Book Review: “Good to Great,” by Jim Collins

"Good to Great" by Jim Collins offers many classic concepts that have helped me through my career. The concepts are not necessarily surprising, but they are backed by the evidence of a scientific study.

Great companies are set apart from good businesses by focusing on disciplined people, disciplined thought, disciplined action and the flywheel. It wasn't too surprising to read that a great organization must first be led by a great leader. Collins describes the five levels of leadership, with Level 5 leading for the good of the company and not for self-interest. Interestingly, many Level 5 leaders attribute their success to good luck.

What's next? Getting the right people on the bus, of course. And just as importantly, getting the wrong people off the bus. You can't ask where we are going or what we are doing until the right people are on the bus. Collins quoted one Wells Fargo executive: "The only way to deliver to the people who are achieving is to not burden them with the people who are not achieving."

Only then can a company create an environment where the team feels comfortable to be brutally honest and have the opportunity to be heard. The Stockdale Paradox is that you must retain faith that you will prevail in the end, regardless of the difficulties, and at the same time, you must confront the most brutal facts of your current reality, whatever they may be. Collins found that spending time and energy trying to motivate people is a waste of effort. The right people will be self-motivated.

Are you a hedgehog or a fox? This is an interesting essay which grew into Collins' Hedgehog concept. This concept helps organizations understand their core business. Now that KLG Engineering is in its fifth year, I've been thinking a lot about our core business and what will that look like over the next five years.

Collins then notes the importance of discipline. He states, "Most companies build their bureaucratic rules to manage the small percentage of wrong people on the bus, which in turn drives away the right people on the bus, which increases the need for more bureaucracy to compensate for incompetence and lack of discipline, which then further drives the right people away, and so forth." Business owners must avoid this bureaucracy and create a culture of discipline, instead. Organizations should create a "stop doing" list. Unplug all of the extraneous junk and stay disciplined.

The final part of the link is technology. Collins was surprised to learn that the majority of great executives did not mention technology as one of the top factors of being a greater business. Technology is certainly important, but it was not the primary cause of the businesses going from good to great.

When a business gets all of these concepts perfected and continues in a persistent effort one year after another, the momentum becomes great, like a flywheel. Then there is a breakthrough. The good to great companies did not have one single defining action. They became great with the turn of the flywheel, which "adds up to sustained and spectacular results."

Regardless of our business, I think we can all relate to these important concepts and agree disciplined people, disciplined thought and disciplined action will prove successful results. In my experience, it's rare to have all of these concepts come together within one organization. We either have a great team or a great strategy or a great leader, but very rarely do we see all of the concepts and discipline working together at the same time. As a business owner, I strive for Collins' description of a great company. As KLG Engineering continues to grow, I will continue to focus on implementing these concepts.