This book was not great, in fact I'm not even sure it was good. At least as far as writing is concerned. My friends in business have told me this book is amazing, genius, and has ideas that have helped many businesses succeed. I believe all that to be true. nevertheless, in all of the authors research it seems he failed to do one thing - "get the right person on the bus." The problem is Jim Collins himself.
That may sound harsh to use his own words against him, but I think his writing, style, personality, and interpretation of data are what held this book back. Granted, the book has sold over 3 million copies, and the only thing I've published is a journal article that less than 100 people will ever read. (Here it is in all its esoteric glory)
But let's start with the positive! This book was a great idea. Look at all the publicly traded companies and find ones that were good for many years and then at some point made a transition and did 3 times better than the market average for 15 years.
The researchers weren't looking at new start-ups or terrible companies that turned it around. They wanted to see if companies that were already good could become and remain great.
I think that is a noble and worthwhile endeavor.
They found companies 11 companies that fit that criteria:
1. Abbott Laboratories
2. Circuit City
3. Fannie Mae
4. Gillette
5. Kimberly-Clark
6. Kroger
7. Nucor
8. Philip Morris (now Altria)
9. Pitney Bowes
10. Walgreens
11. Wells Fargo
The author tried to find what those companies did differently. What made their transition? He compared each company to a competitor. Both companies had to be at about the same level in the same business, but the other company never made the transition.
Jim Collins had a good idea: To try to find the difference between good companies and great companies.
He came up with seven common traits of those 11 companies:
1. Leaders who are humble, but driven to do what's best for the company.
2. They "got the right people on the bus," then figured out where to go. Finding the right people and trying them out in different positions.
3. They confront the brutal truth of the situation, yet at the same time, never give up hope.
4. They focus on Three overlapping circles: What lights your fire ("passion")? What could you be best in the world at ("best at") What makes you money ("driving resource")?
5. They keep a Culture of Discipline
6. Using technology to accelerate growth
7. The additive effect of many small initiatives; they act on each other like compound interest.
These ideas seem just fine. Until we get to what the author did wrong.
First - that's not what he called those 7 traits. He tried really REALLY hard to come up with catchy names or stories to go along with each one. He tried to use parables or easy to understand examples. A few times he succeeded, but most time he failed.
Here are the seven names for those traits:
1. Level 5 Leadership (I still don't know how this name is supposed to be catchy or mean anything)
2. First Who, Then What. (this works)
3. Confront the Brutal Facts: The Stockdale Paradox. (Meh)
4. Hedgehog Concept. (What? I mean what? The idea was great, the name was moronic)
5. Rinsing the Cottage Cheese (silly example - it didn't show discipline, it showed OCD)
6. Technology Accelerators (yeah, it works)
7. The Flywheel (this example was pretty good, the visual was easy and applicable)
There are also inconsistencies within the book. In the first chapter he makes a big point of saying you shouldn't bring in new leaders. They need to be home grown. You need a person who came up through the ranks, not some outside big-shot personality.
Then in the second chapter he says the most important thing is to have the right people. Get rid of those who aren't driven, responsible, moving your company in the right direction.
So which is it? The best people come from within - or change them out and get the right people?
The end of his book talks about companies that kept changing their direction - they repeatedly stopped the momentum of "the flywheel." He says the constant changing was bad because they didn't have a "hedgehog concept." The good companies made a change to one ideal concept and stuck with it.
I wanted to say - "OF COURSE THEY STUCK WITH IT - IT WORKED!" The ideas that didn't work, had to be switched. It seems like a "no duh" observation. The successful companies found an idea that worked and stuck with it and became great. The other companies tried and idea that failed, had to try a new idea, and never developed momentum because none of their new plans worked.
There are two other obvious problems with the book: Circuit City and Fannie Mae.
The book was published in 2001. Those two companies later completely failed, and the other nine didn't fare much better. If you invested in all 11 companies in 2001 when the book was published, you would have fared worse than S&P 500.
So these companies had a great moment, a great idea, a great leader, a great change. But it was unsustained, at least beyond 15 years. I'll admit that 15 years is a long time, and great for the company, investors, and even customers. But let's not kid ourselves. Hindsight is 20/20. It's easy to see the great company when their great. Like his "Egg" example (see below) - the author looked back and thought he found what made the egg into a chicken. Turns out he was just as wrong as all those other folks he mocked in the book.
So - The book had a great idea, but it lacked a "Level 5 Leader" to make it work.
I give the book a C. There are things wroth learning - but the book as a whole was only average.
Here are some of my Favorite Quotes from the book:
- Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice. - p. 11
One ought not to reject the data merely because one does not like what the data implies. - p. 16
- The number one factor was luck. - p. 33
If you begin with "who " rather than "what" you can more easily adapt to a changing world. - p. 42
- Great vision without great people is irrelevant. - p. 42
If you have the right executives on the bus, they will do everything within their power to build a great company, not because of what they will "get" for it, but because they simply cannot imagine settling for anything less. - p. 50
- The only way to deliver to the people who are achieving is to not burden them with the people who are not achieving. - p. 53
When in doubt, don't hire - keep looking. - p. 54
- The moment you feel the needs to tightly manage someone, you've made a hiring mistake. - p. 56
No matter what we achieve, if we don't spend the vast majority of our time with people we love and respect, we cannot possibly have a great life. - p. 62
- Charisma can be as much a liability as an asset. - p. 73
There's a huge difference between the opportunity to 'have your say' and the opportunity to be heard. - p. 74
- The key then lies not in better information, but in turning information into information that cannot be ignored. - p. 79
Retain faith that you will prevail in the end, regardless of the difficulties... AND at the same time, confront the most brutal facts of your current reality, whatever they might be. - p. 86
- Hedgehog Concept: - p. 95
1.What can you be the best in the world at?
2.What drives your economic engine?
3.What are you deeply passionate about?
The only way to remain great is to keep applying the fundamental principles that made you great. - p. 108
- The purpose of bureacracy is to compensate for incompetence. - p. 121
Picture an egg just sitting there. No one pays it much attention until, one day, the egg cracks open and out jumps a chicken! All the major magazines and newspapers jump on the event, writing feature stories - "The Transformation of Egg to Chicken!" "The Remarkable Revolution of the Egg!" "Stunning Turnaround at Egg!" - as if the egg had undergone some overnight metamorphosis, radically altering itself into a chicken. - p. 168
- What do the right people want more than almost anything else? They want to be part of a winning team. - p. 177
When the right people see a simple plan born of confronting the brutal facts - a plan developed from understanding, not bravado - they are likely to say, "That'll work. Count me in." - p. 177
- The drive for mergers and acquisitions comes less from sound reasoning and more from the fact that doing deals is a much more exciting way to spend your day than doing actual work. - p. 180
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