A friend of mine suggested I read this book, and although it isn't exactly hot off the presses, I thought I'd mention the impact it had on me. In my humble opinion, Jim Collins and his staff put together a really good book. I was impressed with the manner in which their research team was able take very qualitative and subjective concepts and organize them for quantitative, measurable analysis. I felt their fact-based method was well conceived and organized in such a way that a computer-nerd/engineer like me could easily relate to it.

The Scientific Method

The basis behind Mr. Collins' book is he was interested to see if he and his team (going forward, I'll refer to them as "the team") could identify a "catalyst" that would propel a company from mediocrity to greatness. As part of the team's research method, they first defined the criteria they were seeking. The overall criteria consisted of publicly traded companies that had a 15 year history of average performance followed by a 15 year period of "well above average" performance. They used publicly traded companies to ease the access to valid data - published financials. This transitional criteria was very strictly enforced and it represented what the team referred to as a change from "good to great".

A Dozen (minus 1) Companies Were Identified

After researching thousands of publicly traded companies, the team was able to identify just 11 companies that met their strict criteria. The team then tried to identify competitors to compare and contrast the "good to great" companies with. The comparison analysis considered asfpects like the industry, social and political factors, as well as interviews with employees and managers from the subject companies. The team was able to identify (with a high degree of certainty) factors that were consistently present in all 11 of the "good to great" companies...and not present within the competition. In fact, the team had a couple of reputable mathematicians (aka "math guys") certify their methods. In both reviews, the "math guys" found the likelihood of the attributes being present in all "good to great" companies to be...well, statistically impossible/highly unlikely. That is, the "math guys" said that the team probably had found some real characteristics which directly resulted in the transition. The catalyst.

Who Are The "Good To Great" Companies?

This is the question that I was most interested to know the answer to after I read the first chapter. I guess it's human nature - everyone I've spoken to about the book (and who hasn't read it) asks this same question first. Is the suspense killing you? The list is Abbott Laboratories, Fannie Mae, Wells Fargo, Gillette, Kimberly-Clark, Phillip Morris, Pitney Bowes, Circuit City, Nucor Corp., Kroger and Walgreens.

Next Question I Asked...How Did They Do It?

Once I heard the list, I was a little surprised. I knew some of the companies really well (everyone shops at Walgreens), I'd heard of a few others, and some, I'd never heard of. My interest was peaked...and I now wanted to know more. The team was able to identify several characteristics that were present in the "good to great" companies, and absent in the competition. The list below, briefly describes these general findings.

Level 5 Leadership

Strong selfless leadership. The "good to great" companies had leaders who were strong willed and simultaneously very humble. These level 5 leaders were able to get the most out of their teams and remained rather anonymous doing so. The competition regularly employed loud, boastful, movie star CEOs that were not nearly as successful.

Hedgehog Principles

This to me meant focus. Specifically, focus on what you can be the best at. The idea of the hedgehog concept is one where the company works on initiatives they are passionate about as well as profitable. Additionally, these are initiatives that the company could be really, really good at. In fact, the "good to great" companies worked on initiatives that they could be "the best in the world" at.

Culture of Discipline

Flywheel and Doomloop

I tend to gravitate towards visual, 3 dimensional, spatial concepts. I thought this analogy was very helpful in understanding the warning signs of thrash. The "flywheel" is conceptual mechanical assembly that represents the work done by a company or an organization. Imagine a huge axel vertically standing up and down in the "z direction". The "flywheel" is a huge disk revolving on the axel. Initially, the "flywheel" is at rest. The one member of the team goes and tries to push the huge gear. Each team member applies a little tangential force to try to get the huge flywheel spinning. Eventually, after thousands of little pushes, the flywheel is spinning really fast with a great deal of angular velocity. If you look at each individual push by the team members, the question was asked...which push was the most important. The point the team is trying to make is that there is no one, "most important" push. They were all important (the sum of the whole). The potential for negative consequences (no work, no rotating) comes about when the pushes are in different tangents/directions. When a company constantly changes directions, it tends to enter the "doom loop".

One Word Review: WOW!

As a small business owner, I'm always interested in learning more about how to effectively run my company. Probably the most interesting finding the team came across was that none of the 11 companies knew they were in the "good to great" transition...all of a sudden, after many years of hard work, and millions of little "flywheel pushes", they were just great. There is a little sarcasm intended here. These were obviously very disciplined organizations that worked very hard to become great. My hat is off to them.

I felt like the research team was able to give me and my team some valuable insight into what we might try to do to make the jump from "good to great". I highly recommend the Jim Collins book.