Jim Collins

Good To Great by Jim Collins Book Summary, Notes, and PDF

Last Updated on April 30, 2020

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The author states in the book that those that are great have only one enemy, which is being good. He explains that he and his team research how to make good companies evolve into great ones. Becoming great from good happens on a rare occasion because it’s not an easy achievement. Collins discovered a systematic phase of what great companies do, and from this he created a framework to help people go from good to great.

There are three areas highlighted in the framework:

  1. Process: You need to build yourself up towards greatness.
  2. Phases: To attain greatness, there are three different phases that you need to go through:
    1. Disciplined People: In order to be great, you must hire disciplined employees and managers.
    2. Disciplined Thought: You need to understand the harder facts of life and create some core values.
    3. Disciplined Action: You must create a culture where people will work appropriately, offering core values alongside freedom.
  1. Flywheel: A quiet process to figure out the actions that need to be taken to attain the best results. 

These steps must be taken one by one, pushing the flywheel in a proper direction until it reaches the melting point. It is vital to bear in mind that these companies don’t go from good to great overnight. You will not wake up all of a sudden to find out that your business has become a revolutionary company. 

The author describes the process as a slow progress, that occurs over time, with a momentum of a flywheel that spins slowly.

Let’s go through these points in detail.

Level 5 Leadership

Research has stated that leaders that have managed to achieve transforming good companies to great ones are not those with larger-than-life personalities. 

Instead, the people that achieve this transformation are quiet and shy. These are people that have a combination of humility and willpower. Large companies strive to have their leaders reach this level.

Collins states that leadership has five different levels and stages. Level 5 leadership is the highest level in the pyramid. 

Level 5 leaders share the following characteristics:

  • They always think about how successful their company is rather than their finances.
  • They are shy leaders but very fierce about doing a proper job.
  • They plan for the future of the company without them in it.
  • They are modest and don’t talk about their own achievements. They share the credit with other leaders.
  • They give credit to other people’s success. If there is no one to give credit to, they credit the whole thing to ‘good luck.’
  • When the company fails, they take responsibility for it. 

The team behind the leader

It is a fact that the right team is needed to attain success. So it’s crucial to create the right team before you even discover which is the right path to achieve success. 

It’s essential to create an excellent team of great members.

Some people will jump the bus the second they smell trouble in the business. You need to find people that are because they believe in the company and will work hard to make the corporation great despite the direction it is headed in. 

The author states that we need to get the right people on the bus and chuck the wrong people off. It’s key not to let those who will sink the ship stay on and drag you down.

It’s a burden if the right people need to carry the weight of the useless workers who don’t make an effort.

Many firms adopt a model that basically focuses on a ‘genius with a thousand helpers.’

The genius leader creates a proper strategy for the corporation and hires people to help him attain success in reaching that vision. Collins states the model might fail when the visionary lives inside a bubble, and is blind to reality.

There are three principles you should always keep in mind when dealing with your employees:

  • When you doubt a person, do not hire them
  • When you know that you have to change the way you handle your employees, do it!
  • Put your best team to work on your best opportunities.

Face tough facts bravely

One of the essential methods of becoming a great firm is to make a lot of right decisions. You cannot attain the right choices until you face the brutal facts first.

Corporations need to create an environment where people learn to hear the truth. There is a difference between your opinion being the only one that’s heard and opening the table for everyone to give their own input. It is a culture of understanding that allows a corporation to face brutal facts and accept the opinions of its workers. This leads them to make the right decisions.

In order to create the proper environment for the truth to flow free:

  • The leader has to lead with questions instead of answers. Probe and delve into the problem until you have a clear picture.
  • Engage in a proper dialog, instead of coercing. It is crucial to become involved in discussions as they can offer solutions rather than just trying to keep everyone happy.
  • Conduct examinations without pushing the blame on everyone. The truth prospers when you go through the problem without pointing fingers. Doing this ends up creating obstacles that keep companies from learning how to grow and become great.

The Hedgehog Concept and The Buildup Phase

The saying goes, the lion is the king of the jungle, and the hedgehog is the king of the forest.

Why does this happen? It is because the hedgehog has the best defense strategy compared to all the other animals when it’s under attack. It curls up into a spiky ball, not letting anything go near it.

Foxes and snakes will devise smart plans to hunt it down, but the hedgehog will just repeat the same old trick over and over again, and no one will be able to beat it.

Collins states that for firms to evolve from good companies to great ones, they need to create their own “Hedgehog concept” so that they can push their way to the top and stay there.

The “Hedgehog concept” is the difference between excellent and good corporations. Great corporations have an in-depth knowledge of three different questions, and the firm uses this knowledge to create their unique way to the top. 

The three questions that must be answered to allow great corporations to get proper knowledge are: 

  • What is the company’s biggest flaw?
  • What drives the economic engine?
  • What are the company’s biggest passions?

It is crucial that the company not only knows what they are best at but also knows what they cannot attain. You need to be the best in your business. 

The most significant idea is to find how competent you can genuinely become the very best and get rid of the competition.

Just because you have been doing something for decades, it doesn’t mean you are the best at it. 

To understand what drives the economic engine of your corporation, you need to derive from the “economic denominator.” It is an important feature that impacts the company actively. If you have to pick only one element that would create the most significant impact, what would it be? Answering this question will lead to a better insight into the organization and help you make better decisions for the company.

There are three parts to the question that will offer you a more in-depth insight into what the company’s passions are. 

Only when companies are happy about things that they are very excited about, they can derive results that exceed expectations. 

A Disciplined Culture

Collins feels that you need to chase after a culture where there are disciplined people always acting in a disciplined way. 

The objective is to create a hedgehog concept as a reliable strategy or theory. If you have the right people on the same team as you, then creating this culture should not be difficult, and everyone should take responsibility for their actions.

You need to become a Level 5 leader, and have the right people on the bus with you, plus being able to face brutal facts about you and the business. Lastly, you must have a strong understanding of the hedgehog concept that will take the company from good to great. 

A culture of discipline requires people to follow the hedgehog concept actively. At the same time, the culture needs to be flexible to carry out disciplined actions.

Another thing about the discipline culture is turning down all the opportunities that do not fit into the company’s hedgehog concept. There has to be strict adherence to the idea that requires corporations to focus on things that they are best at.

Technology Accelerators

Technology is essential for businesses to grow. That being said, it’s key never to follow new technologies blindly. 

It is more important to know how new technologies can accelerate your businesses’ momentum. Big corporations do not try to figure out what type of technology to use, but which kind of technology suits their hedgehog concept better. 

They do not want to get into new technology patterns but try to apply the right technology that will take them to the next level.

Corporations transform from good to great, not from technology but the application of that technology. 

They are not motivated because they are scared that they are left behind, but because they know what steps to take in order to evolve. They will only take into consideration the business’ core values, and this will eventually lead to technological transformation.

Author Biography

Jim Collins is a Socratic advisor and has been researching the concept of success in business for decades.

He has written books that have sold millions of copies worldwide. 

By publishing his bestseller “Good to Great,” he has offered the world of business a whole new different perspective that serves as a guide for leaders across the globe.

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