Good to Great by Jim Collins

Good to Great by Jim Collins

The Big Idea: 

Chapter 1: Good is the Enemy of Great

  • Good to Great companies always had Level 5 Leaders.
  • Recruit the right people before choosing a direction/mission/vision/strategy.
  • Confront the brutal truth and move forward anyways.
  • Stick to your core.
  • Create a culture of discipline.
  • Use technology as an accelerator of existing greatness.
  • Focus on small, continuous progress, not grand transformations.

Chapter 2: Level 5 Leadership

  • Level 5 leaders are a paradoxical blend of personal humility and professional will.
  • Level 5 leaders put their company and their team before themselves.
  • Level 5 leaders are fanatical about results, not credit.
  • Level 5 leaders come from within the company, not from outside.
  • Level 5 leaders display workmanlike diligence, not celebrity charisma.

Chapter 3: First Who…Then What

  • Hold out for the best talent.  Don’t lower your hiring standards.
  • Hire slow, fire fast.  Then strive to zero turnover.
  • Don’t rely on one genius leader.  Have lots of great minds on board.
  • There is no right answer for how to structure executive compensation.  Just make sure it makes sense. The right people will deliver the best results, regardless of the compensation structure.
  • You can create an environment that attracts the best people, but no compensation structure will turn poor performers into rock stars.
  • Hire for attitude and character than for specific knowledge and skills.
  • The best companies build great teams.  They don’t work their people to the bone.

Chapter 4: Confront the Brutal Facts

  • Don’t be afraid to look at the brutal facts.
  • Create a culture that embraces truth and honesty.
  • Ask a lot of question and engage in open dialogue.
  • When something doesn’t work, take responsibility, figure out why but don’t blame others.
  • Pay attention to key metrics so you know early when something is wrong.
  • Regardless of the situation, have unwavering faith that the team will find a way to succeed.
  • The three circles are: what are you deeply passionate about? What can you be the best in the world at?  What drives your economic engine?

Chapter 5: The Hedgehog Concept

  • Focus on the essentials and ignore the rest.
  • You will success if you can identify one simple concept that is good and execute it fanatically.
  • Eg. Walgreens key metric: profit per customer visit; Wells Fargo had profit per employee; Fannie Mae had profit per unit of risk; Kroger had profit per local population.
  • Everyone has strategic plans, but the good-to-great companies are more likely to be based around a simple idea.
  • Three key questions that define the hedgehog concept: what are you deeply passionate about, what can you be the best in the world, what drives your economic engine?
  • Don’t focus on mindless pursuit of growth. Focus on your core business, defined by your hedgehog concept.

Chapter 6: A Culture of Discipline

  • Startups often fail because they hire too many new people, acquire too many new customers, launch too many new products.
  • Things become too complex and problems start to surface.
  • Fast-growing startups will hire professional managers to reign in the mess, but also kill the entrepreneurial spirit.
  • Instead of installing bureaucracy to compensate for incompetence and lack of discipline, hire the right people in the first place.
  • Avoid bureaucracy and hierarchy and instead create a culture of discipline.
  • 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.
  • Create a stop-doing list and focus on the hedgehog concept.
  • Develop a system and manage the system.  Don’t manage the people.
  • Culture beats great individual leadership.
  • A culture of discipline prevents you from expanding outside of your core.
  • A culture of discipline prevents you from an inflated overhead and layers of waste.

Chapter 7: Technology Accelerators

  • Be selective about which technologies you adopt.
  • Make sure your technology supports your hedgehog concept.
  • Technology by itself is never the primary cause of success or failure.
  • Reliance on technology can give you a false sense of invulnerability.

Chapter 8: The Flywheel and the Doom Loop

  • Success is an organic, cumulative process.  It never happens overnight.
  • Success takes patience and discipline.
  • Focus on continuous, incremental improvement, not miraculous transformations.
  • Once there is visible progress, keep the momentum going.  It is infectious.

Chapter 9: From Good to Great to Built to Last

  • The central concept of Built to Last: discover your core values and purpose beyond just making money (core ideology) and combine this with the dynamic of preserve the core/stimulate progress.
  • Hewlett Packard started with “who” before ever deciding what they would build (“what”.)
  • Walmart had taken 25 years to get to 38 stores, patiently defining their hedgehog concept.
  • Profits and cash flow are like blood and water.  They are necessary for life, but they are not the purpose of living.
  • Built To Last 1. Clock Building not Time Telling: culture and systems > single great leader/idea
  • Built to Last 2. Genius of AND: purpose AND profit, continuity AND change
  • Built to Last 3. Core Ideology: core values and purpose
  • Built to Last 4. Preserve the Core/Stimulate Progress: (except for core values) constant change, innovation, experimentation