Years of scholarly research are analyzed in the book Good to Exceptional to show how good organizations evolved into great ones. Jim Collins discovered some characteristics that all successful businesses have as a result of his research. The secret lies in selecting the appropriate candidates, letting go of the incorrect ones, changing when necessary, and elevating capable leaders. The result is a wave of good energy that will carry you and your group to greatness. But this approach is not just a hypothesis. Many great businesses use the Good to Great methodology. For instance, Jim Collins was encouraged by Jeff Bezos, the CEO of Amazon, to apply the ideas from this book to Amazon.
Jim Collins started his research and academic career as a faculty member at the Stanford Graduate School of Business. He was given the Distinguished Teaching Award in this location in 1992. He established a management laboratory in Boulder, Colorado, in 1995, where he conducts research and interacts with senior leadership teams, CEOs, and boards of directors. Jim has an MBA from Stanford University and a bachelor’s degree in mathematical sciences. Additionally, he has honorary doctorates from the University of Colorado and the Claremont Graduate University Peter F. Drucker Graduate School of Management. Jim was chosen by Forbes as one of the 100 Greatest Living Business Minds in 2017.
Good Is the Enemy of Great
The adversary of great is good. And that is a major factor in why we have so little that is truly amazing. We have good schools, which is mostly why we don’t have outstanding schools. We have good government, but not great government, for the most part. Because it is so simple to settle for a good life, very few people achieve great lives.
Collins and his study group conducted a meta-analysis, which allowed Collins to pinpoint particular examples of long-term success. The following businesses participated in this success, which was significantly above the market average:
- Abbott
- Fannie Mae
- Circuit City
- Philip Morris
- Pitney Bowes
- Walgreens
- Wells Fargo
The concern with being great rather than good was the most crucial characteristic these businesses shared. Disciplined people, disciplined thought, and disciplined action encouraged this fixation with brilliance. Each of these characteristics kept these businesses from striving towards virtue.
Pursuing goodness has a drawback in that it never results in greatness. It’s a common fallacy that becoming great is just a marginal step up from becoming good. Collins argues that greatness and virtue are completely distinct and call for various strategies. Collins actually describes good as being the adversary of great because of this misperception. Since they perceive a decent life as only somewhat worse than a magnificent life, people are willing to tolerate it.
Similar to this, the majority of businesses cannot progress from good to outstanding. Great businesses are ones that do well regardless of their industry. Therefore, even if the industry saw a decline, this company would still be successful.
Level Five Leadership
Level 1: Very competent person. Individuals at the Level 1 level contribute to the business through their skills.
Contributing team members at Level 2 have been employed by the organisation for some time and are aware of the tasks at hand.
Level 3 – Skilled managers may arrange personnel and assets for the pursuit of predetermined goals.
Level 4 – Successful leaders pursue an organization’s clear and compelling vision. They can subsequently encourage better performance standards.
Executive at level five (focused on greatness). Humility, fanatical determination, diligence, and willpower are used to achieve the emphasis on greatness.
You need level 5 leadership if you want your business to succeed. Collins discovered that a level 5 leader was present in every organization deemed great. Collins discovered that many of the level 5 leaders in his study had a perplexing blend of tenacity and modesty. They were able to create long-term investments in the growth of the business because to this combination. These executives did not just appear in this position. Instead, they were leaders who had worked their way up through the ranks of the organization. As a result, they are quite familiar with the business. Level 5 leaders don’t priorities their ego or material achievement. Instead, they priorities the long-term success of their group and company over their own.
Collins contends that hiring celebrity CEOs is not a viable way to transform a good firm into a great company. Hire someone who understands and cares about the business instead. 10 out of 11 of the identified companies took this action. When anything goes wrong, these people should be willing to take the responsibility and be the first to provide credit when the team succeeds.
The Two Sides of Level Five Leadership
Will Professional
an unrelenting commitment to taking whatever steps are necessary to get the finest long-term results.
It establishes the benchmark for creating a great, long-lasting enterprise. will not accept anything less than this requirement.
Personal Decency
Never be arrogant.
relies less on personality and more on motivating norms.
focuses ambition on the business rather than the individual.
Who comes first, then What
It is unfair to the right people to keep the wrong people around since they will surely have to make up for their shortcomings. Even worse, it can scare off the best candidates. Strong performers are driven by performance inherently, and when they perceive that their efforts are being hampered by carrying excess weight, they eventually lose motivation.
The Three Practices
According to Collins, there are three disciplines represented in this chapter. Get the proper individuals in your organization and the bad ones out of it to begin the change process.
- Hire slowly and fire quickly is the first rule. If in doubt, wait to hire and continue looking.
- Take action when you see you need to make a personnel change.
- Put your best employees on your biggest possibilities rather than your worst problems
You should be able to hire top-notch candidates with level 5 leadership qualities if you adhere to these rules. This team must be established before you can create a broad strategy. This is due to the fact that your strategy should take your team’s strengths and limitations into account.
Effective Recruitment and Hiring
Many of your organizational issues will go away once the proper individuals are in the correct positions. You will discover, for instance, that you have access to greater resources. Therefore, making the first investment in hiring the appropriate people for the appropriate jobs is worthwhile.
In addition to making wise personnel decisions, management must be brutal. It’s important to recognize when staff are performing poorly. Finding an alternative role that would suit the person better is one possible approach. If the employee simply does not match the organization’s broad plans, however, do not hesitate to fire them. Your chances of creating a successful firm will increase dramatically if you replace unproductive employees with well chosen replacements.
Face the Harsh Reality
Great businesses can adapt to changing consumer tastes and keep up with trends. Your business can never be great if you can’t accept the harsh reality that it needs to adapt in order to succeed.
Collins cites Kroger and A&P as examples. Kroger noticed that the market was shifting toward a more contemporary approach to grocery shopping. As a result, they modified their company strategy to take into account both the growth of online orders and technological improvements. Their goal as a company as well as how their stores were run were altered as a result. In contrast, A&P resisted making the significant changes necessary to keep up with this evolving sector. Instead of succeeding like Kroger has since then, A&P filed for bankruptcy.
Collins lays out a four-step procedure to raise public awareness of new trends and potential issues:
1) Ask more questions than you answer.
2) Discuss and argue issues instead of using force.
3) Perform autopsies free of judgement.
4) Create methods for raising red flags so that information becomes unavoidable information.
The Hedgehog Concept
It is possible for simplicity to produce brilliance. This idea could appear paradoxical at first, which is why Collins utilises the metaphor of a hedgehog. When threatened by predators, hedgehogs have an easy response. They merely ball themselves up. Although it may appear to be a weak defense, it successfully keeps predators away from the prey. Foxes are frequently depicted as symbols of slyness and wisdom. However, they are unable to get past the hedgehog’s straightforward reaction. Importantly, this basic defense strategy retains its effectiveness even after being used 100 times.
Collins’ three criteria can be used to determine the potential hedgehog concept for your business:
Make a list of the things you can excel at. Importantly, make a note of the areas in which you fall short of world-class performance.
Find out what fuels the economic engine of your business.
Determine your company’s and your own deepest passions.
You should have a clearer notion of what concepts might be your hedgehog concept after going through these criteria.
The Doom Loop and the Flywheel
Collins contends that a company’s success or failure can take years to manifest. It’s a common fallacy that success and failure may happen instantly. Success or failure actually don’t show up until enough positive or negative momentum has built up.
From this point forward, you want your company to establish a profitable business cycle. By doing this, you are improving your prospects of future business success. The flywheel effect is what Collins refers to. By making choices and executing activities that support the hedgehog concept, the flywheel effect can be established. The accumulation of concretely advantageous outcomes that follow serves to motivate the workforce and win their trust and loyalty.
Positive momentum will only keep growing with additional employee investment. The time it takes to achieve greatness will be substantially shortened if you can keep up this enthusiasm.
Collins refers to this as a “doom loop,” which you should prevent by avoiding:
- Making decisions on the spot
- extension into too many different areas of focus
- observing passing trends
- frequent personnel and leadership changes
- decline in morale
- disappointed outcomes
Good To Great Book Review
“Good to Great” is a management and leadership book written by Jim Collins. The book details a research project aimed at identifying the common characteristics of companies that made the transition from being merely “good” to becoming great organizations. Through this research, Collins and his team identified several key principles, including the concept of “Level 5 Leadership,” the importance of having a clear and focused strategy, and the need for a “hedgehog concept” that aligns a company’s resources and efforts around a singular, compelling objective. The book also highlights the need for a strong corporate culture and the importance of facing facts, even when they are uncomfortable, in order to make difficult but necessary decisions. Overall, “Good to Great” offers practical insights and lessons for anyone seeking to improve the performance of their organization.
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