This is another book which I was "forced" to read, as I must write a book review of this book for the company that I will work for starting April 2011. Nevertheless, I am grateful to have chanced upon and read this book, because this book is deeply inspiring. Not only it inspires business executives on how to built a great company, but the concepts in the books are also greatly applicable at personal level. It inspires people on how to be a great person and to have a great life. This book is for anyone who is not satisfied by merely being good, but aspires to continue improving to become a great person. In fact, at one point in the middle of the book, there was a concept that struck me so deeply that I needed to pause and think for few days, before resuming to read.
Anyway, this is the summary of the book:
This book is hinged on one question: How can good companies/mediocre companies turn themselves into great companies?
1. Level 5 Leadership
It is commonly perceived that charismatic leaders the best type of leaders and are necessary to develop good to great companies. However, the research team found factual findings said a different thing. Type of leaders that is essential in developing good to great companies is the leaders with "a paradoxical blend of personal humility and professional will.
Figure 2.
Source: Good to Great, Jim Collins
"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."
"Level 5 leaders look out the window to apportion credit to factors outside themselves when things go well (and if they cannot find a specific person or event to give credit to, they credit good luck). At the same time, they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly."
2. First "Who", then "What"
The management of good to great companies always get the right people first before deciding the right thing to do.
Figure 3.
Source: Good to Great, Jim Collins
3. Confront the Brutal Facts
Good to great companies have the courage to face the truth even though it is painful. They are ready to accept reality as it is, to see the problems as they are. Then they gear themselves on what to do about it, what constructive actions are necessary.
Figure 4.
Source: Good to Great, Jim Collins
"There's a huge difference between the opportunity to "have your say" and the opportunity to be heard. The good-to-great leaders understood this distinction, creating a culture wherein people had a tremendous opportunity to be heard and, ultimately, for the truth to be heard."
4. The Hedgehog Concept
This concept was illustrated by the intersection of three concentric circles as shown in Figure 5.
Figure 5. The Three Concentric Circles
Source: www.coachtoolkit.com
"When what [you are deeply passionate about, what you can be best in the world at and what drives your economic engine] come together, not only does your work move toward greatness, but so does your life."
So, it is best to focus on the things that are within the intersection of the three circles, the three things.
"A 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."
"And if you cannot be the best in the world at your core business, then your core business cannot form the basis of your Hedgehog Concept."
-I was struck by the simplicity of this concept, and overwhelmed by the stream of thoughts that rushed into my head. Therefore, I needed to pause reading the book to think and reflect for few days.-
5. Culture of Discipline
We need to be careful of the definition of "discipline" here. What Jim Collins meant by discipline is to make to-do list of the things within the area of the intersection of the three circles, as well as to make stop-doing list of the things outside the area.
"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. We will not launch unrelated businesses. We will not make unrelated acquisitions. We will not do unrelated joint ventures. If it doesn't fit, we don't do it. Period."
"Whereas the good-to-great companies had Level 5 leaders who built an enduring culture of discipline, the unsustained comparisons had Level 4 leaders who personally disciplined the organization through sheer force.
Good-to-great companies choose the right people first before deciding their goals. The right people are the people who have the culture of discipline.
"The 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. They hired self-disciplined people who didn't need to be managed, and then managed the system, not the people."
6. Technology Accelerations
Technology does not cause companies to transform from good to great. It is not a principal factor, but it is an accelerator. To a company that is transforming from good to great because of the above-mentioned factors, technology will accelerate its growth from good to great.
"When used right, technology becomes an accelerator of momentum, not a creator of it. The good-to-great companies never began their transitions with pioneering technology, for the simple reason that you cannot make good use of technology until you know which technologies are relevant. And which are those? Those-and only those-that link directly to the three intersecting circles of the Hedgehog Concept."
7. The Flywheel
There is no miracle moment that leads a company from good to great. Instead, it is the continuous hard work that leads to incremental improvements that build up a great momentum.
"We've allowed the way transitions look from the outside to drive our perception of what they must feel like to those going through them on the inside. From the outside, they look like dramatic, almost revolutionary breakthroughs. But from the inside, they feel completely different, more like an organic development process."
8. From Good to Great to Built to Last
Figure 6. The Formula from Good to Great to Built to Last
Source: Good to Great, Jim Collins
Favorite Quotes from the Book:
"Good is the enemy of great"
"When what [you are deeply passionate about, what you can be best in the world at and what drives your economic engine] come together, not only does your work move toward greatness, but so does your life. For, in the end, it is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work. Perhaps, then, you might gain that rare tranquility that comes from knowing that you've had a hand in creating something of intrinsic excellence that makes a contribution. Indeed, you might even gain that deepest of all satisfactions: knowing that your short time here on this earth has been well spent, and that it mattered."
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline"
"If we only have great companies, we will merely have a prosperous society, not a great one. Economic growth and power and the means, not the definition, of a great nation."
"Consider the idea that charisma can be as much a liability as an asset. Your strength of personality can sow the seeds of problems, when people filter the brutal facts from you"
"For, in the end, it is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work."
"Those who turn good into great are motivated by a deep creative urge and an inner compulsion for sheer unadulterated excellence for its own sake. Those who build and perpetuate mediocrity, in contrast, are motivated more by the fear of being left behind."
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