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By: Marsha, Feb 24th 2011

Good to Great: Why Some Companies Make the Leap...and Others Don't

Source: Good to Great: Why Some Companies Make the Leap...and Others Don't, by Jim Collins

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."

Built to Last-Successful Habit of Visionary Companies

Source: Built to Last, by Jim Collins & Jerry I. Porras.

After reading this book, my perspectives regarding what it takes to build visionary companies/organizations have changed. In this book, Collins shattered many of the management myths that exist in the world of business, as following:

Myth 1: It takes a great idea to start a great company.

Reality: Most of the visionary companies started without any specific idea, or outright failures. Collins mentioned the parable of the tortoise and the hare to illustrate that visionary companies often had a slow start, but they win in the long run.

Myth 2: Visionary companies require great and charismatic visionary leaders.

Reality: Collins said that this type of leaders is not required and, in fact, can be a liability to the company's future. Visionary companies need clock builders, not time tellers.

Myth 3: The most successful companies exist first and foremost to maximize profits.

Reality: Visionary companies also need money to be able to continue operating, but their reasons for existence is beyond making money.

Myth 4: Visionary companies share a common subset of "correct" core values.

Reality: There is no "right" set of "correct" core values. The important thing is they have a set of deeply held core values and they are consistent in alignment to those values.

Myth 5: The only constant is change.

Reality:The visionary companies never, or very rarely, change its core ideology, its reason for being. It fiercely preserve the core idealism, while stimulating the progress and change of any other things beside that to adapt to the changing environments.

Myth 6: Blue-chip companies play it safe.

Reality: Visionary companies may appear conservative from the outside but they are not scared to make bold commitments to "Big Hairy Audacious Goals".

Myth 7: Visionary companies are great places to work, for everyone.

Reality: "There is no middle ground." "You will either fit extremely well, or be expunged like a virus."

Myth 8: Highly successful companies make their best moves by brilliant and complex strategic planning.

Reality: The visionary companies tend to discover their best moves through experimentation, through trials and errors. They keep doing what work well, and discard what do not work.

Myth 9: Companies should hire outside CEOs to stimulate fundamental change.

Reality: Most of the CEOs of the visionary companies were groomed within the companies, and they are the ones who truly understand and believe in the preserved core values.

Myth 10: The most successful companies focus primarily on beating on the competition.

Reality: The visionary companies are not motivated by comparing themselves with others or by fear of being left behind. They are motivated by the desire of wanting to always become better, and they can never feel they have done enough or they are good enough.

Myth 11: You can't have your cake and eat it too.

Reality: They believe in being able to get BOTH and not EITHER ONE.

Myth 12: Companies become visionary primarily through "vision statements".

Reality: Making a visionary statement is just one of the thousand steps necessary to become visionary companies.

So, in order to build a visionary company, what kind of mechanisms need to be there? What kind of leader should one become? What are the myths that are commonly believed by society which are wrong, and what are the correct things to believe?

I am inspired to apply these concepts for the rest of my managerial career:

1. Be a clock builder

2. Embrace the “Genius of the AND”

3. Preserve the core/stimulate progress

4. Seek consistent alignment

Financial Revolution

Source: Financial Revolution Workbook, by Tung Desem Waringin (one of the most successful businessmen in Indonesia)

I attended his seminar which was titled "Financial Revolution" during spring holiday in 2009, and was so enlightened and inspired by his wisdom. I wanted to share his wisdom to my English-speaking friend, so I translated the Indonesian workbook into English.

Why is it necessary to learn how to be rich? It is not a sin to be rich, and in fact we can do more good things, and do less bad things. The concept of win-win relationship :) Poverty is one of the core problems of many societies in the world. Learning to wisely manage and grow money might prove to be helpful to have an organized, peaceful personal life, and also to solve many people's problems when the wisdom is widely shared. Moreover, this is something that is fun and exciting to do :) In the end, with a good control over our own money, we can have one less worry in life and take care of the more important things that matter, as well as avoid being the slave of money.

First of all, how do we go through Financial Revolution? (Tung Desem Waringin)

He told us that many people can't become rich because of the MONEY BLUEPRINTS that they have in mind (the beliefs towards being rich and rich people) that subconsciously hinder them from becoming rich in reality. These blueprints come from:

1. WORDS that we have read or heard before, that are somehow programmed into you

2. MODELING people that we see

3. TRAUMA, events which have affected us emotionally

In order to CHANGE our money blueprints and belief system, we need to change our THOUGHTS & EMOTIONS, with:

1. COURAGE eg. to overcome oneself, etc

2. COMMITMENT eg. 20% effort, 80% use constructive emotions--> can be positive or negative or both

3. FAITH, the most powerful, change our identity

After that, we change our DECISIONS. And we change our ACTIONS, developing constructive HABITS through

1. REWARDS

2. PUNISHMENTS

3. TUNING (just like a musical instrument)

4. MONITORING

In the end, we will be able to change the RESULT, through CONSISTENCY.

This reminds me of this quote:

"Watch your thoughts. They become words. Watch your words. They become deeds. Watch your deeds. They become habits. Watch your habits. They become character. Character is everything" (Ralph Waldo Emerson).

Tung mentioned 102 common blueprints, but I would like to share the ones that struck me the most:

Money can't buy love

People with a lot of money are not really religious

People become rich because they take advantage of people

I am a good giver, not a good receiver

I can't be rich by doing what I love to do

I am an honest person so it's hard to be rich

If I ask for help, that means I am weak

In order to be rich, we need too much hardwork and sufferings

To get a lot of money means taking others' rights

Actually, money is not really important

The most important things in life are happiness, health, and love. Money is not important.

Working hard to find wealth makes people suffer from heart attack, stroke, and stress

It's better to be poor but happy, than rich but unhappy

It's better to be poor and have God, rather than rich but far from God

It's better to be poor and have a harmonious family, rather than rich but have a broken family

Commonly, rich people are dishonest and cunning

The above-mentioned sentences might seem to be correct and logical. In fact, they are widely said and accepted. Those sentences existed in my subconscious mind, and I only became aware when he pointed out in the seminar. In the seminar, he challenged the blueprint one by one. For example, there might be subconscious perceptions of trade-off relationships between being rich and being happy, being rich and being close to God, as well as being rich and having a harmonious family. However, instead of putting OR between the two variables, Tung taught us to use the power of AND. We can be rich and happy at the same time, be rich and be close to God at the same time, be rich and have a harmonious family at the same time. It all depends on our own beliefs.

People think that money is the root of all evils. But the Bible says, "For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs" (1 Timothy 6:10). It is not the money itself that is dangerous, but the greed for money is the source of evil deeds. Instead of being the slave of money, we need to know how to manage money. Many tend to blame money for evil deeds, and subconsciously avoid having so much money because they are afraid that it will be a source of evil.

Furthermore, Tung said, "The only way to change your 'outer world' permanently, is to change your 'inner world' permanently. If you want to be rich, you have to destroy all of your money blueprints that are consciously or subconsciously hindering you from wanting to be rich" (Tung).

Also, according to a concept in organizational behavior theories, "People's behavior is based on their perception of what reality is, not on reality itself. The world as it is perceived is the world that is behaviorally important (Robbins & Judge, 2010).

"If you think you can do a thing or you can't do a thing, you are right", Henry Ford.

Tung said that we will act according to our BELIEF, not according to 'WHAT IS REALLY HAPPENING', which will either ENABLE us or DISABLE us to achieve our goals. We will take actions (or not take actions) according to the belief that dominates your HEART and MIND, and these ACTIONS will produce RESULTS.

21 Ways Rich People Think and Act Differently from Poor & Middle Class People (Tung):

1. Rich people add value. Poor people doesn’t add value/add a little bit of value.

2. Rich people have/use multiplying factor. Poor people doesn’t have/use multiplying factor.

3. Rich people make sure that other people WIN, and then they can win. Poor people: Lose-Win, or Lose-Lose, seek to win first then after that win people.

4. Rich people are always resourceful/try to find resources. Poor people are full of excuses.

5. Rich people take responsibility of their lives. Poor people blame circumstances, situations, environments, other people and fate.

6. Rich people play with money to win. Poor people play with money not to lose.

7. Rich people commit to be rich. Poor people want to be rich. “Genius is one percent inspiration, ninety-nine percent perspiration” Thomas Alfa Edison.

8. Rich people think big. Poor people think small.

9. Rich people focus on opportunities. Poor people focus on obstacles.

10. Rich people admire other rich people and successful people. Poor people are jealous to rich and successful people.

11. Rich people make friends/mingle with positive and successful people. Poor people make friends/mingle with negative and unsuccessful people.

12. Rich people are willing to promote themselves and their values. Poor people think negatively about sales and promotion.

13. Rich people are larger than their problems. Poor people are smaller then their problems.

Example: Super Mom (a single mom who doesn’t even have arms and legs takes care of her son faithfully, independently)

14. Rich people are extraordinary receivers. Poor people are bad receivers.

15. Rich people choose to be paid based on results. Poor people choose to be paid based on time.

16. Rich people think “both”. Poor people think “one of/or”

17. Rich people focus on their Wealth Style (their Massive and Passive Income). Poor people focus on their Life Style.

18. Rich people manage their money well. Poor people do not manage their money well.

19. Rich people make money work hard for them. Poor people make themselves work hard for money.

20. Rich people take actions to overcome their fears. Poor people let their fears stop them.

Example: Loretta Claiborne, a marathon runner. “He who has overcome his fears will truly be free” Aristotle.

21. Rich people continuously learn and grow as long as they live. Poor people think that they know enough already.

III. PURPOSE/GOAL

A goal must be:

1. WRITTEN

2. SPECIFIC

3. POSITIVE

From now onwards, it is the summary of the main part of the seminar.

The most important concepts in this part are passive income and financial independence.

6 financial conditions that we can achieve (from Wealth Master by Anthony Robbins):

1. Financial Protection

When you have enough money to cover your monthy expenses minimum 2-24 months.

2. Financial Security

When you have got a lot of investment (which are secure) and the returns can cover the following needs without you having to work anymore (unless you choose to continue working)

a. Credits for houses

b. Food

c. Electricity, gas, and water

d. Transportation

e. Insurance

f. Taxes

3. Financial Vitality

When you have a lot of investment (and secure) and the returns can cover all the needs mentioned in Financial Security plus the following needs without having to work anymore unless you choose to do so.

a. Children’s education

b. Entertainment (minimum 50% of what you’re enjoying now)

c. To buy new clothes/ one or two luxury goods within common sense

4. Financial Independence

When we have a lot of investment (and secure) and the returns can cover our current lifestyle completely without having to work anymore. In other words, you are free from work for the rest of your life.

5. Financial Freedom

When you have a lot of investment (and secure) and the returns can cover whatever lifestyle that we want to choose.

6. Absolute Financial Freedom

When your returns of investment allows you to really do anything, whenever you want, wherever you want, with whoever you want, as much as you want. (still with the ways that win other people).

Financial Independence = Passive Income > Lifestyle

Passive income is the money that is generated without having to work.

eg. Investment, passive business income, royalty/license/patented ideas.

(A detailed model of calculation is written in the book, but I omit the part here)

To attain Financial Independence as soon as possible

1. Increase passive income

2. Reduce expenses: simplify our life, postpone pleasure and enjoyment

For a frugal lifestyle, I found Warren Buffet to be an excellent role model.

He still lives in the same small 3-bedroom house in mid-town Omaha , that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence. Also, he never travels by private jet, although he owns the world's largest private jet company. He even does not have a cellphone or access to internet. Furthermore, he does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch television.

His advice to young people: "Stay away from credit cards (bank loans) and invest in yourself and remember: Money doesn't create man but it is the man who created money. Live your life as simple as you are. Don't do what others say, just listen them, but do what you feel good". Also, he encouraged people not to buy more than what you "really need" and encourage your children to do and think the same.

I am very inspired to know that the richest man in the world keeps his modest standard of living while he is enjoying life by doing what he loves everyday. He does not need to increase his expenses along with his increased income in order to be happy. In fact, he tries to eliminate any unnecessary expenses as much as possible.

As a saying goes, "Happiness is a state of mind". Before we knew it, we have been made to think that we need to increase our consumption when our income increases. In economics class, we are taught that rational consumers in general would be willing to spend more when their income increase. If we are among the general population of consumers, that means we are still trapped in the rat race. Awareness of self is the first step to enlightenment. We have the power to choose how we are going to act upon it. Tung summarized: success is to get what we want, while happiness is to want what we have got.

What I need to do is to keep track of my expenses, to make sure that I only spend money on what I need (with some reasonable rewards of being successful to stick to plan). I will read up on passive income and how to best invest my savings :) Which means, there is a need to further study about various types of investments :)

At the end of the day, by God's grace, my passive income will be greater than normal life expenses. Thus, financial independence. :)

Last but not least, this verse is to be kept in mind in all hard work in pursuit of financial success. "But seek first His kingdom and His righteousness, and all these things will be given to you as well" (Matthew 6:33).

References

Collins, J., Porras, J. I. (2002). Built to Last: Successful Habits of Visionary Companies. New York: HarperCollins Publishers.

Collins, J. (2001). Good to Great: Why Some Companies Make the Leap...and Why Others Don't.

Holy Bible (NIV).

Jeremiah 29:11-13

Matthew 6:33

Philippians 4:13

Proverbs 16:3

1 Timothy 6:10

Robbins, S. P., Judge, T. A. (2010) Essentials of Organizational Behavior. New Jersey: Pearson.

Waringin, T. Financial Revolution. Indonesia. (Translated by Marsha in 2009).

Table of Contents

Chapter 1. Background of Study

Problem Statement

I just submitted my undergraduate thesis yesterday, December 17th 2010, as one of the requirements for graduation. During the thesis-writing process, I felt the desire to write another thesis with the objective to discover a concrete way (or concrete ways) how God wants to use me to bring glory to His name. Therefore, I pray that He would guide me to write my life thesis.

On why it has to be written, it is just me who love to sort out entangled and scattered insights through writing. Through writing, things can be seen clearly and can be sorted out more objectively. Also, I would like to have an archive of the process of discovery, and see how He has guided me along the way.

Before I came to Japan, God gave me a message through these verses:

Jeremiah 29:11-13

"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future. Then you will call on me and come and pray to me, and I will listen to you. You will seek me and find me when you seek me with all your heart."

Therefore, I am confident that God has a plan for me in the future. But I do not wish to passively wait for things to happen to me. I would like to explore and take actions, while waiting for His revelations. God, please give me wisdom to write the blog posts. Please guide my thought process.

I have a longing in my heart, that hasn't changed over the years. I would like to believe that it is what God planted in my heart, so that it becomes the drive for me to bring glory to Him.

My longing is to inspire people, so that they enjoy lifelong learning process, to strive to be better persons each day. I hope that people in the world can experience God's love, and be deeply moved by how much God loves us. I hope that people will enjoy daily lives, simply because of God's love. I hope that people will have the desire to bring glory to His name through the unique talents that God has granted them. In other words, I hope that people will be passionate to pursue their dreams, regardless their limitations that they have, or the limitations that they perceive to have.

Once a dear friend of me asked me about my dream in May 2009. This is what I wrote in the reply:

If asked "What is your highest goal in life, the ultimate goal that you would like to have?" my heart would answer, I want to inspire people, to empower people. I want more and more people to believe in God, to have confidence in themselves and their abilities, to feel excited to be a better person each day and in pursuing their own dreams".

The year after that, in June 2010, I wrote this to him:

"The dream itself is actually really abstract, as it can be achieved in a lot of different ways. Maybe you can remember when I shared with you last year? If I try to phrase it, it will be: for the people in the world to be empowered and inspired to continue to love on with positive attitude despite all the ups and downs in life, to have the courage to pursue their dreams, and to actually be happy because God loves them and will provide"

I'd love to offer these desires in my heart to God, and for Him to lead the way. God, please guide me and grant me wisdom during research, contemplations, and discussions.

I will implement the conclusion of this thesis, and hope to qualify for graduation from this life. No, I don't mean that I will die :p I just hope to fulfill God's purpose of creating me, and finish my tasks on earth, so that I can have eternal life with Him after death.

Research Objectives

To explore concrete ways in which God can use me to bring glory to Him.

Theoretical Framework

Proverbs 16:3

Commit to the Lord whatever you do, and He will establish your plans.

Hypotheses

No hypotheses, as this will be an exploratory research, and it will be God who reveals the conclusion.

Significance of the Study

The conclusion of this thesis will show me the way how to bring glory to Him, which is the only purpose of my existence on earth.

Scope and Limitations

There is no boundary or limitation, as nothing is impossible with Him.

Philippians 4:13

I can do everything through Him who gives me strength.

Chapter 2. Review of Literature

The literature is the one to be explored in this blog, in the form of blog posts about different materials.

Chapter 3. Methodology

This research is exploratory, with the guidance of God.

1. I will pray to God and ask for His guidance and wisdom.

2. I would daily read materials, reflect on them, and post them on this blog.

3. I would have exchanges of thoughts and insights with people, and I would be open to see things from various perspectives, in order to gain the real understanding of things.

Chapter 4. Results and Discussions

Chapter 5. Conclusion

God will reveal to me about what to write in this part.

Reference

The Holy Bible

Supervisor

God