Built to Last, the defining management study of the '90s, showed how great companies triumph over time and how long-term sustained performance can be engineered into the DNA of an enterprise from the very beginning.

But what about companies that are not born with great DNA? How can good companies, mediocre companies, even bad companies achieve enduring greatness? Are there those that convert long-term mediocrity or worse into long-term superiority? If so, what are the distinguishing characteristics that cause a company to go from good to great?

Over five years, Jim Collins and his research team have analyzed the histories of 28 companies, discovering why some companies make the leap and others don't. Read about their findings in Good to Great.

Reading this book now. ( )

There appear to be some interesting ideas in this book, but overall, it seems to be a case of the author simply choosing a set of companies that happened to meet some criteria, then looking for similar facts about those companies, and calling them causes that the companies met the criteria.

Maybe I've been reading too many books about biases and fallacies in statistics and behavior lately, but I think this is all luck. See http://www.happen.com/article/good-to-great-or-just-lucky/ for another similar view.

As Steven Levitt (http://www.freakonomics.com/2008/07/28/from-good-to-great-to-below-average/) says, these companies have done worse than the overall market since this book was written. I understand Jim Collins has written a later book studying why companies fail, to somewhat try to explain this.

But the simpler explanation is that it's all luck. It was interesting to me to read in Good to Great that when the company CEOs were asked about what they have done to make their companies great, a lot of them said they were lucky. Collins did not take them at face value, but rather, decided that a characteristic of good CEOs is that they are humble and explain their successes as good luck. And similarly, bad CEOs blame their failures on bad luck.

But what if it just is all luck? Isn't that a simpler explanation.

I'm not saying there are factors that make a company successful or not, but this book hasn't convinced me of what any of them are by its use of data, which seems to fail many common tests. ( )

Outdated, maybe, but still pretty awesome study and interpretation on business practices ( )

You can immediately see this book is "serious" because it is based on a big amount of data collected thanks to a deep research on different companies. The concept it contains are useful and crystal-clear, starting from the famous fox vs hedgehog theory and the related "3 circles". ( )

There are really great insights into what factors make some companies perform way better than their competitors. Too bad that the author chose to convey them in an overwhelmingly repetitive and extended manner.

Level 5 Leadership:

“Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious— but their ambition is first and foremost for the institution, not themselves.”
“It is very important to grasp that Level 5 leadership is not just about humility and modesty. It is equally about ferocious resolve, an almost stoic determination to do whatever needs to be done to make the company great.”
“Ten out of eleven good-to-great CEOs came from inside the company, three of them by family inheritance. The comparison companies turned to outsiders with six times greater frequency— yet they failed to produce sustained great results.”
“Level 5 leaders look out the window to apportion credit to factors outside themselves when things go well (and if they cannot find a specific person or event to give credit to, they credit good luck). At the same time, they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly.

First Who, then What:

“I don’t know where we should take this company, but I do know that if I start with the right people, ask them the right questions, and engage them in vigorous debate, we will find a way to make this company great.”
“We found no systematic pattern linking executive compensation to the process of going from good to great. The evidence simply does not support the idea that the specific structure of executive compensation acts as a key lever in taking a company from good to great.”
“To be ruthless means hacking and cutting, especially in difficult times, or wantonly firing people without any thoughtful consideration. To be rigorous means consistently applying exacting standards at all times and at all levels, especially in upper management. To be rigorous, not ruthless, means that the best people need not worry about their positions and can concentrate fully on their work.”
How to be rigorous:
When in doubt, don’t hire, keep looking
When you know you need to make a people change, act: ” The good-to-great companies showed the following bipolar pattern at the top management level: People either stayed on the bus for a long time or got off the bus in a hurry. In other words, the good-to-great companies did not churn more, they churned better.”
Put your best people on your biggest opportunities, not your biggest problems

Confront the Brutal Facts but Never Lose Faith:

“The moment a leader allows himself to become the primary reality people worry about, rather than reality being the primary reality, you have a recipe for mediocrity, or worse. This is one of the key reasons why less charismatic leaders often produce better long-term results than their more charismatic counterparts.”
How to encourage a climate of truth:
Lead with questions, not answers. Don’t assume you know what’s best.
Engage in dialogue and debate, no coercion.
Conduct autopsies and without blame
Build “red flag” mechanisms: “If you raise your hand with your red flag, the classroom will stop for you. There are no restrictions on when and how to use your red flag; the decision rests entirely in your hands… Your red flag can be used only once during the quarter.”
“This is a very important lesson. You must never confuse faith that you will prevail in the end— which you can never afford to lose— with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
“Spending time and energy trying to “motivate” people is a waste of effort. The real question is not, “How do we motivate our people?” If you have the right people, they will be self-motivated. The key is to not de-motivate them. One of the primary ways to de-motivate people is to ignore the brutal facts of reality.”

The Hedgehog Concept (simplicity within three circles)

““The fox knows many things, but the hedgehog knows one big thing.””
More precisely, a Hedgehog Concept is a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles:
What you can be the best in the world at (and, equally important, what you cannot be the best in the world at).
What drives your economic engine. The single denominator— profit per x— that had the greatest impact on their economics. (It would be cash flow per x in the social sector.)
What you are deeply passionate about.

A Culture of Discipline

“Build a culture full of people who take disciplined action within the three circles, fanatically consistent with the Hedgehog Concept.”
“The good-to-great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of that system. They hired self-disciplined people who didn’t need to be managed, and then managed the system, not the people.”
“When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls. When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance.”

Technology Accelerators

“This brings us to the central point of the chapter. When used right, technology becomes an accelerator of momentum, not a creator of it.”

The Flywheel and the Doom Loop

“Sustainable transformations follow a predictable pattern of buildup and breakthrough. Like pushing on a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough.”

From Good to Great to Built to Last

“Bad BHAGs, it turns out, are set with bravado; good BHAGs are set with understanding. Indeed, when you combine quiet understanding of the three circles with the audacity of a BHAG, you get a powerful, almost magical mix.”
“Indeed, the point of this entire book is not that we should “add” these findings to what we are already doing and make ourselves even more overworked. No, the point is to realize that much of what we’re doing is at best a waste of energy. If we organized the majority of our work time around applying these principles, and pretty much ignored or stopped doing everything else, our lives would be simpler and our results vastly improved.” ( )

https://www.goodreads.com/review/show/2702150556

What she said. ( )

student ( )

Such an excellent book on how a business can become great! Collins and his team researched companies that had transitioned from good performance relative to the general market to a sustained period of great performance. By comparing those companies to others that were similar during the good period but remained merely good, they came away with a set of principles that can move a company from good to great.

The most important lesson, and the theme that's common throughout, is that it's no one thing or moment. All of the good to great principles take a long time to get results (think years, not months). They require sustained effort; stop practicing the principle and a company will lose its greatness.

So what are the principles?

First, great companies are ambitious with respect to the company's success but personally humble. They're willing to make big bets and dramatic changes (as well as small bets and incremental changes), and they always keep the company's long term success in mind as they do so. They aren't driven by ego, external pressure, or short term profit. They also tend to be personally humble, seeing failures as opportunities for improvement and successes as outside themselves -- either due to the effort of others or, if there's no obvious cause, due to luck. Compare this to leaders who fail to lead their companies to greatness. These leaders tend to attribute success to their own virtues and failures to bad luck or others.

Great companies focus on making sure that they have the right people in the right positions. They don't compromise on hiring because they need someone now. Having the right people, rather than the people with merely the currently relevant skills, makes a company more able to adapt to change. It also reduces the need for explicit motivation -- the right people in the right positions will be intrinsically motivated to help the company succeed. But who are the right people? The right people are the people whose core values align with your company's core values. There is no single right set of core values, but without alignment to those values, whatever they are, a person won't be the right person, no matter how otherwise qualified. Collins cautions against using this as an excuse to fire people though. If someone isn't a fit, then it's better for the company and for them if the situation is dealt with as promptly as possible, but don't be too quick to confuse the company being a bad fit with the particular role being a bad fit. Also, this rigor has to be applied more strictly the higher up you go in a company hierarchy, not less. The wrong person at a higher level will have a much broader negative influence than the wrong person at the leaves of the org chart.

The third principle for a great company is the delicate balance between confronting reality and keeping faith in the company's ability to succeed. Success comes when a company repeatedly makes good decisions. The way a company makes good decisions is by always being strictly committed to the brutal facts of reality. Looking at the "scary squiggly things" under the rocks, as one executive put it. Most companies spend a lot of time discussing opportunities or what they think they're doing right, but they don't spend a lot of time talking about the scary things, the things they fear will lead to their failure. Focusing on the positive isn't the only way companies avoid reality. Another one, and a particularly toxic one, is when pleasing particular leaders becomes more important than facing external reality. The book goes on to give a number of tips for how to keep those brutal facts coming in the face of people wanting to please those in charge.

This steadfast focus on facts, however, needs to be balanced by faith that the company can prevail. Not that it can necessarily prevail by doing what it's currently doing, but faith that whatever may come, the company can make it through and come out stronger than before. This balance is illustrated with what Collins calls the Stockdale Paradox, after Admiral Jim Stockdale. Stockdale credited getting through an 8 year imprisonment in Vietnam under bad conditions to this balance. As he put it, "This is a very important lesson. You must never confuse faith that you will prevail in the end -- which you can never afford to lose -- with the discipline to confront the most brutal facts of your current reality, whatever they might be."

The fourth principle is that great companies have a hedgehog concept, a simple idea that drives everything they do. This clarity keeps the company from going off on tangents but also opens the company to possibilities that may look very different from what they do today, but which align with their core idea. Not just any idea makes a good hedgehog concept. To be successful at driving a company, the concept should be at the intersection of what the company can be the best in the world at given it's capabilities (notably, this may not be something the company is currently doing), be something which drives a successful economic engine, and be something which the people at the company can feel deeply passionate about. When an idea hits all three of these, then it can drive a virtuous circle of hard work, profit, and new ideas which leads to greatness. One of the core points of the chapter is that "A Hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best, a plan to be the best. It is an understanding of what you can be the best at" -- facing the brutal reality emphasized in the previous principle.

Next is a culture of internalized disciple. Discipline doesn't mean bureaucracy, strict leadership, or inflexibility. Rather, Collins sees those as an outgrowth of a lack of internalized discipline. Rather, the important discipline is the internal discipline of people at all levels of the company to always take actions aligned with the Hedgehog Concept and core values of the company. This is the sort of discipline that allows people to say "no" to a good opportunity if it isn't aligned with the company's core mission. This sort of discipline is accomplished by putting disciplined individuals in a system that is manged to align people's incentives with the company's goals. Note, in particular, that it's the system that is manged, not the individuals.

The last principle is really more of an anti-principle. Collins and his team found that technology does not cause greatness. It can accelerate the rise to greatness of a company that's already on its way, but technology is not a magic bullet. It can even be a danger. One ways companies lose their way on the path to greatness or fall from greatness is to get too worried about chasing the latest technological trend before understanding how (or if) it fits into the company's Hedgehog Concept.

Collins then discusses the flywheel, which isn't so much a principle as a common theme underlying all of the principles. Good to great companies are not overnight successes. They don't have an "aha!" moment. Rather, their greatness is built off of consistent small actions, which build momentum over time. This isn't to say their actions don't change over time. Rather, it's that the actions that seem to have propelled a company into greatness are inseparable from what came before. They focused on continued improvement and consistent delivery of results aligned with an overall goal that the people in the company believe in. A corollary of this is that people at a company with the potential for greatness don't need to be explicitly motivated; their goal is motivating in its own right.

I really enjoyed reading this. The challenge is that these principles are challenging to apply in practice. They require consistency and discipline, both of which can be hard to maintain in the face of ever changing pressures. Which is why, as Collins points out, in the end, very few companies are great, less stay great, and few make the transition from merely good to great. ( )

Besides the two most important reminders that this book brought along, the concept of 'level 5 leadership' and the importance of selecting the right people for the job and despite half of the book describing the methodology of their study, the books has a higher ration of trite, if common sense, ideas than strong arguments that can predict success.

The first thing to remember is that excellent leadership is not only about being a servant leader—it's also mandatory that you are a rigorous, ambitious person that relentlessly follows a vision of excellence. Even so, this seems to me easier to do than being a truly humble leader as you accumulate success and power. And here the book is thin on explanations. I wish it had touched more on how humility is neither about being weak, meek, or indecisive, nor even about shunning publicity. Humility is about a true lack of narcissism—knowing what you don't know (the overwhelming amount of dark matter out there), not underestimating your competition, listening to weird ideas, being passionately curious, and valuing substance to fluff.

Secondly, it is paramount to have the right people on the bus even before knowing the direction. This sounds very common sense, again, but in a world obsessed with fast growth it might also be the first thing to cut on. I'm a strong believer in the hiring principles of continuing to look when in doubt (but making sure you've looked thoroughly) and in being swift in making people changes when a certain formation goes against the vision and the strategy you've all agreed to pursue. Lastly, James Collins makes an interesting point about giving best people the best opportunities rather than the best problems to solve. I've seen many very talented people being crushed because they were given the responsibility of steering a sinking boat.

Overall, James Collins is not the first one to explain that grit, passion, huge amounts of work and discipline, focus, and putting understanding in front of bravado are what builds great performers, both in the individual and in the corporate spheres. In particular, the Hedgehog Concept, for which the book is usually referenced, is argued incredibly weakly but it should give managers the guideline that it's not really worth giving your best performers mandates they aren't passionate about, and this is me turning the concept onto its head towards individual performance, for the book looks at it in a corporate, macro sense.

I also share the sentiment that it is mostly backwards looking (after all, most of the "great" companies are not great companies anymore) and therefore it doesn't really make predictions and it is more about correlation than causation.

As well, while researching the criticism about this book, I've stumbled upon a nice piece in HBR which was proposing that some of these great companies should look at becoming good after all—that is to say coming back from great, which solely means exceptionally profitable, like Pepsi, who are not in the book, or Philips Morris, who are in the book, to working for the greater good.

( )

As far as business books go, Good to Great sets a high standard for methodology and seldom falls back on the palaver that's so representative of the genre. It's an enjoyable, easy read and Collins and his team pull some fine principles from their research.

That said, it still strikes me that the methodology employed in business research, as evidenced in Good to Great, has a long way to go. The conclusions are based on survivorship bias, very broad induction, and tiny sample sets. There's little attempt, as I remember, at creating falsifiable hypotheses, and then falsifying them. The conclusions are based more on comparisons of a few examples and loose correlations.

Now with *that* said, business may never be broken down to a science, so Collins' level of accuracy may be sufficient, as long as readers interpret the conclusions as flexible, guiding principles. The limiting factor there of course is the average business reader, who has far more to improve on in critical reading than good business authors (like Collins) have to improve in the way of critical analysis. ( )

A classic. Everyone in business needs to read. ( )

Insightful ( )

Why did Eckerd fail, when Walgreens took over? Collins explains the basics behind why some companies are able to make the leap to becoming great, while some are destined to fail. ( )

“Good is the enemy of great.” “Level 5 leaders are a paradoxical blend of personal humility and professional will.” “The presence of a gargantuan personal ego contributes to the demise or continued mediocrity of the company.” “In a good-to great transformation, people are not your most important asset. The right people are.”

Jim Collins’ “Good to Great” is one of those books that will be cited at least once, if not multiple times, in every good business or management course, and though quickly approaching its’ tenth anniversary of publication, Collins’ “Level Five Leaders” are needed in companies now more than ever. He argues that there is an unlimited number of potential level five leaders just waiting to be discovered and nurtured — people who can combine ambition, humility and modesty. Other models like the “hedgehog concept” — passion, being the best, and economics — and the culture of discipline are all ideas which are thoroughly discussed in today’s business classes and seminars.

Although this is a well-researched, oft-cited study of great companies, future adherents to the code of Collins need to remember that this is just one model of leadership. In the first chapter, the author himself encourages readers to “question and challenge what you learn… I offer everything herein for your thoughtful consideration, not blind acceptance.” ( )

I read this one after I did "Great By Choice" by the same author as he used some concepts from this book in that one, particularly the Level-5 Leader and the Hedgehog Concept, and I figured I should read this one to find out just what those titles actually refered to. I now know that and a whole lot more about how to take something that works and make it remarkable. Turns out, the ideas are not that difficult to understand, but not so easy to impliment. I think that this takes what everyone says is "common sense" and points out that it is not only uncommon, but also business myths encourages solutions that seem obvious but don't work. I find myself thinking about it and trying to put it into pratice in the coming year. ( )

This work is the result of a cohort business study. The control group consisted of publicly owned companies that had good performance for 15 years and then great performance (defined as outperforming the market by over three times) for 15 years. There were only 11 good-to-great companies. Eleven other companies in similar lines of work were chosen into the comparison group. Then the research group dissected those companies to figure out what the great companies had in common and how they different from the comparison companies. The result is this book.

Collins and his research team undertook interviews, performed research on publicly available information, and tried to details as much as possible. As such, Good to Great not only covers abstract principles which animate these companies, but also, it shares the stories of excellent success along with the not-as-excellent narratives of the comparison group.

On occasion, this book’s writing seems to lapse into marketing and hype, but I guess that is to be expected among the business genre. Although the book is not as hard of a science as something like physics, Collins’ team seems to aspire to genuinely making their study as scientific as possible. It’s clear that they looked for fundamental insights instead of just covering the surface. For that, they deserve to be praised. Also, because of the stringent inclusion requirements (which require 30+ years of historical data), tech companies are not considered in this work. The qualities that make tech companies great – especially in the face of constant changing environments – is of particular interest to me, and I would like to see further exploration on that topic.

Their overall findings suggest a category of leader that they term a “Level-Five Leader.” This type of leader consistently puts the organization above her or his personal needs. They serve as the mortar which connect the bricks of a group into a strong wall. Through reading this book, you can explore more of this quality of leader.

Unfortunately, time has shown that several of these companies have engaged in ethically questionable policies. That blunts this book’s impact significantly. It goes to show that in the field of business research, it is difficult to adequately control all the factors, such as hidden cheating. It was a good attempt, and still brings forth historical insights into an era. Nonetheless, enthusiasm needs to be dampened with reality. ( )

This book was in my opinion good, but not great (you see what I did there? ;) )
Like most management books, this book contains a few interesting key points wrapped in a big pile of examples and elaborations. Unlike its predecessor, Built to Last, I felt that the key points in Good to Great were more basic and not so ground-breaking. Another thing that bothered me a bit while reading was the fact that the good-to-great companies were portrayed as flawless heroes while the comparison companies were portrayed as dumb villains. It gave me the feeling that the research and the findings were simplified to fit a certain narrative and not necessarily 100% accurate. That being said, it is still a good read and does contain some interesting findings. ( )

I’ve resisted reading this book for a decade or so. As a pastor I’ve long associated it with an uncritical business thinking takeover of Christian leadership. As I read it, I’m certainly critical of parts, from methodology to interpretation, but slowly it overwhelmed me with helpfulness. It’s just too helpful of a book to not read and apply. Yes, of course, it’s not the only book to read, and it doesn’t have all the answers (whatever that means), but it’s one of the few books I read this year that I’ll reread in the next three years. ( )

I enjoyed Good to Great as part of our book club at work. I appreciate that the findings were based on data and research, and not anecdotes and poorly remembered details from specific business personalities. I would love to see an updated version twenty years later with how the internet has transformed things, but the book did mention how great companies use technology smartly and not rely on it completely. ( )

A book I go back to routinely for regrinding. ( )

Хотя книга рассказывает о том, как построить великую КОМПАНИЮ, по-моему, эти же принципы подходят и для построения своей личной жизни. Ведь каждого человека можно рассматривать в т.ч. и как некую компанию. ( )

Tremendous book which opened my eyes to a number of valid concepts, especially risk taking. ( )

I learned a bit from this book, and was impressed at the analysis that went into it. Interesting to see that two of the companies are not great anymore (as noted by others, Fannie Mae & Circuit City). Level 5 leadership is needed everywhere. I need to read this again! ( )