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BOOK REVIEW GOOD-TO-GREAT

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📚 Jim Collins – Good To Great Book Review & Key Takeaways

• 2020-10-11 10:14:24
• 13 minute(s)

Jim Collins — Good To Great Book Review & Key Takeaways

T oday, I’ll review and summarize the key points and my personal takeaways of the classic business book, Good to Great by Jim Collins. Throughout Good to Great, Jim Collins presents the conclusions after studying a certain subset of publicly traded companies to identify key attributes of how companies go from Good to Great.

Good is the enemy of Great.

How can a good company become great? This is how Jim Collins sets off a riveting journey explaining his findings of research in the conquest of how to make good companies great.

Essentially, Good to Great happens very rarely and it is because it is damn difficult.

Warning Most great companies enjoyed years of obscurity before their great results compelled the world to look at them. In fact, they seemed just like any other company until a certain ‘ transition point ‘ saw them leave the pack behind.

This is one of the best professional development books I’ve read to date. My only regret is that I didn’t read it sooner.

Good to Great encourages us to be better rather than settling for good enough . Throughout the book I found myself identifying with countless examples of companies, organizations, and individuals used as analogies for the status quo: good enough.

Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice.

Without strategic purpose, good enough will be the inertia that keeps us, or our organizations, from greatness. When you’re doing “good enough” people remind you, “it could be worse.” Good becomes the default equivalent of Great.

Good to Great is a must-read for anyone committed to one day leading an organization that truly represents excellence.

What differentiates good companies from great companies? Why do some companies grow over time, while others seem to stay stagnant? This book can help by showing you how to make more good strategic decisions than bad ones. Let’s get to the takeaways.

Level 5 Leadership

The hedgehog concept, discipline is freedom, confront the brutal facts, final thoughts.

L eaders who have brought the ‘Good to Great’ transformation are not the ones who are charismatic or big personalities but are rather quiet, shy, deliberate. Organizations that strive to become great need to have a Level 5 leader .

Jim Collins explains leadership in terms of 5 different levels with Level 5 being the highest level in the hierarchy.

Level 5 leaders embody a paradoxical mix of personal humility and professional will . These leaders are ambitious, to be sure, but ambitious first and foremost for the company, not themselves.

Level 5 leaders look out the window to attribute success to factors other than themselves.

Warning When things go poorly, however, they look in the mirror and blame themselves, taking full responsibility. Most CEOs often do just the opposite — they look in the mirror to take credit for success , but out the window to assign blame for disappointing results.

Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious — but their ambition is first and foremost for the institution, not themselves.

These Level 5 leaders also share a passion for the products their firm create, however commonplace.

Because they put their firm first, these Level 5 leaders ensure that whoever succeeds them is likely to be just as effective, if not more. They are in it for the future greatness of the company, even well beyond their tenure.

They are fanatically driven, obsessed even, to produce exceptional results on a sustainable basis.

The key word here is sustainable. This isn’t the result of a one-off heroic effort. They are ambitious, but their ambition is for the organization to excel rather than themselves and they tend to be modest about what they personally contribute and are self-effacing.

"Great vision without great people is irrelevant." — Jim Collins Share on X

O riginating from the story, The Hedgehog and the Fox, the hedgehog sees what is most essential. The Hedgehog Concept is made up of three intersecting circles : What you are deeply passionate about, what you can be the best in the world at, and what drives your economic engine.

If you’re going to be great, you must find what you can be the best in the world at, and then do as much of that and as little of everything else as you possibly can.

Warning The 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.

What is it exactly that you stand for? Can you sum it up in a few words? If not, your current efforts are likely to be scattered and lacking energy, just like the ‘merely good’ companies.

Great companies have a single idea or a focus which guides everything they do . Such concepts may take many years to refine, but once in place can generate enormous success because they are so differentiated.

What do you feel most passionate about? This is an important question because passion is hugely motivating.

Great companies don’t tell their employees what to be passionate about. They find what their employees are already passionate about and then look for projects aligned to those passions.

A fox is a very clever creature. It sees the world in all its complexity and can pursue many goals at once. A hedgehog is a much more simple creature. It doesn’t get bogged down by all the complexity. It’s really only able to do one thing well. Hedgehogs are not capable of seeing complexity. All they see is a single goal and they execute to achieve that goal.

What can you be best in the world at? This is about more than developing a great core competency.

It’s about deciding on one key area that your business can do better than any other business and about focusing on this area exclusively so nobody else can match you. Note that this is about focusing on what you can be the best at, not what you want to be the best at.

What drives your economic engine? What is the one factor that creates money for your organization?

You think of the economic engine as being like the blood flowing through our bodies. It doesn’t define us and it’s not who we are and what we are about, but without it we simply can’t survive very long.

"Focusing solely on what you can potentially do better than any other organization is the only path to greatness." — Jim Collins Share on X

B ureaucratic cultures arise to compensate for incompetence and lack of discipline. Typically, cultures which lack discipline arise from having the wrong people on the bus in the first place.

Having discipline of people eliminates the need for hierarchy. Having discipline of thought keeps everyone on track.

Warning Most companies fail not because of the lack of opportunity but because there is too much opportunity, and they spread themselves too thinly. If you get the right people on the bus, and the wrong people off, you won’t need to worry about bureaucracy .

Build a culture of freedom and responsibility but within a defined framework. You will free up your time if you put in place boundaries but let people decide for themselves how to act within those boundaries.

The best way to explain this is by using the example of an airline pilot. The pilot is guided by air-traffic control. But the pilot has ultimate responsibility within that system for the safety of the craft, its passengers, and its crew.

Other thing that involved within culture of discipline is saying NO to all the opportunities that do not fit the hedgehog concept. There needs to be a fanatical adherence to hedgehog concept that requires companies to only focus on things that they have determined they can be best at.

Build a strong culture, not a dictatorship. It’s not about driving your team relentlessly.

Warning It’s more about creating a culture where the team wants to achieve . Obviously, the Hedgehog Concept will help here as it keeps everyone focused.

Good to great companies exist within a culture that combines discipline and an entrepreneurial ethic.

For this to be possible, the company must have solid structures, then give its employees freedom to act and make decisions within those structures. It flows from disciplined people, to disciplined thought, then disciplined action.

Discipline on its own is pointless. There are many examples from history where people have marched with discipline into disaster.

The key to going from Good to Great is to: get the right people , engaging in critical thinking, then taking disciplined action aligned with the Hedgehog Concept.

"Creativity dies in an undisciplined environment." — Jim Collins Share on X

W e are living in an era where it’s very easy to be deceived by the world’s perception of you and your company. It’s easy to buy the hype. Nevertheless, facts are better than dreams .

Great companies aren’t shy to confront the facts, especially when the facts aren’t so pleasing.

They’re most careful when everyone is praising them. They’re also not quick to assign the blame, but will look to thoroughly and honestly analyze the issue before acting.

All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality.

When you start with an honest and diligent effort to determine the truth of your situation, the right decisions often become self-evident. It is impossible to make good decisions without infusing the entire process with an honest confrontation of the brutal facts .

Jim Collins found that charismatic leaders can often get in the way of a company’s greatness, because the staff start to refer only to “what the CEO will think” instead of data being the basis for decisions. The best companies want the truth to be heard, whoever speaks it. They have a culture of questioning and openness uncorrupted by obsequiousness to rank.

Companies need to create a climate where the truth is heard.

Warning There is a difference between ‘having your say’ and ‘being heard of’. It is the ‘being heard of’ culture that enables companies to confront the brutal facts from their own people and then take appropriate right decisions.

Lead with questions, not answers. Constantly probe until you have a clear picture. Engage in dialog and debate, not coercion.

It is important to get involved in intense discussions because they have the capability to evolve into a successful conclusion rather than just being amicable to maintain relationships.

"You absolutely cannot make a series of good decisions without first confronting the brutal facts." — Jim Collins Share on X

G ood to Great organizations think differently about technological change when compared to mediocre ones. How a company reacts to technological change is a good indicator of its inner drive for greatness versus mediocrity.

Great companies respond with thoughtfulness and creativity, driven to turn unrealized potential into results.

Warning On the other hand, mediocre companies react and jump around, motivated by fear of being left behind. Good to Great organizations avoid technology fads and bandwagons, yet they become pioneers in the application of carefully selected technologies .

A company can’t ignore new technologies and hope to be great, but technology by itself is never a primary root cause of either greatness or decline.

The idea that technological change is the principal cause in the decline of once-great companies (or the perpetual mediocrity of others) is not supported by the results from the study of Jim Collins.

Pioneering carefully selected technology is an accelerator of momentum. Good-to-great companies never use technology as an excuse for their problems nor do they depend on it to propel them forward. Rather, they are thoughtful in their approach and choice in technologies, using it as an accelerator of momentum.

Good to Great companies think about technology in a different way. 

Warning Technology is certainly important in the growth of future businesses but what is more important is not to blindly follow the new technologies but rather being diligent of knowing what technology can accelerate the existing momentum. The great companies do not start with what technology to use but start what technology fits best to our defined hedgehog concept.

The transformation from good to great does not happen with a pioneering technology but by realizing the right technology and becoming a pioneer in the application of that technology.

Good to great companies are motivated by inner compulsion of excellence for its own sake. They are not motivated by the fear of being left behind due to the technological changes because they know that after mindful thought and adherence to their core concepts will lead them to eventual success in technological transformation.

"Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the… Share on X

I unexpectedly found Good to Great to be an engaging read, despite being a business book, because of its storytelling style. With this storytelling style also came a level of transparency that you wouldn’t expect from this type of book.

Ultimately, Good to Great is a must-read as it provides unprecedented insight into the dimensions of leading an organization that consistently delivers, demonstrates excellence and can one day be considered great.

Not only do we hear the way in which many of the conclusions are made, we also learn of findings that Jim Collins’ research team unexpectedly discovered along the way, each of which were added to the end of relevant chapters.

If you are looking for factors within a business that can be proven beyond doubt to create success then you might as well stop reading business books!

If however, you are looking for interesting ideas that help develop your business, not as a magic formula but rather as concepts to play against and spark off, then Jim Collins’ Good to Great does just that.

There is no one killer innovation, no solitary lucky break, no wrenching revolution. Good to great comes by cumulative process-step by step, action by action, decision by decision.

Warning Great companies did not emerge due to a dramatic or a revolutionary event but rather years or decades of adhering to their core tenets, building up in the process, gaining momentum slowly as turn-by-turn of the flywheel and ultimately reaching an inflection point of breakthrough.

Good to Great may not hold the secrets to success but it will certainly provide you with food for thought!

So, if you haven’t read it before hopefully you will consider it (or learn “enough” from my abbreviated book review). Or if you have read it, hopefully you will share some of your key learnings for myself and others to learn from as well.

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Books That Shook the Business World: Good to Great by Jim Collins

Professor, Management Strategy & Organisation, University of Bath

Disclosure statement

Margaret Heffernan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

University of Bath provides funding as a member of The Conversation UK.

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As important as what to read is what not to read. So instead of recommending a book on leadership or management (these categories get very confused), I want to suggest that nobody read the ostensible classic, Jim Collins’s Good To Great , first published in 2001 and a steady bestseller ever since.

What’s wrong with this book? Let me count the ways. For me, its first flaw lies in its language. Collins is forever talking about his “lab”, with the implication that management is a science that can be studied with every bit as much rigour as, say, chemistry or physics.

But that is absurd. You can’t do controlled experiments in business because each company is different, markets keep changing, customers and trends are fickle and uncertainty is rife. What works for one company doesn’t necessarily work for another.

In science, a good theory is one that has high predictive capability; if I let go of a cup I’m holding, the theory of gravity predicts it will fall. We have no equivalent theories in business. Management is not a science.

Collins didn’t work in a lab, putting companies under microscopes. He assembled a bunch of researchers who tried to measure company performance to define which ones were great. The research team didn’t visit the businesses or interview its employees but worked from published, not firsthand , materials.

Welcome to our series on key titles that have helped shape business and the economy – as suggested by Conversation writers. We have avoided the Marxes and Smiths, since you’ll know plenty about them already. The series covers everything from demographics to cutting-edge tech, so stand by for some essential reading.

And the definition of greatness that they settled on is startlingly obscure: great companies are those in the Fortune 500 list of the largest US firms that, between 1964 and 1999, achieved returns exactly 6.9 times greater than the stock market over 15 years. Out of 1,435 companies, just 11 meet these criteria.

No private companies were included in this sample set, nor any family or employee-owned businesses. At a time when globalisation was in full swing, all the companies studied were American. And the stock price is the ultimate arbiter; externalities don’t exist in Collins’ world. Perhaps unsurprisingly, many fell from greatness after the book came out.

Continuing the pseudo-scientific theme, Collins writes about “flywheels” that throw off huge success, as though each company is a machine needing magic oil. He favours “big hairy audacious goals” (BHAGs) to build flywheel momentum, a concept that has lured more than a few CEOs into crazy unstrategic flights of fancy.

Yet, Collins purports to offer “timeless universal answers” as immutable as the laws of nature. So how are these exceptional results achieved? CEOs must be ambitious and aim high. That insight surely doesn’t count as a discovery. They hire the right people and confront brutal facts. Unarguable, but impossible to do every time. They stay focused on the metrics that matter . Easy to say, hard, in fact, to distinguish between the metrics that count and those that don’t. They also deploy technology carefully and their leaders stay humble. So far, so banal.

One of Collins’ prosaic phrases made most famous by the book concerns getting the right people “on the bus” and the wrong ones “off the bus”. Well, yes, but how do you know in advance which are which? That’s the hard part. Great people in one company can be disasters in another. What changed – the people or the bus?

Formulaic and over-simplified

Collins, a Stanford mathematician , presents lucid, intelligent analysis of the numbers but his conclusions scarcely seem to merit the effort that went into the work. The aspiration seems to be to prove beyond doubt that consistency, discipline and focus are the ingredients of a secret sauce, but did anyone ever think that these attributes didn’t matter? Causation and correlation are inferred (as they so regularly are in business) but few scientists I know who’ve read the book come away impressed.

The startling black hole at the centre of the book is context. The biggest single challenge for CEOs is knowing how to respond to uncertainty and change. Churchill was a great war leader but arguably dire in peacetime.

Attribution errors are rife among leadership studies because it’s so hard to prove where decisive differences lie. Can you really assign the success of a company entirely to its CEO? Did a business thrive because of the boss, because its competitors were stupid, because it rode a boom, or was it just lucky?

In startups, is it because the founder had a great idea or a tremendous network? Maybe it was two people in the marketing team who swung it. Or it could have been all the above.

Good to Great exemplifies the airport business book: flattering to its tired but aspirational readers and reassuring in its formulaic simplicity. It’s not as crass as many, but in its own aspiration to position management as a science, it has done untold harm.

The world is full of CEOs who now imagine themselves as engineers building the flawless machine that will never break, that will grow ever more efficient and never tire. In their fruitless pursuit, they add more and more rules, goals, targets, key performance indicators, jargon and bureaucracy and then wonder why their people aren’t more “engaged” — a typically mechanical metaphor.

In doing all that they miss what can be the true glory of management: that it is alive, creative, frequently unpredictable and different from one day to the next. As uncertain, in fact, as human life itself.

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Good to Great: Summary & Review

In Good to Great author Jim Collins investigates and explains what’s the secret sauces that make great companies great. I found it to be very good and with some gold nuggets for personal self-development as well.

Bullet Summary

Hedgehog tactic: do one great thing, over and over, the hedgehog realization, poor companies try without sticking, new tech is a means to an end, level 5 leaders: great leaders = great companies, hiring great people.

• Stay Realistically Optimistic

Foster A Culture of Openness

Rigorous self-discipline, 3 levels of discipline, real-life applications.

• Find one thing you can do better than anyone else and stick to it
• Focus on hiring and keeping the best people
• Foster a culture where people feel free to speak their minds and where problems are addressed head-on

Full Summary

About the Author : Jim Collins is an American researcher, author, speaker, and consultant. He earned his bachelor’s in Mathematical Sciences at Stanford, worked a year and a half for McKinsey, and then return to Stanford to get an MBA. Colling focuses on business management, business excellence, and business sustainable growth.

Intro: A Prequel to Built to Last

In his previous book Built to Last Jim Collins analyzes how the best companies manage to keep delivering great results over the long haul.

“ Good to Great ” follows “Built to Last” in chronological terms. However, Collins says that “ Good to Great ” is more of a prequel to Built to Last.

Because first, a company should focus on achieving greatness, and then it should focus on how to make that greatness ever-lasting.

Methodology of Research

With Good to Great Collins wants to explain how to join the ranks of the elite companies.

To do so he examined US public companies and divided them into three groups. The main differentiator between each group was their stock market returns:

• Good to great companies : companies that went from the market average return to 3 times or greater the market returns
• Direct comparison companies : companies that stayed “just good” despite having the same shot at greatness
• Unsustained comparison companies : companies that briefly became but slit back to mediocrity

Let’s see how they did it:

Think of the continuous competition of the hedgehog versus a fox.

A fox tries many different tactics to eat the critter, but the hedgehog always has the same powerful answer: curl up in a spikey ball. And he wins over and over. He can win with such high reliability because he has found one effective method of defense that he is so good at. He doesn’t need anything else, he simply repeats what he’s great at.

And that’s what companies that go from good to great do. Companies that go from good to great have found the one thing they can excel at . Here is what they ask themselves:

• What will we be passionate about?
• What will we be the best in the world at?
• What is one key performance indicator we should concentrate on?

The title is actually incorrect.

It’s because, Jim Collins explains, companies didn’t usually wake up one day and said: “this will be our thing”. Great companies found their winning strategy randomly but stuck with it.

Sure, in retrospect and from the outside it seemed like a huge shift. But there usually is no new strategy, launch event, or mission statement change. Instead, the push in the new hedgehog direction was a sum of tiny steps. Each step delivered better results and further justified and motivated people to keep going until a full-blown strategy became obvious.

One example is Zappos, which focused on selling shoes while delivering the best customer experience ever -read Delivering Happiness for the Zappos story-.

Comparison companies instead did not strive to consistently build momentum in one direction.

Their method instead is to throw everything and “see what sticks”. They try several different changes, but since the following results are underwhelming, they change again and try something new.

Companies that make the leap from good to great see new technology simply as a means to an end, not as an end in itself.

They have one strategy and one goal, and technology simply helps them get there faster. And if the technology wasn’t helping them towards their goal, they didn’t even adopt the new tech.

Underperforming companies instead saw the new technology as a threat or as a competitive advantage in itself and scrambled to adopt it without an overarching plan.

Lesson learned: use technology as a facilitator for your goal, not as a goal in itself.

Jim Collins refers to leaders of great companies as “level 5 leaders”. A level 5 leader:

• Great people, leaders, and team players
• Fanatically driven toward results
• Want to see their company succeed even after they’re gone
• Share credit and shoulder the blame
• They are modest and understated
• Most often come from within the organization

By contrast, two-thirds of underwhelming comparison companies had CEOs with huge egos . These ego-driven leaders didn’t seem to care much about what would happen after them and often had no succession plan.

Sometimes, highly charismatic leaders are also counterproductive when that means that people don’t have enough space to air their concerns and ideas.

Great companies make human resources a priority.

They want to put the right person in the right position, but they focus more on who to hire than what to hire for.

They never hire the wrong person even when they badly need professional skills, and hire more great people even when they don’t have a specific opening for them.

When they spotted the wrong person they acted immediately to keep their workplace as**ole free .

Three HR rules:

• When in doubt, don’t hire
• When you know you need to make people changes, act quickly
• Put your best people on the biggest opportunities (not problems)

Lesson learned : put the right people in the right position and winning is almost assured.

I particularly liked this part of “ Good to Great “.

Collins says that great companies confront reality even when it’s ugly. But even when things seemed to go all wrong, they still retained unwavering faith that somehow they would make it and come out winning.

For more on the science of optimism check out some positive psychology books such as:

• Authentic Happiness
• The Happiness Advantage

Lesson learned : success requires confronting the ugly realities while never losing faith.

To make sure people don’t hide from the truth great companies have a culture where people are free to express worries, concerns, and problems.

This is the same concept that Jack Welch’s Winning refers to as “candor” and Ray Dalio’s Principles refers to as “radical open-mindedness”.

Companies going from good to great have strong self-discipline in pursuing their hedgehog strategy.

They work hard and single-mindedly on their goals.

However, this must be a culture institutionalized in the company that people are willing to adhere to.

Indeed when the culture is mandated top-down by a tyrannical leader, companies might enjoy a brief spell of greatness, but that usually doesn’t last.

An example is Stanley Gault , the CEO of Rubbermaid. A self-styled “sincere tyrant”, he took the company to new heights. But soon after he left the company lost 59% of its value because no real culture was established.

To summarize what it takes to go from good to great, Collins says it’s a discipline at the three key levels:

• Disciplined people : great people focused on excellence and the hedgehog strategy
• Disciplined thought:  honesty and openness
• Disciplined action : unrelenting focusing on what matters, putting first things first

I particularly loved what Jim Collins calls the “ Stockdale Paradox “. Such as staying grounded in reality while you keep being optimistic about the final result.

I find this concept to be immensely helpful since in the past, with the “self-esteem movement”, self-help used to be full of “feel good” and “reality distortion” BS.

The truth is that to move forward in life you must look at reality. But it’s also true that you must keep your faith, confidence, and self-esteem even when things are not great.

Hence, you must do both: believe you’ll eventually prevail while you also stay hyper-realistic .

• Is There No Recipe to Follow?

The moment I read that great companies had no initial strategy was the moment I thought Good to Great was an exercise on theory with limited applications.

Indeed, if poor companies just try different things without finding a great strategy and great companies stumble on their success… What’s the difference between good and great? Because if the difference is “chance”, then what’s the use?

• Some Romanticized Accounts

I found some stories to back the theories to be a bit “romanticized”. Darwin Smith, CEO of Kimberly-Clark for example, works on a farm during holidays and mingles with plumbers and electricians.

• Stock Market Returns As Yardstick?

Of course, it would be difficult for the author to find any data which is more readily available than stock returns to judge a company’s effectiveness.

However, every time the author says that a company did well after X left or took office, I gotta wonder. Did the whole market experience a bear or bull market? Did anything else occur? Was the market simply reacting to external events the company had no control over?

In brief: stock market returns to judge a company’s effectiveness is only a good yardstick if you also consider what happened to the rest of the stock market. And even then, are you sure they are not doing great because they are following strategies that work today, but that will doom them tomorrow? Case in point: Fannie Mae and GE were examples of great companies.

• Abundant Inductive Reasoning & Statistically Not Iron-Clad

I personally felt that the scientific methods used for the analyses in “ Good to Great ” are not the best in class. There is a lot of inductive reasoning here and lots of correlation (and correlation does not mean causation). Be aware of the limitations.

Great Wisdom! The hedgehog strategy idea: awesome stuff!

The deep observer will notice that quite a few of the companies listed as “great” in Jim Collins’ book didn’t turn out to be so great.

However, I wouldn’t take that against “ Good to Great “. As an old article in The Economist once said: “market domination is only a snapshot in time”.

Indeed, just because one company achieves greatness today, doesn’t mean it will stick with greatness forever. A hedgehog strategy won’t last forever and eventually, you gotta find a new one, and cultures can be lost over the years.

Overall, I give a big thumbs up to this book. I think it’s very good and a highly recommended read for, obviously, anyone who is or aspires to be, at top-level management of any organization.

But also a recommended reading for any entrepreneur and even for self-development. The concept of “realistic optimism” is life-changing in my opinion.

Check the best books collection or get Good to Great on Amazon

About The Author

Lucio Buffalmano

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BOOK REVIEW GOOD-TO-GREAT - PowerPoint PPT Presentation

BOOK REVIEW GOOD-TO-GREAT

Book review good-to-great presented by: norhasliza ibrahim sitynoryasmin ahmad khairuddin azlida ... – powerpoint ppt presentation.

• PRESENTED BY
• Norhasliza Ibrahim
• Sitynoryasmin Ahmad Khairuddin
• Author James C. Collins
• Language English
• Publisher William Collins
• Publication date October 16, 2001
• Media type Hardcover
• Chapter 9 chapters include
• 1. Good is the enemy of great
• 2. Level 5 leadership
• 3. First Who..Then What
• 4. Confront the Brutal Facts (Yet never lose faith)
• 5. The Hedgehog Concepts (Simplicity within the three circles)
• 6. A culture of Discipline
• 7. Technology accelerators
• 8. The Flywheel and the Doom Loop
• 9. From Good to great to built to last
• James C. "Jim" Collins, III (born 1958, Boulder, Colorado) is an American business consultant, author, and lecturer on the subject of company sustainability and growth.
• Jim Collins frequently contributes to Harvard Business Review, Business Week, Fortune and other magazines, journals, etc.
• He is also the author of several books How the Mighty Fall And Why Some Companies Never Give In, Built to Last Successful Habits of Visionary Companies, and Good to Great.
• 1994 Built to Last by James C. Collins and Jerry I. Porras (Paperback, Hardcover, CD)
• 1995 Beyond Entrepreneurship Turning Your Business into an Enduring Great Company by James C. Collins and William C. Lazier (Paperback Hardcover)
• 2001 Good to Great Why Some Companies Make the Leap And Others Dont by James C. Collins (Paperback, Hardcover, CD).
• 2005 Good to Great and the Social Sectors by James C. Collins (Paperback)
• 2009 How the Mighty Fall And Why Some Companies Never Give In by James C. Collins
• Emphasis on how the good company can be transform to the great company
• This research is a journey on getting the inner working of good to great
• Concept research
• identifying the company that has make leap from goods to great
• Comparison GTG companies with the comparison companies.
• performance of the companies were measured based on their cumulative return stocks
• There is no warranty that the huge company could leap to great company. The Walgreens has beat 1 invest in Intel by 2 Times, General Electric by 5 and Coca Cola by 8 times.
• The successful of Walgreens bring the curiosity on why Eckerd with the similar resources and opportunity were not being able to make a leap.
• Inside The black Box
• Collected publish material / interview
• Coded according to strategy, technology and leadership
• Analyzed and be debated to further drawing the
• potential conclusion of the involving company
• and the teams are welcome to raise their
• voices on any comment
• Chaos to Concept
• Simulate the outcomes by testing against data in order to build framework, break it and rebuild it against.
• The simulation shows good to good has change 100 of while comparison company make changed estimated 30 .
• Level 5 Leadership
• occurs during the transition from good to great and most of them are sticking on the Stockdale Paradox, and believe the businesses not definitely good in their core business.
• discipline culture in each company.
• Enduring Great Companies
• Good To Great Concept Sustained Great Result Built To last Concept Enduring Great Companies
• Based on the study, the research team found that
• Larger than life Most of the inner celebrity shows the positive correlation with taking good to good. Its proved whereby 10 out of 11 good to great s leader are from inside
• There is no linking between executive compensation and the process of going good to great
• Both good to great and comparison companies has their range of strategic planning
• Most of the good to great company focus on what they should stop instead of what they should do
• Technology were not cause the transformation in the good to great company
• Mergers and acquisition has no impact on the movement of good to great company
• The good to great company has very few attained in managing change, motivation and creating alignment
• There also unaware of official launch event for the transformation
• It is not necessary the good to great company shall be at large and in great industry , since they are company in the terrible industry has move from good to greats.
• The author has taken the good move on this research, it tremendously give us the information and facts that we never expect
• The company that success on the transformation has the level 5 leadership. The transition process may create the leaders level 5. Nowadays, the organization should take serious action on the talent management practices since it were proven the leadership is came from the inner organization. The huge investment to launch the transformation never worth for the value, this is because it has never happened in one slope. Small company in terrible industry also has a chances to success in their transformation.
• This chapter will distinguished traits of good to great leader or Level 5 leaders.
• Kimberly Clark Case Study
• Darwin E smith, decision with switching the business from coated paper company to paper based products.
• He believed the competition and the good economy will make the succeed
• The level 5 leaders usually will to cuts against controversy as long as their ambition is achieve.
• Gillette Company Case Study
• CEO of Gillette, Colman Mockler -threat when Revlon lead by Ronald Perelman
• implement the hostile taking over with the purchase of 44 of their stock and
• their stock also bought by Coniston Partners as much of 5.9.
• not to take for granted on the acquisition - many people investing Mockler and team invest on technology and they finally developed new product called Sensor and Mach 3, and it was success and totally drown the demand for the existing product
• accept the offered by Ronald Perelman and wish it worth.
• Forbes magazine that really gave negative impression to the Gillette team, Mockler was died with heart attack
• Ambition for the Company
• David Maxwell, the CEO for Fannie Mae make lost 1 Million each
• day before he decided to transform to Wall Street firm. With the transformation his business earns 4 Million each day. Day after, he has to retire, and get the benefit of his retirement package, with the gracious heart, Maxwell is willing to contribute the money to low housing income.
• Henry v111 with Biggest Dog Syndromes
• Comparison companies, while for example Scott Paper a leaders at Kimberly Klarks earn the 165,000 per day and to maintain his earn, the business has to cut down on the workforce and Research and development expenses.
• Level 5b leader see windows as a way to segregate credited factors when things goes well and were not blaming bad luck when something goes wrong.
• There researcher categorized two hypotheses where as those leaders in the level 5 leaders and other categories which do not have level 5 leaders. This categories need to has greater ambition of building something larger and more lasting than themselves.
• Level 5 leaders are naturally born with capability and its believed they might have significance experience in their life.
• Steps to becoming leaders level 5
• Level 5 leaders are the key component for business to move from good to great company. Satisfying and powerful idea may enhance the best transition from good to greats. Symbiotic relationship between level 5 and remaining findings would help each level to develop level 5 leaders.
• Lesson Learnt
• The transformation requires the brave decision, because sometimes it requires abnormal decisions, such cases of Abbot Laboratory to remove all nepotism. Level 5 leaders always put the organization as the number one priority and always think about the grow of the company. Level 5 leaders is developed at the time of transition and the most important the organization has to be open in get the powerful ideas that would enhance the transformation and developing level 5 leaders.
• This chapter is about to get right people on the business before you
• figure out where to drive It
• First who, then what
• It is not necessary to set new directions, strategy and to get new people to ensure the successful of the transformation. Good to great companies always understand on whom leaders should join the organization
• Well Fargo Case Study
• Dick Cooley began his talented management team prepare the wrenching change.
• efficient when the business is outperform 3 times against general stock market while others bank fell behind.
• Contrast to Bank of America, where they followed weak generals, strong lieutenants. Weak generals are the employee where as wait for the direction from above. After losing I billions, Bank of America realized strong general to turn the bank around. Strong general is approach of recruiting the talented people from the competitor, mostly from Well Fergo
• Henry Singleton Case study
• The small enterprise has evolved to the corporation and success by has more than 100 acquisition, but once Singleton moved out, and the business were merged with Allegheny, it was failed to be great.
• This study also reveals there is no linking between executive compensation and the process from good to great. They believed, right people will do everything with their power. Compensation is more to get right people in business at place and keep them.
• Good To Great Company always seems for rigorous, they usually consistency with exact standard at all levels especially at upper management. There are three steps on how the companies can be rigorous
• Practice Discipline, when it doubt, dont hire and keep looking
• When you know there is need to make people change, do it.
• Put the best people on the biggest opportunity not the problems.
• Good to Great Company usually take advantage on the level 5 leaders, to get
• maintain them, the right people shall be at right places and it appears the crucial
• the Human resources in recruiting and retains the best resources.
• CONFRONT THE BRUTAL FACT
• (YET NEVER LOSE FAITH)
• Facts are better than dreams
• Good to great companies did not have a perfect track record.
• But on the whole, they made many more good decisions than the comparison companies.
• Even more important on the really big choices such as Krogers decision to thrown all its resources into the task of converting its entire system to the superstore concept, they were remarkably on target.
• Let the Truth be Heard
• To accomplish this, 4 basic practices must
• 1. Lead with question, not answer
• Leading from good to great does not mean coming up with the answer and motivating everyone to follow your messianic vision. It means having the humility to grasp the fact that you do not yet understand enough to have the answers and then to ask the questions that will lead to the best possible insights.
• 2. Engage in dialogue and debate, not coercion
• All good to great companies have a penchant for intense debates, discussions and healthy conflict. Dialogue is not used as sham process to let people have their say so they can buy into a predetermined decision rather it is used to engage people in the search for the best answers.
• 3. Conduct autopsies, without blame
• Good to great leaders must take an honest look at decisions his or her company makes, rather than simply assigning blame for the outcomes pf those decisions. These autopsies go a long way toward establishing understanding and learning, creating a climate where the truth is heard.
• 4. Build red flag mechanisms that turn information into information that cannot be ignored
• Good to great companies have no better access to information than any other company. They simply give their people and customers ample opportunities to provide unfiltered information and insight that can act as early warning for potentially deeper problems.
• THE HEDGEHONG CONCEPT
• (SIMPLICITY WITHIN THE THREE CIRCLES)
• A simple crystalline concept that lows from deep
• understands about the intersection of the
• following circles.
• At what you can be best in the world
• This standard goes far beyond core competence.
• It is because you possess a core competence doesnt necessarily mean you are the best in the world at that competence.
• Conversely, what you can be best in the world at might not even be something in which you are currently engaged.
• The Hedgehog concept is not a goal or strategy to be the bet at something, it is an understanding of what you can be the best at and almost equally important on what you cannot be the best at.
• What drives your economic engine
• To get insight into the drivers of your economic engine, search for the one dominator (profit per x, for example or cash flow per x) that has the single greatest impact, if you could pick one and only one ratio to systematically increase over time to make a greater impact on what that ratio be. This denominator can be subtle and sometimes even unobvious. The key is to use the denominator to gain understanding and insight into your economic model.
• What you are deeply passionate about
• Good to great companies did not pick a course of action and then encourage their people to become passionate about their direction. Rather, those companies decide to do only those things that they could get passionate about. They recognized that passion cannot be manufactured nor can it be the end result of a motivation effort. You can only discover what ignites your passions of those around you.
• Critical point is the hedgehog concepts is not a goal to be the best, its 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 critical.
• Collins points out how companies that stray outside their core competency pay for it dearly.
• In contrast, when a great company can no longer do a certain thing better than someone else, despite the fact that it had been doing it for a long time, it dropped that line at work and it never looked back.
• Characteristics of the Council
• 1. The Council exists as a device to gain understanding about important issues facing the organization.
• 2. The Council is assembled and used by the leading executive and usually consists of five to twelve people.
• 3. Each council member has the ability to argue and debate in search of understanding, not from the egoistic need to win a point or protect a parochial interest.
• 4. Each council member retains the respect of every other council member without exception.
• 5. Council member come from a range of perspectives but each member has deep knowledge about some aspect of the organization and/or the environment in which it operates.
• 6. The Council includes key members of the management team but is not limited to members of the management team, nor is every executive automatically a member.
• 7. The council is a standing body, not an ad hoc committee assembled for a specific project.
• 8. The Council meets periodically, as much as once a week or as infrequently as once per quarter.
• 9. The Council does not seek consensus, recognizing that consensus decisions are often at adds with intelligent decisions. The responsibility for the final decision remains with the leading executive.
• 10. The Council is an informal body, not listed on any formal organization chart or in any formal documents.
• 11. The Council can have a range of possible names, usually quite innocuous. In the good to great companies, they had benign names like Long-Range Profit Improvement Committee, Corporate Products Committee, Strategic Thinking Group and Executive Council.
• A CULTURE OF DISCIPLINE
• This means following
• Build a culture around the idea of freedom and responsibility, within a framework.
• Fill that culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities. They will rinse their cottage cheese
• Dont confuse a culture of discipline with a tyrannical disciplinarian.
• Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection if the three circles.
• To create a culture of discipline, you must
• ? Build a culture around the idea of freedom and responsibility, within a framework.
• Good-to-great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of that system.
• Fill your culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities.
• People in good-to-great companies tend to be almost fanatical in the pursuit of greatness, they possess the discipline to do whatever it takes to become the best within carefully selected arenas and then seek continual improvement from there.
• Many companies that could not sustain their success had leaders who personally disciplined the organization through sheer force. Good to Great companies had Level 5 leaders who built an enduring culture of discipline, powered by self-disciplined people who acted in the companys best interests without strict dictums from leadership.
• Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection of the three circles.
• The good-to-great companies at their best followed a simple mantra Anything that does not fit with our Hedgehog Concept, we will not do. They did not launch unrelated businesses or joint ventures in an effort to diversify.
• Good to Great organizations think differently, about technology and technological change than mediocre ones.
• Good to great organizations also avoid technology fads and bandwagons and they become pioneers in the application of carefully selected technology.
• The good to great companies used technology as an accelerator of momentum, not a creator of it.
• None of the good to great companies began their transformations with pioneering technology.
• so, they are become pioneers in the application of technology once they grasped how it fit with their three circles and after they hit breakthrough.
• we discuss how a company reacts to technological change is good indicator of its inner drive for greatness versus mediocrity.
• So, great companies respond with thoughtfulness and creativity, driven by a compulsion to turn unrealized potential into results, mediocre companies react and lunch about motivated by fear of being left behind.
• The Flywheel Effect
• The Doom Loop
• Good to great transformation often look like dramatic, revolutionary events to observing from the outside, but they feel like organic, cumulative processes to people on the inside. The confusion of end outcomes (dramatic result) with process ( organic and cumulative) skews our perception of what really works over the long haul.
• No matter how dramatic the end result, the good-to-great transformation never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment.
• Sustainable transformations follow a predictable pattern of buildup and breakthrough. Like pushing on a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough.
• The comparison companies followed a different pattern, the doom loop. Rather than accumulating momentum-turn by turn of the flywheel-they tried to skip buildup and jump immediately to breakthrough. Then, with disappointing result, theyd lurch back and forth, failing to maintain a consistent direction.
• The comparison companies frequently tried to create a breakthrough with large, misguided actuations. The good-to-great companies, in contrast, principally used large acquisitions after breakthrough, to accelerate momentum in an already fast-spinning flywheel.
• From this chapter, the good to great research project, they discuss about the ideas in build to last while doing the good to great research. Actually, built to last, based on six year research project conducted at Stanford Business School in the early 1990s. for example, this group research examined companies like Procter Gamble (founded in 1937)
• So they found early in the research, then they made a very important decision. They decided to conduct the research for Good to Great as if built to last didnt exist. This was the only way to clearly see the key factors in transforming a good company into a great one with minimal bias from previous work.
• Concept in Good To Great
• Level 5 leadership
• Relationship to Concept in Built to Last
• Clock Building, Not Time Telling Level 5 leaders build a company that can tick along without them, rather than feeding their egos by becoming indispensable. 
• Genius of AND Personal humility AND professional will.
• Core Ideology Level 5 leaders are ambitious for the company and what it stands for they have a sense of purpose beyond their own success.
• Preserve the Core/Stimulate Progress Level 5 leaders are relentless in stimulating progress toward tangible result and achievement, even if it means firing their brothers.
• The company use both Good to Great and Built to Last to understand why they great, so, they can keep doing the right thing. For example, if you feel you right or failure, so better is to be successful without being resolutely clear about why are successful.( Robert Burgelmen)- Prof. from Stanford Business School.
• To create and find the value from Good to Great and will commit to applying what we learn to whatever we do for our company, social sector work and your own life.
• The Good to Great performance pattern must be a company shift, not an industry event. In other word. The company must demonstrate the pattern not only relative to the market, but also relative to its industry.
• At the transition point, the company must have been established, ongoing company, not a startup.
• This was defined as having operations for at least twenty five year prior to the transition point.
• Additionally, it had to have been publicly traded with stock return data available at least ten years prior to the transition point.

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Good to Great

63 pages • 2 hours read

A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more. For select classroom titles, we also provide Teaching Guides with discussion and quiz questions to prompt student engagement.

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Summary and Study Guide

Good to Great , published in 2001, serves as both a follow-up and thematic prequel to author Jim Collins’s 1994 best seller, Built to Last. Comprehensive in the scope of its research, Good to Great is an examination of the defining qualities of greatness in companies that have made a pivotal transition from “good” (performing relatively consistently) to “great” (performing exceptionally). In making his arguments, Collins brings his expertise as a faculty member at the Stanford University Graduate School of Business, as well as his time at the helm of his own research laboratory in Boulder, Colorado.

Plot Summary

Good to Great is the product of a five-year research project, led by Jim Collins and executed by a team of 20 people, in response to a central question: “Can a good company become a great company and, if so, how?” (3). In the opening chapter, Collins sets the foundational framework for the book, explaining that part of the impetus for writing it was a piece of constructive criticism about his previous book, Built to Last . The unanswered question in Built to Last , which focused on companies that had always been great, serves as the premise of Good to Great. As Collins concludes the first chapter, he identifies sheer curiosity as the motivation behind the tremendous research that resulted in the book, and then articulates the four phases that framed his work: “Phase 1: The Search,” “Phase 2: Compared to What?,” “Phase 3: Inside the Black Box”, and “Phase 4: Chaos to Concept.”

In Chapter 2 (“Level 5 Leadership”), Collins defines the qualities of a leader who turns a good company into a great one, naming this type of leadership “Level 5 Leadership.” Rather than relying on charisma or a big personality, a Level 5 leader “builds enduring greatness through a paradoxical blend of personal humility and professional will” (20). Without a Level 5 leader at the helm, companies seldom achieve greatness.

Chapter 3 (“First Who…Then What”) emphasizes the need to recruit and retain the right people, to remove the wrong people, and to set a mission-driven course once the right people have bought into the idea. The subsequent teams, characterized by a rigorous work ethic, debate constantly in search of consensus. Together, these teams contribute to a company’s greatness thanks to “their character traits and innate capabilities” rather than an impressive list of specific skills (64).

In Chapter 4 (“Confront the Brutal Facts (Yet Never Lose Faith)”), Collins argues that every good-to-great company must undergo a rigorous process of facing its most glaring issues. In order to acknowledge these “brutal facts,” companies must first cultivate and maintain a culture of openness where stakeholders across the organization can voice their perspective in a free and authentic manner. Adversity is common across all companies, regardless of their greatness or lack thereof, but a highly effective response to adversity requires this head-on confrontation.

Chapter 5 (“The Hedgehog Concept (Simplicity Within the Three Circles)”) draws on Collins’s research to suggest that a good-to-great is like a hedgehog—simple, seemingly unimpressive, but highly consistent. The hedgehog image serves as the basis for the three intersecting circles that combine to create greatness: what you are deeply passionate about, what drives your economic engine, and what you can be the best in the world at. According to Collins, good-to-great companies generally take four years to arrive at their Hedgehog Concept.

In Chapter 6 (“A Culture of Discipline”), Collins emphasizes the importance of a company culture where self-disciplined people are free to work within a framework shaped by high expectations and clear communication. This type of culture thrives when people at the company are self-motivated, eager to improve the company and even to suggest innovation, and not fearful that a tyrant at the helm of the company will personally discipline their wrongdoings. According to Collins, companies can only achieve this type of culture by strictly adhering to the Hedgehog Concept.

Chapter 7 (“Technology Accelerators”) focuses on using technology as a means of accelerating success, rather than creating success simply by adopting a new technology. According to Collins, applying cutting-edge technological practices is not enough to transform a company from good to great. Technology is important in a company’s constant evolution and growth, but it cannot make or break a company on its own. Furthermore, good-to-great companies strategically select new technologies that align with the core tenets of their Hedgehog Concepts, rather than simply jumping onto the bandwagon of the latest fad.

In Chapter 8 (“The Flywheel and the Doom Loop”), Collins compares how momentum builds in good-to-great companies to how it builds in others. Good-to-great companies build momentum in the same way that a flywheel does, growing over time through persistence and repetition . Comparison companies, on the other hand, often fall into what Collins calls the “doom loop”—a pattern that results from trying to skip steps along the way, ignoring the benefits of gradual momentum in an effort to achieve breakthrough as quickly as possible.

Finally, in Chapter 9 (“From Good to Great to Built to Last”), Collins contextualizes Good to Great by juxtaposing it with Built to Last . He argues that Good to Great acts more as a prequel to Built to Last , even though he conducted the research for Good to Great years after publishing Built to Last . Both books center on a question that Collins deems essential to any organization: Why do we want to be great in the first place? Collins concludes by arguing that the concepts these books lay out are relevant not only in the context of companies and organizations, but also in the context of our individual daily lives.

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BOOK REVIEW GOOD-TO-GREAT

Feb 20, 2012

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BOOK REVIEW GOOD-TO-GREAT. PRESENTED BY: Norhasliza Ibrahim Sitynoryasmin Ahmad Khairuddin Azlida. INTRODUCTION. Author: James C. Collins Language: English Publisher: William Collins Publication date: October 16, 2001 Media type: Hardcover Pages: 320.

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BOOK REVIEWGOOD-TO-GREAT PRESENTED BY: Norhasliza Ibrahim Sitynoryasmin Ahmad Khairuddin Azlida

INTRODUCTION Author: James C. Collins Language: English Publisher: William Collins Publication date: October 16, 2001 Media type: Hardcover Pages: 320

Chapter: 9 chapters include: 1. Good is the enemy of great 2. Level 5 leadership 3. First Who..Then What 4. Confront the Brutal Facts (Yet never lose faith) 5. The Hedgehog Concepts (Simplicity within the three circles) 6. A culture of Discipline 7. Technology accelerators 8. The Flywheel and the Doom Loop 9. From Good to great to built to last

HISTORY OF AUTHOR • James C. "Jim" Collins, III (born 1958, Boulder, Colorado) is an American business consultant, author, and lecturer on the subject of company sustainability and growth. • Jim Collins frequently contributes to Harvard Business Review, Business Week, Fortune and other magazines, journals, etc. • He is also the author of several books: How the Mighty Fall: And Why Some Companies Never Give In, Built to Last: Successful Habits of Visionary Companies, and Good to Great.

James C. Collins

Books 1994: Built to Last by James C. Collins and Jerry I. Porras (Paperback, Hardcover, CD) 1995: Beyond Entrepreneurship: Turning Your Business into an Enduring Great Company by James C. Collins and William C. Lazier (Paperback & Hardcover) 2001: Good to Great: Why Some Companies Make the Leap … And Others Don’t by James C. Collins (Paperback, Hardcover, CD). 2005: Good to Great and the Social Sectors by James C. Collins (Paperback) 2009: How the Mighty Fall: And Why Some Companies Never Give In by James C. Collins

CHAPTER 1: GOOD IS THE ENEMY OF GREAT • Emphasis on how the good company can be transform to the great company • This research is a journey on getting the inner working of good to great Concept research • identifying the company that has make leap from goods to great • Comparison GTG companies with the comparison companies. • performance of the companies were measured based on their cumulative return stocks • There is no warranty that the huge company could leap to great company. The Walgreens has beat $1 invest in Intel by 2 Times, General Electric by 5 and Coca Cola by 8 times. • The successful of Walgreens bring the curiosity on why Eckerd with the similar resources and opportunity were not being able to make a leap.

The research has four phases Phases 1 Establishing team - The teams consist of four to six people teams have to identify the company with good to great pattern in at least 15 years. Phases 2 Identify factors that good to great company share in common then distinguished them against the comparison companies.

Phase 3 Inside The black Box Collected publish material / interview Coded according to strategy, technology and leadership Analyzed and be debated to further drawing the potential conclusion of the involving company and the teams are welcome to raise their voices on any comment

Phase 4 Chaos to Concept • Simulate the outcomes by testing against data in order to build framework, break it and rebuild it against. • The simulation shows good to good has change 100% of while comparison company make changed estimated 30 %. • Level 5 Leadership • occurs during the transition from good to great and most of them are sticking on the Stockdale Paradox, and believe the businesses not definitely good in their core business. • discipline culture in each company. • Enduring Great Companies • Good To Great Concept + Sustained Great Result + Built To last Concept Enduring Great Companies

Findings • Based on the study, the research team found that • Larger than life: Most of the inner celebrity shows the positive correlation with taking good to good. Its proved whereby 10 out of 11 good to great ‘s leader are from inside • There is no linking between executive compensation and the process of going good to great • Both good to great and comparison companies has their range of strategic planning • Most of the good to great company focus on what they should stop instead of what they should do • Technology were not cause the transformation in the good to great company

Mergers and acquisition has no impact on the movement of good to great company • The good to great company has very few attained in managing change, motivation and creating alignment • There also unaware of official launch event for the transformation • It is not necessary the good to great company shall be at large and in great industry , since they are company in the terrible industry has move from good to greats.

LESSON LEARNT • The author has taken the good move on this research, it tremendously give us the information and facts that we never expect: • The company that success on the transformation has the level 5 leadership. The transition process may create the leaders level 5. Nowadays, the organization should take serious action on the talent management practices since it were proven the leadership is came from the inner organization. The huge investment to launch the transformation never worth for the value, this is because it has never happened in one slope. Small company in terrible industry also has a chances to success in their transformation.

CHAPTER 2: LEVEL LEADERSHIP • This chapter will distinguished traits of good to great leader or Level 5 leaders. Kimberly Clark Case Study • Darwin E smith, decision with switching the business from coated paper company to paper based products. • He believed the competition and the good economy will make the succeed • The level 5 leaders usually will to cuts against controversy as long as their ambition is achieve.

Gillette Company Case Study • CEO of Gillette, Colman Mockler -threat when Revlon lead by Ronald Perelman • implement the hostile taking over with the purchase of 44% of their stock and • their stock also bought by Coniston Partners as much of 5.9%. • not to take for granted on the acquisition - many people investing Mockler and team invest on technology and they finally developed new product called Sensor and Mach 3, and it was success and totally drown the demand for the existing product • accept the offered by Ronald Perelman and wish it worth. • Forbes magazine that really gave negative impression to the Gillette team, Mockler was died with heart attack

Ambition for the Company David Maxwell, the CEO for Fannie Mae make lost 1 Million each day before he decided to transform to Wall Street firm. With the transformation his business earns 4 Million each day. Day after, he has to retire, and get the benefit of his retirement package, with the gracious heart, Maxwell is willing to contribute the money to low housing income. Henry v111 with Biggest Dog Syndromes Comparison companies, while for example Scott Paper a leaders at Kimberly Klarks earn the $165,000 per day and to maintain his earn, the business has to cut down on the workforce and Research and development expenses.

Level 5b leader see windows as a way to segregate credited factors when things goes well and were not blaming bad luck when something goes wrong. • There researcher categorized two hypotheses where as those leaders in the level 5 leaders and other categories which do not have level 5 leaders. This categories need to has greater ambition of building something larger and more lasting than themselves. • Level 5 leaders are naturally born with capability and it’s believed they might have significance experience in their life. Steps to becoming leaders level 5 • Level 5 leaders are the key component for business to move from good to great company. Satisfying and powerful idea may enhance the best transition from good to greats. Symbiotic relationship between level 5 and remaining findings would help each level to develop level 5 leaders. Lesson Learnt • The transformation requires the brave decision, because sometimes it requires abnormal decisions, such cases of Abbot Laboratory to remove all nepotism. Level 5 leaders always put the organization as the number one priority and always think about the grow of the company. Level 5 leaders is developed at the time of transition and the most important the organization has to be open in get the powerful ideas that would enhance the transformation and developing level 5 leaders.

CHAPTER 3: FIRST WHO…THEN WHAT This chapter is about to get right people on the business before you figure out where to drive It First who, then what • It is not necessary to set new directions, strategy and to get new people to ensure the successful of the transformation. Good to great companies always understand on whom leaders should join the organization Well Fargo Case Study • Dick Cooley began his talented management team prepare the wrenching change. • efficient when the business is outperform 3 times against general stock market while others bank fell behind. • Contrast to Bank of America, where they followed “weak generals, strong lieutenants. Weak generals are the employee where as wait for the direction from above. After losing I billions, Bank of America realized strong general to turn the bank around. Strong general is approach of recruiting the talented people from the competitor, mostly from Well Fergo

Henry Singleton Case study • The small enterprise has evolved to the corporation and success by has more than 100 acquisition, but once Singleton moved out, and the business were merged with Allegheny, it was failed to be great. • This study also reveals there is no linking between executive compensation and the process from good to great. They believed, right people will do everything with their power. Compensation is more to get right people in business at place and keep them. • Good To Great Company always seems for rigorous, they usually consistency with exact standard at all levels especially at upper management. There are three steps on how the companies can be rigorous: • Practice Discipline, when it doubt, don’t hire and keep looking • When you know there is need to make people change, do it. • Put the best people on the biggest opportunity not the problems. Lesson Learnt Good to Great Company usually take advantage on the level 5 leaders, to get & maintain them, the right people shall be at right places and it appears the crucial the Human resources in recruiting and retains the best resources.

CHAPTER 4 CONFRONT THE BRUTAL FACT (YET NEVER LOSE FAITH)

Facts are better than dreams • Good to great companies did not have a perfect track record. • But on the whole, they made many more good decisions than the comparison companies. • Even more important on the really big choices such as Kroger’s decision to thrown all its resources into the task of converting its entire system to the superstore concept, they were remarkably on target.

Let the Truth be Heard To accomplish this, 4 basic practices must engaged: 1. Lead with question, not answer Leading from good to great does not mean coming up with the answer and motivating everyone to follow your messianic vision. It means having the humility to grasp the fact that you do not yet understand enough to have the answers and then to ask the questions that will lead to the best possible insights.

2. Engage in dialogue and debate, not coercion All good to great companies have a penchant for intense debates, discussions and healthy conflict. Dialogue is not used as sham process to let people “have their say” so they can buy into a predetermined decision rather it is used to engage people in the search for the best answers. 3. Conduct autopsies, without blame Good to great leaders must take an honest look at decisions his or her company makes, rather than simply assigning blame for the outcomes pf those decisions. These “autopsies” go a long way toward establishing understanding and learning, creating a climate where the truth is heard.

4. Build red flag mechanisms that turn information into information that cannot be ignored • Good to great companies have no better access to information than any other company. They simply give their people and customers’ ample opportunities to provide unfiltered information and insight that can act as early warning for potentially deeper problems.

CHAPTER 5 THE HEDGEHONG CONCEPT (SIMPLICITY WITHIN THE THREE CIRCLES)

A simple crystalline concept that lows from deep understands about the intersection of the following circles.

At what you can be best in the world This standard goes far beyond core competence. It is because you possess a core competence doesn’t necessarily mean you are the best in the world at that competence. Conversely, what you can be best in the world at might not even be something in which you are currently engaged. The Hedgehog concept is not a goal or strategy to be the bet at something, it is an understanding of what you can be the best at and almost equally important on what you cannot be the best at.

What drives your economic engine To get insight into the drivers of your economic engine, search for the one dominator (profit per x, for example or cash flow per x) that has the single greatest impact, if you could pick one and only one ratio to systematically increase over time to make a greater impact on what that ratio be. This denominator can be subtle and sometimes even unobvious. The key is to use the denominator to gain understanding and insight into your economic model.

What you are deeply passionate about Good to great companies did not pick a course of action and then encourage their people to become passionate about their direction. Rather, those companies decide to do only those things that they could get passionate about. They recognized that passion cannot be manufactured nor can it be the end result of a motivation effort. You can only discover what ignites your passions of those around you.

Critical point is the “hedgehog concepts is not a goal to be the best, it’s 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 critical”. • Collins points out how companies that stray outside their core competency pay for it dearly. • In contrast, when a great company can no longer do a certain thing better than someone else, despite the fact that it had been doing it for a long time, it dropped that line at work and it never looked back.

Getting the hedgehog concepts (an interactive process) Ask Question, Guided by the three circles Dialogue and debate, Autopsies and analysis THE Guided by the three circles Guided by the three circles COUNCIL Executive Decisions

Characteristics of the Council 1. The Council exists as a device to gain understanding about important issues facing the organization. 2. The Council is assembled and used by the leading executive and usually consists of five to twelve people. 3. Each council member has the ability to argue and debate in search of understanding, not from the egoistic need to win a point or protect a parochial interest. 4. Each council member retains the respect of every other council member without exception. 5. Council member come from a range of perspectives but each member has deep knowledge about some aspect of the organization and/or the environment in which it operates.

6. The Council includes key members of the management team but is not limited to members of the management team, nor is every executive automatically a member. 7. The council is a standing body, not an ad hoc committee assembled for a specific project. 8. The Council meets periodically, as much as once a week or as infrequently as once per quarter. 9. The Council does not seek consensus, recognizing that consensus decisions are often at adds with intelligent decisions. The responsibility for the final decision remains with the leading executive.

10. The Council is an informal body, not listed on any formal organization chart or in any formal documents. 11. The Council can have a range of possible names, usually quite innocuous. In the good to great companies, they had benign names like Long-Range Profit Improvement Committee, Corporate Products Committee, Strategic Thinking Group and Executive Council.

CHAPTER 6 A CULTURE OF DISCIPLINE

The Good to Great Matrix of Creative Discipline Hierarchical Organization Great Organization High Culture of Bureaucratic Organization Start-up Organization Discipline Low Low Ethic of High Entrepreneurship

This means following: • Build a culture around the idea of freedom and responsibility, within a framework. • Fill that culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities. They will “rinse their cottage cheese” • Don’t confuse a culture of discipline with a tyrannical disciplinarian. • Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection if the three circles.

To create a culture of discipline, you must: ● Build a culture around the idea of freedom and responsibility, within a framework. Good-to-great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of that system. • Fill your culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities. People in good-to-great companies tend to be almost fanatical in the pursuit of greatness, they possess the discipline to do whatever it takes to become the best within carefully selected arenas and then seek continual improvement from there.

Don’t confuse a culture of discipline with a tyrannical disciplinarian. Many companies that could not sustain their success had leaders who personally disciplined the organization through sheer force. Good to Great companies had Level 5 leaders who built an enduring culture of discipline, powered by self-disciplined people who acted in the company’s best interests without strict dictums from leadership. • Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection of the three circles. The good-to-great companies at their best followed a simple mantra — “Anything that does not fit with our Hedgehog Concept, we will not do.” They did not launch unrelated businesses or joint ventures in an effort to diversify.

CHAPTER 7: Technology Accelerators • Good to Great organizations think differently, about technology and technological change than mediocre ones. • Good to great organizations also avoid technology fads and bandwagons and they become pioneers in the application of carefully selected technology. • The good to great companies used technology as an accelerator of momentum, not a creator of it. • None of the good to great companies began their transformations with pioneering technology. • so, they are become pioneers in the application of technology once they grasped how it fit with their three circles and after they hit breakthrough. • we discuss how a company reacts to technological change is good indicator of its inner drive for greatness versus mediocrity. • So, great companies respond with thoughtfulness and creativity, driven by a compulsion to turn unrealized potential into results, mediocre companies react and lunch about motivated by fear of being left behind.

The Flywheel Effect The Doom Loop

CHAPTER 8: The Flywheel and the Doom Loop • Good to great transformation often look like dramatic, revolutionary events to observing from the outside, but they feel like organic, cumulative processes to people on the inside. The confusion of end outcomes (dramatic result) with process ( organic and cumulative) skews our perception of what really works over the long haul. • No matter how dramatic the end result, the good-to-great transformation never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment.

Sustainable transformations follow a predictable pattern of buildup and breakthrough. Like pushing on a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough. • The comparison companies followed a different pattern, the doom loop. Rather than accumulating momentum-turn by turn of the flywheel-they tried to skip buildup and jump immediately to breakthrough. Then, with disappointing result, they’d lurch back and forth, failing to maintain a consistent direction. • The comparison companies frequently tried to create a breakthrough with large, misguided actuations. The good-to-great companies, in contrast, principally used large acquisitions after breakthrough, to accelerate momentum in an already fast-spinning flywheel.

CHAPTER 9: From Good to Great to Built to Last • From this chapter, the good to great research project, they discuss about the ideas in build to last while doing the good to great research. Actually, built to last, based on six year research project conducted at Stanford Business School in the early 1990s. for example, this group research examined companies like Procter & Gamble (founded in 1937) • So they found early in the research, then they made a very important decision. They decided to conduct the research for Good to Great as if built to last didn’t exist. This was the only way to clearly see the key factors in transforming a good company into a great one with minimal bias from previous work.

Concept in Good To Great • Level 5 leadership • Relationship to Concept in Built to Last • Clock Building, Not Time Telling: Level 5 leaders build a company that can tick along without them, rather than feeding their egos by becoming indispensable.  • Genius of AND: Personal humility AND professional will. • Core Ideology: Level 5 leaders are ambitious for the company and what it stands for; they have a sense of purpose beyond their own success. • Preserve the Core/Stimulate Progress: Level 5 leaders are relentless in stimulating progress toward tangible result and achievement, even if it means firing their brothers.

LESSON LEARN • The company use both Good to Great and Built to Last to understand why they great, so, they can keep doing the right thing. For example, if you feel you right or failure, so better is to be successful without being resolutely clear about why are successful.( Robert Burgelmen)- Prof. from Stanford Business School. • To create and find the value from Good to Great and will commit to applying what we learn to whatever we do for our company, social sector work and your own life. • The Good to Great performance pattern must be a company shift, not an industry event. In other word. The company must demonstrate the pattern not only relative to the market, but also relative to its industry.

At the transition point, the company must have been established, ongoing company, not a startup. • This was defined as having operations for at least twenty five year prior to the transition point. • Additionally, it had to have been publicly traded with stock return data available at least ten years prior to the transition point.

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