Good to Great … the simple map that can take you from being a good company, to a great one … and the magic of flywheels

February 15, 2022

Jim Collins’ book “Good to Great” is regarded as one of the all time greats of business literature.

At the heart of his approach, built on years of research, is a map. He spent decades exploring what makes great companies perform better.  The map is the answer, and you can find a fabulous interactive version online.

Collins’ map is divided into inputs and outputs. The inputs includes all the practices that he believes that it takes to become a great company, and is divided into 4 different stages. The outputs refer to the results, or what is a great company. Here’s his map as it appears on his site:

Inputs: What does it take to build a great company?

There are four stages:

Stage 1. Disciplined People

  • Reach for Level 5 Leadership. Cultivate getting the type of leaders and becoming the type of leader who leads to serve a cause and does so with humility.
  • Practise First Who, Then What. Get the right people on the bus and on the right seats of the bus, and only then you figure out where to drive it.

Stage 2. Disciplined Thought

  • Embrace the Genius of the And. Look for how to have purpose and profit, long-term and short-term, execution and innovation, etc.
  • Confront the Brutal Facts in the context of Stockdale’s Paradox.Confront the brutal facts and retain faith that you can and will prevail in the end.
  • Clarify your Hedgehog. Make a series of decisions based on what you are passionate about, what you can be the best in the world at, and what drives your economic engine.

Stage 3. Disciplined Action

  • Turn the flywheel. Build momentum by making a series of good disciplined decisions and executing them well. Then you will get a click on the flywheel.
  • Hit Your 20-mile Marches. Relentlessly try to hit self-imposed performance markers, not just for years but for decades.
  • Fire Bullets, Then Cannonballs. First fire bullets to get empirical validation of new ideas that they will work. Then, convert them into large cannonballs to scale your ideas up.

Stage 4.  Building to last

  • Practise Productive Paranoia. Understand the five stages of decline, and practise constant productive paranoia.
  • Shift from being a Time-teller into being a Watch-maker. Build the right mechanisms so that the company can succeed far beyond the presence of any single leader or any single great idea.
  • Preserve the Core and Stimulate Progress. Hold true to your core values, and change your practices. Hold true to your purpose, and change your strategies.
  • Set Big Hairy Audacious Goals. Set BHAGs as there is a difference between merely having a goal and becoming committed to a huge, daunting challenge.

Collins also adds a 10 x multiplier: the return on luck – or what you eventually do with the luck you get whether it’s good or bad. This is the amplifier of everything else in the framework. “About 50% of great leadership is what you do with the unexpected.”

Outputs: What is a great company?

Collins is quick to remind us that “big doesn’t equal great, and great does not equal big.” He says a great company is one that achieves three specific outcomes:

  • Superior results. “You win at your game” … to be a great company, it’s not enough that you have a great purpose and that you treat your customers well. You need to deliver superior results.
  • Distinctive impact. “You make an indelible impact in the world that you touch” … your impact can be for example the distinctive thing that you do, or it can derive from the level of excellence you deliver.
  • Lasting endurance. “You are able to do this over a very long time” … a truly great company is not dependent on a single leader or specific circumstances. They last no matter what.

Of all of Jim Collins’ concepts, for me, the flywheel is most significant.

Amazon is a great example of a business thriving on a flywheel, a circular process that is not easy to start but then builds – and builds – momentum over time, with multiplying impact. In a digital world, flywheels can have magical impact – building insight through data, building audience through referral, building profitability through customised relationships.

 

 

 


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