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Business Reading: Good To Great

08 December 2021

This week, our recommended reading is Good To Great: Why Some Companies Make the Leap… and Others Don’t by Jim Collins.

Good To Great is the culmination of many years of research, put in by Collins and his team, on how companies have transitioned from operating on a ‘good’ level to being a really ‘great’ company, with results to match.

Collins writes:

“Good is the enemy of great. And that is one the key reasons why we have so little that becomes great”.

His team looked at many different companies and how they progressed, to explore if there were any common contributing factors, for those that made it.

He explains:

“In essence, we identified companies that made the leap from good results to great results and sustained those results for at least fifteen years. We compared these companies to a carefully selected control group of comparison companies that failed to make the leap, or if they did, failed to sustain it. We then compared the good-to-great companies to the comparison companies to discover the essential and distinguishing factors at work”.

Through their research, they have deduced 3 models that can be used to assess your business, the business you work for or to help evaluate a business you are investing in.

3 Concepts

  1. The Hedgehog

This is the first step to finding out if a business can go from good to great. The hedgehog has one behaviour it repeats over and over to protect itself from predators. It rolls into a ball and shows its spines, therefore enabling it to keep moving steadily forward. This represents a unified vision, or strategy, and is a fitting foundation to move from good to great.

  1. The Bus

The next question is about who gets on the ‘bus’ at your business – or more plainly, who does it hire? If you bring people into the business that are not the right fit, then it won’t progress in the way you intend. After the first 3 months of employment of a new hire, good to great companies should ask themselves:

  • Would we hire this person again?
  • If this person left the company would we be disappointed or relieved?

Read our article on how to avoid expensive recruitment mistakes here.

  1. The Level 5 Leader

Each good to great business was found to have a level 5 leader. By this he means they:

  • Have humility and resolve
  • Are modest and humble but NOT weak
  • Doesn’t care if decisions will be unpopular if it benefits the business

Collins writes:

“Level five leaders have stoic determination to do whatever needs to be done to make the company great.”

 

We would very much recommend picking this one up and putting it on your to-read list for the near future if you would like to learn more about how to truly take your business to the next level.

As always, if you would like help implementing any of these concepts in your business, please feel free to reach out.

For any further details on this or any other area of leadership and management, get in touch below.

REQUEST A CALL

We are looking to invest in good businesses.

If you would like to have an obligation free discussion about selling your business, please email shweta@growthidea.co.uk. You can find more about our investment criterion on https://growthidea.co.uk/private-equity.

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