Good to Great by Jim Collins is part of Menlo Group’s Core Library. Our team recently finished reading the book, and we wanted to share some of the thoughts we discussed as a group.
The author and his team conducted research to identify companies that “made the leap from good results to great results and sustained those results for at least 15 years;” only 11 businesses made the list. The researchers then analyzed which factors helped these companies achieve success.
From their research, the team determined that good-to-great companies simplify their businesses into a single idea. (The concept is based on the essay “The Hedgehog and the Fox” by Isaiah Berlin, where the hedgehog repeatedly curls up in a ball to outsmart the fox.)
Your business should revolve around what you are passionate about, what you can be the best at and what drives your economic engine. At Menlo Group, our commercial real estate advisors’ “hedgehogs” are their focus areas and specialties within the market.
Companies may discover their hedgehogs differ from their current business models, which means they need to make a change. Walgreens had to get out of the restaurant business to find success. Likewise, Kimberly-Clark sold its paper mills and transitioned into the consumer goods market.
For your company to become great, you may need to stop putting your energy into certain markets or activities. Members of your team should also create “stop-doing” lists and have the discipline to say no to requests that don’t match their personal hedgehogs.
The researchers found that good-to-great companies have “Level 5 Leaders.” These individuals value the success of their companies over their personal achievements. They are hardworking and ambitious in their pursuit of great results. When things don’t go as planned, they take responsibility, and when the company sees success, these leaders attribute it to their team. Level 5 Leaders set their companies up to succeed even after they are no longer in charge.
The next principle we discussed was hiring the right people to work in the right seats. At Menlo Group, we’ve found that personnel issues were the result of the employee not being the right fit for the role. We strive to take our time in the hiring process to ensure that each team member is the right person in the right seat.
Collins uses the example of Nucor, a steel manufacturer, that hired farmers due to their incredible work ethic. The company could teach farmers to make steel, but they couldn’t teach them hard work. At your company, you may be able to teach employees specific skills, but you can’t engrain your core values within them if they aren’t naturally a fit for your culture.
Technology isn’t what makes a good company great, but technology can help great companies better facilitate the processes they have in place. Menlo Group strives to be technology-forward and implement new tools to help us provide a better experience for our clients.
Finally, the researchers found that there was no single moment that took companies from good to great. Instead, these companies’ successes were achieved over time and through consistent effort. Menlo Group hopes to continue becoming greater, and we know that our desired results will come through sustained dedication to our hedgehog, clients and core values.
We enjoyed this book and look forward to the next one. To see what else we’ve been reading, click here.