PDF Summary:Good to Great, by Jim Collins

In Good to Great, former Stanford business professor Jim Collins offers a primer on turning the average into the exceptional. Through detailed case studies of 11 companies that went from tracking the market to exceeding it by at least 3x, Collins presents the key factors that separate merely good organizations from great ones—from rare leadership to disciplined thinking to the dogged pursuit of a core mission.

Whether you’re an entrepreneur, a manager, or just an individual looking to improve, the concepts in Good to Great provide food for thought—and spurs to action. You’ll learn what it takes to be a “Level 5” leader, why assembling the right team is more important than having the right idea, why you should be more like a hedgehog than a fox, and why “stop doing” lists are as important as “to do” lists. We’ll also revisit the companies that Collins included in his research and compare his ideas to those of other business and leadership experts.

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3. Unearthing and Facing Facts

Collins says the third principle that makes good-to-great companies successful is that leaders are unflinching in the face of facts, no matter how dire—leaders remain stoic yet hopeful, and realistic without turning cynical. Collins adds that in order to respond to facts in this way, leaders cultivate a culture in which facts can be discovered and expressed without fear of reprisal or blame.

(Shortform note: In Principles, Ray Dalio says you might deny the facts and shut yourself off from self-reflection because you want to protect your ego—your underlying desire to be seen as capable. This leads to spontaneous, emotionally driven reactions, rather than well-thought-out decisions. You might also see the world through your own biased lens, causing you to have blind spots. To get over these two hurdles, Dalio says you should be totally receptive to the possibility that others might see something better than you. You must also create a culture that refuses to compromise the truth to skirt people’s egos and emotions.)

For example, in the 1970s, Kroger and A&P were well-established grocery companies that were similarly positioned to take advantage of a new customer demand for a one-stop shopping experience. But whereas Kroger saw the demand for “superstores”—establishments that sold conventional groceries as well as prepared foods and nutritional supplements—and overhauled all their stores, A&P stayed the course. Over the 15-year period that Collins and his team evaluated, Kroger generated 80 times the returns of A&P. Collins says A&P had the facts: It rolled out an experimental superstore that was a success, but management chose to stick to what worked for the company in the past rather than adjust to a changing marketplace.

(Shortform note: A&P’s decision to keep doing what they were doing was partly driven by a phenomenon called groupness, the instinct to form in-groups and view outsiders with suspicion. Psychologists say that we naturally defend our group—sometimes by dismissing information, practices, or culture that comes from others. This tendency gets even stronger when a group works hard toward a goal and succeeds, reinforcing its boundaries and heightening its resistance to outside ideas. It comes into play in harmful ways not only in business—as A&P demonstrated by dismissing outside information—but also in science and nature.)

How to Achieve It

With the right management team—one comprising sharp, critical thinkers—the facts should never be in short supply. Collins says leaders can encourage truth-telling by:

1) Beginning meetings with questions, not answers. Leaders should ask their team tough questions to unearth information and insight. (Shortform note: What questions should you ask your team? Research reveals the five kinds of questions to help you unearth information and insight, and make better decisions. The first is integrative, which gives you a full picture of your situation. The second is speculative, which helps you think creatively. The third is productive, which clarifies the resources you have to help you move forward. The fourth is interpretive, which allows you to dig deeper into a problem and its implications. The fifth is subjective, which reveals your team’s feelings and opinions.)

2) Cultivating, rather than stifling, debate among the team. Collins says that some executives solicit input from their team just to give them a sense of being heard, even though they’re determined to pursue the direction they already had in mind. He says leaders should instead encourage dissent that has real implications on company strategy.

(Shortform note: In Principles, Dalio details the two practices that ensure healthy debate within his company. The first is thoughtful disagreement, which he describes as being open to other viewpoints and moving a conversation in a useful direction. He emphasizes that your goal is not to prove you’re right, but rather to find out which view is right and decide what to do about it. The second practice is fostering an environment where the best ideas win, no matter what the source. However, he concedes that you should give more weight to the opinions of people who are more credible in an area.)

3) Analyzing mistakes without assigning blame. Collins says evaluating failures in this way ensures that the same errors aren’t made twice.

(Shortform note: To evaluate failures with a level head, reframe how you see them. In Right Kind of Wrong, Amy Edmondson says you should see them not as a cause for shame or punishment but simply as results that differ from the desired outcome. She adds that to develop a healthy relationship with failure, you need three things: resilience—the ability to push through embarrassment and frustration, and keep trying after a setback; accountability—recognizing and admitting to your role in a failure; and reflection—examining your failures so you can learn from them and view them as opportunities. Leaders who model this behavior and candidly discuss their own mistakes will encourage others to do the same.)

4. Thinking Like a Hedgehog

Collins says the fourth principle behind good-to-great companies is hedgehog thinking. He explains that people can be divided into foxes and hedgehogs: Foxes know many things and see the world in all its complexity, whereas hedgehogs know one big thing and order the world according to that thing. Leaders of good-to-great companies think like a hedgehog. (Shortform note: Some experts argue against rigidly adhering to hedgehog thinking. They reason that hedgehogs are single-minded and determined, but foxes are agile—they’re more attuned to uncertainties and more readily adapt to a fast-changing environment. Thus, you should adjust your approach to the situation, or even try to be both a fox and a hedgehog at the same time.)

Collins adds that good-to-great leaders develop a “Hedgehog Concept”—an elegant, easy-to understand guiding philosophy based on facts—that the company adheres to fanatically. (Shortform note: Collins’s Hedgehog Concept is similar to the Japanese concept of ikigai, or a person’s reason for being. In Ikigai & Kaizen, Anthony Raymond explains that it combines four elements: what you love doing, what you’re good at or willing to become good at, what benefits others, and what can make money. While ikigai is meant for your personal purpose, you can apply the idea to an organization by considering the company’s intrinsic motivation, its core competencies and resources, and the needs of the market.)

For example, Walgreens’ concept was to build the most convenient drugstores with the highest profit per customer visit in the industry. Once that was established, they built stores on corners rather than midblock, clustered stores in high-traffic areas, provided drive-through pharmacy services, and added highly profitable services like one-hour photo development. In contrast, its competitor Eckerd had no unifying concept for growth and even tried getting into the home-video industry, eventually leading to its collapse.

(Shortform note: Walgreens has since been in decline, with billions of dollars in losses and 1,200 stores shuttered in 2024. As of 2025, it was also set to be taken off the US stock market after 98 years. But unlike Eckerd, its downfall wasn’t caused by a lack of a unifying concept; rather, experts say it’s a combination of factors, including losses due to theft, poor acquisitions, and shrinking profits as a result of competition as well as stricter insurance requirements.)

How to Achieve It

Collins says you can derive your company’s Hedgehog Concept from the answer(s) to three questions:

Question 1: What can you do better than anyone else in the world? Collins says that if you can’t be the best in the world in a particular area, even if it’s your core business, then it can’t be part of your Hedgehog Concept.

(Shortform note: To help you determine if you can become the best in a particular area, use your most formidable competitor as a benchmark. In Playing to Win, A.G. Lafley and Roger Martin say you should ask: “What are they doing that I’m not? How are they serving people better than I am? How can I overtake them?” Note that your strongest competitor might not be the most obvious one. For example, if you’re running a tech startup, your direct competitor in the beginning likely isn’t Google—it might be a much smaller company that’s targeting the same section of the market as you.)

Question 2: What’s your economic engine? Good-to-great companies have sharp insight into the fundamental economics of what aspect of their business will drive profits. The ones in Collins’s research formulated a single economic denominator, such as “profit per X,” and aligned their strategy around that ratio. The challenge was to define the correct X to produce the correct strategy.

(Shortform note: Collins’s economic engine identifies the long-term driver of profitability for a mature company. But if you’re running a startup, consider identifying short-term indicators that reflect whether your company is learning and progressing toward a sustainable model. In The Lean Startup, Eric Ries says you should identify actionable metrics, which are the true drivers of a company’s growth and guide product development, customer acquisition and business viability. He warns against using vanity metrics—like total users or downloads—which look impressive but don’t meaningfully predict future success.)

For example, while banks used to focus on profit per loan, Wells Fargo changed tack in the era of deregulation and focused on profit per employee. (Shortform note: While this approach was successful during Collins’s research period, it may have contributed to the Wells Fargo cross-selling scandal in 2013: Bank employees, under pressure to meet aggressive sales targets, created millions of fake accounts for customers without their consent.)

Question 3: What are you passionate about? Collins says good-to-great companies certainly want to maximize profits, but they also choose opportunities that inspire their people. (Shortform note: In Built to Last, Collins and Porras write that visionary companies are able to maximize profits while pursuing other objectives. This is because they don’t limit themselves with the view that they must choose between seemingly contradictory choices A or B. Instead, they figure out how to have A and B. For example, they don’t choose between change or stability, or investing in the long-term or doing well in the short-term; they find a way to achieve both.)

5. Maintaining Discipline

The fifth principle behind good-to-great companies is that they create and maintain discipline, meaning they constantly refer to and consistently realize their Hedgehog Concepts. Collins contends that rigorous adherence to a Hedgehog Concept saves companies from panic acquisitions or misguided projects. (Shortform note: In Great by Choice, Collins and Morten T. Hansen looked at another set of high-performing companies and found that they had a disciplined, consistent approach to progress. Even, or especially, during tough times—economic downturns, market turbulence, or unexpected crises—these companies hit their targets. They resisted the temptation to overreach in good times or to cut back too drastically in bad times.)

Collins clarifies that discipline does not mean a tyranny presided over by the executive. Rather than having an executive who imposes and enforces discipline, good-to-great companies have a culture of discipline permeating the organization. With a solid understanding of the company’s Hedgehog Concept, individuals can police themselves and make sound decisions without layers of bureaucracy.

(Shortform note: In order for employees to have a solid understanding of the company’s Hedgehog Concept, you need to give them enough information. In No Rules Rules, Netflix cofounder Reed Hastings says a company should have a culture of radical transparency, making sensitive information such as financial data available to all employees. With access to relevant information, employees can then operate more autonomously—making decisions, taking risks, and taking ownership of the consequences without having to seek approval from higher-ups.)

How to Achieve It

Collins says you can maintain discipline by doing the following:

1) Allow individuals freedom within a clear framework of responsibility. (Shortform note: In Team of Teams, General Stanley McChrystal says he veered away from the traditional command-and-control model and gave individuals more freedom by instituting a policy of empowered execution. Instead of explicitly delegating, he had a general rule: If it advances the team effort, do it—assuming it’s moral and legal.)

2) Retain self-disciplined people who are driven to produce results. (Shortform note: Money isn’t the only way you can retain your top performers. Experts say you can encourage them to stay by being receptive to their ideas, giving them space to grow, and recognizing their hard work.)

3) Recognize that a disciplined culture is different from a culture led by a tyrant or disciplinarian. (Shortform note: If you believe that people won’t be disciplined if you’re not breathing down their necks, then you might be a micromanager (or worse). Tame your inner tyrant by hiring people who have the right skills for the job, being clear about your expectations, and allowing your employees to use their own approach to tackle problems.)

4) Adhere fanatically to hedgehog thinking. A key technique for staying true to your Hedgehog Concept is to create a “stop doing” list, meaning if an activity doesn’t serve your Hedgehog Concept, you should stop doing it. (Shortform note: One way to stop doing things that don’t serve your Hedgehog Concept is to ask yourself the Focusing Question. In The One Thing, Gary Keller says this question is: “What’s the one thing I can do such that by doing it everything else will be easier or unnecessary?” This has the dual purpose of clarifying your big-picture purpose and identifying your most important immediate action toward attaining it.)

6. Using Technology Tactically

The sixth principle behind good-to-great companies is that they engage with groundbreaking technologies in a very specific way. Rather than betting the house on the technology itself, they think deeply about how the technology can serve the company’s Hedgehog Concept. In other words, good-to-great companies don’t use technology to create growth but to accelerate it. In contrast, other companies fear being left behind, so they adopt new technology as a reflex without methodical thought.

(Shortform note: This principle is even more relevant in the age of artificial intelligence (AI). Many companies are rushing to adopt it, but research shows that 95% of AI projects don’t deliver real results. The problem isn’t the technology itself—it’s how it’s used. Affirming Collins’s ideas, experts say that AI only works when it’s woven into everyday workflows, when different departments are on the same page, and when the company culture supports it. The companies that succeed are those that understand the real problem before picking a tool to use. AI—and other new technologies—can boost what’s already working, but if a company hasn’t laid the groundwork to properly use the tool, AI only amplifies dysfunction.)

How to Achieve It

Collins says that when evaluating a new technology, the key question to ask is: Does this technology impact my Hedgehog Concept? If it doesn’t, you can safely ignore it and/or adopt it just enough to keep pace. If it does support your Hedgehog Concept, you must figure out how you can lead in the application of that technology.

(Shortform note: Collins advises you to evaluate how technology will impact your Hedgehog Concept, but it can be difficult to get a full picture because new technology comes with many unknowns—mainly whether its benefits will outweigh the costs. Experts thus advise gathering information and experimenting incrementally, so you can learn about a technology’s value before fully committing while also staying flexible enough to adjust your approach as uncertainty resolves. Collins and Hansen recommend a similar approach in Great by Choice: Fire “bullets” before “cannonballs”—conduct experiments that don’t cost much and that have minimal consequences, then only pursue the projects that show the greatest potential.)

Flywheels Versus Doom Loops

Greatness is the result of the steady, disciplined adherence to the six principles described above. Each step on the road to greatness takes time—there’s no bolt from the blue or miracle moment. Collins likens the process of going from good to great to the turning of a heavy flywheel. To get the flywheel moving takes continuous effort and dedication, but once it’s spinning, its momentum keeps it going.

Unfortunately, Collins says, many leaders are under the impression that massive success can happen overnight—by dint of a splashy initiative, a big-ticket acquisition, or a cutting-edge technology. These moves all too often fail and lead to further drastic measures—such as restructurings and layoffs—which lead to further declines and on and on. This painful cycle is the “doom loop,” and it can be avoided by the diligent observance of Collins’s good-to-great principles.

(Shortform note: While the flywheel is a metaphor for positive momentum built from disciplined effort, it can also create what experts call active inertia: Companies cling to the strategies, routines, and values that made them successful, even when circumstances change. In short, the flywheel itself can become a doom loop. To avoid falling into the active inertia trap—or to break free from it—resist the urge to make quick, sweeping changes and instead regularly challenge your assumptions, processes, and values. Then, be willing to make strategic shifts in response to a changing environment.)