{"id":5844,"date":"2019-12-24T16:42:04","date_gmt":"2019-12-24T20:42:04","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=5844"},"modified":"2022-03-17T15:57:32","modified_gmt":"2022-03-17T19:57:32","slug":"key-takeaways-from-good-to-great","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/key-takeaways-from-good-to-great\/","title":{"rendered":"9 Key Takeaways From Good to Great: In-Depth Guide"},"content":{"rendered":"\n<p>What are the key takeaways from <em>Good to Great <\/em>by Jim Collins? How does Collins believe good companies can <a href=\"https:\/\/www.shortform.com\/blog\/become-great\/\">become great<\/a> ones?<\/p>\n\n\n\n<p>We&#8217;ll cover the most important key takeaways from <em>Good to Great. <\/em>Whether you\u2019re an entrepreneur, a manager, or just an individual looking to improve, the concepts in <em>Good to Great<\/em> provide food for thought\u2014and spurs to action. You\u2019ll learn what it takes to be a \u201cLevel 5\u201d leader, why assembling the <a href=\"https:\/\/www.shortform.com\/blog\/building-a-successful-team\/\">right team<\/a> first is more important than having the right idea, and why you should be more like a hedgehog than a fox.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\">What Are the <strong>Key Takeaways from Good to Great<\/strong>?<\/h2>\n\n\n\n<p>Before we dive into the key takeaways from <em>Good to Great<\/em>, we need some context. What is <em>Good to Great<\/em> about?<\/p>\n\n\n\n<p>At a dinner Collins was attending in 1996, a McKinsey <a href=\"https:\/\/www.shortform.com\/blog\/what-does-a-managing-director-do\/\">managing director<\/a> pointed out a flaw in <em>Built to Last<\/em>, Collins\u2019s 1994 bestseller that explained how long-lasting companies achieved their success. The flaw was that the companies Collins studied were, for the most part, <em>always <\/em>unique\u2014they never had to make the leap from just good to great.<br><br><\/p>\n\n\n\n<p>Thus the idea for <em>Good to Great <\/em>was born: to study whether good companies can indeed become great companies and, if so, <em>how <\/em>they can. This led to the key takeaways from <em>Good to Great<\/em>.<br><br><\/p>\n\n\n\n<p>Over five years, Collins\u2019s team of 21 researchers reviewed close to 6,000 articles and generated over 2,000 pages of interview transcripts to determine whether and how companies can go from good to great.<br><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>9 Key Takeaways<\/strong> from Good to Great<\/h2>\n\n\n\n<p>In the process of analyzing and coding the various facets of the good-to-great companies and their comparisons, Collins and his team were clued into key concepts by a number of surprising differences.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Good to Great Key Takeaway #1: <\/strong>High-profile, celebrity CEOs brought in from the outside to whip a company into shape actually <em>hurt <\/em>a company\u2019s ability to transition from good to great.<br><br><\/li><li><strong>Good to Great Key Takeaway #2:<\/strong> \u201cStrategy\u201d\u2014that is, the formulation of a long-term plan of any kind\u2014didn\u2019t correlate with good-to-great. Both the good-to-great companies and the comparison companies had long-term strategies in place.<br><br><\/li><li><strong>Good to Great Key Takeaway #3:<\/strong> Technology was insignificant as far as <em>starting <\/em>a transition from good-to-great. It helps <em>hasten <\/em>a transformation, but isn\u2019t required for a transformation to begin.<br><br><\/li><li><strong>Good to Great Key Takeaway #4:<\/strong> Mergers and acquisitions were not a cause of greatness.<br><br><\/li><li><strong>Good to Great Key Takeaway #5:<\/strong> Good-to-great transformations weren\u2019t highlighted by a press release, announcement, rollout, or anything at all. Rather, they were the result of steady, dogged work that, to observers inside the company and out, seemed perfectly ordinary\u2014even <em>boring<\/em>.<br><br><\/li><li><strong>Good to Great Key Takeaway #6:<\/strong> The particular industry wasn\u2019t important: Some good-to-great companies specialized in unglamorous areas yet were able nevertheless to produce great results.&nbsp;<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p>So how did the good-to-great companies do it? Collins provides a tidy chronological diagram that details the companies\u2019 unique traits. The diagram constitutes one of the key takeaways from <em>Good to Great<\/em>.<br><br><\/p>\n\n\n\n<p><strong>Good to Great Key Takeaway #7:<\/strong> <strong>Buildup Phase<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>People<ul><li><em><a href=\"https:\/\/www.shortform.com\/blog\/jim-collins-level-5-leadership\/\">Level 5 Leadership<\/a>: <\/em>Good-to-great companies are led by \u201cLevel 5\u201d leaders\u2014personally humble but professionally driven executives.<\/li><li><em>The Right Team: <\/em>Having the <a href=\"https:\/\/www.shortform.com\/blog\/hiring-the-right-people\/\">right people<\/a> on board early pays dividends down the line.<\/li><\/ul><\/li><li>Thought<ul><li><em>Facts Over Fantasy: <\/em>Companies need to develop a culture where brutal truth is heard (but hope springs eternal).<br><br><\/li><\/ul><\/li><\/ul>\n\n\n\n<p><strong>Good to Great Key Takeaway #8:<\/strong> <strong>Breakthrough Phase<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em><a href=\"https:\/\/www.shortform.com\/blog\/hedgehog-concept\/\">Hedgehog Thinking<\/a>: <\/em>To think like a hedgehog, rather than a fox, is to develop a simple guiding concept for your organization.<\/li><li>Action<ul><li><em><a href=\"https:\/\/www.shortform.com\/blog\/culture-of-discipline-jim-collins\/\">Disciplined Culture<\/a>: <\/em>The organization from top to bottom needs to understand and adhere to the \u201cHedgehog Concept.\u201d&nbsp;<\/li><li><em><a href=\"https:\/\/www.shortform.com\/blog\/use-of-technology-in-business\/\">Tech Done Right<\/a>: <\/em>Good-to-great companies never latch onto new technology for its own sake. They use tech to <em>accelerate <\/em>transitions, not create them.<br><br><\/li><\/ul><\/li><\/ul>\n\n\n\n<p><strong>Good to Great Key Takeaway #9:<\/strong> To head off the notion that these features can be implemented or cultivated overnight, Collins and his team came up with the <strong>\u201cflywheel\u201d analogy<\/strong>. A heavy flywheel takes an enormous amount of energy to get going\u2014but once it\u2019s spinning, it only takes a small amount of energy to keep it turning or to increase<em> <\/em>its speed. Good-to-great companies achieve their key strengths steadily and doggedly; they stay patient in the confidence that, with the right cogs in place, the breakthrough will come. This is a key takeaway from <em>Good to Great<\/em>.<br><br><\/p>\n\n\n\n<p>The opposite of the flywheel is the \u201cdoom loop.\u201d A company that tries to revolutionize its strategy, culture, product, or process in one fell swoop is fated to fail.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Methods of Good to Great<\/strong><\/h2>\n\n\n\n<p>To understand why the key takeaways from <em>Good to Great<\/em> are so important, we need to understand how Jim Collins got his data. Collins\u2019s criteria for a good-to-great company was as follows:<br><br><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>A fifteen-year stock return at or below the general market return; followed by<br><br><\/li><li>A transition point; resulting in<br><br><\/li><li>Fifteen-year cumulative returns at least 3x the general market return.<br><br><\/li><\/ul>\n\n\n\n<p>The team chose fifteen years as the default scale for two reasons:<br><br><\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>It\u2019s long enough to rule out lucky breaks or one-offs; and <br><br><\/li><li>It exceeds the average CEO\u2019s tenure, thereby mitigating the singular effects of a particular leader.<br><br><\/li><\/ol>\n\n\n\n<p>Meanwhile, the team chose the 3x stock-return metric because it exceeded the returns posted by companies commonly thought of as great (Intel, Boeing, Walt Disney, etc.). <br><br><\/p>\n\n\n\n<p>Collins and his team found 11 companies that satisfied the criteria. The answer was <strong>yes: companies <em>could<\/em> go from good to great<\/strong>. This idea would influence the key takeaways from <em>Good to Great<\/em>. But how did these companies make the jump?<br><br><\/p>\n\n\n\n<p>To determine what set these 11 companies apart from their competition, Collins and his team compiled a list of \u201ccomparison companies.\u201d Each comparison company<br><br><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Competed in the same industry as its relative good-to-great company;<br><br><\/li><li>Possessed similar resources and opportunities as its good-to-great company; and<br><br><\/li><li>Featured a fifteen-year stock return at or below the general market return that <em>remained <\/em>at that level after the good-to-great company\u2019s transition point.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>The Companies<\/strong><\/h4>\n\n\n\n<p>To understand the key takeaways from <em>Good to Great<\/em>, let&#8217;s look at the companies Collins and his team studied. The 11 companies are listed below. Comparison companies are in parentheses, followed by the companies\u2019 industries.<br><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Abbott (Upjohn) \u2013 Health Care<\/li><li>Circuit City (Silo) \u2013 Retail<\/li><li>Fannie Mae (Great Western) \u2013 Financial Services<\/li><li>Gillette (Warner-Lambert) \u2013 Consumer Goods<\/li><li>Kroger (A&amp;P) \u2013 Retail<\/li><li>Nucor (Bethlehem Steel) \u2013 Steel<\/li><li>Philip Morris (R. J. Reynolds) \u2013 Tobacco<\/li><li>Pitney Bowes (Addressograph) \u2013 Business Services<\/li><li>Walgreens (Eckerd) \u2013 Pharmacy<\/li><li>Wells Fargo (Bank of America) \u2013 Banking\/Financial Services<br><br><\/li><\/ul>\n\n\n\n<p>In addition to direct comparisons with statically good companies, Collins and his team compared the good-to-great companies with companies that showed great results but couldn\u2019t sustain them over the fifteen-year window (\u201cUnsustained Comparisons\u201d). Those companies are:<br><br><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Burroughs \u2013 Business Services<\/li><li>Chrysler \u2013 Automotive<\/li><li>Harris \u2013 Aerospace and Defense (previously Business Services)<\/li><li>Hasbro \u2013 Toys\/Entertainment<\/li><li>Rubbermaid \u2013 Manufacturing<\/li><li><a href=\"https:\/\/www.shortform.com\/blog\/teledyne-henry-singleton-the-outsiders\/\">Teledyne<\/a> \u2013 Conglomerate (Electronics, Aerospace and Defense)<\/li><\/ul>\n\n\n\n<p>Once Collins and his team had determined the good-to-great companies and their comparisons, they compiled and coded material related to each company\u2019s strategy, technology, leadership, culture, compensation structure, and management turnover. They also conducted interviews with the executives who presided over the various companies at the transition point.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What are the key takeaways from Good to Great by Jim Collins? How does Collins believe good companies can become great ones? We&#8217;ll cover the most important key takeaways from Good to Great. Whether you\u2019re an entrepreneur, a manager, or just an individual looking to improve, the concepts in Good to Great provide food for thought\u2014and spurs to action. You\u2019ll learn what it takes to be a \u201cLevel 5\u201d leader, why assembling the right team first is more important than having the right idea, and why you should be more like a hedgehog than a fox.<\/p>\n","protected":false},"author":4,"featured_media":5886,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45],"tags":[67],"class_list":["post-5844","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-good-to-great","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>9 Key Takeaways From Good to Great: In-Depth Guide - Shortform Books<\/title>\n<meta name=\"description\" content=\"What are the key takeaways from Good to Great? 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