Professional Documents
Culture Documents
Good To Great PDF
Good To Great PDF
“Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice.” – Jim Collins
Jim Collins and his team studied 11 publicly traded companies that performed at or below the market average for 15 years, then outperformed
the market by more than threefold over the next 15 years.
Collins compared these ‘Good to Great’ companies to nearly identical companies (same industry, size, and access to resources) that failed to
outperform the market. Collin's and his team discovered that the Good to Great companies mastered three concepts the comparison
companies did not. You can use these three concepts to determine if the companies you invest in, the company you work for, or the business
you own can go from good to great.
The Hedgehog Concept
“The fox knows many things, but the hedgehog knows one big thing.” – Ancient Greek Parable
The Good to great companies had a hedgehog concept – a core strategy; a unifying vision they simplified their business around. The Good to
Great companies discovered their hedgehog concept by focusing on three circles.
Circle #1: What can we (and can not) be the best in the world at?
Wells Fargo outperformed the market by a multiple of four from 1983 to 1998, “accept(ed) the
truth that it could not be better than Citicorp in global banking. Wells Fargo then turned its
attention to what it could be the best in the world at: running a bank like a business, with a
focus on the western United States.”– Jim Collins
Circle #2: What is our economic engine?
How can the company generate more profit per X than any other company in the industry (X might
be customers of a certain demographic, like new mothers living in Manhattan; or employees or
stores)? Wells Fargo discovered that by restructuring their branches to have more ATMs and fewer
employees, they could generate more profit per employee than any other bank.
Circle #3: What are we deeply passionate about?
A big difference between Philip Morris (a Good to Great company from 1964 to 1979) and other tobacco companies, was executives at Philip
Morris genuinely believed life was better with cigarettes, despite the long‐term health risks. A Philip Morris vice‐chairman once said, “I love
cigarettes, it’s one of the things that makes life really worth living.”
The Bus
Good to Great companies are careful about who they let on their bus, are quick to get the wrong people off their bus, and constantly move the
right people around until they find the right seat.
All good to great managed their people (i.e., their bus) using three principles:
Principle #1: When in doubt, don’t hire – keep looking.
Principle #2: When you know you need to make a people change, act. Collins says, “Letting the wrong people hang around is unfair
to all the right people, as they inevitably find themselves compensating for the inadequacies of the wrong people.” You’ll know if
you need to make a change if the answer is ‘no’ either questions: “Would we hire this person again?” & “If this person told us she
was leaving to pursue a new exciting opportunity, would we feel terribly disappointed?”
Principle #3: Put your best people on your biggest opportunities, not your biggest problems.
Level 5 Leadership
“Compared to high‐profile leaders with big personalities who make headlines and become celebrities, the good‐to‐great leaders seem to
have come from Mars...They are more like Lincoln and Socrates than Patton or Caesar.” – Jim Collins
All the Good to Great leaders were Level 5 leaders ‐ great managers with the perfect mix of humility and stoic resolve to do whatever it took to
make the company great.
The Level 5 leaders Collins interviewed routinely said things like, "I don't think I can take much credit. We were blessed with marvelous
people." The leaders of Good to Great companies didn’t care about being famous or well‐liked; they only cared about making their company
great. One good to great CEO of a family pharmaceutical company kicked family members off the board when he took over the company
because that's what was needed to move the company forward. Another CEO routinely went against Wall Street and held to his vision even
after Wall Street analysts downgraded the company's stock.
“Look for situations where extraordinary results exist but where no individual steps forth to claim excess credit. You will
likely find a potential Level 5 leader at work.” – Jim Collins
www.ProductivityGame.com