Good to Great: Why Some Companies Make the Leap...And Others Don't

by Jim Collins

Good is the enemy of great.

The good-to-great companies did not focus principally on what to do to become great; they focused equally on what not to do and what to stop doing.

Technology and technology-driven change has virtually nothing to do with igniting a transformation from good to great. Technology can accelerate a transformation, but technology cannot cause a transformation.

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

The best answer I can give is that it was an iterative process of looping back and forth, developing ideas and testing them against the data, revising the ideas, building a framework, seeing it break under the weight of evidence, and rebuilding it yet again.

We found instead that they first got the right people on the bus, the wrong people off the bus, and the right people in the right seats—and then they figured out where to drive it.

You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be.

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.

Like Smith, they were self-effacing individuals who displayed the fierce resolve to do whatever needed to be done to make the company great.

The good-to-great leaders never wanted to become larger-than-life heroes. They never aspired to be put on a pedestal or become unreachable icons. They were seemingly ordinary people quietly producing extraordinary results.

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.

they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it. They said, in essence, “Look, I don’t really know where we should take this bus. But I know this much: If we get the right people on the bus, the right people in the right seats, and the wrong people off the bus, then we’ll figure out how to take it someplace great.”

The right people don’t need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great.

Maxwell made it absolutely clear that there would only be seats for A players who were going to put forth an A+ effort, and if you weren’t up for it, you had better get off the bus, and get off now.

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

“We hire five, work them like ten, and pay them like eight.”

Practical Discipline #1: When in doubt, don’t hire—keep looking.

the ability to get and keep enough of the right people.

Practical Discipline #2: When you know you need to make a people change, act.

The moment you feel the need to tightly manage someone, you’ve made a hiring mistake. The best people don’t need to be managed.

Letting the wrong people hang around is unfair to all the right people, as they inevitably find themselves compensating for the inadequacies of the wrong people. Worse, it can drive away the best people. Strong performers are intrinsically motivated by performance, and when they see their efforts impeded by carrying extra weight, they eventually become frustrated.

Practical Discipline #3: Put your best people on your biggest opportunities, not your biggest problems.

The people we interviewed from the good-to-great companies clearly loved what they did, largely because they loved who they did it with.

When, as in the Kroger case, you start with an honest and diligent effort to determine the truth of the situation, the right decisions often become self-evident.

You absolutely cannot make a series of good decisions without first confronting the brutal facts.

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.

If you have the right people on the bus, they will be self-motivated.

1. Lead with questions, not answers.

2. Engage in dialogue and debate, not coercion.

3. Conduct autopsies, without blame.

4. Build “red flag” mechanisms.

What separates people, Stockdale taught me, is not the presence or absence of difficulty, but how they deal with the inevitable difficulties of life.

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.

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.

The good-to-great companies understood that doing what you are 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.

The point is that they felt passionate about what they were doing and the passion was deep and genuine.

Avoid bureaucracy and hierarchy and instead create a culture of discipline.

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.

The good-to-great companies at their best followed a simple mantra: “Anything that does not fit with 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.”

It takes discipline to say “No, thank you” to big opportunities. The fact that something is a “once-in-a-lifetime opportunity” is irrelevant if it doesn’t fit within the three circles.

Sustained great results depend upon building a culture full of self-disciplined people who take disciplined action, fanatically consistent with the three circles.

Bureaucratic cultures arise to compensate for incompetence and lack of discipline, which arise from having the wrong people on the bus in the first place. If you get the right people on the bus, and the wrong people off, you don’t need stultifying bureaucracy.

A culture of discipline involves a duality. On the one hand, it requires people who adhere to a consistent system; yet, on the other hand, it gives people freedom and resp...

The good-to-great companies appear boring and pedestrian looking in from the outside, but upon closer inspection, they’re full of people who display extreme diligence and a stunning intensity (they “rinse their cottage cheese”).

“Stop doing” lists are more important than “to do” lists.

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 good-to-great companies never began their transitions with pioneering technology, for the simple reason that you cannot make good use of technology until you know which technologies are relevant. And which are those? Those—and only those—that link directly to the three intersecting circles of the Hedgehog Concept.

Technology without a clear Hedgehog Concept, and without the discipline to stay within the three circles, cannot make a company great.

“People don’t know what they don’t know,” they said. “And they’re always afraid that some new technology is going to sneak up on them from behind and knock them on the head. They don’t understand technology, and many fear it.

“The primary factors,” said Ken Iverson, “were the consistency of the company, and our ability to project its philosophies throughout the whole organization, enabled by our lack of layers and bureaucracy.”

they emphasized other factors even more—getting people with a farmer work ethic on the bus, getting the right people in key management positions, the simple structure and lack of bureaucracy, the relentless performance culture that increases profit per ton of finished steel.