Good to Great — Valuable lessons Summarized

Good to Great is a book written by Jim Collins, who is a business researcher and consultant. In the book, Collins tries to dissect what makes a company great using the research he and his team have been working on for a long time. In the book, he shows the reader the most important factors for a company to go from “Good to Great”. In this article, I will go through some of the most valuable lessons that I learned from this book, and summarize these key lessons.

The characteristics of a great leader

The most important knowledge I gained from this book was how a great leader behaves. Collins talks about 5 levels of leaders, with the level 5 leaders being the ones we see in the great companies. The characteristics of a level 5 leader might surprise you, as when you think of a good leader you might think of a CEO who is a known figure and who is always in the media, but this couldn’t be further from a good leader. A good leader according to Collins's research is a leader which is rather quiet and deliberate, and who has a great amount of personal humility, mixed with a professional will. A level 5 leader is a person who thinks about the success of the company, before personal riches, they are also very modest, and don’t like to talk about themselves and their achievements, never taking credit, always pointing to other factors when asked about the company’s success.

First who, then what

Another important piece of knowledge taught in this book is how important building a good team is for the success of the company. Collins suggests that for a company to be successful it should look at recruiting the right people, even before it knows the path it will go down. He explains this by pointing out that when a person joins your company because of the direction your company is going in, or what strategies you have in place, there is no guarantee that they will stay in the company when it changes its path. In regards to getting the right team, Collins also talks about how important it is to get the wrong people out of the company. Collins talks about how destructive one bad person can be for the company as a whole, and how to get rid of these people in a good way.

Collins explains how many companies adopt a ‘genius with a thousand helpers’ model. Where there is a visionary, and all the companies are just helping the ‘genius’ get to that vision. Collins shows us that in reality, to create a great company sustainable for the long term, relying on this is not a good idea, he suggests that you need a common vision in the company for it to be successful in the long term. This means that a good leader also needs to plan, and build the company for when they are gone.

Confronting the brutal facts

To successfully run a business it is very important to confront the brutal facts straight up. Collins talks about how companies need to build a culture where people are not afraid of the truth because this will most likely lead to much better decision-making in the company. To facilitate this, Collins has shown through the book that companies that engage in discussions and debates usually have much better decision-making than firms that rely on coercion. A key part of this is also for a leader to instead of leading with answers, should lead with questions. This is because by asking questions, a leader can get a much clearer picture of the situation. This can again lead to much better decision-making which is key for a company’s success.

The Hedgehog Concept

This is the last lesson/concept I wanted to talk about is the Hedgehog Concept. The Hedgehog concept is really a concept that makes companies understand themselves on a deeper level, and is a strategy that most great companies use in some shape or form.

The three key dimensions of the hedgehog concept are:

1. What can you be the best in the world at?
2. What drives your economic engine?
3. What are you deeply passionate about?

As you can see in the illustration below

It is important for companies to look at these questions and find an area of business/direction to focus on, for the company to really succeed. This is because when your company asks itself these questions, the understanding of what direction you should take in the future to succeed becomes much clearer. If you as a company are able to find an area of business where you have extremely high competency, already drives the company’s economic engine and your employees are passionate about, this is an area of business you have a high chance of succeeding in.

But how do you measure these factors, you ask? For the first factor, Collins explains that you have to find out which single area where your company has the most competency, and then focus more on using this competency instead of the ones that your company is not so highly skilled at. For the second factor, you have to look at what part of the business is driving the biggest ratio of your revenue — it has the biggest impact on the company’s profits. The last factor is quite self-explanatory, but I want to add a good point — only when companies do what they are passionate about, they produce results that exceed expectations.

Conclusion

To conclude, this was a little insight into the most valuable lessons I learned from the book “Good to Great” by Jim Collins. I believe that the four concepts that I covered are essential when building a great company, or taking your company to the next level, and if you enjoyed the book I highly recommend you to read it.

Have a great day and good luck with your future endeavors!