Good to Great

About the Author

Jim Collins is a renowned author and business consultant, best known for his research and writing on what makes companies great. With a background that includes teaching at the Stanford Graduate School of Business and working as a consultant for McKinsey & Company, Collins has dedicated his career to understanding the dynamics of enduringly successful companies. His other notable works include "Built to Last" and "How the Mighty Fall," which also explore the themes of business success and failure.

Main Idea

"Good to Great" by Jim Collins investigates how good companies can transform into great ones and achieve long-term, sustainable success. The book is based on a comprehensive research project that analyzed the performance of 1,435 established companies over 40 years. From this database, 11 companies were identified as having made the transition from good to great, generating cumulative stock returns exceeding the general stock market performance by 6.9 times over a 15-year period. The key finding is that these companies did not launch radical change programs but instead implemented pragmatic, down-to-earth initiatives centered around disciplined people, thought, and action.

Table of Contents

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

Level 5 Leadership

The journey from good to great begins with Level 5 Leadership. This type of leadership is characterized by a paradoxical blend of personal humility and professional will. Level 5 Leaders are not high-profile celebrities but rather individuals who are more likely to attribute their success to good luck than personal greatness. They are driven by the desire to build something enduring and are willing to make whatever sacrifices are necessary to achieve that goal.

"Level 5 leaders look out the window to apportion credit to factors outside themselves when things go well. At the same time, they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly." – Jim Collins

The term "Level 5" refers to the highest level in a hierarchy of leadership capabilities. Level 5 Leaders build enduring greatness through a blend of humility and professional will, contrasting with Level 4 Leaders who are effective but may not necessarily build something that lasts beyond their tenure.

Level 5 Leaders demonstrate the following characteristics:

• Personal Humility: They act with modesty, shunning public adulation, and emphasizing the contributions of others.
• Professional Will: They are fiercely determined to do whatever it takes to make the company great.
• Ambition for the Company: Their ambition is for the success of the company, not for personal gain.
• Commitment to Greatness: They set high standards and inspire others to follow suit.

The essence of Level 5 Leadership is captured in the stories of two leaders who embodied these qualities:

• Darwin Smith of Kimberly-Clark: As CEO, Smith transformed the company into a leading consumer paper products company, outpacing industry giant Procter & Gamble. Despite his accomplishments, he remained humble and focused on the company’s success.
• Colman Mockler of Gillette: Mockler successfully defended Gillette against multiple takeover attempts while significantly increasing the company's market value. His leadership was marked by a quiet resolve and a steadfast commitment to the company's long-term vision.

First Who, Then What

Good-to-great transformations begin by getting the right people on the bus and the wrong people off the bus before figuring out where to drive it. The key to making a good-to-great transition isn't setting the right objective; it's getting the right people on board. These people will determine the right direction for the company.

"The good-to-great leaders understood three simple truths. First, if you begin with 'who', rather than 'what', you can more easily adapt to a changing world. Second, if you have the right people on the bus, the problem of how to motivate and manage people largely goes away. Third, if you have the wrong people, it doesn’t matter whether you discover the right direction; you still won’t have a great company." – Jim Collins

This principle emphasizes the importance of assembling a team of talented and motivated individuals who are committed to the company’s success. Once the right people are in place, they will be able to identify and pursue the most important objectives.