This is another in a series of reviews on management & leadership books that I’m doing on the blog.
Last week I finally sat down and read Jim Collins’s Good to Great: Why Some Companies Make the Leap… and Others Don’t. Obviously, at Chef we’re trying to build a great company, and I thought this book would show us a way forward.
Good to Great was written in 2001, so you might be wondering why it’s taken me 13 years to crack it open. Well, quite honestly, I once had a co-worker and friend who was given this book upon starting a new job, and he scoffed at it. In retrospect, I think he did so because it was obvious that his employer was most definitely not on the path to greatness. The notion that handing out copies of a business book could fix their dysfunctional culture & failure to execute is laughable. It’s about as useful as giving anti-drug pamphlets to a meth user. In any case, I associated his mockery with the conclusion that the book is bad, which it most definitely is not.The lessons in Good to Great are pretty easy to summarize — it’s almost as if the book were written for reviewers. Not that I suggest simply reading my review and taking the key points. The book itself is immensely readable, which is not something I can necessarily say of books by, for example, Stephen Bungay (I’m also in the middle of The Art of Action and am totally lost in the weeds of stories about the Prussian Army — get to the point, already!) However, Good to Great can be summarized like this:
- People are actually more important to a company’s greatness (or not) than strategy, execution, or any other factors you think of as being traditional values taught in business school. Some of the companies featured in the book spent years jettisoning underperformers and hiring “Level 5” executives before embarking on radical strategies to turn their companies into superstars. (One interesting finding: companies who have humble, CEOs rather than brash & arrogant ones are generally the most successful over the long-term.)
- To be a really great company, do only a few things well. It’s what Collins calls the “hedgehog concept”: despite being small, dowdy, and slow, the hedgehog outmatches the fox every time because of its superior defenses. The three things that great companies do well, Collins says, are to be deeply passionate about what they do, to be the best in the world at one thing, and to have “piercing insight into how to most effectively generate sustained & robust cash flow & profitability”.
- Have a strong culture of discipline. Even in the fast-moving technology sector, Collins says, slow and steady generally wins the race. If you’ve developed a solid vision and can execute consistently & in a disciplined way, both from product development and financial standpoints, you will be wildly successful.
Obviously, Collins and his team have backed this up with a great deal of research, and there are a few more chapters addressing the role of technology in companies (a great accelerator for the flywheel already spinning, but useless in a company that can’t execute the basics), and also how to go from “great” to “enduring greatness”, but that’s kind of it. Thus, one of the criticisms of the book are that the lessons are amazingly simple and common sense. However, so-called “common-sense” lessons like keeping a team disciplined & focused on the long game are often very uncommon, particularly in the technology industry. Our sector, after all, gave birth to the Gartner Hype Cycle, which often drives people to act irrationally. (OMG DOCKER DOCKER DOCKER OMG.)
Reading the book thirteen years later was actually beneficial. Not only am I older and more sure of my direction in life as a leader & manager, but the lessons that the book tries to derive from “great” companies can be easily measured against their track records in the intervening time. Circuit City, for example, went bankrupt, and overall, investing in the 11 companies from 2001 to the present would have actually underperformed the S&P 500. Thus, Good to Great falls a little into the category of business books that Ben Horowitz criticized in The Hard Thing About Hard Things: the fact that “lessons learned” in business books are often only derived from survivors/successful companies (“survivor bias“).
Enough of the conclusions were surprising to me that I still think the book is a superb read. I’d recommend it to anyone who is really passionate about building a world-class company and wants it to be great.