This month’s book is a modern classic in leadership, Jim Collin’s Good to Great. He assembled a research team and spent several years seeking to answer the question, “what does it take to move an organization from good to great?” He looked at years of stock market history and found eleven company whose performance was fairly flat for a decade and then reached a pivot point where their growth beat the overall market by at least 2.5x for a period of over 15 years. These companies are: Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and Wells Fargo (although a few of these companies have since faltered, the principles still stand). He established comparisons companies in each of the industries of the “good to great” companies, conducted thorough interviews and pinpointed what each of these companies had in common that really made them great.
Here are some of the main points:
- Level 5 Leadership – Many companies have effective leaders but to really have sustained performance, the leaders need to display humility. Level 5 Leaders put their ego aside and give credit to their team. In short, they build a company that will survive without them.
- First Who, Then What – Before each company transitioned into greatness, they worked hard to assemble a great team: they got rid of the people holding the company back and got the right, committed people on the bus. After they had a great team, then they figured out where they were going.
- Confront the Brutal Facts (Yet Never Lost Faith) – Many of the comparison companies had leaders who were surrounded with “yes men” and didn’t have a strong sense of where they really stood. Great companies had a clear understanding of the market, where they stood, and what they needed to do strategically going forward.
- The Hedgehog Concept (Simplicity within the Three Circles) – Great companies focused on the overlapping of three area: what they are passionate about, what drives their economic engine, and what they can be the best in the world at. For many of the companies, this meant giving up some opportunities so that they could narrow their focus on other opportunities.
- A Culture of Discipline – Some companies spend a lot of time trying to motivate employees in order to get them to perform. Great companies found employees who were already disciplined, which enables them to have the latitude and freedom to try innovative ideas.
- Technology Accelerators – Great companies don’t relay on technology to succeed; they succeed because of their principles and objectives. Technology is merely a means to help them achieve their goals objectives.
- The Flywheel – Great companies don’t become great overnight; they take years to build momentum. It’s usually not a matter of making a few big changes but rather many small changes that move the ship in the right direction. After they have built momentum, the companies tends to perform organically on their own without having to be strongly forced.
This book is an interesting read for anyone looking to improve their organization or their own personal performance. I highly recommend it.