Why Some Companies Make the Leap and Others Don't
How can good companies, mediocre companies, even bad companies achieve enduring greatness?
For years, this question preyed on the mind of Jim Collins. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? And if so, what are the universal distinguishing characteristics that cause a company to go from good to great?
Discover the key determinants of greatness—why some companies make the leap and others don’t.
Good to Great Animated Summary
Video By Productivity Game
Key Takeaways
Three Concepts to go From Good to Great
1. Hedgehog An ancient Greek Parable says, “The fox knows many things, but the hedgehog knows one big thing.”
- When a hedgehog waddles down familiar path to retrieve its lunch, a fox tries to attack it in different ways and different points along its route. But every time the clever fox think its about to catch the hedgehog off-guard, the hedgehog notices the fox, rolls into a ball and becomes a sphere of sharp spikes. The fox insists on a new strategy everyday, while the hedgehog relies on one tried and true strategy, and the hedgehog always wins.
Good to Great companies have a hedgehog mentality. They look to distill their business into a simple strategy, a core concept, a unifying vision. They develop a hedgehog mentality by focusing on three circles:
1. What they can be the best at, and more importantly what they can’t be the best at.
2. The companies economic engine, more specifically how that company can generate more profit per X than any other company in the industry? X=profit per customer, profit per employee, or profit per store.
3. Passion, all the good to great companies asked are we in this for the money, or are we passionate about our business? While comparison companies developed products and services they thought they could make a profit, good to great companies only invested in products and services they loved.
At the intersection of these three circles is what Collins calls, “a Hedgehog Concept” Every good to great company simplifies their business around their hedgehog concept and had the discipline not to get distracted by business opportunities that didn’t align with their hedgehog concept.
2. The Bus How does a company manage their bus?
- Who gets on the bus Who does the company hire? Strong character, obedient, entrepreneurial spirit, etc..
- When do they get off the bus Sometimes they’ll bring people onto the company that aren’t the right fit. People either stay on the bus for along time or get off in a hurry. Good to great companies rarely laid people off during tough times. CEOs devote time to putting the right people in the right seats.
- Where do people sit on the bus? imagine the bus has two section: the front is best pursuing the companies opportunities for growth, the rear sections is reserved for people who resolve the companies biggest problems. In every good to great company, the front half of the bus is filled with the companies highest performers. Brightest minds on the biggest opportunities = one step ahead of the competition.
3. The Level Five Leader Every good leader advances through the levels:
1. They become a skilled worker.
2. They become a reliable teammate.
3. Become an organized manager.
4. Become a visionary with a compelling message that people buy into.
5. Very few leaders reach level 5. Reserved for leaders with extreme humility, and extreme resolve. The prototypical level 5 leader is Abraham Lincoln. All good to great leaders are Lincolnesque
- Humble but has a ferocious resolve to make a company great.
- Every level 5 leader have stoic determination to do whatever needs to be done to make the company great.
- Level 5 leaders front care about being popular, they only care about doing what’s best for the company.
