“Good to Great” is a best-selling book written by business guru, Jim Collins. He summarizes the research compiled by his team of twenty people who spent five years studying 11 companies that posted exceptional results over a fifteen year period. These companies achieved exceptional growth rates and stock performance. The research attempts to distill how these 11 companies went from “good to great.” What they found were seven common characteristics:
Leadership: The best performing companies are led by humble but driven leaders. Despite their lower profile style they are tenacious about the performance of their organizations. Collins refers to this style as “level 5” leadership style, and unlike the traditional charismatic leaders, level 5 leaders are reserved but tenacious at the same time.
The right people: Collins describes getting the right people with the right skills on the team as “First Who, Then What.” Alternatively he says, “Get the right people on the bus, then figure out where to go.” So, the first priority of leaders at successful companies is to make sure that they have the right people in key positions.
Facing Reality: Leaders of successful enterprises also “confront the brutal facts” of their situation. They are honest about what’s working and what is not; furthermore, they don’t sugar-coat their situation or the operating environment. Even when the news is bad, they face reality because they know that this is the only way that they can ultimately make realistic plans to move forward.
Hedgehog Concept: The hedgehog concept is a simple but core concept for these successful companies. Just like the animal from which then concept’s name is derived, these leaders put their heads down and push ahead with an intense effort. Their companies focus on a few simple goals: How they make money; What they are best in the world at doing; and What motivates them to succeed.
Discipline: The leaders of these companies instill a high level of discipline into their organizational culture. Discipline helps to focus effort and leverage resources.
Technology: These companies use technology to help accelerate their growth. Technology is a way to leverage resources to achieve their objectives. In military parlance, technology would be termed a “force multiplier.”
The Flywheel: The flywheel refers to the concept of “success breeds success.” As these organizations become more successful, then their growth begins to compound just like the momentum of a flywheel.
As with all similar studies of high performing organizations, over time, some of the target companies trip and fall. It is difficult to maintain exceptional performance over an extended period of time. The original study was completed in 2001, and since then some of these companies have run into problems, including Circuit City and Fannie Mae among them. Nevertheless, these seven principles are still important characteristics that are found in many successful organizations, and leaders who wish to grow their companies would be wise to consider them as they develop their own vision for the future.