Good to Great by James C. Collins (2001, Hardcover, Illustrated)

Jim Collins’ book, “Good to Great” is a summarization of 6 months of research and analysis of numerous companies’ financial data’s. After the research was completed Collins’ team discovered 11 companies that have exhibited various accomplishments to earn themselves a title of a “Good to Great” company. These companies’ stock returns were, all at one time, at or below the markets’. They then experience a growth until they registered stock returns three times that of the market, and were able to sustain this success for at least 15 years. These 11 exceptional companies where then compared to other companies in the same industry, that had the same or similar opportunities and had access to comparable resources. The bulk of the text is a synopsis of the concepts that enabled the good to great companies to achieve and sustain their success.
The first concept is leadership. Collins uses levels to identify the better leaders. The highest level, 5, are leaders that display modesty, have the interests of the company ahead of their own. They are not flamboyant and focus on setting up successors for future success. They have a need to sustain results, will do whatever it takes to achieve greatness and look to themselves in failure.
The next concept is “first who then what.” This concept explains how the good to great companies went out and found “good” people and got rid of the “bad” people, before discovering their core competency. These companies always used their best people for the biggest opportunity, instead of the biggest problem. Collins makes the comparison of companies with genius leaders who are surrounded by incompetent workers and cannot get anything done or done properly
Another difference between the good to great companies and the others, are that the good to great companies were able to “confront brutal facts.” They understand their industries and realized they have problems and limitations that would hinder them from accomplishing various things; whether it is money, people or opportunity. Collins uses the example of A&P, who at one time were the second largest company in the country. A&P’s leaders did not face the fact that their industry was changing, because of greater demands for super stores, like Wal-Mart. Wal-Mart made the move, while A&P did not and the rest is history.
For the “hedge hog” concept, Collins uses an insightful analogy of a hedge hog and a fox. The fox is never focused, when he sees another animal, he attacks, without hesitation or study. The hedge hog is focused and never leaves his burrow unless necessary and with proper defences. The good to great companies, or the hedge hogs, are focused on their issue. They ask themselves three questions; 1. What can we be the best in the world at? 2. What are we deeply passionate about? 3. What drives our economic engine? These three questions, which Collins calls the three “circles,” were the basis of which the good to great companies decided on what they would focus on. To ensure that the company’s people would follow these three circles, the good to great companies all show a strong culture of discipline. This does not mean; a tyrant disciplinarian. Rather it means; after getting “good” people, they themselves are guided by the consistent system of the three circles and operate freely within them.