Jim Collins

Good is the Enemy of Great

The book emphasizes that settling for good often prevents organizations from reaching greatness. Jim Collins asserts, 'Good is the enemy of great,' underlining that complacency can hinder progress. This principle is vital for schools, governments, and businesses, which may become stagnant once they achieve a certain level of adequacy. To strive for greatness, organizations must consciously choose not to settle for merely good performance. For instance, companies that transitioned from good to great did so because of their relentless pursuit for excellence and not just contentment with the status quo.

Level 5 Leadership

A recurring theme is the necessity of Level 5 Leadership, which combines personal humility with professional will. These leaders are not flamboyant but are dedicated to their company's success. Collins highlights Darwin E. Smith of Kimberly-Clark, who made transformative decisions without seeking recognition. 'Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company,' Collins states, illustrating that such leaders are vital for fostering substantial organizational success.

First Who, Then What

The book underscores the principle of prioritizing the right people over strategies. Jim Collins argues that having the right team in place is the foundation for transformation. 'The key point is that 'who' questions come before 'what' decisions,' Collins notes. As seen in the case of Walgreens, focusing on getting the right people in roles drove the company's effective transformation. This principle ensures that the team can handle changes and challenges, thereby fostering sustainable growth.

Confront the Brutal Facts

Organizations must regularly face and discuss the brutal facts of their current reality while maintaining faith in their vision. Collins emphasizes the importance of unflinching honesty, illustrated by Kroger's rigorous self-assessment, which led to its successful shift to superstores. 'You must never confuse faith that you will prevail in the end with the discipline to confront the most brutal facts of your current reality,' Collins explains. This approach ensures that organizations are grounded and prepared to address real challenges.

The Hedgehog Concept

Central to the transformation is the Hedgehog Concept, which calls for a clear understanding of what a company can be the best at, what drives its economic engine, and what it is deeply passionate about. Collins uses the example of Walgreens focusing on 'profit per customer visit,' leading to remarkable growth. 'The distinction is absolutely crucial,' he writes, underscoring the importance of focusing efforts on areas where the company can achieve true excellence.

The Flywheel and The Doom Loop

A key idea is the Flywheel concept, which symbolizes how consistent efforts accumulate over time, leading to significant transformations. 'Each turn of the flywheel builds upon work done earlier, compounding your investment of effort,' Collins notes. Conversely, the Doom Loop describes organizations that seek quick fixes and make frequent, disjointed shifts. Companies like Harris Corporation that fell into the Doom Loop demonstrated that erratic changes often lead to failure.

Technology as an Accelerator, Not a Creator

Collins argues that technology should be viewed as an accelerator of momentum, not the creator of it. Successful companies first understand their core concepts and then selectively adopt technologies that enhance these areas. 'When used right, technology becomes an accelerator of momentum, not a creator of it,' Collins states. Walgreens' strategic use of technology to support its core business exemplifies this principle, contrasting with companies that pursue technology for technology’s sake.

Embrace Rugged Honesty

Regularly confront and discuss the brutal facts of your current reality without losing faith in your vision. This honesty helps keep the organization grounded and ready to address real challenges.

Prioritize People Over Strategy

Focus on getting the right people in the right roles. This sets a strong foundation for future success and allows for effective handling of changes and challenges.

Simplify Your Strategy

Identify a simple, unifying concept that aligns with your strengths and execute it consistently. This clarity in focus can drive long-term success and differentiation.

Cultivate Humble Leadership

Encourage leaders to channel their ambitions into the company's goals rather than personal recognition. This helps build a dedicated and capable leadership team.

Use Technology Effectively

Adopt technology that aligns with your core business principles. Use it as a tool to enhance existing momentum rather than relying on it as the primary driver of success.

Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great.

Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice.

We found no systematic pattern linking specific forms of executive compensation to the process of going from good to great.

We should only do those things that we can get passionate about.

If you didn’t have the capacity to become the best executive in the industry in your span of responsibility, then you would lose your paycheck.

Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company.

The good-to-great leaders never aspired to be put on a pedestal or become unreachable icons.

Level 5 leaders look out the window to apportion credit to factors outside themselves when things go well… they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly.

The key point is that every step of diversification and innovation stayed within the three circles.

Each turn of the flywheel builds upon work done earlier, compounding your investment of effort.

When used right, technology becomes an accelerator of momentum, not a creator of it.

The right people will do the right things and deliver the best results they’re capable of, regardless of the incentive system.

Put your best people on your biggest opportunities, not your biggest problems.

Those who build and perpetuate mediocrity, in contrast, are motivated more by the fear of being left behind.

Disciplined people engage in disciplined thought and take disciplined action.

Give people the room they need. Freedom of movement brings about spontaneity, and that, in turn, may lead to brilliant ideas.

“Take small steps.” Small steps start a long journey – and at the same time, they save you from huge failures. If a small step doesn’t work, it’s easier to fix than a huge problem.

“Accept that mistakes will be made.” You don’t know what result your actions will bring, so be ready that there will be mistakes.

“Give it a try – and quick!”: When in doubt, doing an experiment, or trying something new, don’t stop. Do something, make mistakes, fix them – but don’t stand still.

Core Ideology = Core Values + Purpose

The critical question asked by a visionary company is not “How well are we doing?” or “How can we do well”… the critical question is “How can we do better tomorrow than we did today?

In examining the history of visionary companies, we were struck by how often they made some of their best moves not by detailed strategic planning, but rather by experimentation, trial, and error, opportunism, and – quite literally – accident.

Profitability is a necessary condition for existence and a means to more important ends, but it is not the end in itself for many of visionary companies. Profit is like oxygen, food, water, and blood for the body; they are not the point of life, but without them, there is no life.

Joining these companies reminds me of joining an extremely tight-knit group or society… If you’re willing to really buy in and dedicate yourself to what company, then you’d be very satisfied and productive… If not, however, you’ll probably flounder, feel miserable and out of place.

Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.

I like to think of Good to Great as providing the core ideas for getting a flywheel turning… while Built to Last outlines the core ideas for keeping a flywheel accelerating long into the future.

No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program… Good to great comes about by a cumulative process – step by step.

When used right, technology becomes an accelerator of momentum, not a creator of it. The good-to-great companies never began their transitions with pioneering technology, for the simple reason you cannot make good use of technology until you know what technologies are relevant.

Few companies have the discipline to discover their Hedgehog Concept, much less the discipline to build consistently within it. They fail to grasp a simple paradox: The more an organization has the discipline to stay within its three circles, the more it will have attractive opportunities.

To go from good to great requires transcending the curse of competence… The good-to-great companies understood that doing what you’re good at will only make you good; focusing solely on what you can potentially do better than any other organization is the only path to greatness.

When… you start with an honest and diligent effort to determine the truth of the situation, the right decisions often become self-evident… And even if all decisions do not become self-evident, one thing is certain: you absolutely cannot make a series of good decisions without first confronting the brutal facts.

Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people.

Level 5 leaders channel their ego needs away from themselves and into the larger goal of building the company… they are incredibly ambitious – but their ambition is first and foremost for the institution, not themselves.

Few people attain great lives, in large part because it is just so easy to settle for a good life. The vast majority of companies never become great, precisely because the vast majority become quite good - and that is their main problem.

Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great.

Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice.

We found no systematic pattern linking specific forms of executive compensation to the process of going from good to great.

We should only do those things that we can get passionate about.

If you didn’t have the capacity to become the best executive in the industry in your span of responsibility, then you would lose your paycheck.

Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company.

The good-to-great leaders never aspired to be put on a pedestal or become unreachable icons.

Level 5 leaders look out the window to apportion credit to factors outside themselves when things go well… they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly.

The key point is that every step of diversification and innovation stayed within the three circles.

Each turn of the flywheel builds upon work done earlier, compounding your investment of effort.

When used right, technology becomes an accelerator of momentum, not a creator of it.

The right people will do the right things and deliver the best results they’re capable of, regardless of the incentive system.

Put your best people on your biggest opportunities, not your biggest problems.

Those who build and perpetuate mediocrity, in contrast, are motivated more by the fear of being left behind.

Disciplined people engage in disciplined thought and take disciplined action.