Click to listen to the latest episode of The Richards Report about Jim Collins' Good To Great.
Some of the best investing, business and financial lessons are in books, so I thought it worthwhile to change it up and review a famous book and the lessons it contains. So I’m going to review one of my favourites, Good to Great by Jim Collins, which is all about why some companies make the leap to become great companies, and why others don’t.
However, instead of simply breaking it down chapter by chapter as is so often done I thought it might be interesting to do it a little differently. I review the book by touching on real-life examples I implemented when I first read the book and how it helped me at the time.
Good to Great changed my football career - well, even more than that, it’s so special it pretty much changed my life. I read it for the first time back in 2010. At the time my football career wasn’t panning out the way I had hoped, and I thought I wasn’t going to be offered a new contract. During the podcast episode I go into detail about what I took from the book at the time, and how it made me a better footballer.
It probably all started with this quote of Jim’s that I vividly remember: “Whether you prevail or fail, endure or die, depends more on what you do yourself, than what the world does to you.” During the episode I discuss why that meant so much to me at the time.
In the book Jim refers many times to the analogy of hedgehog and the fox, which may be familiar to you. The fox’s strength lies in knowing many things; it’s incredibly smart and adaptable. The hedgehog is the opposite: it doesn’t have all the tools at its disposal that a fox has, it only knows one thing. Jim talks about how this analogy can apply to businesses. I love his quote about this: “The signature of mediocrity is chronic change.” I took this on board and implemented some changes around this too.
The book also talks about a BHAG throughout the book. For those not familiar with this acronym, B-H-A-G stands for a big hairy audacious goal. I discuss the BHAG that I ended up creating for myself.
The flywheel analogy throughout the book describes how driving a new strategy is like getting a huge, heavy flywheel into motion. It’s not really a single push that gets the flywheel to the breakthrough point where it’s spinning all by itself, rather it’s the culmination of a lot of little continual pushes over time that gets the flywheel quicker and quicker. That’s what gets it to break through.
Jim says that, to go from being a good company to a great company, you need disciplined people, disciplined thought, and disciplined action.
Disciplined people: means getting the right people “on the bus” and keeping them focused on excellence.
Disciplined thought: means being honest about the facts and avoiding getting sidetracked.
Disciplined action: means understanding what is important to achieve and what isn’t.
This is all related to another topic that he also talks about throughout the book, the attributes of level 5 leaders which is fascinating.
Throughout the book the underlying theme is that being good is the enemy of great. No matter what age you are or what line of work you’re in, it’s full of valuable lessons.
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