Why Some Companies Make the Leap … 
And Others Don’t
Good to Great

  6 min 24 sec to read

In this book the author, Jim Collins outlines a model for turning a good, average or even mediocre company into a great one. The book includes a useful model which brings all the theory together in a meaningful and memorable way. By bringing together disciplined people, using disciplined thought and disciplined action, companies can build up and breakthrough the barriers that hold them back from greatness. Kimberly-Clark, Nucor, Abbott, Gillet, Walgreen’s and Wells Fargo are some of the “good-to-great” companies that Collins and his researchers studied to determine the key factors behind their jump to exceptional sustained success — defined by Collins as 15 years of cumulative stock returns at least three times the market average.

 The companies that made the list might surprise you as much as those left off (the likes of Intel, GE and Coca Cola are nowhere to be found). The real surprise of Good to Great isn’t so much what good companies do to propel themselves to greatness — it’s why more companies haven’t done the same things more often.The following are the key factors to takeaway from the book:

Disciplined people: Level 5 Leadership
You might assume that the leaders behind these companies are high-profile, well known individuals. However, the study found the good to great leaders shared a common set of characteristics: They set up successors for success, they are extremely modest and have unwavering resolve. Ultimately, they cared and focused a lot more on their companies, than their own personal profile or success.

Level 5 leader—an individual who blends extreme personal humility with intense professional will. These leaders are ambitious about the company, not themselves. It is very important to grasp that Level 5 leadership is not just about humility and modesty. It is equally about ferocious resolve, an almost stoic determination to do whatever needs to be done to make the company great.

Level 5 leaders look out the window to apportion credit to factors outside themselves when things go well (and if they cannot find a specific person or event to give credit to, they credit good luck). At the same time, they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly.

First Who, Then What
Instead of starting by defining your vision and then driving your team of people towards it, the good to great companies focused on getting the right people on the bus first, before even considering when to drive it.

It's easier to motivate the right people and they require less management.If you focus on the who first, it's easier to change direction later because these people are on the bus because of who else is on the bus. If you focus on the what, then people focus on the direction the bus is going and it becomes harder to change direction later.

Hire based on character rather than skills or educations. Not that these things aren't important, but it becomes harder to teach if the character won't support it.Put your best people on your biggest opportunities, not your biggest problems. (Corollary: If you sell off your problems, don’t sell off your best people.). Good-to-great management teams consist of people who debate vigorously in search of the best answers, yet who unify behind decisions, regardless of parochial interests.

Disciplined Thought
When the brutal facts of a situation are accepted, the solutions often become obvious. By being honest about tough situations and coming to terms with the reality of a situation, the most obvious and logical solution will often present itself. When the brutal facts of a situation are accepted, the solutions often become obvious.

There's a difference between having your say, and being heard:Lead with questions, not answers. Engage in dialogue and debate. Not coercion.Conduct autopsies without blame.Build ‘red flag' mechanisms.

If you have the right people on the bus, they are already motivated. In order to avoid demotivating them, you can't give people false hope. Confront fact. On the one hand, they stoically accepted the brutal facts of reality. On the other hand, they maintained an unwavering faith in the endgame, and a commitment to prevail as a great company despite the brutal facts. We came to call this duality the Stockdale Paradox.

The Hedgehog Paradox 
The hedgehog concept is a model for defining your company’s strategy in the simplest of terms. The essential strategic difference between the good-to-great and comparison companies lay in two fundamental distinctions. First, the good-to-great companies founded their strategies on deep understanding along three key dimensions—what we came to call the three circles. Second, the good-to-great companies translated that understanding into a simple, crystalline concept that guided all their efforts—hence the term Hedgehog Concept. Says Walgreens, “What's the simple concept? Simply this: Be the best, most convenient drugstores, with high profit per customer visit. That’s it. That’s the breakthrough strategy that Walgreens used to beat Intel, GE, Coca-Cola, and Merck.”

It’s not just about building on strength and competence, but about understanding what potential your organisation truly has to be the very best at and sticking to it. 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. 

  • Celebrity executives almost never lead good companies to greatness. Good-to-great leaders embody a paradoxical mix of personal humility and professional will.
  • You can’t achieve great things without great people. Many companies create strategy, then try to rally people around it; good-to-great companies start with great people and build great results from their efforts.
  • Simplicity rules. To go from good to great requires leaders to know what their organizations are passionate about, what drives their economic engine, and at what they can (and cannot) be the best in the world.
  • Enterprise-wide discipline is essential. When you combine a culture of discipline with an ethic of entrepreneurship, you are more likely to achieve great results.
  • Technology is an accelerator. Good-to-great companies do not jump on technological bandwagons or chase after fads. They determine what technology makes the most sense for them, then pioneer its application.

Author    : James C. Collins
Publisher    : William Collins
Page count    : 320

By Nabin Shrestha, Brand Consulting and Design,  www.water-comm.com

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