I loved reading Built To Last, which was a formative book for my business education, because (for one thing) it convinced me of the importance of non-financial motivation. I’m finding lots of good things in Collins’ other famous book, Good To Great, and here are some of them:
- In good to great Jim Collins uses Isaiah Berlin’s the hedgehog in the fox to come up with his hedgehog concept. The fox knows many things, and the hedgehog knows one big thing. But in fights the hedgehog always wins, because it knows exactly how to win. his strategy is solid, and he never forgets it. Collins says that hedgehogs have the ability to simplify a complex world by one unifying idea or vision or concept. A basic principle that unifies and guides everything you do. Things that don’t relate to the idea hold no relevance.
- Princeton Professor Marvin Bressler pointed out the power of the hedgehog by using examples from history. He says that everyone who makes an impact are hedgehogs. Freud and the unconscious. Darwin and natural selection. Marks in class struggle. Einstein and relativity. Adam Smith and division of labor. All are examples of hedgehogs. Those who leave the biggest footprint, are hedgehogs.
- The essential strategic difference between the good to great and the mediocre companies is not that the good to great have strategies, and the others don’t. The hedgehog concept means that the good to great companies founded their strategies on deep understanding a long three key dimensions which he calls circles, and the second thing is that they translated their understanding into a simple concept that guides all their efforts. The three dimensions of the hedgehog concept that matter are: something you’re passionate about, something they can be the best in the world out, and what drives their economic engine. Those are the three circles of the hedgehog concept.
- The “genius with 1,000 helpers” model of CEO is particularly prevalent in bad companies.
- Jim Collins found no systematic pattern linking executive compensation to the process of going from good to great. (In my opinion, this is essentially a consistent finding with his other book, built to last, which found that motivations other than money are vital to success. Essentially, money motivation, is not the key factor.)
- One study of the company Nucor found that they would open plants to build steel, and in the first year they would have 50% turnover, followed by extremely low turnover, once they found the right people with the right work-ethics. In other words, you absolutely must find the right people, and you should keep trying until you do. Then, keep them.
- One immutable laws of management physics is Packard’s law (David Packard of Hewlett-Packard). It says that no company can grow revenues faster than its ability to get enough people to implement that growth. If your growth rate in revenue consistently outpaces your growth rate in people you simply will not build a great company.
- Another important point is that you put your best people on your biggest opportunities, not your biggest problems.
- One of the dominant themes from good to great is that breakthrough results come about by a series of good decisions, diligently executed, and accumulated one on top of another. This sounds a lot like what Tim Ferris says, the little things are the big things.
- Furthermore, the best companies had a culture of confronting painful brutal facts. And second, they developed a simple yet insightful framework by which to look at any major decision.
- Jim Collins warns that charismatic leaders will have a tendency to cause those around them to filter their facts. This means that brilliant charismatic leaders need to compensate in order to make sure that they receive unfiltered important information. He uses the example of Winston Churchill who created a special office for statistics, that was vital during World War II, and kept him supplied with all the real hard-core numbers related to Nazi movement and victories. Things that might be otherwise kept from him.
- One of the surprising findings in the book is that you do not need to motivate the right people, they will largely be self motivated. The question then becomes how do you avoid de-motivating them. One of the most demotivating actions you can take is to hold out false hopes soon to be swept away by events. This is why great companies have a culture of the truth. This means that those leaders often start with questions, not answers.
In my opinion, Collins’ work illustrates how important character is in everything.