Good to Great by Jim Collins - The 7 Key Concepts
Good to Great by Jim Collins is a beloved and timeless management book, with over 4 million copies sold to date.
Collins first bestseller was Built to Last in 1994, on how to take a company with great results and turn it into an enduring great company of iconic stature. After years of research, Jim released Good to Great in 2001, not as a sequel, rather, a prequel to the question: how do you turn a good organisation into a great one?
What are the timeless principles of good to great? How do you take a good organisation (be it a company, non-profit, church, government) and turn it into one that produces sustained great results?
Let's outline the 7 key concepts from Good to Great. To go deeper into each one of these concepts, I highly recommend reading the book and purchasing it for your leadership team.
The 7 Key Concepts (Overview)
1. Strive for 'Level 5' Leadership
Every good-to-great company had Level 5 leadership, especially during the pivotal transition years. Level 5 refers to a 5-level hierarchy of executive capabilities, outlined in the book.
Level 5 leaders embody a (paradoxical) mix of personal humility and professional will. They are ambitious and fanatically driven, but first and foremost for the company, not themselves. They make diligent and difficult decisions to produce sustained results, setting up their successors for even greater success in the long term, whereas egocentric level 4 leaders often set up their successors for failure.
Source: Jim Collins
2. Get the right people on the bus
"First who... Then what". Almost nothing is more important to a business than the talent it employs. Jim Collins calls this "getting the right people on the bus". Many businesses start with mission and strategy, but Collins proposes a different path to greatness. Before figuring out where to drive the bus, get the right people on the bus and the wrong people off it. Only then, will you figure out how to take it some place great.
Getting people on the bus is more than simply filling empty seats. It's ensuring each seat is occupied by individuals who desire to drive the organisation forward. Collins emphasises this for leadership and management roles. Good-to-great leaders put who before what by rigorously forming a superior executive team that consists of people who vigorously search for the best answers, regardless of parochial interest.
The comparison model to this is 'a genius with a thousand helpers', whereby a genius leader sets a vision and employs a thousand helpers. This model fails when the genius leaves the company.
3. Confront the brutal facts
Building a great business requires making a series of good decisions, diligently executed and accumulated one on top of another. But how do you make consistently good decisions? Collins team found that good-to-great company displayed a distinctive form of disciplined thought. They found a path to greatness by confronting the brutal facts of their current reality, which often made the right decisions become self-evident.
To create a 'climate of truth', Collins outlines a four-step process to promote awareness of emerging trends and problems:
Lead with questions, not answers.
Engage in dialogue and debate, not coercion.
Conduct autopsies, without blame.
Build red flag mechanisms that turn information into information that cannot be ignored.
Another key psychology of good-to-great leaders is the Stockdale Paradox: Retaining absolute faith that you can and will prevail in the end, regardless of difficulties
4. Develop your 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.” A fox can move around quickly, devising a myriad of complex strategies to sneak up on its opponent, whereas a hedgehog moves about slowly and relies on one proven strategy of protection. At the end of the day, the hedgehog always wins against the fox. Collins unpacks in detail how to take this analogy and apply it to business.
Developing a Hedgehog Concept involves understanding the intersection of three circles: what we are fanatically passionate about, what we can be the best at, and what drives the economic engine. Good-to-great companies crystallise this concept to guide all their efforts.
"The Hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best or a plan to be the best. It is an understanding of what you can be the best at. The distinction is absolutely crucial." - Jim Collins
5. Have a culture of discipline
All companies have a culture. Some have discipline. But only few have a culture of discipline. Collins emphasises that when you have disciplined people, you don't need a lot of hierarchy or bureaucracy.
A culture of discipline involves duality, meaning, it requires people to adhere to a consistent system, while also enabling them to operate with freedom and responsibility within the framework of that system. When you combine a culture of discipline with entrepreneurship, you get a 'magic alchemy of great performance'. Collins also warns against 'saviour CEOs' who discipline through sheer force of personality and often fail to produce sustained results.
6. Think different about technology
Good-to-great companies think very differently about technology and its role in transformation. Comparison companies in the book treat technology as a ignition for transformation. Collins argues that technology itself is never a primary root cause of either greatness or decline.
Instead of relying soley on technology to accelerate momentum, good-to-great companies avoided the latest fads and focused instead on how technology could be carefully applied to their strengths within the Hedgehog Concept. Ironically, these companies all became pioneers in technology.
7. Build a flywheel of momentum
The final concept to draw from this book is that good-to-great transformations never happened in one fell swoop. There was no single defining action, no revolution, restructuring or dramatic change program that these businesses relied on to become great organisations. Rather, the process resembled relentlessly pushing a giant flywheel in one direction, building momentum until a point of breakthrough.
Credit: Good To Great. Jim Collins.
Good To Great offers business owners and leaders timeless concepts to transform their organisation, in any economy, despite any challenges, to produce consistently great results.
Download the book Discussion Questions
Written by Lachlan Nicolson. Small Business Coach at Leader Guide, based in Brisbane.
We're talking about Good to Great on our podcast this week: My Business Guide. Listen and subscribe wherever you get podcasts.
Further Reading: The Best Books for Small Business Owners
