Good To Great:
Why Some Companies Make the Leap... and Others Don't

by Jim Collins. NY: Harper Collins, 2001.

The following are selected quotes from the book to give a preliminary idea of what it is about. For full understanding, you need to read the entire book. We have copies in the library.. or buy a copy yourself.

"[This book] is about the question -- Can a good company become a great company and, if so, how?" (5).

"In essence, we identified companies that made the leap from good results to great results and sustained those results for at least fifteen years... We then compared the good-to-great companies to the comparison companies to discover the essential and distinguishing factors at work" (3).

"... [in the study] we were frequently just as astonished at what we did NOT see..." (10):

Here is an overview of the concepts discovered in the study:

1. Level 5 Leadership - "...good-to-great leaders [are] self-effacing, quiet, reserved... a paradoxical blend of personal humility and professional will" (12-13).

2. First Who... Then What - "We expected that good-to-great leaders would begin by setting a new vision and strategy. We found instead that they FIRST got the right people on the bus, the wrong people off the bus, and the right people in the right seats -- and THEN they figured out where to drive it. The old adage "People are your most important asset" turns out to be wrong. People are NOT your most important asset. The RIGHT people are" (13).

3. Confront the Brutal Facts (Yet Never Lose Faith) - "You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, AND, at the same time have the discipline to confront the most brutal facts about your current reality, whatever they may be" (13).

4. The Hedgehog Concept (Simplicity Within the Three Circles) - "...if you cannot be the best in the world at your core business, then your core business absolutely cannot form the basis of a great company" (13).

5. A Culture of Discipline - "When you have disciplined people, you don't need hierarchy. When you have disciplined thought, you don't need bureaucracy. When you have disciplined action, you don't need excessive controls" (13).

6. Technology Accelerators - "Good-to-great companies THINK differently about the role of technology. They never use technology as the primary means of igniting a transformation. Yet, paradoxically, they are pioneers in the application of CAREFULLY SELECTED technologies" (13).

7. The Flywheel and the Doom Loop - "...the good-to-great transformations never happened in one fell swoop... Rather, the process resembled relentlessly pushing a giant flywheel... building momentum..." (14).

Level 5 Leadership

" airs of self-importance" (18).

"...a level 5 leader... blends extreme personal humility with intense professional will... a fierce resolve to do whatever needed to be done to make the company great" (21).

"It's not that level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious -- but their ambition is first and foremost for the institution, not themselves" (21).

"Level 5 leaders are fanatically driven, infected with an incurable need to produce RESULTS" (30).

"Cain made it clear that neither family ties nor length of tenure would have anything to do with whether you held a key position in the company. If you didn't have the capacity to become the best executive in the industry in your span of responsibility, then you would lose your paycheck" (31).

First Who... Then What

"...if you have the wrong people, it doesn't matter whether you discover the right direction; you STILL won't have a great company. Great vision without great people is irrelevant" (42).

"Maxwell made it absolutely clear that there would only be seats for A players who were going to put forth A+ effort, and if you weren't up for it, you had better get off the bus, and get off NOW" (45).

"In determining "the right people," the good-to-great companies placed greater weight on character attributes than on specific educational background, practical skills, specialized knowledge, or work experience... they viewed these traits as more teachable (or at least learnable), whereas they believed dimensions like character, work ethic, basic intelligence, dedication to fulfilling commitments, and values are more ingrained" (51).

Guidelines to finding good people:

  1. "When in doubt, don't hire -- keep looking" (54).

  2. "When you know you need to make a people change, act... The moment you feel the need to tightly manage someone, you've made a hiring mistake... Letting the wrong people hang around is unfair to all the right people" (56). "The good-to-great leaders, however, would not rush to judgment. Often, they invested substantial effort in determining whether they had someone in the wrong seat before concluding that they had the wrong person on the bus entirely" (57).

  3. "Put your best people on your biggest opportunities, not your biggest problems" (58).

"...each core member of the team transformed personal ambition into ambition for the company... the team members had Level 5 potential" (60).

Confront the Brutal Facts

"The moment a leader allows himself to become the primary reality, you have a recipe for mediocrity, or worse. This is one of the key reasons why less charismatic leaders often produce better long-term results than their more charismatic counterparts" (72).

"Now, you might be wondering, "How do you motivate people with brutal facts? Doesn't motivation flow chiefly from a compelling vision?" The answer, surprisingly, is "No." Not because vision is unimportant, but because expending energy trying to motivate people is largely a waste of time... If you have the right people on the bus, they will be self-motivated. The real question then become: How do you manage in such a way as not to de-motivate people?" (74).

The Hedgehog Concept

"In his famous essay "The Hedgehog and the Fox," Isaiah Berlin divided the world into hedgehogs and foxes, based upon an ancient Greek parable. "The fox knows many things, but the hedgehog knows one big thing"" (90).

"Hedgehogs simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything. It doesn't matter how complex the world, a hedgehog reduces all challenges and dilemmas to simple -- indeed almost simplistic -- hedgehog ideas. For a hedgehog, anything that does not somehow relate to the hedgehog idea holds no relevance" (91).

""You want to know what separates those who make the biggest impact from all the others who are just as smart? They're hedgehogs." Freud and the unconscious, Darwin and natural selection, Marx and class struggle, Einstein and relativity, Adam Smith and division of labor -- they were all hedgehogs" (91).

"...the essence of profound insight is simplicity... Hedgehogs see what is essential and ignore the rest" (91).

"Consider the case of Walgreen's... What was the concept? Simply this: the best, most convenient drugstores with high profit per customer visit. That's it... In classic hedgehog style, Walgreen's took this simple concept and implemented it with fanatical consistency" (92).

"...the good-to-great companies founded their strategies on deep understanding along three key dimensions --- the three circles... (95)

  1. "What you can be the best in the world at (and, equally important, what you CANNOT be the best in the world at)" (95).

  2. "What drives your economic engine" (95).

  3. "What are you deeply passionate about" (96).

This concept of three circles is equally applicable to any individual trying to choose a career... "First, you are doing work for which you have a genetic or God-given talent ("I feel that I was born to be doing this."). Second, you are well paid for what you do. ("I get paid to do this? Am I dreaming?"). Third, you are doing work you are passionate about and absolutely love to do, enjoying the actual process for its own sake. ("I look forward to getting up and throwing myself into my daily work...") (96).

"You can't just go off-site for two days, pull out a bunch of flip charts, do breakout sessions, and come up with a deep understanding" (112).

"It took about FOUR YEARS on average for the good-to-great companies to clarify their Hedgehog Concepts... getting the concept can be devilishly difficult and takes time" (114).

"The essence of the process is to get the right people engaged in vigorous dialogue and debate, infused with the brutal facts and guided by questions formed by the three circles" (114).

A Culture of Discipline

"...the purpose of bureaucracy is to compensate for incompetence and lack of discipline -- a problem that largely goes away if you have the right people in the first place. Most companies build their bureaucratic rules to manage the small percentage of wrong people on the bus, which in turn drives away the right people on the bus, which increases the need for more bureaucracy to compensate for incompetence and lack of discipline... " (121).

"When you put these two complementary forces together -- a culture of discipline with an ethic of entrrepreneurship -- you get a magical alchemy of superior performance and sustained results" (121-2).

Building a culture of discipline means the following:

  1. "Build a culture around the idea of freedom and responsibility, within a framework" (124).

  2. "Fill that culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities" (124).

  3. "Don't confuse a culture of discipline with a tyrannical disciplinarian" (124).

  4. "Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection of the three circles. Equally important, create a "stop doing list" and systematically unplug anything extraneous" (124).

Technology Accelerators

"The good-to-great companies never began their tranitions with pioneering technology, for the simple reason that you cannot make good use of technology until you know which technologies are relevant. And which are those? Those--and ONLY those--that link directly to the three intersecting circles of the Hedgehog Concept" (152-3).

"We were quite surprised to find that fully 80 percent of the good-to-great executives we interviewed didn't even mention technology as one of the top five factors in the transition" (155).

"One Nucor executive summed up, "Twenty percent of our success is the new technology that we embrace... [but] eighty percent of our success is in the culture of our company"... Indeed, you could have given the exact same technology at the exact same time to any number of companies with the exact same resources as Nucor -- and even still, they would have failed to deliver Nucor's results" (156).

"Mediocrity results first and foremost from management failure, not technological failure" (156).

"...the United States -- despite its technological sophistication -- did not succeed in Vietnam. If you ever find yourself thining that technology alone holds the key to success, then think again of Vietnam" (159).

The Flywheel
And the Doom Loop

"...under the right conditions, the problems of commitment, alignment, motivation, and change just melt away... the way to get people lined up behind a bold new vision is to turn the flywheel consistent with that vision -- from two turns to four, then four to eight, then eight to sixteen -- and then to say, "See what we're doing, and how well it is working?"" (176).

"The good-to-great companies tended not to publicly proclaim big goals at the outset. Rather, they began to spin the flywheel" (177).

"When you let the flywheel do the talking, you don't need to fervently communicate your goals. People can just extrapolate from the momentum of the flywheel for themselves: "Hey, if we just keep doing this, look at where we can go!" ...the goal almost sets itself" (177).

The Doom Loop - "We found a very different pattern at the comparison companies" (178). "Each new.. CEO brought his own new program and halted the momentum of his predecessor... back and forth, lurch and thrash, with each CEO trying to make a mark with his own program" (179).

"...there were some highly prevalent patterns... the selection of leaders who undid the work of previous generations" (180).

From Good To Great
To Built to Last

"Enduring great companies don't exist merely to deliver returns to shareholders. Indeed, in a truly great company, profits and cash flow become like blood and water to a healthy body: They are absolutely essential for life, but they are not the very POINT of life" (194).

"Indeed, the point of this entire book is NOT that we should "add" these findings to what we are already doing and make ourselves even more overworked. No, the point is to realize that much of what we're doing is at best a waste of energy. If we organized the majority of our work time around applying these principles, and pretty much ignored or stopped doing everything else, our lives would be simpler and our results vastly improved" (205).

End Notes

"The recent spate of boards enamored with charismatic CEOs... is one of the most damaging trends for the long-term health of companies" (216).

Colby Glass, MLIS