Good to great
Why some companies make the leap... and others don`t
Learn how to establish or take an already existing good company and make it great, with some easy to follow principles and guidelines explained in this book.
Good to great – why some companies make the leap..and others don’t, written in 2002 by Jim Collins and a group of scientists.
Jim and the scientist did a 5 years study, with a lot of interviews with top leaders in different companies, analyzed the data collected, and come down to 11 companies they called good to great (GTG) companies, these companies turned around an average stock development to an extraordinary development for at least 15 years.
What they found, that turned good companies to great companies is shared in this book. The main found is: have a great leader, hire the right people, and follow your H-concept.
All the GTG-companies had the leader of the highest caliber, level 5. (a level hierarchy designed by Jim and co), and some of the character traits were repeated for all the top-level leaders.
The level 5 leaders weren’t superstars or high profile celebrity leaders with a big ego, They were modest but determined, humble, and fearless and with an unwavering will to do what was necessary, and they did not cope well with mediocrity. They never let their own self-esteem get in the way of the company’s ambitions, they took the blame when things went badly when things went well, they pointed to the employees and gave them all the honor and glory.
Get on the bus
The second big point in the book is to hire the correct people, perhaps self-explanatory, but still an important part. The GTG companies didn’t necessarily know in which direction the company would go, but one thing they did was to hire the right people, and more importantly, they got rid of the wrong people.
The “right people” are, not necessarily people with top grades and a lot of skills, skills can be learned, but character traits like work ethic, intelligence, dutiful and a passion for what they do(don’t have to be passion for work , just something they are really passionate about). If you meet someone like that you should hire them, even though you don’t have a specific job for them in mind.
Because the right people don’t need to be strictly controlled or incited, they are self-motivated by their inner desire to achieve as good results as possible and help create something outstanding.
you can look at it as a bus with lots of people, you need to get the right people on the bus and the wrong people of the bus, when that is done you can point out a destination for where the bus will go.
Get the right people on the bus and get the wrong people off
The fox knows many things, but the hedgehog knows one thing.
The H-concept is a simple, crystal clear concept that is based on a deep understanding of the overlap between the following three rings (see picture)
- Understand your company, really understand it, and know what the people you hired there are capable of, with this understanding you can figure out what the company can be best in the world at, and as important, what the company cannot be best at.
- What drives one’s finances. All the GTG companies gained sharp insight into how the most efficient could create lasting and robust profitability.
- What one is passionate about. The GTG companies focused their energy on the activity that ignited their passion.
If you can steer towards the overlap zones (see picture) between these three rings and turn that overlap into a simple, crystal clear concept, then you have an H-concept.
An example from 1960, when Abbot understood that they couldn’t be the world’s best pharmaceutical company, even though it accounted for 99% of the company’s revenue, they had fallen too far behind the competition. They confronted the brutal facts and shift all of their focus to creating a product range that contributed to cheaper health care, primarily food for use in hospitals, diagnostic aids, and consumables for hospitals. This resulted in huge growth and earnings.
Even if you may not be a level 5 leader, you can still hire the right people, and get rid of the wrong once, you can analyze the company and find out exactly what this company can be best at, and what you and the employees are passionate about, at the same time as you make good money.
Don’t be a fox, be a hedgehog !