Good to Great – How to Turn a Good Company Into a Great One

The Good to Great book outlines a model for turning a good company into a great one. It includes a very useful model which brings the theory together in a memorable and meaningful way. You must do whatever has to be done to turn a good company into a great company.

Level 5 Leadership

It is easy to believe that leaders of great companies are well known, high profile people. But, the study by Jim Collins found that good to great leaders shared similar characteristics. The good to great leaders were normal people that produced extraordinary results.

So what is a level 5 leader? A level 5 leader is an individual who combines extreme personal humility with an intense professional will. Level 5 refers to the highest level in a hierarchy.

Humility + Will = Level 5

Professional will of level 5 leaders:

• Produces amazing results with a clear and smooth transition from good to great
• Will do whatever is necessary to get great results, no matter how difficult – Level 5 leaders are financially driven and have a need to drive incredible results. They always go over and beyond for clients and the company.
• Sets the standard of building an enduring great company and won’t settle for anything less – being good isn’t good enough
• Will take a portion of blame for bad results never blaming others, external factors, or bad luck.

Personal humility of level 5 leaders:

• Never boastful – Great leaders are not worried about their own ego but are more concerned about the company itself to help it become a great company.

• Always determined – Good to great leaders will do what ever needs to be done to make the company great
• Sets up successors for even greater success in the next generation – Great leaders will set people up for success. For instance, if you leave a company and it falls apart, then you did not set the place up for success before leaving. It should not be “I” but “we.”
• Praises others for their great work – Good to great leaders tend not to talk about themselves, they would talk about everyone and the contribution they made.

Get The Right People On The Bus

Often, the first step in taking a company from good to great would be to set a new direction, vision, and strategy for the company and then get people on board. However, one of the most important parts is to get the right people on board first and get the wrong people out. In other words, get the right people on the bus and the wrong people off the bus. Then you can go somewhere great.

The right people are easily motivated and require less management and will, therefore, produce great results. Hire people with great character. You must have a culture that will work for people in the company to make it great. If you hire the right people and they love working together, it feels less like work. If you have the right people, you do not need to motivate them as they will be self-motivated. Having a great vision without great people will not work. If you are ever in doubt hiring an individual, don’t hire. Keep searching for that great individual.

The Importance Of Incentives

By offering great incentives, it will help people stay in your company. It should not be to get the right behaviors from the wrong people. People must have a strong work ethic. If you don’t have what it takes to work in a great company, you will not last. If people won’t last in the long term, don’t make them suffer in the short term.

It is important to note that you can build a great company and a great life. You must have a balanced life. Spend time with family and relax.

Respect amongst other people in the company is also very important. Good to great teams become friends and remain friends for life. And it is important to have fun. People within good to great companies love what they do, as they love who they work with. Again, it is all about having the right people.

Confront The Brutal Facts

All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts about their company. It is impossible to make good decisions without infusing the entire process with an honest confrontation of the brutal facts. A primary task to take a company from good-to-great is to create a culture wherein people have a tremendous opportunity to be heard and have a voice.

To create a climate where the truth is heard involves four basic practices:

• Lead with questions, not answers – always ask your team questions rather than giving them the answers. It will help create a clear picture and direction. Always ask why, why why? By asking questions it will help gain an understanding. Can you help me understand? Can you tell me about that?
• Engage in dialogue and debate, not coercion – this process was like a heated scientific debate, with people engaged in a search for the best answers.
• Conduct autopsies without blame – talk about the mistakes that were made and learn from them. Always look for understanding and learning without having to assign blame.
• Build “red flag” mechanisms – make sure you have the right information.

Leadership begins with getting people to confront the brutal facts and once they are accepted, the solutions will become clear. If you have the right people on the bus, they are already motivated.

The Hedgehog Concept

The purpose of the Hedgehog Concept is a model for identifying and defining your overall strategy for your company in the simplest terms.

The Three Circles of the Hedgehog Concept:

• What are you deeply passionate about – you love what you do. You will look forward to going into work and you are passionate about what you do. You will never have to work a day in your life.
• What you can be the best in the world at – “It’s not just about building on strength and competence, but about understanding what your organization truly has the potential to be the very best at and sticking to it”. “A hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best, a plan to be the best. It is an understanding of what you can be the best at. The distinction is absolutely crucial.” It feels like as if you were born to do this. You don’t have to be the best at it, you just need to understand what you could be the best at.
• What drives your economic engine – you get well paid for what you do.

You must have passion for what you do, and you must produce great results. The good-to-great companies understand that doing what you are good at will only make you good; focusing solely on what you can potentially do better than any organization is the only path to greatness. Allocate resources to areas where you can see you can be the best in the world at. Do things that you are passionate about.

Understand what your company can be the best at in the world, and if you can’t be the best, then your core business cannot form the business of the Hedgehog Concept. You don’t need to be in a great industry to produce great results. Follow your dream, and you will never have to work a day in your life.

A Culture Of Discipline

A culture of discipline is where disciplined people take disciplined action that is consistent towards the Hedgehog Concept. The culture must be built around the idea of responsibility and freedom. This, of course, depends on having the right people on the bus who are disciplined. Build your culture around the idea of freedom and responsibility within the Hedgehog Concept. Then fill the culture with self-motivated people who are willing to do anything to fulfill their responsibilities. The key is to not enforce discipline, but create a disciplined culture.

Technology Acceleration

Good-to-great companies think differently than good companies about technology and changes in technology. Great companies become pioneers in the application of carefully selected technologies. When technology is used correctly, it becomes an accelerator, not a creator of momentum. “Does the technology fit directly with your Hedgehog Concept? If yes, then you need to become a pioneer in the application of that technology. If no, then ask, do you need this technology at all? If yes, then all you need is parity.”

The Flywheel And Doom Loop

Turning a company from good to great does not happen overnight, you must be patient. You need a process to figure out what has to be done to create the best results for the future, then take those steps, one by one over time, until they hit their breakthrough moments. Growth and momentum are built up slowly overtime, like a spinning flywheel.

The Flywheel Effect

To get the flywheel moving it must be pushed. Once you start pushing a flywheel, it’s very hard to create any significant effect. It takes time to gather pace; your efforts may only move it a few inches at the beginning. However, overtime, the flywheel gets easier to move, and it rotates with increasing ease, carried along by its momentum. “The flywheel image captures the overall feel of what it was like inside the companies as they went from good to great.

No matter how dramatic the result, the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no wrenching revolution. Good to great comes about by a cumulative process—step by step, action by action, decision by decision, turn by turn of the flywheel—that adds up to sustained and spectacular results.” In other words, the move from good to great is gradual. This approach looks at doing the work and getting results.

The Doom Loop

The doom loop signifies companies who wanted the quick transition and results. They would change the direction of the flywheel quickly to try and find the ‘ah-ha’ moment. It is not recommended to take this approach.

Wrapping Up

Level 5 leaders are not worried about their ego but are more concerned about the company itself. Get the right people on the bus and the wrong people off the bus. In other words, you must find the best people to join your company.  These are crucial stages in building a company from good to great. Keep pushing the flywheel. “We’re not going to hit breakthrough by Christmas, but if we keep pushing in the right direction, we will eventually hit breakthrough.” By confronting the brutal facts, you will see the obvious and help you identify the steps that must be taken to keep pushing the flywheel.