Good to Great written by Jim Collins (Co-author of the bestselling ‘Built to Last’)

Why Some Companies Make the Leap…and Others Don’t

Coming from a finance background and ‘only’ reading those accounting and tax updates (the thousands that come through), I was given this book for Christmas as challenge to break away from legislation updates and take the leap to read something new.

In my twenties I read A LOT on leadership and different books associated to this genre, however I found that in reading this book, I have gained so many different insights on just how to help a company go from good to great. It’s the type of book you can read time and time again and learn something different from it each time.

Do you think you have what it takes as a leader? There are so many different leadership books out there, so you really need to know which ones to read and invest your time in. I’d have to say this has been one of the best leadership books I’ve read. It makes sense, it’s based on very in-depth research by Collins and you can start making these changes today.

Good to Great outlines a model from turning a good, average or even mediocre company into a great one. It is based on a model of bringing disciplined people together, using disciplined thought and disciplined action and this is all governed by his six principles.

So, let’s look at what these are:

  1. Level 5 Leadership
  2. First Who…Then What
  3. Confront the Brutal Facts
  4. Hedgehog Concept
  5. Culture of Discipline
  6. Technology Accelerators

1. Level 5 Leadership (Disciplined people)

“You can accomplish anything in life, provide that you do not mind who gets the credit.” – Harry S. Truman

Most of you will assume that a level 5 leader is high profile, egocentric and a ‘celebrity’ style individual. Collins discovered something very different and that all good to great leaders shared some common characteristics: They set up successors for even greater success, they are modest, they attribute success to factors other than themselves and sometimes they credit ‘good luck’ rather than credit themselves. They never blame bad luck when things don’t go well, they apportion the responsibility to themselves. They are ambitious but ambitious for the company, not themselves.

The figure below will help you understand the level of leadership Collins has discovered. It’s essential to have a Level 5 Leader to make the transition from good to great…

Figure 1 – Collins Level 5 Hierarchy

 

2. First Who, Then What (disciplined people)

“There are going to be times when we can’t wait for somebody. Now, you’re either on the bus or off the bus.” – Ken Kesey

Collins discovered that the good to great companies focused solely on getting the right people on the bus first, THEN defining the vision and driving towards that vision.

Good people are hard to find, but if we put the wrong people on the bus its unlikely that the company will go somewhere great. Collins advice is that we should take time to recruit the right people, once we have the right people in the right seats on the bus, it’s easy. We can move the bus in different directions and the people will move with it as they are on the bus because of the people who are also on it, not because of the vision of the company.

Good to Great management teams consist of people who debate in search of the best answers yet come together and unify when a decision is made (whether they personally agree with it or not). They get behind the decision as a team and work ferociously towards achieving this.

We all know the vision and direction of a company can change over time, so challenge yourself – do you have the right people on your bus? Will they move in the different directions as the company moves? Do your people on your bus need a lot of management and motivation? are they fixed in their ways? are you in the business all hours of the day and night? if your answer is yes to majority of these questions, then maybe you need to look at your people and kick some of them off the bus?!

Collins uncovered three practical disciplines for being rigorous in people decisions:

  1. When in doubt, don’t hire—keep looking. (a company should limit its growth based on its ability to attract enough of the right people.)
  2. When you know you need to make a people change, act. (just make sure you don’t have someone in the wrong seat.)
  3. Put your best people on your biggest opportunities, not your biggest problems.

“Whether someone if the ‘right person’ has more to do with the character traits and innate capabilities than with specific knowledge, background, or skills.” – Collins

3. Confront the Brutal Facts (Yet Never Lose Faith) (disciplined thought)

Sometimes we all find it hard to hear the brutal truth, whether it be from your manager, family or friends.

In Collins’ research he found that all the good to great companies’ leaders were honest about tough situations and coming to terms with the reality of a situation, they accepted the brutal facts of the situation and more so than often he found that the most obvious and logical solution presented itself once the brutal facts came out and were heard.

Collins found that the ‘comparison companies’ (those that did not go from good to great) continually refined the path to greatness but never achieved greatness as they did not consider the brutal facts of reality that could impact that path.

He found the there was a real difference between having your say and being heard. Here are a few takeaways you can use in your company – try them and see what happens…

  1. Lead with questions, not answers
  2. Engage in dialogue and debate, not coercion
  3. Conduct ‘autopsies’ without blame
  4. Build red flag mechanisms that turn information into information that cannot be ignored.

One of the keys to avoid demotivating the right people is to listen, don’t give false hopes, and to confront the brutal facts whether you want to hear them or not.

4. The Hedgehog Paradox (Simplicity Within the Three Circles) (disciplined thought)

Collins found that in each good to great company there were ‘Foxes’ and ‘Hedgehogs’. Hedgehogs were most common in the good to great companies.

The hedgehog concept is a simply model for defining your company’s strategy – so let’s take a deeper look at these…

  • “Foxes pursue many ends at the same time and see the world in all its complexity. They are “scattered or diffused, moving on many levels,” never integrating their thinking into one overall concept or unifying vision.
  • Hedgehogs, on the other hand, simplify a complex world into a single organising idea, a basic principle or concept that unifies and guides everything.” Hedgehogs see what is essential and ignore the rest.

The Three Circles

The Three Circles (Hedgehog Concept), displayed in Figure 2, represent the following:

Figure 2 – The Three Circles (Hedgehog Concept)

 

What you can be the best in the world at:

  • It’s about understanding what your organisation truly has the potential to be the very best at and sticking to it.
  • “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. The distinction is absolutely crucial.” – Collins
  • You don’t have to start by being the best at it – you just need to understand what you could be the best at.

What drives your economic engine (profit per x):

  • “If you could pick one and only one ratio—profit per x—to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?” – Collins

What you’re passionate about:

  • Follow your passion and you’ll never have to work a day in your life.

If a huge opportunity comes along but does not fit into your three circles, then you need discipline to say ‘no’. I’m sure this will be a huge challenge to most of us, saying ‘no’ doesn’t come easy and I know myself I find it very hard. But, maybe it works, maybe it doesn’t, but if it doesn’t fit the three circles that Collins has developed from his detailed research and you develop these three circles for your business, don’t change the circles, start to use the word ‘no’ and see where it takes the company.

Collins talks about budgets – and don’t all Accountants love to have a budget? One takeaway here for me is that we don’t work out what activity gets what budget, we look at it much more deeper and determine what activities support the ‘three circles’ (Hedgehog Concept) and then eliminate those activities that don’t support it.

5. A Culture of Discipline (disciplined action)

A culture of discipline is where disciplined people take disciplined action that is consistent towards the hedgehog concept. They are self-disciplined to fulfil their responsibilities. This then take us back to ‘first who’, we need to make sure we get it right at the recruitment phase – ensuring we hire the right motivate people for the bus that are self-disciplined within their role. If we get the recruitment wrong, then based on Collins research and principles developed – the company will never go from good to great!

“Avoid bureaucracy and hierarchy and instead create a culture of discipline. When you put these two complementary forces together—a culture of discipline with an ethic of entrepreneurship—you get a magical alchemy of superior performance and sustained results.” – Collins

Collins found that all good to great companies managed the system and process and DID NOT need to manage the people.

Whether you agree with this or not, Collins states that all good to great companies followed a simple mantra: “Anything that does not fit within our Hedgehog Concept, we will not do. We will not launch unrelated businesses. We will not make unrelated acquisitions. We will not do unrelated joint ventures. If it doesn’t fit, we don’t do it. Period.”

Another interesting fact is that we all make ‘to-do’ lists, we focus on these and generally stick to them, add more to them and live and breathe these lists. How about creating a ‘stop-doing’ list to keep focused and stay focused on the “three circles”. Collins says all the good to great companies do ‘stop-doing’ lists – maybe we should all look at a ‘stop-doing’ list and see what impact this has?!

6. Technology Accelerators (disciplined action)

Technology – just the sound of that word makes us all shiver. We all think we need to have the best in the business and that this will help our companies be successful. Its assumed that technology makes companies better and creates growth, but Collins discovered that technology is used by good to great companies as an accelerator, not a creator of growth. The good to great companies avoid jumping on technology bandwagons and only pursue technology consistent with their hedgehog concept.

Good to great companies did have technological sophistication however they applied the applications that were consistent with their company strategies (developed through the hedgehog concept) – they took the time to research relevant technology that would accelerate their company.

“Does the technology fit directly with your Hedgehog Concept? If yes, then you need to become a pioneer in the application of that technology. If no, then ask, do you need this technology at all? If yes, then all you need is parity.”

Summary

So, if you’re still with me after taking in all the above it is important to state that a good to great transformation does not happen overnight and there is apparently no defining ‘ah-ha’ moment according to Collins research. Momentum and growth is built up overtime, like a spinning ‘flywheel’ (Collins).

Good to great comes about by a cumulative process—step by step, action by action, decision by decision, turn by turn of the flywheel—that adds up to sustained and spectacular results.” – Collins.

Companies who do not find the success of going from good to great sought after quick transition, they change direction of the ‘flywheel’ quickly in a quest to find the ‘ah-ha’ moment. They have new leaders who come in and stop an already spinning ‘flywheel’ and change the direction.

It all starts with Level 5 leaders, who naturally gravitate toward the flywheel model. They’re are interested in the quiet, deliberate process of pushing on the flywheel to produce exceptional results for the company NOT themselves.

At Aurora Marketing, our team works hard with clients to ensure we achieve good-to-great results on all projects. We have an exceptional winning success rate for our clients of 98.5%.

For further information about Aurora Marketing and how we can help you win your tenders, call us on 07 3211 4299 or email info@254.152.

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