Introduction

Have you ever wondered why giant companies like Abbott and Gillette archived greatness
while others don't? Is there a way for ordinary businesses – maybe your own company–which
wasn’t born superior, to make the leap? ​Good to Great ​(2001) is a journey to explore the
main reasons why this problem happens and also provide the key to building a great business.

This book is perfect for

• leaders & entrepreneurs who want their business to become giant

• startup leaders want to build a proper company.
• anyone who wants to know more about how great companies made the cake.

Who is the author?

James C.Collins (1958) is an American author, consultant, and lecturer. Collins received a BS
in Mathematical Sciences at Stanford University and afterwards obtained his MBA from
Stanford Graduate School of Business followed by 18 months as a consultant with McKinsey
& Company. He has authored/co-authored six books that have sold in total more than 10
million copies worldwide.

Lessons in a nutshell

The inspiration for Jim to write ​Good to Great​ is a comment from his friend Bill Meehan
about his last book ​Built to Last​, which was all about the always-great companies. And
because it didn't mention the majority ones that just stayed good and wanted to be great, Jim
Collins decided to write this book as an answer.

In this summary, you'll find out

• why it’s important to get the proper companions onboard

• how to build critical thinking and work with discipline
• how to take the wise chance to jump from good to great, then sustained the result with a
core ideology.

Chapters

1. Is being "good" enough?

2. Which qualities mark a great leader?
3. Don't forget to choose the right team first!
4. Why discipline thoughts matter?
5. Think like a hedgehog!
6. Be alert to technology trends
7. Disciplined actions: a quantum leap for any company's growth
8. One last step to endure a great company

1. Is being "good" enough?

There are a lot of companies which have quite popular products: Coca-Cola, Intel or
Walmart. In general, ordinary people consider them as great companies, but guess what?
They are not. But why?

Perhaps these companies have been through a long time to become great and then they settled
in their comfort zone while other components are still growing faster and faster. Some of
these companies don't even have the desire to become the greatest one in their field.
One day, new rising stars may take the place of the "good but not enough" ones because those
companies are outdated.

So, after all, what is a great company? According to Jim Collins and his twenty-one people
team researchers, the great companies are the ones with these patterns: fifteen-year
cumulative returns at or below the general stock market, punctuated by a transition point,
then cumulative at least three times the market over the next fifteen years.
The good-to-great transformation process includes two phases: "build-up" and
"breakthrough." The first phase is made of two components, which are disciplined people and
disciplined thoughts. The other one is about the quantum leap caused by disciplined actions.
In the next chapters, you'll learn some everlasting rules of good to great.

However, changing from good to excellent is definitely easier said than done. And isn't an
overnight changing. Like building a perfect house, build a great company needs time to put
every single brick in the right place. It's purposeful, a conscious journey of finding out what's
in need to create a secure basement then pushing the flywheel in a consistent direction until it
achieves a breakthrough point.

Quote: "​While you can buy your way to growth, you absolutely cannot buy your way to
greatness."​

2. Which qualities mark a great leader?

If a business strives to become great, it should have a level-5 leader. The five-level ladder
starts with a "highly capable individual" who makes productive contributions to the company.
It ends with a "level 5 executive" who builds enduring greatness through a blend of personal
humility and professional will.

Not the ones in black suits and shiny shoes, great leaders in this book are described simpler
than ever. They are the ones who concern about their companies more than their positions.
Some of their main traits are modest, conscious, and iron-willed.

To be concrete, there are five qualities that mark a great leader. Firstly, they always put the
success of their organizations above their reputations. Secondly, these leaders are humble.
They rarely brag about their personal achievements.

Moreover, those great leaders have vehement desires in getting the job done correctly. They
are the ones with purposes. Every step they take is to make the company great, no matter how
big or hard the decisions are.
All of them have one thing in common: their responsibility, especially when everything
misses the mark. They usually look at the mirror and blame themselves but never forget to
look out the window to see other people's contributions to success.

Finally, those great captains work harder than anyone. As a person who has been through all
the ups and downs, she understands " more plow horse than show horse."

Quote: "​The good-to-great leaders never wanted to become larger-than-life heroes. They
never aspired to be put on a pedestal or become unreachable icons. They were seemingly
ordinary people quietly producing extraordinary results​."

3. Don't forget to choose the right team first

We all know that the right team is indispensable in building a successful company, but do
you know what's more important? It's to create the right squad before you do everything:
before vision, strategy, or even the company itself.

You know it's the right team when it's full of great people, and they're working because of the
group, for a shared purpose. These people are passionate, and they will stick around and be
motivated even when the company changes its direction. The critical point here is to build a
team in which everyone is excellent, not a team with only a great leader and a bunch of
"helpers" – which will quickly fail when the leader goes.

Making "people" decisions is not easy, but after several pieces of research, Jim and his team
have found three practical ways to make rigorous decisions. The first thing to remember is:
don't hire a person if you're still in doubt. Just keep looking until you find the right one.

The next thing to keep in your mind is to act decisively. If you need to make a people change,
do it. Nothing's more harmful to your company than putting people in wrong seats. They
make no contributions and become a loss to your business.
Last but not least, remember not to put your best people on your worst problems but in the
most significant opportunity. In the 1960s, Joe Cullman at Philip Morris International decided
that the international market is the best opportunity for long-term growth. So he pulled his
best executive- Weissman, off the domestic business, which is 99% of the company and put
him to the international department.

Twenty years later, under Weissman's lead, Marlboro became the best-selling cigarette in the
world for three years and after that, conquered the United States.

A note for you is: it's who you pay that matters, not how you pay them. If you choose the
right people to go with you, they will do everything they can to make the company great. Not
because of the salaries, but they simply can't bear working in a lousy company. It's all about
their own moral code requirements.

Quote: "​Great vision without great people is irrelevant​."

4. Why disciplined thoughts matter?

But first, what is a disciplined thought? It's to have deep understandings about the reality your
company is facing and create a climate where the truth is shared.

All good-to-great companies began their way to great success by facing the harsh reality.
How can you make the right decisions when you do not realize all the positive and negative
of your situation? Fundamental psychology for this idea is the Stockdale Paradox: Retain
absolute faith that you can and will prevail in the end regardless of the difficulties. Also, you
need to confront the most brutal facts of your current reality, whatever they might be.

In the 1970s, the market has a significant fluctuation, and Kroger company's outdated grocery
stores were going to become died out. At that moment, the Kroger team decided to deal with
this problem by opening the brand-new "super-combination" stores. They also realized that
they had to be the number one or number two in the market, or they had to withdraw.
The Kroger team was so decisive and brave. They replaced all the outdated stores which
didn't fit in their new concept. In 1999, their empire became the number-one grocery chain all
over the United States. That was a breakthrough result came about by following disciplined
thoughts.

After you read all these things, you may wonder: how can you motivate your team with all
these naked facts? The answer is surprisingly simple: you don't need to. It's a massive waste
of time trying to motivate them all. If your team members are the right ones, they will be
self-motivated.

Moreover, companies need to create an environment where the truth is shared. Leading from
good to great doesn't mean knowing all the answers and push everyone to go with the leader's
vision. Being a great leader means being humour and grasps all the facts that you do not yet
understand to have the right answers — making open discussions, not coercion. And don't
blame.

Quote: "​We will never give up. We will never capitulate. It might take a long time, but we will
find a way to prevail."

5. Think like a hedgehog!

It is essential that the organizations not only know their exceptionally high strength but also
understand the advantages of the opponents and they need to highly concentrate on the core
idea. It's the "hedgehog concept" of running a lean yet effective business.

Think like a hedgehog means you focus on a fundamental principle instead of chasing after a
lot. Despite the variety of their opponents, a hedgehog has only one way to defend and attack:
its quills. But for a company, is simplicity enough? Think of the elegant and straightforward
of Adam Smith's imperishable "invisible hand." It's the beautiful core, simple insights that
hide inside the complexity.
The hedgehog concept is the convergent point of the three circles: what you can do best, what
drives your economic engine and about what you are deeply passionate.

First, you are doing work for which you have a God-given talent, and you could become one
of the best in the world in applying it. Let's take a look at Wells Fargo's case. In the
beginning, they were a diversified company. Then Wells Fargo executives ask themselves a
question: "What can we potentially do better than any other company?". After that, the
company withdrew from the vast majority of its international investments and turned all
attention to what they could do best in the world: running a bank like a business. In the end,
they became one of the best-performing banks in the world.

Second, knowing what drives your economic engine is also crucial. Your company doesn't
need to be in a super great industry to become great, instead, build a marvellous economic
engine, regardless of the industry. The key here is to understand the deep insight of your
economic realities and create the following system.

One more important thing is having a deep understanding of what you are passionate about. If
the companies work on things that they truly love, they can make results beyond every
expectation. This process won't be fast. In fact, it usually takes four years for a great business
to realize their "hedgehog concept." So, be patient.

Quote: "​What separates people, Stockdale taught me, is not the presence or absence of
difficulty, but how they deal with the inevitable difficulties of life."​

6. Be alert to technology trends!

We entered a significant point in history when technology has played a considerable role, and
everybody is talking about the revolutionized effect of it. But before you decided to apply
new techniques into your business, take a moment to understand it thoroughly: will this new
trend connect to your Hedgehog concept?
Be alert to new technology trends because maybe they're just bubbles. You should instead
give deep thoughts on the application of the "right" technology that will drive your business
to the next level. Learn how to say no to all the things that do not fit your standard. One
scabby sheep is enough to spoil the whole flock.

When used correctly, technology becomes an " accelerator of momentum," not a creator of it.
80% of the good-to-great leaders that Jim Collins and his team interviewed didn't think
technology is one of the top 5 factors to their transitions. Ken Iverson - CEO of Nucor - said:
"The primary factors were the consistency of the company, and our ability to project its
philosophies throughout the whole organization."

When Fannie Mae wanted to bring new technology into the company, they did it perfectly.
Firstly, following the principle of choosing the right team first, a great executive - Kelvie-
was hired. Following their hedgehog concept of simplicity, over the next five years, Kelvie
and his team have significantly reduced the paper documents by changing them into online
data. This technology reduced the loan-approval time from thirty days to thirty minutes. To
date, it has saved home buyers almost four billion dollars.

Remember: No technology will help you create a "level 5" leader. There's also no technology
can turn the wrong companions into the perfect ones. No technology can create a culture.
You can only make it yourself, with the fundamental concepts mentioned in the previous
chapters.

Quote: ​"While the practices of engineering continually evolve and change, the laws of
physics remain relatively fixed. I like to think of our work as a search for timeless principles."

7. Disciplined actions: a quantum leap for any company's growth

After you've got a Level 5 leader plus your dream team and you've also confronted harsh
reality about your business and gained an insightful understanding of your "hedgehog
concept." It is now time to create a culture that is self-disciplined to take actions with it.
A culture of discipline expects everyone in the company to follow the defined hedgehog
concepts strictly. But, at the same time, the culture must be built around the idea of freedom
and responsibility. In that kind of culture, people will have the chance to develop their self
disciplines so that they won't need to be "managed." The leaders will have more time to
manage their system, not the people.

Most companies build their administrative rules just to control a small group of wrong people
in the team, but these rules disgusted the "right" ones. To avoid it, a great company should fill
their squad with self-discipline co-workers who are willing to do everything to fulfil their
responsibilities." This was the secret to how we were able to run stores from a great distance,
by remote control." said the leader of Circuit City.

All the great company followed a simple "disciplined action": never do anything that does not
fit with their Hedgehog concept. Most of us have an endless, ineffective to-do list. To solve
this problem, great leaders made a "stop-doing list" instead. They made a strict discipline to
avoid all the extraneous junk.

When the CEO of Kimberly-Clark saw that seeing Wall Street annual forecast made people
focus too much on the short term, he just stopped it. He also withdrew Kimberly from all
paper industry trade associations as he wanted to make the business a consumer-not a paper
company.

Stop and think for a moment before doing anything: What is the purpose of this action?
Determine which ones best support the hedgehog concept and which ones should be
eliminated entirely.

Quote: "​In a good-to-great transformation, people are not your most important asset. The
right people are."​

8. One last step to endure a great company

The good-to-great transformations never happened overnight. There was no one-hit-wonder,
no one-killer innovation or a supernatural phenomenon here. It's like pushing on a gigantic
and heavy flywheel. At first, you need a lot of effort to get it moving. But after a long time
driving in the right direction, the flywheel builds momentum and one day, and it will reach
the breakthrough point to greatness. Good things take time.

For example, Ken Iverson and his companion began turning the Nucor's flywheel in 1965. No
one paid any attention until ten years after -the year of their tipping point- 1975. From the
outside, it looked like a miracle. But from the inside, it was a natural, step-by-step process.
While the world ignored Nucor, every person in the company was developing, trying their
best in every single task to move the company ahead.

In a great business, profits flow like blood in a body, but it's not the meaning of life. The
meaning lies in one thing, which after all the change needed to adapt on the way to greatness,
is that one thing never changes: the core ideology.

But the point is not what core values your business owns, but that it has core values at all,
that "you know what they are, that you build them explicitly into the organization, and that
you preserve them over time."

Just take a look at Disneyland. Walt Disney wanted to build a place that is much better than
any ordinary park in the world, and they must have a theme. Over time, Disney theme parks
have become a symbol of the theme park and brought joy to a lot of families all over the
world. The key idea was straightforward: "to bring a smile to a child's face." The lesson here
is to stick to your purpose. It could be difficult at first, but don't lose faith. Where there is a
will, there is away.

Quote: "​For, in the end, it is impossible to have a great life unless it is a meaningful life. And
it is very difficult to have a meaningful life without meaningful work.​"

Epilogue
Through "Good to Great", Jim Collins has shown some fascinating ideas which seem to be
revolutionizing. But they will never work unless you do. After reading all these principles,
take an insightful look at your business. Does it have a level-5 leader, the right team, and a
core ideology yet? Are your business plans identical enough to build a "hedgehog concept"?
If the answers are "no", don't hesitate. Make a conscious change that fits your company's
situation and transforms your business's life.

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