About the book

This book is pure gold even after 17 years when it was published published.

How was the book?

The Good to Great book by Jim Collins is a story about eleven companies and their comparison companies. But eventually it’s more about people than systems, more about how to facilitate growth than maximizing profit and more about companies that existed in the pre-Internet era.  People and especially the right people are in the heart of the book. Passionate, disciplined and willing to prevail right people. Those people who can execute disciplined actions within the Hedgehog Concept. Then there is the another story about ”exploration and description of the pieces of the buildup-to-breakthrough flywheel pattern” i.e. how to facilitate enduring growth in greatness.

What are the key learnings?

What are great companies? Those are companies that have had cumulative stock returns beating the market on average 6,9 times.

How to become a great company. First you need time from 10 to 20 years. Then you need a board of directors who know what you are doing. And then:

·      You need a Level 5 leader.

·      Get the right people on the bus and the wrong people off the bus.

·      Remember the Stockdale Paradox.

·      Brutal facts.

·      Find you Hedgehog Concept.

·      Make disciplined decisions and actions.

·      The Flywheel loop.

After all this your company is on it’s way from good to great and built to last.

How to describe a great company?

·      Typically the CEO comes from inside.

·      Compensation was not a key driver.

·      Strategy work didn’t differ from other companies.

·      They focused also on the what-not-to-do.

·      Technology was accelerator, but not the cause of transformation.

·      M&A played no role.

·      Scant attention on leading change.

·      No revolutionary process behind the transformation.

·      And greatness was ”matter of conscious choice”.

I will elaborate few topics in more detail such as The Hedgehog Concept and the right people. Let’s start with leadership and right people. Leadership accounts in the transformation from good to great. In these companies leadership rest on two main factors – humility and fearless, modesty and will. Level 5 leader is like a servant leader.

When talking about people Collins scrutinized always about the right people. It all starts from disciplined people. The right people. What do right people want? They want to be part of winning team. Right people are according to Collins people who are disciplined and understand the meaning just like Viktor Frankl descripes. About discipline you must first understand that culture of discipline is born from the work ethic and lack of discipline creates need for bureaucracy. So right people are on the bus, because of the other right people. They don’t need to be motivated and ”great vision without great people is irrelevant”. Collins states that right people is your most important asset. And rigorous people management comes from three practicalities – ”when in doubt, don’t hire – keep looking”, ”when you know you need to make a people change, act” and ”put your best people on your biggest opportunities, not your biggest problems”.

The Hedgehog Concept is the turning point for the good to great companies. The Hedgehog name sounds childish, but it’s actually something that sticks. You cannot become a good to great company without the Hedgehog Concept. So read this very carefully, because with the Hedgehog Concept you will prevail. The Hedgehog concept is like the business idea for a good to great companies. For Wahlgreen the Hedgehog concept was drugstores with high profit per customer visit. Also passion is key ingredient in the concept, so do not think it’s only something that you can measure. And how long does it take to develop a Hedgehog Concept. Typically it took four (4) years for the good to great companies in order to get their Hedgehog concept right.

After you have found your Hedgehog concept you should start spinning the flywheel. It also requires time and effort to get it turning, but when it does start turning it will pay dividends. But avoid the doom loop by changing the direction of the flywheel. Learnings from the doom loop: 

·      ”You absolutely cannot buy your way to greatness”, because two turkey’s won’t make an eagle.

·      The new CEOs typically stop the flywheel process. Obviously backed up by the board of directors.

Doing deals is exciting and that’s why comparison companies had a ”when the going gets tough, we go shopping”-attitude. In good to great enterprises the acquisitions where used after the Hedgehog and the flywheel had built momentum. The executives of good to great companies wanted to accelerate their business after they knew what they were doing.

How should we change according to the book?

More relevant question would be that how to become a great company in today’s business environment. Collins states that ”technology cannot turn a good enterprise into a great one, nor by itself prevent disaster”. 80% of the interviewed executives did not mention technology as a transition factor on becoming a great enterprise.

How about today? Internet technology and it’s applications are pervasive. Did Collins miss this trend? Isn’t the Internet bigger phenomenon than other tech trends that good to great companies deployed? Is technology today merely an accelerator or the cause? Somehow Collins is on the top of the technology when he talks about Boeing. Technology was an accelerator while he analyzed the Boeing’s change from military segment to commercial segment, but I think that he still underscores the essence of Internet. I suppose that the Internet is the commercial airline of worlds boeings. Maybe today we should promote technology to the agenda for the companies on their way from being a good to a great.

To be fair let’s not forget the story about Wahlgreens and Drugstore.com. It was supposed to eat up Wahlgreens businesses. Well, that didn’t happen, because Wahlgreens was a good to great company and Drugstore.com was not. Eventually Wahlgreens bought it

Great enterprises never talked about competitive strategy. They were minding their own business, not competitors. They were not driven by fear. And they were driven by the aspiration of becoming better all the time. This trait is something that can be recognized extremely well from companies minding their own businesses.

What is the key ingredient to ensure that the good to great company will become a built to last company also? In short it’s the core values. ”Core values are essential for enduring greatness, but it doesn’t seem to matter what those core values are”. And how long does it take? For example the buildup-to-breakthrough took two year’s for Fannie Mae’s, but for Circuit City’s it took nine year.

At the end of the book Collins asks ”why greatness?” He replies with two answers – it’s as hard to build a good as it’s hard to build a great company. Secondly we are all looking for meaning and in the great companies people tend to know the meaning. This is what the Good to Great book is all about it. Read it!

What should I personally do?

Five things I should elaborate:

·      ”Sell the mills”.

·      Should I form a council which should iterate at least three times. ”It will not happen overnight”. 

·      Why not do my own ”stop doing”- list? Focus on continual improvements around selected areas.

·      Avoid hoopla and show evidence that the flywheel is turning – short-term wins. Just like Kotter is talking in book about Leading Change .

·      Remember why rinse the cottage cheese when the life is so good? Bank of America syndrome and it’s executive perks.

Summary

The book in six words – Good is the enemy of great.