Book of the Week 12: Good to Great

An immensely popular business book with over 70,000 ratings on Goodreads. What makes this book so great? Following last week’s review on what makes ideas great, this time I was interested in seeing if there were any similarities between great ideas and great companies.

Using the SUCCESS model explained last week, Jim Collins in this week’s book uses simple (they’re really nothing too groundbreaking), concrete (using examples from the companies themselves), credible (using empirical data from his research among over 80 companies) stories (also using examples from the companies themselves) with some unexpected facts (for example, a CEO of a “great” company being humble instead of having the stereotypical ego) to convince us that these specific traits will make any company great.

The SUCCESS model works. Let’s see how that applies to making riches.

76865Rating: 3/5

Verdict: Content is well worth the read. Heavily researched, but with an arbitrary methodology. Explanations feel verbose.

Jim Collins provides a concrete five-year study of multiple companies who have sustained a stock market value of a given percentage (150%) above the average market. From there, he reverse engineers the remaining companies by discovering commonalities among their practices, given the empirical data he had discovered.

Many of his claims aren’t new: stay humble, stay ambitious, discover your passion, discover your strengths. At the same time, he explains these claims in great, almost unnecessary detail, repeating himself multiple times sometimes even on the same page. In addition, from his findings, he claims that if a company doesn’t undergo all of the steps he discovered, they cannot become great. These are the main factors for my 3-star rating.

However, seeing the common themes among these “great” companies is not easy to find without empirical data to back it up; most people simply theory-craft when making claims, using one or two companies to generalize what makes a great company. This in itself makes the book worthwhile, especially if you are an aspiring entrepreneur, but even if you are simply curious in reading up on business. As a bonus, these themes will be helpful in your everyday life as long as you remain mindful of them. I’ll label these with a “Personal” note, the last paragraph of each section,

Collins claims that all great companies continuously iterate through a sequential process, underlying within the sections below.

Level 5 Leadership

The great irony is that the animus and personal ambition that often drive people to positions of power stand at odds with the humility required for Level 5 leadership.

Level 5 leaders stay humble. They give concern for the company’s success over themselves. They take full blame for when things go wrong, whether it’s their fault or not, and they attribute success to everything other than themselves. They leave their ego behind. They set up their successors for success, making sure the company can stay great without them.

Personal: Just try to be the best person you can be. Be as ambitious as you can be humble.

First Who, Then What

If we get the right people on the bus, the right people in the right seats, and the wrong people off the bus, then we’ll figure out how to take it someplace great.

It’s much easier to make a great team develop a mediocre idea than it is to develop a mediocre team making a great idea. Make sure the people argue not for the sake of their egos or interests but for the search for the best answers. Use compensation to find and keep the right people instead of motivating the wrong people.

Personal: If you’re working with someone who needs to be motivated with a reward, whether it be money, experience, etc., you are not working with the best for that job. Find people with passion – so much passion that no matter what happens they will want to work their way through.

Confront the Brutal Facts

Leading from good to great does not mean coming up with the answers and then motivating everyone to follow your messianic vision. It means having the humility to grasp the fact that you do not yet understand enough to have the answers and then to ask the questions that will lead to the best possible insights.

Create an environment where people have an opportunity to be heard – for the truth to be heard; lead with questions, engage in dialogue. Tackle difficulties head on; don’t try to plan around it or ignore it altogether. Ignoring the brutal facts may be just enough to demotivate the right people.

Personal: Once again, just stay ambitious. Work your way through difficult moments. Don’t give up just because things are getting difficult. Just watch out too: giving up doesn’t necessarily mean stopping altogether, but may also mean continuing while ignoring what needs confrontation.

Hedgehog Concept

A Hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best, a plan to be the best. It is an understanding of what you can be the best at. The distinction is absolutely crucial.

A Hedgehog Concept is an idea that requires an understanding of three intersecting concepts:

  1. What are you passionate about?
  2. What drives your economic engine?
  3. What can you become the best in the world at?

This concept focuses on understanding, not desire. This overlays with the above of confronting the brutal facts – if you know you cannot become the best in the world at something, no matter how badly you want it, keep searching. At the same time, stay ambitious – just put your ambitions where it counts. Set goals and strategies around this iterative process of discovering and understanding this concept.

The Hedgehog Concept focuses on specialization, not generalization. I remember having my career crisis upon realizing this fact not too long ago.

Personal: Once again stay ambitious, and confront all facts objectively. Don’t just keep chasing dreams just because “anything is possible.” Focus on your strengths. Keep exploring the world around you, because you might not even know what your true strengths are. The passion will follow.

Culture of Discipline

It takes discipline to say “No, thank you” to big opportunities. The fact that something is a “once-in-a-lifetime opportunity” is irrelevant if it doesn’t fit within the three circles.

Planning is priceless, but plans are useless. Focus on what you’ve accomplished relative to what you said you were going to accomplished. If it doesn’t fit within your Hedgehog Concept, don’t bother. Don’t just make a to-do list; make a stop doing list. A culture of discipline requires getting disciplined people who engage in disciplined thought and who then take disciplined action.

Personal: Stay disciplined when it comes to chasing your dreams – which ideally follow the Hedgehog Concept. Make sure everything you do counts, and stop doing things that don’t count. Stay focused, always.

Technology Accelorators

When used right, technology becomes an accelerator of momentum, not a creator of it. The good-to-great companies never began their transitions 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.

Consider the following when it comes to technology: does it fit with your Hedgehog Concept? Ideas that involve primarily around technology are a red flag. Technology is always just a fad and never last, even for companies known for their technology.

Personal: When you stumble upon a great idea, do a quick sanity check. What’s the underlying concept? Is it the technology? If so, keep iterating through ideation.

The Flywheel and the Doom Loop

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!” As people decide among themselves to turn the fact of potential into the fact of results, the goal almost sets itself.

Great companies never had a specific moment that them great; it was always over an extended period of time. Becoming a great company simply involves a disciplined pattern of buildup and breakthrough. Companies who fall short of becoming great strive for an immediate breakthrough, resulting in lackluster results.

Personal: Just keep iterating. Stay disciplined, don’t lose focus. No shortcuts.

Collins nicely summarizes the book with an explanation for why we should strive for greatness in the first place: for a meaningful, fulfilling life. I have to agree with him here: just keep chasing your dreams, while remaining objective and humble. You’ll get there in no time.


Author: Kevin Who

Developer. Designer. Smasher. Reader. Creator.

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