Why Some Companies Make the Leap... and Others Don't
This report consists of the critical analysis of Jim Collins’s book Good to great, a brief introduction of the author and background of the book.
Materials Engineering (Sec-A-97)
Jim Collins is a student and teacher of enduring great companies — how they grow, how they attain superior performance, and how good companies can become great companies. Having invested nearly a quarter of a century of research into the topic, Jim has authored or co-authored six books that have sold in total more than ten million copies worldwide. They include: the classic BUILT TO LAST, a fixture on the Business Week best seller list for more than six years; the international bestseller GOOD TO GREAT, translated into 35 languages; and HOW THE MIGHTY FALL, a New York Times bestseller that examines how great companies can self-destruct.
The book starts with explaining the characteristics of the leaders of the companies that were transforming from the good to great. Author calls these leaders “level 5 leaders” who poses ability to build enduring greatness through a paradoxical blend of personal humility and professional will.
Level 5 leaders set up successors for even greater success in the future unlike egocentric level 4 managers. They are resolved to do whatever it takes to make the company great. They look for the opportunities and work selflessly for the betterment of the organization and when the things go wrong they blame themselves and resolve the issues. They are humble and attribute the success to luck rather than personal greatness.
There is a damaging trend in the business society to look for the celebrity leaders rather than looking for level 5 leaders. Author thinks they are all around us, we just need to know what to look for. He says there are many people who can easily evolve into level 5 leaders.
The research of the author indicates that celebrity leaders are negatively correlated with going from good to great: that Larger-than-Life leaders are not successful in leading an organization from good to great.
In the second chapter named “First who… Then What” the author says that the level five leaders first choose the right people, give them the right job, and get rid of the wrong people and with this team they decide where they want to take the organization. The author insists that “who” comes before “what”; means first you have to decide that who will do the actual work and then you decide what is your vision, mission and strategy.
The studies show that the companies who hire a genius leader who sets up visions and missions and then hire perfect people to do the job fail when the leader departs their growth is not sustained and permanent, While good-to-great leaders were rigorous rather than ruthless. They did not use downsizing and restructuring as primary strategies.
Researches uncovered three practical decisions for being rigorous in people decisions.
First, do not hire when in doubt: when you think company cannot attract enough good people, limit its growth.
Second, when you know you need to change the human resource, do it. And third, put your best people on your biggest opportunities, not your biggest problems.
In god-to-great model, compensation is not to keep the wrong people motivated. But to keep the right people in place and the thinking that old people are the most values assets is wrong, the book suggests that people are not your most important asset, but the right people are your most important asset. And the right person has more to do with character traits and innate capabilities than specific knowledge, background and capabilities.
The third thing the book insists on is that greatness does not come in a swoop, but it is slow process that takes a long time, effort and a constant push in one direction that ultimately leads it to the greatness.