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

by Jim Collins

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.

all of them had Level 5 leadership in key positions, including the CEO, at the pivotal time of transition.”

Professional Will

Personal Humility

The two sides of the leadership are titled, “Professional Will” and “Personal Humility.”

For these people, work will always be first and foremost about what they get—fame, fortune, adulation, power,

whatever—not what they build, create, and contribute.

And under the right circumstances—self-reflection, conscious personal development, a mentor, a great teacher, loving parents, a significant life experience, a Level 5 boss, or any number of other factors—they begin to develop.

Look for situations where extraordinary results exist but where no individual steps forth to claim excess credit.

On the one hand, Level 5 traits enable you to implement the other findings; on the other hand, practicing the other findings helps you to become Level

Whether or not we make it all the way to Level 5, it is worth the effort.

For like all basic truths about what is best in human beings, when we catch a glimpse of that truth, we know that our own lives and all that we touch will be the better for the effort.

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.”

But if people are on the bus because of who else is on the bus, then it’s much easier to change direction:

Second, if you have the right people on the bus, the problem of how to motivate and manage people largely goes away. 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.

The main point is to first get the right people on the bus (and the wrong people off the bus) before you figure out where to drive it. The second key point is the degree of sheer rigor needed in people decisions

“who” questions come before “what” questions—before vision, before strategy, before tactics, before organizational structure, before technology.

“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...

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

It’s not how you compensate

your executives, it’s which executives you have to compensate in the first place.

you have the right executives on the bus, they will do everything within their power to build a great company, not because of what they will “get” for it, but because they s...

Their moral code requires building excellence f...

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

Nucor system did not aim to turn lazy people into hard workers,

but to create an environment where hardworking people would thrive and lazy workers would either jump or get thrown right off the bus.

In determining “the right people,” the good-to-great companies placed greater weight on character attributes than on specific educational background, practical skills, specialized knowledge, or work experience.

We find out who they are by asking them why they made decisions in their life.

To be rigorous means consistently applying exacting standards at all times and at all levels, especially in upper management.

“The only way to deliver to the people who are achieving is to not burden them with the people who are not achieving.”

We were not going to subject our culture to a death by a thousand cuts.’”

To be rigorous in people decisions means first becoming

rigorous about top management people decisions.

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

your growth rate in revenues consistently outpaces your growth rate in people, you simply will not—indeed cannot—build a great company.

Those who build great companies understand that the ultimate throttle on growth for any great company is not

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

‘You don’t compromise. We find another way to get through until we find 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.

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.

“Let’s take the time to make rigorous A+ selections right up front. If we get it right, we’ll do everything we can to try to keep them on board for a long time. If we make a mistake, then we’ll confront that fact so that we can get on with our work and they can get on with their lives.”

First, if it were a hiring decision (rather than a “should this person get off the bus?” decision), would you hire the person again? Second, if the person came to tell you that he or she is leaving to pursue an exciting new opportunity, would you feel terribly disappointed or secretly relieved?

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

The good-to-great companies made a habit of putting their best people on their best opportunities, not their biggest problems.

managing your problems can only make you good, whereas building your opportunities is the only way to become great.

When you decide to sell off your problems, don’t sell off your best people.