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After co writing Built To Last, published in 1994, Jim Collins asked the question, "Can a good company become a great company and if so, how?" Collins and his team of researchers began their 5 year quest by sorting through a list of 1,435 companies, looking for those that made substantial improvements in their performance over time and continue to produce great, sustained results.

After establishing a definition of a good-to-great transition that involved a 10-year fallow period followed by 15 years of increased profits, Collins's crew combed through every company included in the Fortune 500 and found 11 that met their criteria, including Walgreens, Kimberly Clark and Circuit City.

If there's one over arching lesson to be learned and model to apply, it is probably Collins' "Three Circles" model aligns business strategy to core competencies and the business model. Collins says "ask three important questions"
Passion — What do you care very deeply about?
Ability — What are you really good at?
Economic Reward — What is your potential for economic gain?

By latching onto a purpose you care deeply about, focusing sharply on what you are good at doing, and on superior rewards, everything comes together. His ideas are developed as Collins talks about six concepts that comprise the heart of Good To Great. They are:

Level 5 Leadership
First Who... Then What
Confront the Brutal Facts
The Hedgehog Concept
A Culture of Discipline
The Flywheel

Collins characterizes the Level 5 leader as "a paradoxical blend of personal humility and professional will", generally not an outsider but grown from inside the existing corporate culture, and very concerned about what they could "build, create and contribute".

In First Who, Then What, Collins very much focuses on giving the right people the opportunity to do what they do best. He talks about getting the wrong people "off the bus" and finding the right people, and only then deciding where to go. He says only the right people, in the right seats, can take the bus to the right place.

Interestingly, each of the great companies faced serious threats, but all faced them down by confronting the truth dead on. Only by appropriate analysis of what was happening inside the organization and outside the organization, and being entirely dispassionate about markets, products, technologies, people etc, can organizations understand (very important) and respond appropriately

The Hedgehog Concept is so simple it is almost self evident, but far too many companies stray. It says do what you do best. Focus on a single competency that defines you and continue to refine it and hone it.

A Culture of Discipline talks about developing motivated, committed people who care not only about what they are paid, but about their co workers and the company as a whole. It talks about an inspirational culture, one that encourages individual accomplishment and responsibility, yet one that still happily adheres to organizational requirements.

The Flywheel is another neat concept. A flywheel is weighted so that after it starts, it gains momentum. But it requires slow, deliberate progress to start it, to move it, and to continue until the momentum makes up the bulk of the work. It's all about figuring out what needs to be done to create the best future results and then simply taking those steps, one after the other, turn by turn of the flywheel.

The strength of the book lies in the war stories that illustrate these points, and their simplicity, and of course the central theme. Find the intersection between your ability, passion and some substantial economic reward and you have the ingredients to build a great business. Think about the power of passionately engaged people, doing what they're good at, operating in an area that provides substantial returns on investment.

No wonder this book is still a best seller in the years since it was first published in 2001. Definitely a book for the business owner's bookshelf.


Good To Great
Jim Collins
First Published in 2001
Harper Collins
ISBN- 0-06-662009-6


© 2007 John B Voorpostel CA www.iaccountant.ca