GOODTOGR8CHAPTERWISE

8/6/2019 GOODTOGR8CHAPTERWISE

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Chapter 1: Good is the Enemy of Great

The first chapter of the book lays out the criteria that Collins and his research

team used in selecting the companies that served as the basis of the meta -

analysis that provided the findings set forth in the book. The most important

factor in the selection process was a period of growth and sustained success that

far outpaced the market or industry average. Based on the stated criteria, the

companies that were selected for inclusion were Abbott, Fannie Mae, Circuit

City, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney

Bowes,Walgreens, and Wells Fargo.

Collins also offers a few of the most significant findings gleaned from the study.

Of particular note are the many indications that factors such as CEO

compensation, technology, mergers and acq uisitions, and change management

initiatives played relatively minor roles in fostering the Good to Great process.

Instead, Collins found that successes in three main areas, which he terms

disciplined people, disciplined thought, and disciplined action, we re likely the

most significant factors in determining a companys ability to achieve greatness.


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Chapter 2: Level 5 Leadership

In this chapter, Collins begins the process of identifying and further explicating

the unique factors and variables that differentiate good and great companies.

One of the most significant differences, he asserts, is the quality and nature of

leadership in the firm. Collins goes on to identify "Level 5 leadership" as acommon characteristic of the great compan ies assessed in the study. This type

of leadership forms the top level of a 5-level hierarchy that ranges from merely

competent supervision to strategic executive decision-making.

By further studying the behaviours and attitudes of so -called Level 5 leaders,

Collins found that many of those classified in this group displayed an unusual

mix of intense determination and profound humility. These leaders often have a

long-term personal sense of investment in the company and its success, often

cultivated through a career-spanning climb up the companys ranks. The

personal ego and individual financial gain are not as important as the long -termbenefit of the team and the company to true Level 5 leaders. As such, Collins

asserts that the much-touted trend of bringing in a celebrity CEO to turn around

a flailing firm is usually not conducive to fostering the transition from Good to

Great.


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Chapter 3: First Who, Then What

The next factor that Collins identifies as part of the Good to Great process is thenature of the leadership team. Specifically, Collins advances the concept that

the process of securing high-quality, high-talent individuals with Level 5

leadership abilities must be undertaken before an overarching strategy can be

developed. With the right people in the right positions, Collins contends that

many of the management problems that plague companies and sap valuable

resources will automatically dissipate. As such, he argues, firms seeking to

make the Good to Great transition may find it worthwhile to expend extra

energy and time on personnel searches and decision -making.

Collins also underscores the importance of maintaining rigorousness in all

personnel decisions. He recommends moving potentially failing employees and

managers to new positions, but not hesitating to remove personnel who are not

actively contributing. He also recommends that hiring should be delayed until

an absolutely suitable candidate has bee n identified. Hewing to both of these

guidelines, Collins claims, will likely save time, effort, and resources in the

long-term.


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Chapter 4: Confront the Brutal Facts (Yet Never Lose Faith)

Another key element of some companies unique ability to make the transition

from Good to Great is the willingness to identify and assess defining facts in the

company and in the larger business environment. In todays market, trends in

consumer preferences are constantly changing, and the inability to keep apace

with these changes often results in company failure. Using the example of an

extended comparative analysis of Kroger and A & P, Collins observes that

Kroger recognized the trend towards modernizati on in the grocery industry and

adjusted its business model accordingly, although doing so required a complete

transformation of the company and its stores. A & P, on the other hand, resisted

large-scale change, and thus guaranteed its own demise.

Collins outlines a four-step process to promote awareness of emerging trends

and potential problems: 1) Lead with questions, not answers; 2) Engage in

dialogue and debate, not coercion; 3) Conduct autopsies without blame; and 4)

Build red flag mechanisms that turn information into information that cannot be

ignored.


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Chapter 5: The Hedgehog Concept (Simplicity Within the Three Circles)

In this chapter, Collins uses the metaphor of the hedgehog to illustrate the

seemingly contradictory principle that simplicity can sometimes lead togreatness. When confronted by predators, the hedgehogs simple but

surprisingly effective response is to roll up into a ball. While other predators,

such as the fox, may be impressively clever, few can devise a strategy tha t is

effective enough to overcome the hedgehogs simple, repetitive response.

Similarly, Collins asserts, the way to make the transformation from Good to

Great is often not doing many things well, but instead, doing one thing better

than anyone else in the world. It may take time to identify the single function

that will be a particular firms "hedgehog concept," but those who dosuccessfully identify it are often rewarded with singular success. In order to

help expedite this process, Collins suggests using the following three criteria: 1)

Determine what you can be best in the world at and what you cannot be best in

the world at; 2) Determine what drives your economic engine; and 3) Determine

what you are deeply passionate about.


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