Can you identify one company that had changed from being good to being great around you? Jim Collins, the author of Good to Great, is a student and teacher of enduring great companies. In order to make this book, Mr. Collins started his research with 1,435 good companies. Then, he examined their performance over 40 years, to later on, find the 11 companies that became great.
The purpose of this book is to make us see that nearly all-operating prescriptions for creating large-scale corporate change are nothing but myths and that changes do not happen from one day to another by a miracle, the change from good to great is the result of a successful plan who is composed of steps, so that the mass of people would gain confidence from the successes, not just the words. Good to Great: Why Some Companies Make the Leap… and Others Don’t is a 2001 management book by James C. Collins that aims to describe how companies transition from being average companies to great companies and how companies can fail to make the transition. It is ranked on Amazon. com as the #70 of the top 100, and the first in Management-books. James “Jim” Collins III is certainly a talented author. This management philosopher is the author of business must-reads and his niche lies in analyzing what makes enduring companies tick. He describes his work as looking at these companies and asking “how they grow, how they attain superior performance, and how good companies can become great companies. Twenty years of research and consultancy has allowed him to come with the conclusion that priority should be given to building lasting mechanisms on top of strategies.
A native of Colorado, the 50-year old management guru invested a lot in his education. He graduated with degrees in Business Administration and Mathematical Science from Stanford University. To create a headquarters for his research, consulting and teaching sessions, he founded a management laboratory in Boulder, Colorado in 1995. Here his team of brilliant, driven student’s work with him on research projects, the results of which have contributed to Jim Collins’ bestsellers.
He is also a regular contributor to prominent business publications such as the Harvard Business Review, The Wall Street Journal, Fast Company, Business Week, and Fortune Magazine. Jim Collins did an excellent job in explaining how a company can be transformed from good to great, since a good company is just not good enough. His goal was achieved by making clear and realistic examples in order to express his knowledge. Collins includes many suggestions on how a company can become a great company that is built to last. The following lines mention some of the most important and remarkable suggestions provided by Collins.
Something that is often seen and that Collins mentioned is that most of the great company leaders and/or CEOs are employees that have been working for the company for many years before they became CEOs and leaders; which mean that theses CEO and/or leader are loyal to the company. This was one of the suggestions that many of us can be related to and the one that is more interesting as well. Actually, is not fair to select an outsider as a CEO instead of promoting an existing employ who has been working for the company many years. An outsider doesn’t really care what happens to the company, while an insider truly cares.
Collins states that hierarchy is not necessary to apply when company hires disciplined employees. He explains that the second that a company needs to manage its employees, the company has made a hiring mistake. Collins believe that an organizations needs to manage systems, not its employees. Truly, this is new information for many of us; most of the people believe that hierarchy is necessary in an organization. Another new knowledge and another important suggestion that Collins incorporate in his book is that people are not your most important asset, the right people are. In order to explain himself he used an example of a bus driver.
In this example he describes that in order to fulfill the bus you fist need to get the right people in, and then you get the wrong people off the bus, then you need to position the right people in the right seats, and last you need to figure out where you want to drive that bus. He relates this with an organization because a company needs to focus to whom they are paying, not how. His suggestion is to analyze a person’s characteristic, work ethic, intelligence, and dedication before deeply analyzing practical skills. Collins believe that companies focus too much on what to do and his ecommendation is for companies to concentrate on what to do, what not do, and what to stop doing. “No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. There was no defining action, no grand program, no one killer innovation, no solitary lucky break… Good to great comes about by a cumulative process…that adds up to sustained and spectacular results”; this was a quote he said in this wonderful book, a quote that says the reality of businesses nowadays, a quote that for us defined in short words the name of this book and the research Collins made.
Collins illustrates a persuasive profile of what it takes to be the leader of not a good but a great organization in the modern day. He also demonstrates the development of successful organizations as a consequence of ethical behavior rather than despite the apparent compromises ethical behavior carries. Collins often used the term “level 5 leadership” in his book. This term refers to the type of leader that is part of a company that went from good to great. This type of leader takes credit for bad performance and also gives credit to others when things go well.
The ambition of this type of leader is to build a great company. The level 1 is highly capable individual, level 2 is contributing team member, level 3 is competent manager, level 4 is effective leader and level 5 is executive. Mr. Collins not only teaches us the Level 5 Leadership explained above, he also shows us through this book that for us to move from good to great requires a little understanding of three circles or questions to which he named “Hedgehog Concept “.
This makes us wonder: who really excites us, that one may be the best in the world and moving the machine of our economy. This concept we can apply it not only in our personal lives, also in our business life. If we can answer these three questions, the answers will guide our decisions and we can achieve success with this. A very important idea mentioned in the book is to have a culture of discipline. We must create a culture of individuals acting in a disciplined manner within the Hedgehog Concept.
Collins mentioned that one of the secrets to pass from good to great is largely in the discipline to do whatever it takes to become the best in the area in which the business specializes. The goal of this book was to answer the question of how good companies can become great companies, what strategies they should change and what strategies they should follow. When Mr. Collins investigated, he found a very important term, which makes us understand many things in business.
This term is “Technology Accelerators”. This explains us that great companies use technology as an accelerator of momentum, not for its creation, that is, neither company was transformed or rather was created with the technology, they began to grow and develop from good to great with the Technology. In this research, Collins found out that 80% of companies did not mention the term technology or technology accelerators as one of the main factors in their transformation.
Collins states that good is the enemy of great. He recalls that the reason why we do not have a numerous of great things is because we feel comfort of having “good” things. We feel that a good school, a good President, etc are well enough; and this is why we tend to stay in this “good” position and not try to push ourselves to a “great” position. Since we don’t overcome this “good” level we also don’t demand it, therefore the majority of the companies don’t become a great company.
Nevertheless, the reason why a company doesn’t overcome the phase of being a “good” company is not only because people don’t demand it, is also because just like customers feel satisfied with a “good” company, the company itself feels that it has reach its maximum level and doesn’t struggle to pursue a “great” level. However, a company that goes from good to great attracts more customers and as a result more profit. In order for the reader to familiarize on what the author meant by companies going from good to great he evaluated and mentioned eleven companies, which he believed, that matched with his criteria of being good to great company.
These companies were: Abbot Laboratories, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens and Wells Fargo. Due to the fact that the book mentions examples from everyday life and also mentions big companies that most people know, it is easier for the reader to understand what the writer is explaining. Therefore, this is a recommended book for any person that wishes to build a company to last and also for any person that wants to increase its knowledge.
This book report was a task given by our professor Hector Martinez, with the purpose of acquiring more knowledge about management, and see other perspectives or points of views, and we are certainly happy and proud of having read this clever and wise book, where we learn so much, that we certainly promise from now on that we will even try to implement all this new lessons to our career, and also to our daily life, because as you read the book you start to notice that it is more than what you think, this book not only teach you how to be great, but also how to distinguish it from the good, but most important, how to endure it.
Basically in this book we have seen that Collins describe how to do the right thing, in the right order, in the right moment and the most important, with the right people. He describes this with a term: Flywheel, because at first in a business it is very hard to move on, but over the time, with pressure and making good decisions this flywheel will start to move and having speed.
After this flywheel has a lot of momentum, it will be easier because it will need less energy to keep moving. This is a truly description of a business nowadays. He tried to reflect the actual business world in some lines. Collins at the end of this book mentions a very truly quote: When all these pieces come together, not only does your work move toward greatness, but so does your life. 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” this quote explains us every single detail we mentioned above, the importance of each step or research Collins made, the importance that all this information has in our business lives. While reading this book anyone can feel that what Collins is explaining sounds like common sense, but even though we feel that we already know this material we also can notice that it is not often applied. Collins has his words when he states that we tend to feel comfort with small goals we attained and not try to pursue greater ones.