ABOUT THE BOOK

• THIS BOOK ADDRESSES A SINGLE QUESTION: CAN A GOOD COMPANY BECOME A GREAT
COMPANY, AND IF SO, HOW? GOOD TO GREAT SHOWS THAT GREATNESS IS NOT PRIMARILY A
FUNCTION OF CIRCUMSTANCE BUT LARGELY A MATTER OF CONSCIOUS CHOICE, AND
DISCIPLINE.
• THIS IS HOW THE AUTHOR SETS OFF A EXCITING JOURNEY EXPLAINING THE
FINDINGS FROM HIS AND HISTEAM’S. HE SPENT HALF A DECADE OF RESEARCH IN
THE CONQUEST OF HOW TO MAKE GOOD COMPANIES GREAT. ESSENTIALLY, ‘GOOD
TO GREAT’ HAPPENS VERY RARELY AND IT IS BECAUSE IT IS DAMN DIFFICULT.
• IN HIS RESEARCH, JIM COLLINS (THE AUTHOR), HAS FOUND OUT SYSTEMATIC
PHASES THROUGH WHICH ANY GREAT COMPANY GOES THROUGH AND LAYS OUT A
FRAMEWORK.
• “GOOD IS THE ENEMY OF GREAT’”.
THE BOOK IS ABOUT BEING GREAT, NOT MERELY GOOD. GOOD IS THE ENEMY OF
GREAT. MANY PEOPLE AND COMPANIES SETTLE FOR GOOD BECAUSE IT’S EASIER
AND THEY ARE SATISFIED. GREAT REQUIRES YOU TO OPERATE IN A DIFFERENT
MINDSET AND DISCIPLINE.
MANY COMPANIES DON’T EVEN TRY TO BE GREAT. THERE’RE NOT STRIVING TO BE
THE BEST IN THE INDUSTRY. THIS OPENS THE DOOR TO COMPETITORS. BEING THE
BEST MEANS THERE IS ABSOLUTELY NO ROOM FOR MEDIOCRE THINKING. IT’S THE
SAME IN OUR LIVES. FEW PEOPLE LEAD GREAT LIVES. THIS IS BECAUSE THEY’RE
HAPPY WITH LIVING A GOOD LIFE.
THE FRAMEWORK HAS GOT THREE
MAIN COMPONENTS:
1. PROCESS: FROM SETTING UP YOURSELVES TOWARDS GREATNESS (AKA BUILD UP) TO
ACHIEVING AN INFLECTION POINT THAT TAKES YOU TO GREATNESS (AKA
BREAKTHROUGH)
2. PHASES: THERE ARE THREE DIFFERENT PHASES IN THE ‘GOODTO GREAT’ JOURNEY.
• DISCIPLINED PEOPLE: INVOLVES GETTING THE RIGHT LEADER ANDTHE RIGHT TEAM
• DISCIPLINED THOUGHT: INVOLVES UNDERSTANDING OF BRUTAL FACTSAND CREATING A
SET OF COREVALUES
• DISCIPLINED ACTION: CREATING A ROBUST CULTURE WHERE THERIGHT PEOPLE
WILL WORK WITHIN THE DEFINED CORE VALUES WITH THE APPROPRIATE FREEDOM
• 3. FLYWHEEL: AQUIET AND DELIBERATE PROCESS OF FIGURING OUT WHAT NEEDS TO
BE DONE FOR BEST FUTURE RESULTS AND TAKING THOSESTEP ONE BY ONE, PUSHING
THE FLYWHEEL IN A CONSISTENT DIRECTION UNTIL IT ACHIEVES A BREAKTHROUGH
POINT.
• RESEARCH HAS SHOWN THAT LEADERS WHO HAVE BROUGHT THE ‘GOOD TO GREAT’
TRANSFORMATION ARE NOT THE ONE’S WHO ARE CHARISMATIC OR BIG
PERSONALITIES BUT ARE RATHER QUIET, SHY, DELIBERATE.
• THEY ARE THE ONE’S WHO HAVE THE COMBINATION OFHUMBLENESS AND
PROFESSIONAL WILL. ORGANIZATIONS THAT STRIVE TO BECOME GREAT NEED TO
HAVE A LEVEL 5 LEADER.
GOOD TO GREAT
COMPANIES
Top Great Companies:
Tata Motors, IOCL, ICICI Bank and
IDFC.
Top Good to Great companies:
Maruti Suzuki, Larsen & Toubro,
Ultratech Cement, Zee
Entertainment, IndusInd Bank, ITC
and United Spirits.
• CELEBRITY LEADERS WHO RIDE IN FROM THE OUTSIDE ARE NEGATIVELY
CORRELATED WITH TAKING A COMPANY FROM GOOD TO GREAT. TEN OF ELEVEN
GOOD-TO-GREAT CEOS CAME FROM INSIDE THE COMPANY, WHEREAS THE
COMPARISON COMPANIES TRIED OUTSIDE CEOS SIX TIMES MORE OFTEN.
• STRATEGY DID NOT SEPARATE THE GOOD-TO-GREAT COMPANIES FROM THE
COMPARISON COMPANIES. BOTH SETS OF COMPANIES HAD WELL-DEFINED
STRATEGIES, AND THERE IS NO EVIDENCE THAT THE GOOD-TO-GREAT COMPANIES
-_ SPENT MORE TIME ON LONG-RANGE STRATEGIC PLANNING.
• THE GOOD-TO-GREAT COMPANIES DID NOT FOCUS PRINCIPALLY ON WHAT TO DO
TO BECOME - GREAT; THEY FOCUSED EQUALLY - - ON WHATNOT TO DO AND
WHAT TO STOP --- DOING
TO GO FROM A GOOD COMPANY TO A GREAT COMPANY YOU NEED DISCIPLINED
PEOPLE, DISCIPLINED THOUGHT, AND DISCIPLINED ACTION.
• DISCIPLINED PEOPLE: MEANS GETTING THE RIGHT PEOPLE AND KEEPING THEM
FOCUSED ON EXCELLENCE.
• DISCIPLINED THOUGHT: MEANS BEING HONEST ABOUT THE FACTS AND AVOID
GETTING SIDETRACKED.
• DISCIPLINED ACTION: MEANS UNDERSTANDING WHAT IS IMPORTANT TO ACHIEVE
AND WHAT ISN’T.
• SOME FINDINGS ‘INSIDE THE BLACK BOX’
• LARGER THAN LIFE CELEBRITY TYPE LEADERS WHO RIDE IN FROM THE OUTSIDE
ARE NEGATIVELY CORRELATED WITH TAKING A COMPANY FROM GOOD TO GREAT
• 10 OF 11 CEO’S WERE FROM INSIDE THE COMPANY
• NO LINK BETWEEN COMPENSATION AND GOOD TO GREAT PROCESS
• THE STRATEGY DID NOT SEPARATE FROM THE COMPARISON COMPANIES
• GOOD-TO-GREAT FOCUSED ON NOT WHAT TO DO LISTS
• TECHNOLOGY HAS VIRTUALLY NOTHING TO DO WITH IGNITING THE
TRANSFORMATION BUT CAN ACCELERATE IT
• GOOD-TO-GREAT PAYS LITTLE ATTENTION TO MOTIVATION. UNDER THE RIGHT
CONDITIONS, THERE IS NO NEED
• NO LAUNCH EVENT, ONLY IN RETROSPECT THE TRANSFORMATION TOOK PLACE. A
REVOLUTIONARY PROCESS
LEVEL 5 LEADERSHIP
ACHIEVING "GREATNESS" AS A LEADER
• LEVEL 1: THE HIGHLY CAPABLE INDIVIDUAL - HIGHLY CAPABLE INDIVIDUALS ARE REGULAR WORKERS
WHO ARE TALENTED, KNOWLEDGEABLE, AND SKILLED. THEY ARE EFFECTIVE IN THE WORKPLACE.
• LEVEL 2: THE CONTRIBUTING TEAM MEMBER - CONTRIBUTING TEAM MEMBERS ARE GOOD AT
WORKING WITH OTHERS AND ARE NOTABLY PROFICIENT AT HELPING THEIR GROUPS REACH
OBJECTIVES.
• LEVEL 3: THE COMPETENT MANAGER: COMPETENT MANAGERS CAN EFFECTIVELY OVERSEE PEOPLE
AND RESOURCES, HELPING TO ACHIEVE PREDETERMINED GOALS.
• LEVEL 4: THE EFFECTIVE LEADER- EFFECTIVE LEADERS CAN STEER THEIR COMPANIES TOWARDS
WELL-DEFINED, COMPELLING GOALS. THEY ALSO KEEP THEIR ORGANIZATIONS FUNCTIONING AT HIGH
LEVELS OF PERFORMANCE.
• LEVEL 5: THE EXECUTIVE - EXECUTIVES HAVE THE UNIQUE CAPABILITY TO DEVELOP A COMPANY’S
GREATNESS THROUGH WHAT COLLINS IDENTIFIES AS “A PARADOXICAL COMBINATION OF PERSONAL
HUMILITY PLUS PROFESSIONAL WILL.”
• OPENING CASE:
DARWIN SMITH CEO OF KIMBERLY CLARK. SMITH DECIDED TO SELL THE COMPANY'S MILLS AND ENTER THE CONSUMER PAPER
PRODUCTS BUSINESS. MEDIA CALLED IT STUPID AND STOCK WENT DOWN.
KIMBERLY CLARK WAS IN COMPETITION WITH P&G AND SCOTT PAPER.
HE HAD ONLY TWO OPTIONS THAT IS TO BECOME A GREAT COMPANY, OR TO PERISH. HE INVESTED HEAVILY IN BUILDING
BRANDS LIKE HUGGIES & KLEENEX TISSUES - WHICH APPEARED SUICIDAL.
KIMBERLY CLARK HAD BEATEN P&G AND SCOOT PAPER IN 6 TO 8 PRODUCTS UNDER THE LEADERSHIP OF SMITH.
IT ALSO OUT PERFORMED THE MARKET BY RATIO OF 4:1. ITS PERFORMANCE WAS FAR BETTER THEN GREAT COMPANIES LIKE HP,
COCA COLA AND EVEN GE.
WHAT MAKES A COMPANY GREAT?
LEADERSHIP CAN TAKE A COMPANY FROM "GOOD" TO "GREAT“. LEVEL 5 VS. LEVEL 4HIGHLY AMBITIOUS FOR THE SUCCESS OF
HIS COMPANY EG: SAM WALTON LEVEL 5 LEADER - WALL STREET. HE WANTED TO PROVE THAT HIS COMPANY IS BIGGER THEN
HIMSELF. IS OFTEN MORE BOTHERED ABOUT HIS PERSONAL GREATNESS THAN OF THE COMPANY'S GREATNESS EG: LEE IACOCCA
LEVEL 4 LEADER CHRYSLER. HE DID SAVE COMPANY BUT WAS MORE INTERESTED IN HIS OWN IMAGE THEN COMPANY[11:47 PM,
6/27/2022] ABOLI: CHARACTERISTICS OF LEVEL 5 LEADERS FIERCE WILL- CREATES SUPERB RESULTS, A CLEAR CATALYST IN
THE TRANSITION FROM GOOD TO GREAT COMPELLING HUMILITY-DEMONSTRATES A COMPELLING MODESTY, SHUNNING PUBLIC
ADULATION; NEVER BOASTFUL.
 LEVEL 5 VS. LEVEL 4
• LEVEL 5 LEADER: HIGHLY AMBITIOUS FOR THE SUCCESS OF HIS COMPANY EG: SAM WALTON - WALL STREET. HE WANTED TO
PROVE THAT HIS COMPANY IS BIGGER THEN HIMSELF. HE IS OFTEN MORE BOTHERED ABOUT HIS PERSONAL GREATNESS
THAN OF THE COMPANY'S GREATNESS.
• LEVEL 4 LEADER CHRYSLER. HE DID SAVE COMPANY BUT WAS MORE INTERESTED IN HIS OWN IMAGE THEN COMPANY

CHARACTERISTICS OF LEVEL 5 LEADERS

• FIERCE WILL- CREATES SUPERB RESULTS, A CLEAR CATALYST IN THE TRANSITION FROM GOOD TO GREAT. COMPELLING
HUMILITY-DEMONSTRATES A COMPELLING MODESTY, SHUNNING PUBLIC ADULATION; NEVER BOASTFUL.
 TRAITS OF LEVEL 5 LEADERS:
LEVEL 5 = HUMILITY + PROFESSIONAL WILL
AMBITION FOR THE COMPANY
• • NOT THAT THEY DON'T HAVE EGO OR SELF INTEREST
• • THEIR AMBITION IS FIRST AND FOREMOST FOR THE COMPANY AND CONCERN FOR ITS SUCCESS RATHER THAN FOR
THEIR OWN RICHES AND PERSONAL GREATNESS.
• THEY SET UP SUCCESSORS FOR SUCCESS. WANT TO SEE THE COMPANY EVEN MORE SUCCESSFUL INTHE NEXT
GENERATION.
A COMPELLING MODESTY
• QUIET, HUMBLE, MODEST, RESERVED, SHY, SELF EFFACING
• MADE REMARKABLE RESULTS, YET ALMOST NO ONE EVER REMARKED ABOUT THEM.
• NEVER WANTED TO BECOME LARGER THAN LIFE HEROES (NEVER TALK ABOUT THEIR ACCOMPLISHMENTS)
• THE COMPARISON LEADERS WERE THE EXACT OPPOSITE (THEY USE ‘I' INSTEAD OF ‘WE.’ UNWAVERING RESOLVE TO DO
WHAT MUST BE DONE
NOT JUST ABOUT HUMILITY AND MODESTY
• INCREDIBLE NEED TO PRODUCE RESULTS
• SELL THE MILL OR FIRE THEIR BOAT, IF THAT'S WHAT IT TAKES TO MAKE THE COMPANY GREAT.
5 DARING INDIAN CEOS WHO
REDEFINED LEADERSHIP AT THE
HIGHEST LEVELS
• RAHUL AGARWAL, CEO OF LENOVO INDIA
• AGARWAL BECAME THE CEO OF LENOVO INDIA ALMOST TWO YEARS AGO AFTER WORKING
WITH THE COMPANY FOR CLOSE TO 10 YEARS. AFTER SOME RESEARCH, HE FOUND THAT
LENOVO'S RETAIL PRESENCE WAS LOW IN SOME STATES FOR NO PARTICULAR REASON. HE
DISCOVERED THAT IN BIG CITIES LIKE PUNJAB OR LUDHIANA, LENOVO DIDN'T HAVE ENOUGH
RETAIL STORES. HE CHOSE TO REMEDY THAT BY SCANNING THE TOP 500 CITIES IN THE COUNTRY
AND COMPARING THE BRAND'S RETAIL PRESENCE TO WHAT THE MARKET COULD BE.
• SURESH NARAYANAN, CEO OF NESTLE INDIA
AFTER TRACES OF MONOSODIUM GLUTAMATE WERE FOUND IN MAGGI, THE PRODUCT WAS
DECLARED CLINICALLY DEAD IN THE COUNTRY. NARAYANAN ENSURED THAT THE COMPANY ROSE
LIKE A PHOENIX FROM THE ASHES TO BECOME A MARKET LEADER IN A SHORT SPAN OF SIX
MONTHS. HE MANAGED ONE OF THE BIGGEST FMCG CRISES IN DECADES.
• AVANI DAVDA, MANAGING DIRECTOR OF NATURE'S BASKET
DAVDA IS THE ONE WHO STREAMLINED NATURE'S BASKET. SHE HELPED DEVISE A FIVE-YEAR
STRATEGY TO TURN NATURE'S BASKET FROM AN OCCASIONAL DESTINATION TO A
NEIGHBOURHOOD STORE. IMMEDIATELY AFTER JOINING THE COMPANY, SHE MADE A BOLD MOVE
AND SHUT DOWN EIGHT UNDER-PERFORMING STORES IN DELHI. AFTER THAT, SHE INTRODUCED
SEVERAL OTHER INITIATIVES FOR THE REVIVAL OF NATURE'S BASKET. SHE REALIZES THAT
LEADERSHIP IS ALL ABOUT MANAGING PEOPLE AND THEREFORE SHE DOES SO WITH HUMANITY
AND HUMILITY.
• ANANTH NARAYANAN, CEO OF MYNTRA AND JABONG
AFTER MYNTRA ACQUIRED JABONG, NARAYANAN BECAME THE CEO OF INDIA'S LARGEST PLATFORMS
FOR LIFESTYLE AND FASHION PRODUCTS. UNDER HIS LEADERSHIP, MYNTRA HAS MADE TWO CRUCIAL
ACQUISITIONS. THE FIRST ONE IS CUBEIT, WHICH IS A BENGALURU-BASED STARTUP THAT EXPEDITES
CONTENT AGGREGATION. THE SECOND ONE IS JABONG WHICH HE ACQUIRED FROM GLOBAL
FASHION COMPANY, MAKING IT INDIA'S GO-TO SHOPPING DESTINATION IN THE ONLINE WORLD.
• VASANTH KUMAR, EXECUTIVE DIRECTOR OF MAX FASHION INDIA
KUMAR WAS THE FIRST EMPLOYEE OF MAX FASHION INDIA AFTER LANDMARK GROUP MADE ITS
ENTRY INTO THE COUNTRY. THE FIRST FOUR YEARS WERE A TEST FOR HIM BECAUSE THE BRAND'S
FORMAT WAS CHALLENGING BY NATURE. IT WAS VIRTUALLY A 100 PERCENT PRIVATE LABEL.
HOWEVER, ONCE THE COMPANY BROKE EVEN IN 2011, THERE WAS NO LOOKING BACK FOR THEM.
 STEP 2 – FIRST WHO …. THEN WHAT?
FIRST STEP IS TO GET THE RIGHT PEOPLE ON THE BUS (AND THE WRONG
PEOPLE OFF THE BUS) AND THEN FIGURE OUT WHERE TO DRIVE IT.
IF YOU BEGIN WITH "WHO" RATHER THAN "WHAT", YOU CAN MORE EASILY
ADAPT TO A CHANGING WORLD.
“PEOPLE ARE NOT
YOUR MOST
IMPORTANT ASSET,
THE RIGHT PEOPLE
ARE.” — JIM
COLLINS
IF YOU GET THE RIGHT PEOPLE ON THE BUS, THE PROBLEM OF
HOW TO MOTIVATE AND MANAGE PEOPLE LARGELY DISAPPEAR.
IF YOU HAVE THE WRONG PEOPLE, IT DOESN'T MATTER WHETHER
YOU DISCOVER THE RIGHT DIRECTION, YOU STILL WON'T HAVE A
GREAT COMPANY.
"FIRST WHO" IS A VERY SIMPLE IDEA TO GRASP AND A VERY
DIFFICULT IDEA TO DO.
BUILD A STRONG EXECUTIVE TEAM, NOT A "GENIUS WITH A
THOUSAND HELPERS."
IF YOU HAVE THE RIGHT PEOPLE, THEY WILL DO ANYTHING WITHIN
THEIR POWER TO MAKE THE COMPANY GREAT, NOT BECAUSE OF
WHAT THEY WILL GET, BUT BECAUSE THEY SIMPLY CANNOT
IMAGINE SETTLING FOR ANYTHING LESS.
IN DETERMINING THE RIGHT PEOPLE, THE GOOD-TO-GREAT COMPANIES PLACED
GREATER WEIGHT ON CHARACTER ATTRIBUTES THAN ON SPECIFIC
EDUCATIONAL BACKGROUND, PRACTICAL SKILLS, SPECIALIZED KNOWLEDGE OR
WORK EXPERIENCE. GOOD TO GREAT COMPANIES HAVE RIGOROUS, NOT
RUTHLESS CULTURES.
WAYS TO BE RIGOROUS
• WHEN IN DOUBT, DON'T HIRE - KEEP LOOKING.
• WHEN YOU KNOW YOU NEED TO MAKE PEOPLE CHANGE – ACT.
• THE MOMENT YOU FEEL THE NEED TO TIGHTLY MANAGE SOMEONE, YOU’VE
MADE A HIRING MISTAKE.
• LETTING THE WRONG PEOPLE HANG AROUND FOR TOO LONG IS UNFAIR TO
ALL.

THE RIGHT PEOPLE

• WAITING FOR TOO LONG BEFORE ACTING IS EQUALLY UNFAIR TO THE PEOPLE
WHO NEED TO GET OFF THE BUS
• GOOD-TO-GREAT LEADERS WILL NOT RUSH TO JUDGMENT. THEY WILL FIRST
DETERMINE WHETHER THEY HAVE THE RIGHT PERSON IN THE WRONG SEAT.
• PUT YOUR BEST PEOPLE ON THE BIGGEST OPPORTUNITIES, NOT YOUR
BIGGEST PROBLEMS.
3.CONFRONTTHEBRUTALFACTS(PROCESSSTAGE:
BUILDUP;PHASE:DISCIPLINEDTHOUGHT)
• ONE OF THE IMPORTANT RECIPES TOWARDS BECOMING A GREAT
COMPANY IS TO MAKE A SERIES OF GOOD DECISIONS AND GOOD
DECISIONS CANNOT BE MADE UNLESS YOU CONFRONT WITH
BRUTAL FACTS FIRST.
• COMPANIES NEED TO CREATE A CLIMATE WHERE THE TRUTH IS
HEARD. THERE IS A DIFFERENCE BETWEEN ‘HAVING YOUR SAY’ AND
‘BEING HEARD OF’. IT IS THE ‘BEING HEARD OF’ CULTURE THAT
ENABLES COMPANIES TO CONFRONT THE BRUTAL FACTS FROM
THEIR OWN PEOPLE AND THEN TAKE APPROPRIATE RIGHT
DECISIONS.
CREATINGACLIMATE WHERE TRUTH IS
HEARD:
• LEAD WITH QUESTIONS, NOT ANSWERS. CONSTANTLY PROBE UNTIL YOU
HAVE A CLEAR PICTURE.
• ENGAGE IN DIALOG AND DEBATE, NOT COERCION. ITIS IMPORTANT TO GET
INVOLVED IN INTENSE DISCUSSIONS BECAUSE THEY CAN EVOLVE INTO A
SUCCESSFUL CONCLUSION RATHER THAN JUST BEING ADJUSTMENT TO
MAINTAIN RELATIONSHIPS.
• CONDUCT AUTOPSIES, WITHOUT BLAME. THE CLIMATE OF TRUTH PROSPERS
WHEN YOU ANALYZE THE DEBACLES WITHOUT BLAMING ANYONE FOR IT.
CONSIDER THESE DEBACLES AS LEARNINGS ANDMOVE ON TO BUILD
ROBUST SYSTEMS TO AVOID SIMILAR DEBACLES IN THE FUTURE.
 STOCKDALE PARADOX
• EVERY GOOD-TO-GREAT COMPANY FACED SIGNIFICANT CHALLENGES ALONG THE WAY TO
GREATNESS. IN EVERY CASE, THE MANAGEMENT TEAM RESPONDED WITH A POWERFUL
PSYCHOLOGICAL DUALITY. ON THE ONE HAND, THEY ACCEPTED THE BRUTAL FACTS OF REALITY. ON
THE OTHER HAND, THEY MAINTAINED AN STRONG FAITH IN THE ENDGAME, AND A COMMITMENT
TO PREVAIL AS A GREAT COMPANY DESPITE THE BRUTAL FACTS. WE CAME TO CALL THIS DUALITY
THE STOCKDALE PARADOX.
• THE NAME REFERS TO ADMIRAL JIM STOCKDALE, WHO WAS THE HIGHEST-RANKING UNITED STATES
MILITARY OFFICER IN PRISONER-OF-WAR CAMP DURING THE HEIGHT OF THE VIETNAM WAR.
TORTURED THROUGHOUT, STOCKDALE LIVED OUT THE WAR WITHOUT ANY PRISONER’S RIGHTS, NO
SET RELEASE DATE, AND NO CERTAINTY AS TO WHETHER HE WOULD EVEN SURVIVE TO SEE HIS
FAMILY AGAIN. …
• WHEN ASKED HOW HE HANDLED THE UNCERTAINTY OF HIS OUTCOME, HE SAID HE
NEVER DOUBTED THAT HE WOULD SURVIVE.
• 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 SEVERAL MORE. AND EVENTUALLY, THEY GAVE UP AND DIED
DEMORALIZED AND OF A BROKEN HEART.
• SO, AS YOU CAN SEE THE STOCKDALE PARADOX IS A PHILOSOPHY OF DUALITY. IT
INVOLVES HAVING THE DISCIPLINE TO CONFRONT THE BRUTAL FACTS ABOUT YOUR
SITUATION. BUT AT THE SAME TIME, IT INVOLVES NEVER LOSING FAITH THAT YOU
WILL PREVAIL IN THE END.
• BUSINESS, AND OF COURSE LIFE, WILL INEVITABLY THROW LOTS OF DIFFICULTIES
AT US. BUT IT IS HOW WE HANDLE THESE DIFFICULTIES THAT WILL HAVE THE
BIGGEST IMPACT ON THE COURSE OF OUR LIVES AND OUR BUSINESS.
 4.THEHEDGEHOGCONCEPT

(PROCESSSTAGE: BUILDUP;

PHASE:DISCIPLINEDTHOUGHT)
‘THE HEDGEHOG CONCEPT’ ESSENTIALLY IS THE
STRATEGIC DIFFERENCE BETWEEN GOOD AND GREAT
COMPANIES.
IT IS MORE THAN DEVELOPING A CORE COMPETENCY. IT IS ABOUT DECIDING THE KEY AREAS
OF THE BUSINESS AND THEN FOCUSING ON THESE KEY AREAS SO THAT NO ONE ELSE CAN
MATCH THAT LEVEL.
THUS, IT IS ABOUT FOCUSING ON WHAT PEOPLE CAN BE THE BEST AT, NOT THE THING
PEOPLE WANT TO BE THE BEST AT.
EACH ORGANIZATION MIGHT WANT TO BE THE BEST AT SOMETHING, HOWEVER FEW REALLY
UNDERSTAND THIS WITH PIERCING INSIGHT AND EGOLESS CLARITY MEANS WHAT THEY
REALLY DO HAVE THE POTENTIAL TO BE THE BEST OR THEY ARE JUST IMPORTANT. THUS,
THIS IS ONE OF THE BASIC DIFFERENCE BETWEEN GOO TO-GREAT COMPANY AND
COMPARISON COMPANY.
A HEDGEHOG CONCEPT IS NOT AN OBJECTIVE TO BE THE BEST, A PROCEDURE TO BE THE
BEST, A GOAL TO BE THE BEST, AN ARRANGEMENT TO BE THE BEST. IT IS AN ARRANGEMENT
OF WHAT ONE CAN BE AT THE BEST.
THE HEDGEHOG CONCEPT REQUIRES AN EXTREME STANDARD OF GREATNESS. IT IS NOT
ABOUT BUILDING COMPETENCE AND STRENGTH BUT IT IS ABOUT THE POTENTIAL OF
ORGANIZATION TO BE THE BEST IN COMPARISON TO OTHER.
 INDIA’S “BHAG” IS AATMANIRBHAR BHARAT.
THE AATMANIRBHAR BHARAT IS THE BHAG OF INDIA.
BHAG IS – BIG HAIRY AUDACIOUS GOAL. IN SIMPLE WORDS IT IMPLIES- ‘THINK BIG AND AIM HIGH’. BHAG IS A LONG TERM
GOAL SPREAD OVER 10 TO 30 YEARS.
THE TOP-LEVEL LEADERSHIP OF THE BHARAT HAS MADE A DECISION TO BE AATMANIRBHAR. THIS IS A TIME CONSUMING
AND LONG TERM WORK.
IT IS A ‘BIG’ WORK AND ENGAGES A LOT OF STAKEHOLDERS, INCLUDING- BUYERS AND CONSUMERS AND THEIR
PARTICIPATION IN ITS FAVOUR.
IT IS ‘HAIRY’ AS IT TOUCHES ALL THE SECTORS, INCLUDING- DEFENCE AND COMMUNICATION, PHARMACEUTICALS AND
EDUCATION.
IT IS ‘AUDACIOUS’ AS THE WORLD IS INTEGRATED AND SEARCHING FOR SUBSTITUTE RAW MATERIALS AND PROCESSES
ARE A COMPLEX CHALLENGE, INCLUDING- ENCAPSULATING THE TRADE POLICY AND FOREIGN POLICY.
THE ‘GOAL’ IS DEMANDING IN CHARACTER AND NATURE, INCLUDING-TAKING CARE OF THE GLOBAL CITIZENS AND
GLOBAL CLIMATE.
AATMANIRBHAR BHARAT IS MORE COMPLEX THAN MAKE IN INDIA. MAKE IN INDIA IS ABOUT MANUFACTURING IN INDIA. IT
DOES NOT DIFFER TOO MUCH BETWEEN A DOMESTIC BRAND COMPANY AND A FOREIGN BRAND COMPANY.
AATMANIRBHAR BHARAT IS ABOUT THE FAIR PARTNERSHIP AND SUSTAINABLE GROWTH BY LINKING THE ASPECTS OF
SECURITY, SOVEREIGNTY, ENVIRONMENT, SOCIETY, EDUCATION, FOOD, CLIMATE AND MANY MORE.
 CULTURE OF
DISCIPLINE
Having disciplined people eliminates the need
for hierarchy. Having disciplined thought
keeps everyone on track. Now we move to the
discipline of action which eliminates the need
for bureaucracy.
This means that there is no need to
excessively control the actions of your people.
A culture of discipline means having the
organization full of people who will take action
consistent with the hedgehog principle.
Don’t make the mistake of many executives:
mistaking control for discipline.
5.6.1. MEANING OF CULTURE OF DISCIPLINE
THE PROCESS OF CREATING A CULTURE OF DISCIPLINE BEGINS WITH SELF DISCIPLINED
PEOPLE WHERE THE TRANSACTION BEGINS NOT BY TEACHING RIGHT DISCIPLINE TO WRONG
PEOPLE BUT BY GETTING THE DISCIPLINED PEOPLE FIRSTLY. THERE IS NEED OF DISCIPLINE TO
FACE THE CRUEL FACTS OF TRUTH. THEY CAN GO AND BUILD A PATH OF GREATNESS WITH
PERSEVERANCE.
THE DISCIPLINE IS REQUIRED TO UNDERSTAND THE CONCEPT OF HEDGEHOG. THE PRIMARY
SUBJECT OF THIS IS TO HAVE ACTION OF DISCIPLINE. THE COMPANIES DIRECTLY TRY TO
REACH ON DISCIPLINED ACTION FROM RIGHT ACTION BUT THIS ACTION IS NOT POSSIBLE
WITHOUT HAVING SELF-DISCIPLINED PEOPLE WITHIN THE COMPANY.
THUS, THE DISCIPLINE ITSELF WILL NOT GIVE BETTER RESULT. AUTHOR AND HIS TEAM
OBSERVE MANY ORGANIZATIONS WHICH HAD TREMENDOUS DISCIPLINE AND WHICH WORKED
ACCURATELY IN DISASTER WITH PRECISE AND WELL-DEFINED DIRECTIONS. BUT THE FACT IS
TO GET SELF-DISCIPLINED PEOPLE FIRST AND THEN TAKE DISCIPLINED ACTIONS WITHIN THE
CONSTANT ENVIRONMENT AS EXPLAINED IN HEDGEHOG CONCEPT
1. BUILD A CULTURE OF FREEDOM AND RESPONSIBILITY BUT WITHIN A DEFINED
FRAMEWORK.
YOU PUT IN PLACE THE BOUNDARIES BUT LET EMPLOYEES DECIDE FOR 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 THE PILOT HAS ULTIMATE
RESPONSIBILITY WITHIN THAT SYSTEM FOR THE SAFETY OF THE CRAFT, ITS
PASSENGERS, AND ITS CREW.
2. GET THE RIGHT PEOPLE ON BOARD. THOSE THAT HAVE THE WILL TO ACHIEVE
THEIR RESPONSIBILITIES.
3. BUILD A STRONG CULTURE, NOT A DICTATORSHIP.
4. EXERCISE EXTREME FOCUS IN ADHERING TO YOUR HEDGEHOG CONCEPT
I5. CREATE A STOP-DOING LIST
CREATE A LIST OF THINGS YOU WILL STOP DOING SO YOU CAN BETTER FOCUS ON YOUR
HEDGEHOG CONCEPT.
CHANGE THE WAY YOU PLAN. INSTEAD OF THINKING WHICH PROJECTS SHOULD GET WHICH
PEOPLE, THINK WHICH PROJECTS SUPPORT YOUR HEDGEHOG CONCEPT. THOSE THAT DO GET
MORE FUNDING. THOSE THAT DON’T SUPPORT THE HEDGEHOG CONCEPT GET LESS FUNDING OR
ARE SCRAPPED.
A KEY TAKEAWAY FROM THIS CHAPTER IS THAT DISCIPLINE ON ITS OWN IS POINTLESS. THERE
ARE MANY EXAMPLES FROM HISTORY WHERE PEOPLE HAVE MARCHED WITH DISCIPLINE INTO
DISASTER.
THE KEY TO GOING FROM GOOD TO GREAT IS TO: GET THE RIGHT PEOPLE, ENGAGING IN CRITICAL
THINKING, THEN TAKING DISCIPLINED ACTION ALIGNED WITH THE HEDGEHOG CONCEPT.
RINSING YOUR COTTAGE CHEESE - LITTLE
TINGS MAKES BIG DIFFERENCE
IN THIS RESEARCH, THE COMMONLY USED WORDS ARE DISCIPLINED, RIGOROUS, DETERMINED,
SYSTEMATIC, METHODICAL, CONSISTENT, FOCUSED, ACCOUNTABLE, RESPONSIBLE ETC….
THESE ARE WORDS USED AS A SOURCE MATERIAL IN INTERVIEWS, ARTICLES ETC AND WERE
COMPLETELY UNAWARE OF THE CONTENTS OF COMPANIES.
ON THE OTHER HAND, PEOPLE OF BEST COMPANIES ARE INVOLVED IN FULFILLING THEIR OWN
RESPONSIBILITIES WITHIN BOUNDARIES. SOME AUTHOR AND HIS TEAM CALLED THIS AS "RINSING
YOUR COTTAGE CHEESE" FACTOR.
DAVE SCOTT DOES NOT HAVE ANY ISSUE RELATED TO WEIGHT BUT HE BELIEVES THAT HIGH-
CARBOHYDRATE AND LOW FAT DIET GIVE GOOD HEALTH. HE BURN 5000 CALORIES IN A DAY, THUS
FOR FAT OFF HE WILL NOT TAKE HIS COTTAGE CHEESE.
THERE IS NO PROOF THAT FOR FAT OFF HE HAS TO RINSE THE COTTAGE CHEESE. HENCE, THIS IS
NOT THE MAIN POINT OF STORY. THE MAIN POINT IS THAT THE RINSING COTTAGE CHEESE IS A SMALL
STEP TOWARD MAINTAINING HIS HEALTH. THIS IS AN ADDITIONAL STEP ALONG WITH OTHER SMALL
STEPS AND THIS SHOWS THE CONSISTENCY TOWARDS DISCIPLINE.
TECHNOLOGY ACCELERATOR
GOOD TO GREAT COMPANIES WILL INVEST IN NEW TECHNOLOGY ONLY IF IT SERVES THEIR
HEDGEHOG CONCEPT.
1. THEY VIEW TECHNOLOGY IN LIGHT OF THEIR HEDGEHOG CONCEPT.
THEY ASK IF A NEW TECHNOLOGY FITS WITH THEIR HEDGEHOG CONCEPT. ONLY IF THERE
IS A FIT WILL THEY THEN INVEST IN IT.
2. THEY BECOME PIONEERS OF TECHNOLOGY ALIGNED TO THEIR HEDGEHOG CONCEPT.
THEY USE TECHNOLOGY TO SPEED UP THE MOMENTUM THEY ALREADY HAVE. THIS IS
PART OF THEIR DISCIPLINED APPROACHED TO EXCELLING AT THEIR HEDGEHOG CONCEPT.
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
IMAGINE A VERY LARGE FLYWHEEL. THOUSANDS OF KILOGRAMS OR POUNDS IN WEIGHT.
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. THEN ANOTHER STEP.
A SINGLE PUSH AS NO IMPACT ON THE WHEEL. EVEN A SINGULAR MASSIVE PUSH HAS NO
IMPACT ON THE WHEEL.
AS YOU FIRST START TO PUSH IT SEEMS ALMOST IMPOSSIBLE TO TURN. BUT YOU KEEP AT
IT. PUSHING IT, AND PUSHING IT, AND PUSHING IT. THE MORE MOMENTUM YOU BUILD UP
THE EASIER IT GETS BUT YOU STILL NEED TO KEEP PUSHING HARD.
THEN AT SOME POINT, AS YOU RUN BEHIND THIS GIANT FLYWHEEL, 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 ITS REALLY DIFFICULT TO STOP! WE HAVE ACHIEVED A GOOD TO GREAT
FLYWHEEL EFFECT. WE ARE TAKING CONSISTENT ACTION IN ALIGNMENT WITH OUR
HEDGEHOG CONCEPT. WE ARE THEN ACHIEVING SOME VISIBLE RESULTS. THIS, IN TURN,
ENERGIZES PEOPLE AND MOMENTUM IS EASY TO SUSTAIN WITHOUT MUCH EFFORT.
DOOM LOOP
THEY 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 FOCUSED ON HAVING ONE BREAKTHROUGH. THIS BREAKTHROUGH NEVER
COMES.
THE ABSOLUTE KEY THING TO REMEMBER IN THIS FLYWHEEL ANALOGY IS THAT EACH
PUSH ON THE FLYWHEEL BUILDS ON ALL THE PREVIOUS THOUSANDS OF PUSHES AND
MOVES YOU ONE STEP CLOSER TO GOING FROM GOOD TO GREAT.