Good to Great Summary

Jim Collins

Good to Great

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Good to Great Summary

SuperSummary, a modern alternative to SparkNotes and CliffsNotes, offers high-quality study guides that feature detailed chapter summaries and analysis of major themes, characters, quotes, and essay topics.  This one-page guide includes a plot summary and brief analysis of Good to Great by Jim Collin.

Jim Collins’s work of nonfiction Good to Great: Why Some Companies Make the Leap…and Others Don’t far outsold the typical business oriented book with millions of copies in print. It did this by appealing to the mainstream and not just the business community. In it, Collins explains how some companies that are “good” become “great” and why others do not make that leap. “Great” is not used by Collins as a simple synonym for “wonderful” or “superb,” but refers to financial performances that outstrip the average performance of other companies over the same time. Collins offers that a company becomes “great” by using a narrow focus to concentrate the company’s resources. A likely reason for the book reaching a diverse audience is that Collins does not believe his theories are exclusive to the business world. His concept of “good to great” can be applied to any type of organization and to the lives of individuals.

In Good to Great, Collins cites eleven companies that began on par with the prevailing market and became great by achieving major increases of at least three times that of the market average across a fifteen-year period. The use of the word “great,” since largely quantified by specific numerical values, is far less a subjective term than common conversational usage would suggest. The first chapter, “Good is the Enemy of Great,” explains the criteria Collins used in choosing companies to analyze in the book. Some of those included among the eleven were Gillette, Fannie Mae, Circuit City, Walgreens, Kimberly-Clark, and Wells Fargo. Business factors, such as the salary levels of CEOs, mergers, and technology, were insignificant in supporting the move from good to great, while three main areas emerged as the most important factors: disciplined people, disciplined thought, and disciplined action.

In the next chapter, he cites what he refers to as Level 5 leadership as a common factor in great companies. This is the top level of a five-level hierarchy of leadership on a spectrum that runs from competent supervision to strategic, executive level decision-making. Leaders at this level feel personally invested in the company and are highly determined while remaining humble. The future of the company to them is more important than personal gain and ego stroking. In the third chapter, “First Who, Then What,” the focus is on the basic concept of “the right man for the right job” and contends that the move from good to great is helped by increased focus on the recruitment and hiring activities of the company.

In chapter four, Collins talks about the need for companies to recognize and adapt to changes in the markets in which they operate. He presents this as a four-step process. First, it is important to begin with a focus on questions, not answers. Next, use conversational methods, such as dialogue and debate rather than force or intimidation, to deal with situations. The third step involves examining situations a company finds itself in and dissecting them to understand them without regard to blame. Finally, put into place early warning signals to flag information that should not be ignored. The subsequent chapter, “The Hedgehog Concept,” symbolically uses the paradoxical nature of the hedgehog to show that greatness can stem from simplicity. When a hedgehog is threatened in its environment, rather than attack or flee, it rolls itself into a ball. Collins applies this to his theory of good to great by suggesting that rather than trying to do many things well, it can be more beneficial to do one particular thing better than everyone else. He outlines three steps to make this concept work. First, determine what the company, or individual can be the best in the world at, and what he cannot be the best at. Next, figure out what the economic incentives are, and finally, determine what one is most passionate about. The sixth chapter discusses “A Culture of Discipline” or, developing a system in which people are driven by inner determination. “Discipline” is not meant to imply creating an oppressive authoritarian-like environment. Disciplined workers will be more prepared to adapt to the changes and challenges and still maintain a self-investment in the company.

In chapter seven, Collins warns that there is a danger in turning to technology as a cure for problems in a company. In continuing its quest from good to great, a company should apply caution and consideration with respect to technology in the same manner it does with all business decisions. Successful companies use the same selective approach to technology as they do in determining what they are best at. They focus only on the technologies that are compatible with their guiding strengths and the objectives they have established. Chapter eight talks of two cycles that show how business decisions tend to establish a trend that either advances a company toward greatness or retards its progress. He calls this a “flywheel” effect, which determines the direction in which a company’s momentum will progress. The final chapter explains that a company must have a set of core values in order to maintain success over a long period. A company must have an objective that goes beyond simply maximizing profits if it is to become great. What that objective is can be very specific or somewhat ambiguous. What is important is that all members of the company team share a dedication to a common set of values.