Good to great

The book, ”Good to great” is about how companies can make the transition from good to great. Jim Collins and his research team, researched and analyzed companies and identified 11 companies that were able to make this transition and identified the key aspects of how that was possible. These companies were Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens and Wells Fargo. What all these 11 companies had in common were, 15 years of cumulative stock returns at or below the general stock market, followed by an obvious turning point and eventually a cumulative stock returns of at least 3 times that of the general market over the next 15 years.

The key aspects necessary to create a great company can be broken down into steps and depending on the situation, they can change places.

Collins explains the concept of a “Level 5 leadership”. Level 5 leaders have a high level of personal humility mixed with intense professional will. Leaders need to put the company first before personal achievements, because ego-driven leaders tend to lose sight of the real goal. They also do what must be done and courageously take on responsibility.

In the beginning who is more important to figure out before what. Great companies need to get the right people in their right seats before the company can achieve what it wants to. You should never compromise on the quality of staff and figuring out where people fit the best is very important, because someone can be great at one thing and terrible at another.

Confronting negative realities, but not losing hope is another key aspect. For a company this means being able to confront problems, while being open about them in a nonjudgmental environment and finding solutions.

The hedgehog concept is another interesting and equally important aspect. The hedgehog concept is based on three things:

1. What can we be the best in the world at?
2. What can we be passionate about?
3. What is the key economic indicator we should concentrate on?

I find this to be very true and it makes sense, because focusing on too many things stretches out your energy and focus and leaves you with only adequate solutions, whereas focusing on one thing that you decide you want to be the best at, narrows down your focus and lets you excel at that thing. To me the hedgehog concept sounds a lot like the idea of finding your why, from Simon Sinek’s book “find your why”, because once your focused and passionate about something, you won’t stray and give up so easily.

The flywheel effect and doom loop are what really sum up the book. The flywheel effect is an idea based on slow growth towards greatness and moving in one direction to eventually succeed. This means being consistent with all the key aspects mentioned before. The doom loop is when you lose patience and starts moving in multiple directions and lose sight of your vision.

I didn’t particularly enjoy reading this book, because the ideas presented in it were very vague and didn’t seem helpful for a startup and it also seemed far from my personal zone of proximal development. I think this book is a good read but not a great one, though it may be great for someone who has already started a company and is thinking about how to grow their business. This book was also written in 2001, and the idea presented about technology not having a huge impact on companies, I disagreed with. The idea was to only start using new technology once you were sure that it would benefit your company, but I think the process and time to figure that out in 2018 needs to be a lot faster and I think companies need to focus on how to benefit from new technology nonstop.

My personal take away from Good the Great is probably the hedgehod concept, because the 3 questions, “What can we be the best in the world at?”, “What can we be passionate about?” and “What is the key economic indicator we should concentrate on?” I think are good to keep in mind to find what is important for you to focus on.