Good to Great
Jim Collins
Why did I choose this book?
The book Good to Great or also known in Czech language as "Jak z dobré firmy udělat skvělou”. I chose the book on recommendation for a course on corporate identity. I was very surprised by the book because I was only going to use it as a handout for the exam, but it intrigued me so much that I ended up reading the whole thing and I think the book has a lot of potential to learn how to create a difference when you launch your own company.
About the book:
The first thing you must know is that Jim Collins was a Professor at Stanford University. It is the reason why he has such a scientific approach in his book. He reviewed over a thousand companies and then he decided to pick only eleven publicly traded companies to a more complex analysis. In his research, Jim Collins has found out that “Good to Great” happens very rarely and it is because it is difficult. You may wonder how he choose the companies he wanted to analyse. As you can see on the chart below, he compared several companies that were on the same market, and which shared multiple similarities.
He realised that at a certain point of time, when a company had much better results that the other ones, it separated itself from the comparison companies. He then asked himself what the difference between the comparison companies was and the one that took off. After a long work, he came with the idea of the flywheel:
Source : https://medium.com/@aniket.ambekar/book-summary-good-to-great-by-jim-collins-e29f5c90c327
The flywheel is an attempt at understanding how a company could transition from good to great. The framework has got three main components:
1. Process: From setting up yourselves towards greatness (aka Build Up) to achieving an inflection point that takes you to greatness (aka Breakthrough)
2. Phases: There are three different phases in the ‘Good to Great’ journey.
- Disciplined People: Involves getting the right leader and the right team.
- Disciplined Thought: Involves understanding of brutal facts and creating a set of cores values
- Disciplined Action: Creating a robust culture where the right people will work within the defined core values with the appropriate freedom.
3. Flywheel: A quiet and deliberate process of figuring out what needs to be done for best future results and taking those steps one by one, pushing the flywheel in a consistent direction until it achieves a breakthrough point.
Points I take away from the book:
At first, Jim Collins didn’t want to focus on the leader of the companies. He thought it wasn’t a good indicator but after a while, he admitted he was wrong, and that the leader has a big role in the success of one company. I have learned the different levels of leadership and I take away what makes the difference between a good and a great leader which is Level 5 leadership: they have personal humility but a huge professional will, they are ambitious for the company (not for themselves), they are modest and finally, the great leaders look at the window to explain why the company succeed and at the mirror when something doesn’t work. In fact, when Jim Collins asked leaders what the biggest reason of their companies success, the great leaders always talked about external factors. On the other hand, when something was wrong, they always blame themselves first.
The second point I take from the book is the hedgehog concept. To make a company great, I have learned that I should know three big things:
1. What I can be the best in the world at and more importantly, what I can’t be the best at
2. What drives your economic engine, which is profit per x = profit per x can be per customer, per employee, per store
3. What are you deeply passionate about
Conclusion: This book has introduced me to a new leadership style that I can now apply to my future projects. I found the three points of the hedgehog concept relevant and will be able to use them in my work, my studies and when I start my own business, if it happens one day. Finally, the fundamental question in the study is not "What did the firms that went from good to great have?" but "What did the firms that went from good to great have in common that distinguished them from the comparison firms?"
