Good to Great
Good to Great
We all are here at the same school basically learning how to make good businesses. Alongside we learn skills to work in a team and some of us will find out a lot about leadership also. In our community we try to embrace failure, learn about it and have better tools for the next time.
Once we have established a company and reached the point we can say that we have a good business, we want to find out how to make it great. We always want to become a better version of ourselves and do the same with our business. So how to go from good to great? Is it random chance, or is there a formula that all the great companies follow to succeed? Why don’t every company become great?
Jim Collins is discussing this topic, and revealing some of the concepts used in business, in his book called Good to Great: Why some Companies Make the Leap… and Others Don’t.
In his book he uses an extensive amount of research on companies that are commonly recognized as great companies, at least at the time of publishing (2001), such as Philip Morris, Wells Fargo and Circuit City. Already here we can see that once a great company should not be taken for granted. Still using real companies allowed Jim Collins to introduce findings and themes in more digestible way.
For me the core theme Jim Collins depicts is that certain companies are great because they’ve identified what they can do best, and they execute it as cleanly as possible. This is something he calls “The Hedgehog concept”. Idea seems to me a bit too simple to work in business. On the other hand, keeping things simple in business may help you become great but only if you do this one thing better than anyone else in the world. On the other, it is easy to fail in determining what are best at, where is your passion and what drives your economic engine, as it was said in the book.
Closer to my understanding was discussion about how the evaluation and placed metrics can guide your business. In order to measure your success and development you have to be able to compare past and present. For example: If you measure your profit per customer visit your actions will be taken to improve this particular metric and your decisions will reflect this too. If instead your main metrics will be set to measure profit per store your actions and strategy will be guided in totally different direction.
I see this as a good reminder that whatever your goals are, measure them in some way, but even more meaningful is to measure the right things.
One thing I tried to keep in mind was that in the complexity of business world and mechanics of economies, it is hard to simplify everything, the book does good job on that but it is hard to find one key feature or a recipe to create a great company. Another thing I have been wondering is that the book relies on past, and might not indicate the future accurately. Some of the concepts must be taken with caution, since they necessarily don’t work in every case and in modern world.
The book is great reading to challenge current methods and ideas of business you now might have and it might spark some ideas and give valuable tips and perspective, but I recommend also going through the companies carefully to better understand how these suggested concepts might work for you.