Good to Great: Why Some Companies Make the Leap… and Others Don’t is a management book by Jim Collins that provides a comprehensive analysis on how companies transition from being good companies to great ones. The book is the result of a 5-year research project led by Collins and his team. They examined 1,435 companies, filtering down to 11 unique companies that made a leap from good to great performance and sustained it for at least 15 years.
Here are top Key takeaways from this book.
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Contents
Level 5 Leadership
Every good-to-great company had a Level 5 leader who was in charge of the company during its transition period. Level 5 is a hierarchy of executive capabilities, consisting of 5 levels: highly capable individual, contributing team member, competent manager, effective leader, and level 5 executive at the very top.
Level 5 executives showed a lot of humility and modesty, and preferred to live quietly while they were realizing great changes in their companies. Level 5 leaders would humbly attribute success to factors outside of themselves.
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First Who, Then What
This is the second concept of disciplined people. It’s not just the quality of leadership that is important to be great. The quality of all other people in the team is equally as important. Getting the right people takes precedence over strategy, over vision, over almost everything.
First, you get the right people. Then you let them work out where you’re going to go, what you’re going to do, and how you’re going to do it. First who, then what means shifting your mindset to realize that people are not your most valuable asset, the right people are.
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Confront the brutal facts
If you have Level 5 Leadership, and you have the right people, then the whole organization is able to put company performance ahead of their own ego. This enables you to confront the brutal facts, without losing faith that the company will be successful.
Great results can only be achieved when you make lots of good decisions and then execute well. To make good decisions you need to confront the facts, even if those facts are brutal and uncomfortable. To avoid distorting the facts you need an atmosphere where the truth is welcomed.
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The Hedgehog Concept
The fourth step of going from Good to Great is the Hedgehog Concept. Good to Great companies stick to doing what they’re best at and avoid getting distracted. It’s incredibly easy to get distracted, with even great companies having to fight to stop this from happening.
The Hedgehog Concept is a turning point in the journey from Good to Great. The remaining concepts only make sense if you have your Hedgehog Concept in place. Be prepared for it to take several years to find your Hedgehog Concept.
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Culture of Discipline
Having discipline of people eliminates the need for hierarchy. Having discipline of thought keeps everyone on track. Now we move to the discipline of action which eliminates the need for bureaucracy. This means that there is no need to excessively control the actions of your people.
A culture of discipline means having the organization full of people who will take action consistent with the hedgehog principle. Don’t make the mistake of many executives: mistaking control for discipline.
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Technology Accelerator
Good to Great companies think about technology in a different way. They will invest in new technology only if it serves their Hedgehog Concept.
A key concept here is to realize that no single push makes a difference. No matter how herculean the effort. So you have to be thinking about cumulative effects, not looking for the dramatic singular win
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The Flywheel and the Doom Loop
The flywheel effect describes building momentum through consistent application of the key concepts over time, leading to a breakthrough.
Conversely, the doom loop refers to companies that frequently jump from strategy to strategy, looking for a quick fix without building cumulative momentum, which leads to failure.
Conclusion:
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