Good to Great
In Good to Great: Why Some Companies Make the Leap…and Others Don’t, Jim Collins tries to answer the question, “Can a good company become a great company and, if so, how?” (5). Trying to answer this question Collins and his team carried out a research which involved comparing eleven good-to-great companies for example, Abbott Laboratories, Nucor, Kimberly- Clark etc., with eleven other control companies such as Scott Paper, Silo etc.
which failed to make the leap. In order to evaluate what factors were responsible for the success or failure of twenty-two companies, the author and his team assessed public records of companies that were available at that time, including financial records, as well as published reports. The team also interviewed 84 members of the board and a senior management of the case companies (11). However, no interviews were done for the control company board or management members (239). Within a five-year period, Collins and his team did a thorough analysis of the information they had collected about these companies.
Based on their evaluation they came up with the main determinants of greatness that enables certain companies to make the leap and not others. They discovered the following; 1) Leadership is vital in transforming from good to great, what they refer to as “Level 5” leadership. Level 5 leaders are leaders who are humble, determined, result- driven, and put the interest of their company’s first; 2) Good-to-great companies are likened to hedgehogs. They concentrate on one simple idea consistently; 3) The Flywheel concept: a transformation of good-to-great companies does not occur instantly just by one big action, or through a single killer program. Instead, it requires persistent and gradual pushing in the right direction until desired results are achieved. Those companies that employ radical change programs always end up failing; 4) A combination of a culture of discipline and entrepreneurship ethics produce magical results; 5) Good-to-great companies harness correct technologies that are applicable to what they do, to speed up their momentum, instead of striving to keep up with technological change, because they fear being left behind (145).
These findings are applicable to any type of business and can make a big difference, if applied correctly. How the Collins’ ideas and concepts will help our team, establish a Consulting Company Just like any company, starting a Consulting Company is not an easy task. A lot of critical thinking is required as to why it is being established, what we intend to achieve, and the risks involved. However, once the concept of how to establish the company is clear and the decision is made, the next step is to swing into action. Many people usually seek for professional advice on how to start a company, but in our case the principles discussed in Good to Great: Why Some Companies Make the Leap… And Others Don’t will be very instrumental. In order to start the Consulting Company we will need to choose the right people, starting with the right executive team, which consist of the CEO of the Company, as well as various managers that will be working closely with the executive.
As Collins notes in his book, selecting the right people requires a discipline. This means that we focus our efforts on sourcing only the best executive team. It will be very important to us, as noted by the author, not to compromise by recruiting wrong people just because we happen not to get the right individuals at one time. That will require us to be patient and disciplined until we get the right team that will steer our company to success. We will start be looking for a CEO of our Consulting Company, who according to Collins should be the “Level 5” leader.
The author defines the “Level 5” leader as one who puts his company first above his ego. Collins notes that good-to-great companies have leaders who are self-effacing, with a fierce determination, a blend of humility, and a professional will. The author gives an example of Darwin Smith who took over the CEO of Kimberly-Clark Paper Company in 1971, when the company was declining. The Company managed to grow and surpass its competitors such as Procter & Gamble under the leadership of Smith and yet Smith did not brag about it neither did he show any interest in self-promotion. The book specifies the qualities of the “Level 5” leaders which include; modesty, and determination, a fierce drive to succeed.
They emphasize on obtaining results, they are reluctant to accept credit for the success of their companies and quick to take blames and responsibilities for their actions. Moreover, their efforts are solely directed towards the success of the company and not themselves. So, in our search for a CEO we will be looking out for above mentioned qualities from our applicants. Once we get the right person for the position of the CEO we will work closely with him to select the right management team. This brings us to the next principle of Collins “First Who, Then What”. Collins notes that the quality of people working in a company determines to a great extent whether the company will succeed or not.
Having the right people in the company solves numerous problems ranging from motivation, strategy, change, and even alignment. However, when your company consists of wrong people, it does not matter how bright your idea may be; wrong people may not be able to implement it. Executives of good-to-great companies should be concerned about sourcing the best people from the world and putting them in the right positions in the company as well as getting rid of those that they do not need. Collins gives an example of Dick Cooley, the CEO of Wells Fargo, who hired the best management team they could get worldwide. When the banking industry was faced with deregulation, Cooley and his team was able to handle challenges better than their competitors (59).
The idea we will employ is to exercise discipline and patience until we get the best people in our executive team, and then position them strategically within the company. Since we are starting a new company we should not compare ourselves with already established consulting firms. We will apply Collins’ hedgehog concept, which emphasizes on simplicity of the concept. We will focus on a single and simple concept which is aimed at helping struggling businesses in order to succeed. Collins says that it is easier to correct or modify one concept when problems arise. He gives an example of Walgreen Company, which focused on creating the best drugstore in the world offering convenience and profit to customers.
Walgreen grew to double its size, and achieving a profit of one billion more than its main competitor Eckerd (45). Collins notes that the basis for any company’s strategy is to first identify what it is good at. Collins advices leaders of good-to-great companies to create a culture, which encourages freedom of speech, openness, collaboration, and teamwork. This helps to dispel any fear that employees may have so as to enable them feel free to discuss anything with ther executives. We expect that the CEO of our company will create an environment where other employees will be able to work closely and freely with one another. For instance, he should be approachable enough to accept to be told when he is wrong, and to allow other executive members who know more than him to help him.
As the CEO of our Consulting, he or she will be expected to instill a culture of the discipline in the company. According to Collins, discipline does not mean controlling actions of others, but giving the best people freedom to exercise their abilities and skills, while emphasizing on the accountability (66). “Level 5” leaders should walk the talk while instilling the discipline in their subordinates; they should be in the fore front in implementing the changes that the want their employees to adopt. As a part of the executive team we will expect him to let his executive team use their knowledge and expertise to steer the company, while holding them accountable for their actions. For instance, as a Consulting Company client relations are very important to our Company when offering services to struggling businesses.
A case of the customer dissatisfaction based on how they are treated is a common thing and is expected to be observed. If such cases happen in our firm, we will not take them lightly as they might destroy our public image and reduce our customer base consequently. We will expect the CEO to act by transferring the manager who did not handle the customers well to another department where he can work better, or even get rid of him or her. That means that the gap has to be filled with the right person who has excellent skills in customer relations; a person who will bring more clients to our firm. This brings us to Collins’ principle “confronting the brutal facts.” Collins found out in his research that good-to-great companies confront challenges that come across on their way with courage (189).
The author notes that the success of a company starts with making good decisions, which are carefully executed after exhaustive consultations and critical thinking. However, making good decisions requires that companies face facts of circumstances the way they are. They should not burry their heads in the sand, or live in denial, but they should be able to act guided by facts on the ground. By putting the right person in the department of customer relations, we will have tackled the problem of poor customer relations head on. By applying Collins’ principle “the flywheel and the doom loop”, transformation does not come instantly with just one big push (125).
It is an accumulative process that involves actions and steps which are taken one step at a time until they finally produce sustained and brilliant results. It is a planned process that involves knowing what needs to be done, and then executing it gradually. Therefore we will develop our company gradually until it grows into a Consulting Company that offers the best solutions to struggling businesses. The use of technology is also very important to our company. But as Collins advices good-to-great companies should not use technology as the basis of their success; they should instead use technology as an accelerator of their momentum. Therefore, we will carefully scrutinize available technologies and select carefully one that is most applicable to the needs of our company.
How the Collins’ ideas and concepts will help me start a Restaurant The principles discussed in “Good to Great: Why Some Companies Make the Leap… And Others Don’t”, are applicable to any business, and I am certain that they will also be very instrumental in helping me establish a restaurant some day. Just like the Consulting Company discussed above, the restaurant will be a new business that is being started from scratch. In the current world, where people are too busy with work, school, business etc, there is hardly any time left to prepare a descent meal for oneself. Therefore, my idea of establishing a restaurant that focuses on low selling low-calorie fast foods such as chips and chicken, will not only go along way in providing food at the convenience of our customers, but, it will also help in improving the long term health of our esteemed clients. A majority of fast foods being sold in restaurants are prepared with a lot of high calorie ingredients such as, a lot of fat, salt, sugar and spices.
It is unfortunate that, people do not realize what they are consuming. Continued consumption of high-calorie foods puts the consumer’s risk of developing obesity, heart diseases, just to mention but a few. It is based on this need to offer the customer’s healthy fast foods that I decided that I will start a restaurant that prepares only low calorie chips and chicken; this will be achieved by limiting the amount of oil used during the preparation. Focusing on providing healthy fast foods will give me a competitive advantage over my competitors, and therefore, I am certain that my business will succeed. Like any other business, my restaurant will require that I work with other people. That means that I will have to employ workers from various disciplines to help me run the business.
I intend to start a small business first, after which, I will expand it as time goes by, depending on how our product is received in the market, as well as, the demand. I will require a CEO, a general manager, an expert in food nutrition, five chefs, three waiters and two waitresses, an accountant, and a customer relation’s person. According to Collins, the success of any company or business starts with recruiting the right persons into the company. Collins says that having the right people in the company solves numerous problems ranging from motivation, strategy, change, and even alignment. As the owner of the restaurant, I will be its CEO.
According to the author, leaders of a good- to-great company or business should have qualities such as modesty, and determination, a fierce drive to succeed. They emphasize on obtaining results, they are reluctant to accept credit for the success of their companies and quick to take blames and responsibilities for their actions. Moreover, their efforts are solely directed towards the success of the company and not themselves. Collins refers to such leaders as, the Level 5, leaders. Having read the book, “Good to Great: Why Some Companies Make the Leap… And Others Don’t”, am in a better position to apply its concepts in my restaurant as its CEO. My first assignment will be to look for employees to work with, starting with the General Manager, an Accountant, a customer relations person, a food nutritionist, waiters and waitresses, and finally the chefs.
Collins advices that in searching for the right people to work in a business, exercising discipline is necessary, in order to get the right people. When a business consists of wrong people, it does not matter how bright your idea may be; wrong people may not be able to implement it. This gives me a great challenge because I do not want my restaurant to go down, just because I did not source the right persons. My strateegy is to conduct as many interviews as I can, until I get the right persons that will help steer my business to success. Numerous interviews will be costly on my part, but in the end, getting the best employees will be worthwhile. Collins “flywheel and the doom loop” concept states that transformation does not come instantly with just one big push (125).
It is an accumulative process that involves actions and steps which are taken one step at a time until they finally produce sustained and brilliant results. According to the author, transformation from a good business to a great business is a planned process that involves knowing what needs to be done, and then executing it gradually. This concept will be very important to my team and I, because it will help us to know that, for our business to become great, we will have to start small, and develop it gradually, until we achieve our core goal, of being among the biggest fast food restaurants in the world. According to Collins, a CEO of a good-to-great company should create a culture of teamwork, collaboration, openness, and above all, discipline. Having sourced the best people, I expect that they will bring with them varied skills and experiences that will be very important in the running of the restaurant and making it succeed. Naturally, I am a very approachable person, and I am certain that, it will go along way in helping me to deal with my employees.
They will be free to relate with me, and advice me on what to do whenever I am wrong; after all, who said that CEOs are perfect. Discipline does not mean controlling actions of others, but giving the best people freedom to exercise their abilities and skills, while emphasizing on the accountability (66). I will create an environment where, my employees are free to do what they think is right for the business. For instance, if the general manager feels that, the accountant or the customer relations person is not doing his or her job well, and decides to replace them with the right people, I will have no problem with that. While giving them freedom, I will emphasize on accountability; they will have to be accountable for their actions i.e.
an employee cannot decide not to report to work without permission and expect that I will just laugh with him. If his reasons for being absent are not good enough to me, I will just have to fire him, to be a lesson to others to take their jobs seriously. As a young business, we will expect a lot of competition from already established restaurants, since fast food restaurants are numerous all over the world, due to the high demand of fast foods. That is where Collins’ flywheel and the doom loop” concept will come in. We will not allow the stiff competition in the market to move us, because we know where we are headed.Collins “confronting the brutal facts” concept stresses on the need for good-to-great companies to confront challenges that come across on their way with courage (189).
The author notes that the success of a company starts with making good decisions, which are carefully executed after exhaustive consultations and critical thinking. However, making good decisions requires that companies face facts of circumstances the way they are. They should not burry their heads in the sand, or live in denial, but they should be able to act guided by facts on the ground. As a young restaurant that is just starting, the “brutal fact” that will have to face is to fierce competition from already established companies. While we take things one step at a time, as advised by the author, we will also have to put in place strategies that will give our restaurant competitive advantage over the others.
For our case, we will concentrate on preparing healthy fast foods, which will keep the customers coming back for more. We also expect that when our customers approve of our foods, they will tell other people about us, and that will increase our customer base, which will consequently translate into increased profitability. Another way to beat competition is to offer faster services to our customers. In many restaurants, it is a common thing to give an order, and wait for some time before your food is finally served. That pisses off some customers who are very busy, and have no time to waste.
Our customers will be our greatest treasure, and we would not want to loose them just because of delayed services. That is why; we are determined to provide the clients with healthy foods, served at a faster pace than our competitors. We will also put advertisements on the radio and televisions to market our restaurant. Public image is a very important aspect that every successful business, or businesses that aspire to succeed, cannot ignore. How the public perceives a business greatly determines whether it will succeed or not. We intend to create an excellent image of our restaurant on the public’s eye, by providing excellent customer relations.
That means that, we cannot afford to have the wrong persons who do not know how to relate well with people. In case I will hear any complaints from the customers about not being treated well, replacing the person (s) concerned, whether it is my general manager, or the waitresses, with the right people will be the best option. That is what Collins refers to as, “confronting the brutal facts”. Another concept that we will borrow from the author is the hedgehog concept, which emphasizes on simplicity of the concept. We will focus on a single and simple concept which is aimed at providing healthy chips and chicken, by limiting the amount of oil used during the preparation process.
Collins says that it is easier to correct or modify one concept when problems arise. He gives an example of Walgreen Company, which focused on creating the best drugstore in the world offering convenience and profit to customers. Walgreen was able to grow to double its size, and achieve a profit of one billion more than its main competitor Eckerd (45). According to Collins, the basis for any business’s strategy is to first identify what it can do best. With the current competitive business environment, the use of technology has become a part and parcel of our every day lives, as well as businesses. However, with the technological changes that are being experienced globally, businesses and companies are really trying hard to keep up with the latest technologies, lest they are thrown out of business.
Collins advices businesses that aspire to be great, not to use technology as the basis of their success, but, as an accelerator of their momentum. Some businesses do not want to be left behind in terms of technology, and as a result, they resort to certain technologies, some of which are not applicable to their businesses. Having read Collins’ book, my team and I will carefully analyze the technologies available, and after a thorough scrutiny, we will settle on the one (s) that best suit the needs of our business and customers. In conclusion, the principles in the book, “Good to Great: Why Some Companies Make the Leap… And Others Don’t” are very valuable, and can help any business to succeed. It is a must read for anyone who aspires to have a successful business or company.