Book Summary: Good To Great

This article is based on the following book:
Good to Great
"Why Some Companies Make the Leap... and Others Don't"
Jim Collins, co-author of ‘Built to Last'
Random House Business Books, London
300 pages

Explore what goes into a company's transformation from
mediocre to excellent. Based on hard evidence and volumes of
data, the book author (Jim Collins) and his team uncover
timeless principles on how the good-to-great companies like
Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark,
Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and
Wells Fargo produced sustained great results and achieved
enduring greatness, evolving into companies that were indeed
‘Built to Last'.

The Collins team selected 2 sets of comparison companies:
a. Direct comparisons – Companies in the same industry with
the same resources and opportunities as the good-to-great
group but showed no leap in performance, which were:
Upjohn, Silo, Great Western, Warner-Lambert, Scott Paper,
A&P, Bethlehem Steel, RJ Reynolds, Addressograph, Eckerd,
and Bank of America.

b. Unsustained comparisons – Companies that made a short-term
shift from good to great but failed to maintain the
trajectory, namely: Burroughs, Chrysler, Harris, Hasbro,
Rubbermaid, and Teledyne

Wisdom In A Nutshell:
a. Ten out of eleven good-to-great company leaders or CEOs
came from the inside. They were not outsiders hired in to
‘save' the company. They were either people who worked
many years at the company or were members of the family
that owned the company.
b. Strategy per se did not separate the good to great
companies from the comparison groups.
c. Good-to-great companies focus on what Not to do and what
they should stop doing.
d. Technology has nothing to do with the transformation from
good to great. It may help accelerate it but is not the
cause of it.
e. Mergers and acquisitions do not cause a transformation
from good to great.
f. Good-to-great companies paid little attention to managing
change or motivating people. Under the right conditions,
these problems naturally go away.
g. Good-to-great transformations did not need any new name,
tagline, or launch program. The leap was in the
performance results, not a revolutionary process.
h. Greatness is not a function of circumstance; it is clearly
a matter of conscious choice.
i. Every good-to-great company had “Level 5” leadership during
pivotal transition years, where Level 1 is a Highly Capable
Individual, Level 2 is a Contributing Team Member, Level 3
is the Competent Manager, Level 4 is an Effective Leader,
and Level 5 is the Executive who builds enduring greatness
through a paradoxical blend of personal humility and
professional will.
j. Level 5 leaders display a compelling modesty, are
self-effacing and understated. In contrast, two thirds of
the comparison companies had leaders with gargantuan
personal egos that contributed to the demise or continued
mediocrity of the company.
k. Level 5 leaders are fanatically driven, infected with an
incurable need to produce sustained results. They are
resolved to do whatever it takes to make the company great,
no matter how big or hard the decisions.
l. One of the most damaging trends in recent history is the
tendency (especially of boards of directors) to select
dazzling, celebrity leaders and to de-select potential Level
5 leaders.
m. Potential Level 5 leaders exist all around us, we just have
to know what to look for.
n. The research team was not looking for Level 5 leadership,
but the data was overwhelming and convincing. The Level 5
discovery is an empirical, not ideological, finding.
o. Before answering the “what” questions of vision and
strategy, ask first “who” are the right people for the team.
p. Comparison companies used layoffs much more than the
good-to-great companies. Although rigorous, the
good-to-great companies were never ruthless and did not
rely on layoffs or restructuring to improve performance.
q. Good-to-great management teams consist of people who debate
vigorously in search of the best answers, yet who unify
behind decisions, regardless of parochial interests.
r. There is no link between executive compensation and the
shift from good to great. The purpose of compensation is
not to ‘motivate' the right behaviors from the wrong people,
but to get and keep the right people in the first place.
s. The old adage “People are your most important asset” is
wrong. People are not your most important asset. The right
people are.
t. Whether someone is the right person has more to do with
character and innate capabilities than specific knowledge,
skills or experience.
u. The Hedgehog Concept is a concept that flows from the deep
understanding about the intersection of the following three
circles:
1.What you can be best in the world at, realistically,
and what you cannot be best in the world at
2.What drives your economic engine
3.What you are deeply passionate about
v. Discover your core values and purpose beyond simply making
money and combine this with the dynamic of preserve the core
values - stimulate progress, as shown for example by Disney.
They have evolved from making short animated films, to
feature length films, to theme parks, to cruises, but their
core values of providing happiness to young and old, and not
succumbing to cynicism remains strong.
w. Enduring great companies don't exist merely to deliver
returns to shareholders. In a truly great company, profits
and cash flow are absolutely essential for life, but they
are not the very point of life.

"IF YOU'RE DOING SOMETHING YOU CARE DEEPLY ABOUT AND IF YOU
BELIEVE IN IT, IT'S IMPOSSIBLE TO IMAGINE NOT TRYING TO MAKE
IT GREAT."



By: Regine P. Azurin and Yvette Pantilla
Regine Azurin is the President of BusinessSummaries.com, a company that provides business book summaries of the latest bestsellers for busy executives and entrepreneurs.
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