Good To Great – Book Review and Notes

Good To Great is a book by Jim Collins. Collins is a management consultant, speaker, and writer for magazines like HBR and Fortune. In the book, he lays out 8 key principles that every company must adhere to if they wish to go from good to great. Here they are:

8 Principles To Go From Good To Great

1. Great leaders combine humility with tremendous personal resolve. They are not focused on personal gains, but setting up the company for success.

Analysis:

There’s a misconception that great companies are led by gregarious, highly-influential CEO types. In fact, the greatest leaders are often the ones no one’s ever heard of. They focus religiously on their core competency, and that makes the company great.

2. Hiring the right people for a company is the most important first step to greatness. Before identifying the “what,” it is important to identify the “who” of who will be making important decisions.

Analysis:

The old adage, “people are your most important asset” is flawed. It should be, “the right people are your most important asset.” Great people should be in every position, at all levels of operation. If you have the right people for the right positions, you can trust them to hire the right people, too.

3. Companies that strive to become great must force themselves to confront brutal facts and uncomfortable realities if they are going to be able to address them. At the same time, they must maintain belief that they can prevail in becoming great.

Analysis:

The act of balancing harsh reality with optimism is what Collins calls the “Stockdale Paradox,” named after James Stockdale, who was a POW in Northern Vietnam for seven years. Check out his story here if you want to learn about a real war hero. A company cannot get better unless it is honest about its problems and weaknesses. At the same time, and despite recognition of these problems, a company must maintain faith that it can achieve greatness if it addresses these weaknesses honestly and adequately. The gratification offered by “yes” men may be pleasing in the short term, but it is a disastrous strategy in the long term. It prevents leaders from confronting the facts, however unpleasant they may seem, and however challenging they may be to overcome. Rulers cannot maintain the illusion they try to perpetuate. Believing in an dividual’s or a company’s ability to become better is important in implementing the necessary changes.

4. A company must be best at its core competency in order to become great. This means, understanding what the company is truly best at doing, not just what it wants to be best at or thinkis it ‘should’ be best at, and sticking to this competency consistently.

Analysis:

Comaníes have a tendency to stick to the thing they’ve been doing for years, or the thing for which they are most well-known. But, this is not always the thing which they are best at doing. To become great, a company must focus on its one core competency. This goes hand-in-hand with Principle 3 above — a company must be brutally, unrelentingly honest with itself. Businesses, like people, can easily be sidetracked by trends, fashions, and idealized self perceptions. Being brutally honest about one’s core competency requires a dedicated pursuit of self-knowledge, for people and businesses alike. It may seem foolish for a business to abandon an activity or identity with which it has long-been associated. But if this activity or identity does not align with its present day strengths and weaknesses, then it must be discarded in favor of a more-honest assessment. Notably, companies and individuals who fail to make the transition from good to great to to have their hands in too many different entreprises or projects, they lack consistency, and are unable to focus on a single, over-arching competency.

5. Going from good to great requires a culture of discipline. This does not mean the CEO disciplines employees harshly, but that employees have a strong sense of self-discipline, focusing their energies on the company’s core competency.

Analysis:

With disciplined, competent employees, there is less need to motivate and less need to monetize behavior. The right people are self-motivated and self-disciplined to focus on the company’s core competency, and disregard other avenues. This does not mean they lack creativity; however, a good culture fosters focus, along with freedom and entrepreneurship. This recalls and expands on Principle 2 — making sure a company hires the right people. These people must have the ability to discipline themselves, avoiding unnecessary activities and needless competition within the company.

6. Technology neither makes a company great nor makes it fail. Rather, great companies use technology as a way to accelerate momentum in line with their core competency.

Analysis:

How a company responds to changes in technology is an important indicator of its ability to become great. The best companies are pioneers in using technologies but not reliant on tech to transition from good to great. Lesser companies experience FOMO in the form of fear of being left behind. Motivated by fear, they are less careful in their application of technology. Becoming great requires thoughtful insight about how a technology can align with a company’s strengths. Avoid the dangerous allure of chasing trends. If a company remains focused on its core competency, it will be better equipped at knowing which technology aligns with its strengths, and which technologies might be distracting or damaging to the company’s success. Savvy use of technology requires returning to the notion and cultivation of self-knowledge.

7. The transformation from good to great does not come in one big swoop of dramatic action. Rather, it is a long process that requires persistent effort.

Analysis:

Going from good to great doesn’t happen overnight. A sudden revolution doesn’t provide deeper, lasting change. Rather, greatness requires patient effort in a carefully considered direction over the long term. For change to be sustained, it must be implemented gradually and carefully over time. Business should not try to “LEAP” from good to great in a single, dramatic action. Success, if it comes too early, might actually hinder great success later. Lasting change requires patience and persistence, not big, dramatic upheaval.

8. These principles are timeless and they apply even in a rapidly changing business world. Economies are always evolving, and even if the present challenges look different than the past ones, the principles for reaching greatness remain the same.

Analysis:

There is a tendency for each new generation to thing it’s unique, believing that it is confronting unprecedented challenges and change. The truth is, there is always something new and different. Change is inevitable. These principles, however, do not change. They are as immutable as the laws of physics. Note that brutal honest may require recognition that busines contexts have completely changed in time, and demand an appropriate response.