The key takeaway from Good to Great is discipline. Jim Collins and his team studied 28 companies over 5 years and identified the key determinants of success and failure. The books describe 6 different levels mentioned as follows:
1. Level 5 Leadership
The first is Level 5 Leadership. Every great company Collin studied had the same type of leader – Level 5 Leaders.
The organizational hierarchy’s lowest level of leadership includes the Highly Capable Individual who contributes using their skills, know-how and good work habits. The next is Contributing Team Members who are able to use their skills and knowledge to help their team succeed.
The next level is Competent Manager who are capable of organizing their team to efficiently reach pre-determined objectives. Level 4 is Effective Leaders where the majority of leaders can be found and are able to create the commitment from their team to vigorously pursue a clear and compelling vision.
Finally the Level 5 Leadership level consists of great leaders. They have the abilities of the other four levels plus a unique combination of willpower and humility.
Entrepreneurs should try to develop the following traits if they want to become a Level 5 Leader.
Paradox, Driven, Share praise, Take blame, Normal people, and Come from within the organization.
To encourage and find Level 5 Leaders in your organization you can:
-Look for great results without an individual claiming the credit.
-Practice the Good to Great concepts.
-Hire from within. Avoid the temptation to recruit external talent.
– Invest in personal development, coaching and mentoring for your team.
2. First Who, Then What
This is the second concept of disciplined people. It means that you don’t decide what you want to do and then get the people you need to do it. Instead, you start by getting the right people into the organization and the wrong people out. Getting the right people takes precedence over strategy, vision and over almost everything. First who, then what means shifting your mindset to realize that people are not your most valuable asset, the right people are.
The benefits of putting “who” before “what” include:
-It’s easier to change direction because people are present because of who they get to work with rather than what they are working on.
-A person doesn’t have to waste time and energy motivating and managing his team.
-Putting who before what gives the organization the potential to become great.
As part of first who, then what, Collins gives three principles to follow. These are:
Principle 1: When in doubt, don’t hire – keep looking.
Great companies are prepared to grow only at the rate they can hire the right people.
Principle 2: Act the right way when there is a need to make a personal change.
You must let go of the wrong people because it isn’t fair on them and it’s not fair on the organization to keep them around.
Principle 3: Put your best people at the required place.
The best people will be debating what the “what” should be. This gives you a better chance of making the right “what” decision.
3. Confront the brutal facts
Great results can only be achieved when you are making 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.
There are four practices to help you create this atmosphere:
1. Lead with questions not with answers.
The leaders of Good to Great companies start by assuming they don’t know what is required. They ask questions until a picture of reality and its implications emerges. This is the opposite of superstar leaders who assume they have all the answers are likely to make bad decisions because they don’t have a true understanding of the facts.
2. Engage in dialog and debate, not coercion.
Engage in a debate, have heated discussions, even agree to disagree, but great leaders never coerce people.
3. Conduct autopsies without blame and use them to learn.
Even great companies make mistakes. Great companies don’t try to hide these mistakes. Rather, they try to learn from them. Trying to blame someone for the mistake doesn’t even enter into the conscious thoughts of Good to Great leaders.
4. Build red flag mechanisms
Great companies pay attention to what’s really important. They build red flag mechanisms. Further, these turn raw data into information that cannot be ignored.
The Stockdale Paradox
In this part of the book the author explains a concept called The Stockdale Paradox.
A US Navy Vice-Admiral named James Stockdale, was a prisoner of war for over seven years during which time he was tortured many times.
He never doubted that he would survive and that’s how he handled this situation. When asked which kind of people didn’t survive, Stockdale said it was the optimists. The ones who, for example, believed they’d be out by Christmas. Christmas then came and went. And so did the following Christmas. And eventually, they gave up and died demoralized and of a broken heart.
So, Stockdale Paradox is a philosophy of duality which involves having the discipline to confront the brutal facts regarding your circumstances. But at the same time, it involves never losing faith that you will prevail in the end.
It all depends how we handle these difficulties that will have the biggest impact on the course of our lives and our business.
4. The Hedgehog Concept
The next in going Good to Great is the Hedgehog Concept. To explain this concept the author quotes an example of the difference between a fox and a hedgehog.
A fox is a very clever creature because it sees the world in all its complexity and can pursue many goals at once. Whereas, a hedgehog is a much more simple creature because it doesn’t get bogged down by all the complexity. Hedgehogs are not capable of seeing complexity. They see is a single goal and accordingly execute it.
Good to Great companies behave in a similar way to a hedgehog. They stick to doing what they’re best at and avoid getting distracted.
So you can find your inner hedgehog at the intersection of these three questions:
1. What do you feel most passionate about?
2. What can you be best in the world at?
3. What drives your economic engine?
Great companies set their goals on Hedgehog concept. This is very different from setting your goals from the desire to grow, for example.It takes time to develop your Hedgehog Concept. It’s not going to happen overnight, in a flash of brilliant inspiration.
A business council is primarily established to achieve great results. The members are tasked with finding the Hedgehog Concept. To be effective the council needs the right people on board. You can get align with other concepts only if you have developed a hedgehog concept.
5. 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.
Most companies fail not because of the lack of opportunity but because there is too much opportunity, and they spread themselves too thinly.
To support a culture of discipline you’ll need to do five things:
1. Within a defined framework build a culture of freedom and responsibility.
You will free up your time if you put in place boundaries but let people decide themselves how to act within those boundaries. All you’ll have to do is manage the system itself. The best way to explain this is by using the example of an airline pilot. The pilot is guided by air-traffic control but with an ultimate responsibility for the safety of the its passengers, and crew.
2. Get the right people on board those that have the will to achieve their responsibilities.
You need the right people, confronting the brutal facts, following the Hedgehog Concept and then having the discipline to do what needs to be done to reach their objectives.
3. Build a strong culture, not a dictatorship.
It’s about creating a culture where the team wants to achieve.
4. Exercise extreme focus in adhering to your Hedgehog Concept
If you want to be average, start by trying to be great at lots of things. But Good to Great companies give supreme attention to their hedgehog concept.
5. Create a Stop-Doing list
Create a list of not to do things to retain more focus on goals. Focus on which projects support your Hedgehog Concept. Those who doesn’t support the Hedgehog Concept get less funding or are scrapped.
6. Technology Accelerator
Good to Great companies invest in new technology only if it serves their Hedgehog Concept.
Good to Great companies behavior around technology include the following traits:
1. They view technology if it serves the purpose of their Hedgehog Concept.
They invest in new technology only if it it fits with their Hedgehog Concept.
2. They use technology in unique ways.
3. They maintain a balanced view of technology.
This means that they view how technology is used as being far more important than adopting the latest technology.
The Flywheel and Doom Loop
Imagine a very large flywheel which is thousands of kilograms or pounds in weight. Now to get it to spin you need to start pushing it. As you begin to push you might make one single step of progress. Then another step and then another.
A single push has no impact on the wheel. As you first start to push it seems almost impossible to turn. Pushing it, and pushing it, and pushing it. Then ultimately with all the efforts it takes on a life of its own and its spinning really fast and doesn’t need as much effort to spin.
In fact, now it’s really difficult to stop! We have achieved a Good to Great Flywheel Effect. This, in turn, energizes people and momentum is easy to sustain without much effort. The media is obsessed with moments of breakthrough and inspiration. But, if someone came to you and inquired as to what was the one big push that made your flywheel spin so fast what would you say? You wouldn’t be able to answer! It’s about consistency over a long period of time.
A key concept here is to realize that no single push makes a difference. So you have to be thinking about cumulative effects, not looking for the dramatic singular win.
The Doom Loop
This concept states that big companies start with a great idea or a flash of brilliance. But then they work on it intermittently, giving only intermittent big pushes. These huge efforts are exhausting. Over time, their intermittent nature leads to poor results.This, in turn, causes the firm to switch to a new idea because the previous one didn’t work out the way they’d hoped. Each time they switch idea momentum is lost.
These companies completely stop trying to create momentum. Instead, they are focus on having one breakthrough. This breakthrough never comes.
The absolute prime thing to grasp in this flywheel analogy is that each push on the flywheel builds on all the previous thousands of pushes and bridge the gap between good to great.
Thus the book focuses entirely upon creating a disciplined life, thoughts and actions aligned with hedgehog concept to become Good to Great.