Good to Great: Summary and Key Takeaways

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This is another book that doesn’t necessarily strike you as a great resource for finding your purpose. It’s a business book, great for managers and CEOs who want to optimize their team to go from, you guessed it, good to great.

Jim Collins is, himself, a businessman. Though he is now known as a researcher, speaker and consultant for business. His research into various companies that succeeded, as well as those that didn’t, form the basis for this book and many of the others that he has authored.

So what does this book have to do with finding your purpose? Well, it is mostly related to the “hedgehog concept” which is a theory we will get to in a bit. But suffice it to say that if you follow these concepts, even though they are originally created for businesses, they will work for your personal life as well.

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So let’s talk about the core ideas from Good to Great.

What Doesn’t Lead from Good to Great

Jim Collins took a look at many different businesses and how they grew, comparing different elements that might or might not factor into their success. What he found is that many aspects of the business that conventional wisdom says matters, actually don’t. Here are a few examples:

  • Example #1: When companies brought in a CEO from another company, particularly a successful CEO, in order to “whip the company into shape”, this did not actually result in an improved company. In fact, it actually hurt their chances of going from good to great. Creating a great company does not happen from the outside.
  • Example #2: We often hear about the importance of strategy, a.k.a. a long-term plan toward success. Turns out there is no correlation between this and companies that go from good to great. That’s not to say that strategy isn’t important, because all of the major companies tested for this book had them, it just means that it is not a determining factor of success.
  • Example #3: Technology is not an important part of beginning the transition from good to great. Technology isn’t important in itself, and it is definitely not a good idea to hop on the hype train just because something looks good. However, when used correctly, it can accelerate the transformation from good to great, as long as the company understands how a particular technology or trend can aid its growth.
  • Example #4: When a company merges with or acquires another company, that is not a factor in greatness.
  • Example #5: Making the transition from good to great happened at a steady pace. The transition was never highlighted with any kind of fanfare such as press releases, announcements, integrated rollout programs, etc. It happens in a much more “boring” way.
  • Example #6: Good-to-great transformations can happen in any industry. They are not exclusive to any one type of business. On the contrary, some businesses are able to thrive even in “unglamorous” arenas. The industry does not matter.

So how can we apply this to us? One of the core themes here is that going from good to great doesn’t happen from outside influences, nor does it depend on what you do.

Instead, it has more to do with what happens internally. Most change in our daily lives occurs because of a mindset shift; if we change ourselves, we can change the world we live in.

What DOES Lead from Good to Great?

Jim Collins outlines a couple of things that companies did in order to go from good to great.

  1. Leadership: Good-to-great companies are led by what Collins calls “Level 5” leaders. These are leaders that have ambitious goals and are highly driven to reach those goals, but personally are very humble individuals.
  2. The Team: When just starting out, these companies boast a team of the right professionals. Having a highly qualified team that is unified in pursuing the company’s “why” is an essential factor for companies that want to go from good to great.
  3. No BS: Good to great companies are not led by leaders who ignore the advice of those beneath them. Instead, the company needs to establish a culture where the brutal truth can be voiced, and anyone has the opportunity to do so. That said, they must also be able to maintain hope for the future and understand that they can accomplish the company’s mission, otherwise the brutal truth will just lock the company down.
  4. The Hedgehog Concept: We’ll cover this more below, but companies that go from good to great often have a clear understanding of what their company does. This goes deeper than just understanding the “what” of the job, but understanding the “why”, as well as other simple guiding concepts for the business.
  5. A Culture of Discipline: In addition to understanding the company’s hedgehog concept, everyone within the organization needs to understand their place in it and work hard to make the dream a reality.
  6. The Right Technology: A company never uses technology for technology’s sake. Instead, these companies use the right technology to accelerate their growth rather than create it.
  7. The Flywheel: Collins compares the good-to-great process to a flywheel. It can take an enormous amount of energy to get it going, and the buildup is slow. But once it’s going, it takes very little effort to keep it spinning or to increase speed. Likewise, building a great business is a long and slow process, but one that pays dividends later on.
  8. Built to Last: In order to be great and stay great, a company must be built to last. They do this by focusing on core values and a purpose that is beyond just making money. If your focus is making money, you will eventually find yourself pursuing avenues that are not beneficial to the company as a whole.

Once again let’s ask, how can we apply this in our own life?

If you do not run a business or work as a manager, you can still use these principles. You can learn to be humble yet still have ambitious goals. You can learn to understand your “why”. You can keep yourself from delusions of grandeur by not allowing BS into your life.

But the most important application here is…

The Hedgehog Concept

What is the hedgehog concept? The hedgehog concept is a way of narrowing down a company’s purpose, and it is often displayed as a Venn diagram that should be very familiar to those looking to find their own purpose.

This is an intersection of three circles labeled with the following:

  1. What are you deeply passionate about?
  2. What can you be the best in the world at?
  3. What drives your economic engine?

Let’s take a look at each of these

What are you deeply passionate about?

First, you need to be deeply passionate about what you do, in business as in life.

This is common in almost every other Venn diagram others have built to help find purpose. It’s that thing that lights us up inside, the thing we are interested in.

If you are not interested in something, then why are you spending time with it?

Furthermore, this has to be something you were “deeply passionate” about. Because when you are deeply passionate, you are willing to go through some hard times in order to pursue that dream. This is a founding principle at the core of the concept of passion.

What can you be the best in the world at?

This goes along with many other circles you see in other Venn diagrams, though it is usually spelled out as “what are your skills?”

I love that this version phrases it this way: what can you be the best at?

This goes along with what I talked about in my review of Bo Eason’s book, There’s No Plan B for Your A Game. It’s not just about having skills. It’s looking at what you can be the best at. What is something that only you can do to its fullest? What is your calling?

What this also implies is that you don’t necessarily need skills to fill this circle. You can be determined to gain the skills that you need and be the best at something, even if you are not particularly talented yet.

What drives your economic engine?

In order for your business to thrive it must have a practical element, i.e. something people will pay you for.

This goes along with some models for finding your purpose which suggest that you need to make money at the thing that you pursue. I don’t always agree with this, as I believe that there is almost always a niche of people that will pay you for whatever it is you’re passionate about.

That said, if you are running a business, which is the central idea of this book, it is definitely a factor you need to consider. There are many things that people are passionate about that simply won’t make good businesses.

Notably absent from this Venn diagram is another circle commonly found in these models, that of service to the world. What can you do to benefit the world in some positive way?

While that is not part of this specific model, it is something that can be combined with what you are deeply passionate about, or what you can be the best in the world at. But it is something that shouldn’t be forgotten, even though it is not part of the hedgehog concept. That said, Jim Collins does address it in other areas of his book. You can’t have a sustainable business if all you want to do is make money.