique ability to make the transition from Good to Great is the willingness to identify and assess defining facts in the company and in the larger business environment. In today’s market, trends in consumer preferences are constantly changing, and the inability to keep apace with these changes often results in company failure. Using the example of an extended comparative analysis of Kroger and A & P, Collins observes that Kroger recognized the trend towards modernization in the grocery industry and adjusted its business model accordingly, although doing so required a complete transformation of the company and its stores. A & P, on the other hand, resisted large-scale change, and thus guaranteed its own demise.
Another key element of some companies ’ singular ability to make the transition from good to Great is the willingness to identify and assess defining facts in the company and in the larger clientele environment. In nowadays ’ randomness marketplace, trends in consumer preferences are constantly changing, and the inability to keep quickly with these changes often results in company failure. Using the exercise of an elongated comparative psychoanalysis of Kroger and A & P, Collins observes that Kroger recognized the swerve towards modernization in the grocery industry and adjusted its business model consequently, although doing therefore required a arrant transformation of the caller and its stores. A & P, on the other hand, resisted large-scale variety, and frankincense guaranteed its own demise. Collins outlines a four-step serve to promote awareness of emerging trends and potential problems : 1 ) precede with questions, not answers ; 2 ) hire in dialogue and debate, not coercion ; 3 ) lead autopsies without blame ; and 4 ) Build red iris mechanisms that turn information into data that can not be ignored.

Chapter Five: The Hedgehog Concept (Simplicity Within the Three Circles)

In this chapter, Collins uses the metaphor of the hedgehog to illustrate the apparently contradictory rationale that simplicity can sometimes lead to greatness. When confronted by predators, the hedgehog ’ second simple but amazingly effective answer is to roll up into a ball. While other predators, such as the fox, may be impressively apt, few can devise a strategy that is effective enough to overcome the porcupine ’ randomness simpleton, repetitive reaction. Similarly, Collins asserts, the way to make the transformation from Good to Great is often not doing many things well, but instead, doing one thing better than anyone else in the world. It may take time to identify the single function that will be a particular firm’s “hedgehog concept,” but those who do successfully identify it are often rewarded with singular success. In order to help expedite this process, Collins suggests using the following three criteria: 1) Determine what you can be best in the world at and what you cannot be best in the world at; 2) Determine what drives your economic engine; and 3) Determine what you are deeply passionate about.

Chapter Six: A Culture of Discipline

similarly, Collins asserts, the way to make the transformation from dependable to Great is frequently not doing many things well, but rather, doing one thing better than anyone else in the world. It may take clock time to identify the single function that will be a particular firm ’ s “ hedgehog concept, ” but those who do successfully identify it are often rewarded with remarkable success. In order to help expedite this summons, Collins suggests using the follow three criteria : 1 ) Determine what you can be best in the worldly concern at and what you can not be best in the worldly concern at ; 2 ) Determine what drives your economic engine ; and 3 ) Determine what you are profoundly passionate about. Another defining characteristic of the companies that Collins defined as capital in his study was an overarch organizational acculturation of discipline. He is immediate to point out that a culture of discipline is not to be confused with a rigid authoritarian environment ; rather, Collins is referring to an organization in which each director and staff extremity is driven by an persistent inner sense of determination. In this character of organization, each individual functions as an entrepreneur, with a deeply rooted personal investment in both their own work and the company ’ sulfur success. Although this discipline will manifest itself in a high standard of quality in the work that is produced by managers and employees alike, its most significant outcome will be an almost fanatical devotion to the objectives outlined in the “hedgehog concept” exercises. Disciplined workers will be better equipped to hew to these goals with a single-minded intensity that, according to Collins, will foster the transformation from merely Good to Great. In addition, the author asserts, it is important that within this overarching culture of discipline, every team member is afforded the degree of personal empowerment and latitude that is necessary to ensure that they will be able to go to unheard-of extremes to bring the firm’s envisioned objectives into existence.

Chapter Seven: Technology Accelerators

Although this discipline will manifest itself in a eminent standard of quality in the workplace that is produced by managers and employees alike, its most significant consequence will be an about fanatic devotion to the objectives outlined in the “ porcupine concept ” exercises. Disciplined workers will be better equipped to hew to these goals with a single-minded saturation that, according to Collins, will foster the transformation from merely good to Great. In addition, the author asserts, it is significant that within this overarch culture of discipline, every team member is afforded the degree of personal authorization and latitude that is necessity to ensure that they will be able to go to unheard-of extremes to bring the firm ’ s envisioned objectives into universe. today, many businesses have come to depend upon technology to increase efficiency, reduce disk overhead, and maximize competitive advantage. however, Collins cautions that engineering should not be regarded as a potential panacea for all that ails a company. The folly of this kind of think was revealed in the consequence of the crash of the technical school bubble in the early 2000s. The market correction threw into sharp stand-in the differences between sustainable uses of the Internet to extend established businesses and ill-planned, unviable on-line start-ups. Collins contends that the good-to-great companies approach the prognosis of modern and emerging technologies with the like prudence and careful slowness that characterizes all of their other business decisions. Further, these companies tend to apply technology in a manner that is brooding of their “ porcupine concepts ” — typically by selecting and focusing entirely upon the growth of a few technologies that are basically compatible with their established strengths and objectives. Collins characterizes the ideal approach to technology with the surveil bicycle : “ Pause — Think — Crawl — Walk — Run. ”

Chapter Eight: The Flywheel and the Doom Loop

In this chapter, Collins describes two cycles that demonstrate the means that clientele decisions tend to accumulate incrementally in either an advantageous or a disadvantageous manner. Both, the writer emphasizes, accrue over fourth dimension. Despite the popular misconception that commercial enterprise success or failure much occurs abruptly, Collins asserts that it more typically occurs over the course of years, and that both lone transpire after sufficient positive or negative momentum has been accrued. Collins describes the advantageous business cycle that, in some cases, can foster the transition from Good to Great as “the flywheel effect.” By making decisions and taking actions that reinforce and affirm the company’s “hedgehog” competencies, executives initiate positive momentum. This, in turn, results in the accumulation of tangible positive outcomes, which serve to energize and earn the investment and loyalty of the staff. This revitalization of the team serves to further build momentum. If the cycle continues to repeat in this manner, the transition from Good to Great is likely to transpire. In contrast, the doom loop is characterized by reactive decision-making, an over-extension into too many diverse areas of concentration, following short-lived trends, frequent changes in leadership and personnel, loss of morale, and disappointing results.

Chapter Nine: From Good to Great to Built to Last

In the concluding chapter of Good to Great, Collins makes a connection between this book and his previous work, Built to Last, which represented the findings of a six-year study into the factors that determined whether a new company would survive in the long-term. First and foremost, Collins contends that companies need a set of core values in order to achieve the kind of long-term, sustainable success that may lead to greatness. Companies need to exist for a higher purpose than mere profit generation in order to transcend the category of merely good. According to Collins, this purpose does not have to be specific — even if the shared values that compel the company toward success are as open-ended as being the best at what they do and achieving excellence consistently, that may be sufficient as long as the team members are equally dedicated to the same set of values.
Collins describes the advantageous occupation hertz that, in some cases, can foster the transition from good to Great as “ the flywheel effect. ” By making decisions and taking actions that reinforce and affirm the ship’s company ’ s “ porcupine ” competencies, executives initiate positive momentum. This, in turn, results in the accretion of tangible positive outcomes, which serve to energize and earn the investment and loyalty of the staff. This revival of the team serves to foster build momentum. If the bicycle continues to repeat in this manner, the transition from good to Great is probably to transpire. In contrast, the doom iteration is characterized by reactive decision-making, an over-extension into besides many divers areas of concentration, following ephemeral trends, frequent changes in leadership and personnel, passing of esprit de corps, and disappointing results.In the concluding chapter of well to Great, Collins makes a association between this record and his previous work, Built to last, which represented the findings of a six-year learn into the factors that determined whether a newfangled company would survive in the long-run. First and first, Collins contends that companies need a set of core values in order to achieve the kind of long-run, sustainable success that may lead to greatness. Companies need to exist for a higher purpose than bare profit generation in decree to transcend the class of merely good. According to Collins, this purpose does not have to be specific — even if the shared values that compel the company toward success are a open-ended as being the best at what they do and achieving excellence systematically, that may be sufficient equally long as the team members are evenly dedicated to the lapp set of values. Although many of the conclusions of both of the books overlap, Collins notes that Good to Great should not be seen as the follow-up to Built to Last, which focuses on sustaining success in the long-term. Instead, Good to Great actually functions as the prequel to Built to Last. First, a company should focus on developing the foundation that is necessary to work toward greatness. Then, they can begin to apply the principles of longevity that are set forth in Built to Last.
Although many of the conclusions of both of the books overlap, Collins notes that good to Great should not be seen as the follow-up to Built to final, which focuses on sustaining success in the long-run. rather, well to Great actually functions as the prequel to Built to last. First, a company should focus on developing the initiation that is necessary to work toward enormousness. then, they can begin to apply the principles of longevity that are set away in Built to end.

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