Jim Collins and his research team screened 1,435 companies that appeared on the Fortune 500 between 1965 and 1995. Just 11 turned years of ordinary results into long, sustained outperformance.¹ The book that came out of that search, Good to Great, opens with one of the most quoted lines in management.
For those of us who develop leaders, the book is above all about people: who gets on the bus, how the person at the top behaves, and how discipline turns into culture.
What the Great Ones Shared
Collins compared each of his eleven companies with a similar rival that failed to make the leap. The differences he found are easy to state and hard to live.¹
Level 5 Leadership. The leaders who made the leap combined personal humility with intense professional will. They credited others for success and took the blame for failure.
First Who, Then What. They got the right people on the bus, the wrong people off it, and the right people into the right seats before deciding where to drive.
Confront the Brutal Facts. They kept unwavering faith that they would prevail while facing the harshest facts of their situation. Collins calls this the Stockdale Paradox.
The Hedgehog Concept. They focused on the intersection of three circles: what they could be best in the world at, what drove their economic engine, and what they were deeply passionate about.
A Culture of Discipline. Disciplined people, disciplined thought and disciplined action made heavy-handed control unnecessary.
The Flywheel. Breakthroughs came from many consistent pushes in one direction, which built momentum until the wheel turned almost by itself. The comparison companies tended toward the doom loop: a new program, a new leader, a new direction, every few years.
"Good is the enemy of great."JIM COLLINS
Read With Care
The study looks back at companies already known to have succeeded. That invites what Phil Rosenzweig calls the halo effect: once a company wins, everything it did looks wise in hindsight.² Two of the eleven later stumbled badly. Circuit City filed for bankruptcy in 2008, and Fannie Mae was placed under government conservatorship the same year.
We read the book accordingly: as a set of well-observed patterns rather than laws of nature. The patterns about leadership and people have aged far better than the stock picks.
By the Numbers
1,435 companies screened¹
11 made the cut¹
15 years of returns at least three times the market, the bar for inclusion¹
2 of the 11 in serious trouble by 2008
What We Can Try Right Away
Window and mirror. When things go well, look out the window and credit others. When they go badly, look in the mirror.
Who before what. Before launching the next initiative, ask whether the right people are in the right seats.
Welcome the brutal facts. Set aside a regular moment for bad news, and thank the person who brings it.
Push the flywheel. Pick one development practice and repeat it for a year before adding the next.
Talent Takeaway
Collins's great companies were led by people who put others first and their own ego last. For anyone who develops leaders, Level 5 remains a useful compass: humility about ourselves, relentless ambition for the work and for the people doing it.
¹ Collins, J. (2001). Good to great: Why some companies make the leap… and others don't. HarperBusiness. Get the book
² Rosenzweig, P. (2007). The halo effect… and the eight other business delusions that deceive managers. Free Press. Get the book