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Book Review: Good to Great – Why Some Companies Make the Leap…and Others Don’t

There are a lot of good companies, schools, and nonprofits — but there are few truly great ones. Why? Because it’s so easy to be adequate that there’s not enough incentive to be great. In “Good to Great,” Jim Collins makes a compelling case that being great does not require any more effort than being good. There are certain principles of greatness, and in this summary, you’ll learn how to apply these principles to your own life.

Discover the simple principles any organization can follow to go from “good” to “great.”


  • Want to take your company, school, or nonprofit to the next level
  • Yearn to do meaningful work in the world
  • Are an investor looking for truly great companies that will grow for years

Book Review: Good to Great - Why Some Companies Make the Leap…and Others Don’t

Jim Collins’s previous best seller Built to Last explains how great companies sustain high performance and stay great. Most companies, however, are not great. Hence the more burning question: How do companies go from good to great? What do they do differently from their competitors who stay mediocre at best?

To answer these questions, Jim Collins and his research team studied three groups of public US companies in a five-year project:

Good-to-great companies, which had been performing at or below the average stock market performance for 15 years, before making a transition to “greatness,” in other words generating cumulative returns of at least three times the general stock market over the next 15 years.

Direct comparison companies, which remained mediocre or dwindled although they had roughly the same possibilities as the good-to-great companies during the time of transition.

Unsustained comparison companies, which made a short-lived transition from good-to-great, but slid back to performing at a level substantially below the stock market average after their rise.

Over the course of their research, Collins and his team examined over 6,000 press articles and 2,000 pages of executive interviews. The goal was to discover what the good-to-great companies had done differently, and thus help other companies make the same leap.

Good-to-great companies can teach others how to make the same leap.


Jim Collins and his team combed through decades of data, articles, and financial papers on over 1,000 current and former members of the Fortune 500. They were looking for companies that had gone from an extended period of goodness to one of greatness, which they defined as beating the market by three times for more than 15 years. These companies were great, not merely lucky. They found 11 companies that fit this description. From there, they worked backward and discovered certain principles of greatness that held true for all 11 of the good-to-great companies.

Collins and his team were as surprised by what the data did not show as by what it did. For example, genius CEOs who ride in to save a company do not lead to sustained transformations of greatness. In addition, CEO pay and incentive structure turned out to have nothing to do with company greatness either.

Instead, the 11 good-to-great companies shared the following seven traits and philosophies:

  1. Level-five leadership. Truly great leaders — what Collins and his team call “level fives” — are as humble as they are hardworking.
  2. First who…then what. The good-to-great companies got the right people in and the wrong people out before addressing strategy.
  3. Confront the brutal facts (but never lose faith). No company can succeed by ignoring financial reality.
  4. The hedgehog concept. This is your company’s single idea that ties together your company’s values, its economic engine, and the thing it can be best at.
  5. A culture of discipline. In business, there’s no more powerful combination than disciplined people, disciplined thought, and disciplined action.
  6. Technology accelerators. Good-to-great companies make smart implementations of technology based on testing and insight, never based on panic.
  7. The flywheel. A flywheel is a big, heavy metal plate used to store energy and increase momentum. It builds speed slowly at first, but then, with the same amount of energy input, it gains momentum. This is how companies went from good to great: first buildup, and then breakthrough.

Level-Five Leadership

There are five distinct levels of leadership:

  1. Level one is someone who demonstrates individual competence.
  2. Level two is someone who contributes by demonstrating competence within the setting of a collaborative team.
  3. Level three is a competent manager who extends that competence to guiding and mentoring others.
  4. Level four is an effective leader who becomes an effective organizational level leader.
  5. Level five has all the elements of an effective leader but with additional humility. These leaders are as humble as they are diligent.

There are many level-four leaders out there, and some of them achieve short bursts of greatness within their organizations. But none of them are able to sustain that greatness. In many cases, these level-fours are undone by a lack of modesty. Level fives, on the other hand, always take the blame for their companies’ failings, while being quick to give others credit for their success.

In Collins’ research, one of the best examples of a level-five leader was Darwin Smith of Kimberly-Clarke. During his 20 years as CEO, Smith helped Kimberly Clarke beat the market by more than four times after falling behind the market for years. Smith was an extremely humble man who seemed to feel most at home doing manual labor on the farm and talking to laborers. He was a quiet man in his personal life — but in in his professional life he was daring, intuitive, and dogged.

His first major action as CEO was to sell off the company’s entire coated-paper business. By getting rid of all the materials and mills used in this core business, he had the money to reinvest in the much more competitive consumer-paper business. Smith’s rationale was to enter a market with a truly great competitor, Proctor & Gamble, so that his company would have no choice but to produce a world-class product if it wanted to succeed. And that’s exactly what it did, eventually becoming the most profitable company in the industry.

Level-five leaders like Smith have ambition for the company and its workers, not for themselves. And when asked about their companies’ tremendous success, they’re quick to credit others, company culture, or even “luck” — always code for “hard work.” None of them say, “I did this. I came up with the ideas. I changed the culture.”

Unfortunately, this type of humility often keeps people out of these leadership positions, as the hiring process for leadership rewards flashiness and selling yourself. There are many level-five leaders out there who simply do not get the chance to lead.

First Who… Then What

To go from good to great, a company must first get the right people in and the wrong people out.

When a company has the right people, it doesn’t need as much organizational hierarchy or management. As a rule, when a company has clear objectives, good people don’t need much management — they’re adaptable and self-motivated. On the other hand, no amount of planning or clever incentive pay schemes can motivate the wrong people.

The most striking example within the book is probably Nucor Steel. During its sustained run of excellence, this company developed a profit model that basically turned happier, more empowered workers directly into more steel and more profits.

However, firing people doesn’t equal growth in and of itself. The point is that the overall standards of the company — its culture — are built from each individual’s standards. A company won’t have truly high standards until its people do. Once the right people and the right standards are in place, there will be leadership and competence at every level. This is a proven way to encourage organizational growth.

Confront the Brutal Facts (yet Never lose Faith)

No company can go from good to great without first gaining a full understanding of internal and external factors keeping it from greatness. Every company that becomes great must overcome the exact same market forces and changes their competitors face. But unlike their competitors, they don’t just make it through the hard times — they thrive.

When faced with market realities that demand serious change, most companies will either go into optimistic denial or panic and try something drastic, such as a merger or new technology. In doing this, they hope to tap into something new that will save them. Very few of them, however, have the patience to stop, think, and really figure out a solution that will work for them.

Take Kroger and its old competitor A&P. In the ’50s, A&P was one of the largest grocery chains in the country, but by the ’70s, it was falling behind. Research showed that this was because shoppers wanted supermarkets. A&Ps were designed more modestly, had fewer exotic foods and flavors, had less of a showroom feel, and were smaller. The bosses at A&P wouldn’t accept the reality that consumers’ needs and wants had changed — and as a result, the store could not keep up.

Kroger, on the other hand, took the exact same data and decided it would pioneer the supermarket experience that people truly wanted. Rather than denying reality, Kroger understood that this dramatic shift in consumer taste represented an opportunity to create a new experience and to be the very best at it. It was a painful and expensive transition for the company — but as a result, from 1973 to 1988, Kroger grew at 10 times the rate of the market and gobbled up market share.

Both companies saw the same facts, but only one had the discipline to accept the facts and act accordingly.

This dedication to the truth should permeate every layer of a good-to-great company — everyone should feel empowered to speak the truth and be heard. The leaders accomplish this by leading with questions (instead of answers) and engaging in dialogue and debate (instead of coercion). They conduct autopsies of all company failures and build “red flag” mechanisms that make it easy for employees to present information and insights that must be acknowledged if the company is to succeed.

Doing this forces a company to face the brutal facts, while maintaining an unwavering faith, even amid all the chaos, that will help it come out victorious in the end.

The Hedgehog Concept

The hedgehog concept is named for Isaiah Berlin’s “The Hedgehog and the Fox.” In this tale, the fox is a cunning animal with many great strategies and skills, while the hedgehog knows just one single great thing. The fox constantly refines his strategy, trying to attack the hedgehog. But no matter what clever idea the fox comes up with, the hedgehog has the perfect defense — it’s what it’s best in the world at, and it’s the only advantage the hedgehog needs to thrive.

A company’s hedgehog concept is a fundamental insight that combines what Collins calls the three circles:

  1. What can the company be best at?
  2. What is the single metric that correlates most directly to profit?
  3. What is the company passionate about?

Where these three intersect is where a company finds its hedgehog concept.

Look at Walgreens. Its hedgehog concept came from the intersecting circles of:

  1. Having the best drugstores
  2. Focusing on a metric of high profit per customer visit (as opposed to profit per store)
  3. Focusing on a deep passion for making life easier and more convenient for customers

During their rise, this laser focus allowed Walgreens to stumble onto a unique and counterintuitive business model. They could get more customers — and thus more profit — by clustering their stores in highly trafficked, highly populated areas. So, they clustered their stores with each other, sometimes seeming to be on the corner of every city block. This move was consistent with all aspects of their hedgehog concept, and they became the best in their industry at turning a passion for customer convenience into higher profits.

Walgreens’ insight came from adhering to its company values, while also being honest about what the facts said. These profitable insights do not require genius or a world-beating leader — they require a company to have the discipline to stay true to its hedgehog concept, even as it faces a changing world head on.

A Culture of Discipline

Good-to-great companies have a highly disciplined workforce — while also having, on average, significantly less bureaucracy and hierarchy than their comparison companies. Bureaucracy is designed to control the wrong people and to try to fix them with rules or processes. But as the research says, no incentive programs can motivate the wrong people to achieve greatness. It cannot be emphasized enough that a company must not only get the right people but also get rid of the wrong people to create a culture of discipline.

In many cases, companies that went from good to great were filled with workers and management who were borderline fanatical about their work. Collins’ team referred to this recurrent pattern of extreme focus as the “rinsing your cottage cheese” factor. This name is from a former Ironman Triathlon winner who was so committed to his low-fat, high-carb diet that he would actually wash his cottage cheese to try to lower its fat content. Rinsing the cottage cheese likely had nothing to do with him winning the triathlon, but his obsessive focus on his goal and his willingness to do any small thing that might add to his edge had everything to do with his victory. The greats are disciplined. They know their purpose and have the doggedness to do whatever is necessary and exploit every tiny advantage to fulfill their purpose in life — they rinse their cottage cheese.

One of the biggest life lessons to take away from this summary is to start a “stop-doing list.” The great companies that Collins investigated all had the discipline to focus on what they shouldn’t be doing. They used their budgeting processes as their main tool and cut funding immediately to any aspect of their companies that didn’t fit within their hedgehog concept. In interviews, it was a common theme among good-to-great CEOs (all of them level-five leaders) that what their companies stopped doing had more to do with their success than anything else.

Technology Accelerators

In Collins’s study, there were no examples of companies that went from good to great because they stumbled onto some new technology first. But time and again, they demonstrated an understanding of how technology worked in conjunction with their hedgehog concept to allow them to get better at what they were already the best at.

Walgreens is a great example of this. In the early years of the dot-com boom, investors were in love with an online pharmacy called It had no profit, no plan to become profitable, and very little real infrastructure in the way of people or warehousing. Yet at its peak, it was such a desirable stock that it was trading at almost 400 times its revenue.

Short-term investors demanded that Walgreens copy — or else they believed Walgreens would be too old-school to survive. But Walgreens methodically went about its business. It had a corporate philosophy of crawl, then walk, and then run. Walgreens did the homework and carefully tested every solution it came up with before releasing it at scale. And everything it did was in line with the company’s hedgehog concept of increasing profit per visit through a commitment to convenience. Walgreens went on to build an online pharmacy experience that was far superior to and was connected to retail locations, meaning that no matter where people were, it was easy to get their prescriptions. Walgreens didn’t change its core — it expanded upon it.

No great company grows or declines primarily because of a change in technology. They grow from seeing things clearly and fail when they’re unable to grow to meet new market demands.

The Flywheel and the Doom Loop

Imagine a flywheel — a heavy, steel wheel on an axel. Now, picture the immense energy it takes to push it forward the first time. The second time, it’s slightly easier, as the wheel’s momentum helps it along. The fifth time, the 10th time, and the 1,000th time are all easier than the last. Eventually, the flywheel gains so much momentum that it seems to be gaining speed of its own accord, even with the same effort in each push — that’s the power of the flywheel.

Progress is made through iterative action in one single direction, such as a thousand pushes on the flywheel. When companies act with discipline and trust in the flywheel effect, they don’t need tricks to sell themselves or motivate their employees. Instead, they allow their results to speak for themselves, and the culture of excellence and good results keeps employees motivated and attracts the best workers.

However, the comparison companies often exhibited an anti-flywheel tendency, or “the doom loop.” Disappointing results lead to reactionary decision-making, which leads to risky changes of direction. This leads to further disappointing results and starts the process all over again — each loop pushing the company farther and farther from greatness.

Finding a simple “Hedgehog concept“ provides a clear path to follow.

Imagine a cunning fox hunting a hedgehog, coming up with a plethora of surprise attacks and sneaky tactics each day to devour the tasty critter. The hedgehog’s response is always the same: curl up in a spiky, unbreachable ball. Its adherence to this simple strategy is the reason the hedgehog prevails day after day.

Good-to-great companies all found their own simple Hedgehog concept by asking themselves three key questions:

What can we be the best in the world at?

What can we be passionate about?

What is the key economic indicator we should concentrate on?

At the intersection of the questions, after an average of four years of iteration and debate, good-to-great companies eventually discovered their own simple Hedgehog concept. After that point, every decision in the company was made in line with it, and success followed.

Consider the drugstore chain Walgreens. They decided simply that they would be the best, most convenient drugstore with a high customer profit per visit. This was their Hedgehog concept, and by pursuing it relentlessly they outperformed the general stock market by a factor of seven.

Their competitor, Eckerd Pharmacy, lacked a simple Hedgehog concept and grew sporadically in several misguided directions, eventually ceasing to exist as an independent company.

Finding a simple “Hedgehog concept“ provides a clear path to follow.

Success comes from many tiny incremental pushes in the right direction.

In retrospect, good-to-great companies seemed to go through a sudden and dramatic transformation. The companies themselves, however, were often unaware they were even in the midst of changing at the time: their transformation had no defined slogan, launch event or change program.

Rather, their success was a sum of tiny, incremental pushes in the direction of their simple strategy, the Hedgehog concept. Like pushing a flywheel, these small improvements generated results which motivated people to push further, till enough speed was gathered for a breakthrough. Unwavering faith and adherence to the Hedgehog concept was rewarded by a virtuous circle of motivation and progress.

Consider Nucor, the steel manufacturer which outperformed the general stock market by a factor of five. After battling the threat of bankruptcy in 1965, Nucor understood they could make steel better and cheaper than anyone else by using mini-mills, a cheaper and more flexible form of steel production. They built a mini-mill, gained customers, built another one, gained more customers, and so on.

In 1975, CEO Ken Iverson realized if they just kept pushing in the same direction, they could one day be the most profitable steel company in the US. It took over two decades, but eventually the goal was reached.

Comparison companies did not strive to consistently build momentum in one direction, instead trying to change their fortunes with dramatic changes and hasty acquisitions. Since these delivered lackluster results, they became discouraged and were forced to once again attempt a change, not letting the flywheel gather speed.

Success comes from many tiny incremental pushes in the right direction.

New technology should be viewed only as an accelerator toward a goal, not as a goal itself.

Good-to-great companies used new technology primarily to accelerate their momentum in the direction they were already going in, but never to indicate the direction itself. They saw technology as a means to an end, not the other way around.

Comparison companies often felt new technologies were a threat, and worried about being left behind in a technology fad, scrambling to adopt them without an overarching plan.

Good-to-great companies, on the other hand, carefully contemplated whether the particular technology could accelerate them on their path. If so, they became pioneers of that technology, otherwise they either ignored it or merely matched their industry’s pace in adoption.

Walgreens, a major drugstore chain, provides an excellent example of how new technology can best be harnessed.

At the beginning of the e-commerce boom, the online drugstore company was launched amid major market hype. The mere perception of being slower in adopting online business cost Walgreens 40 percent of its share value, and the pressure was on for them to lunge at this new technology.

Rather than yielding, they considered how an online presence could help them in their original strategy: making the drugstore experience even more convenient and further raising profits-per-customer.

Just over a year later, they launched, which advanced their original strategy through, for example, online prescriptions. While lost nearly all of its original value in a year, Walgreens bounced back and almost doubled its stock price in the same time.

New technology should be viewed only as an accelerator toward a goal, not as a goal itself.

Level 5 leaders drive successful transformations from good to great.

All good-to-great companies enjoyed level 5 leadership during their transition.

Level 5 leaders are not only excellent individuals, team members, managers and leaders, but also single-mindedly ambitious on behalf of the company. At the same time they remain humble. They are fanatically driven toward results, and want their company to continue performing even after they leave.

Far from being ego-driven, level 5 leaders are modest and understated. Level 5 leaders share the credit for their company’s achievements, downplaying their own role in them, but are quick to shoulder blame and responsibility for any shortcomings.

Take for example Darwin Smith, who transformed Kimberly-Clark into one of the leading paper consumer goods companies in the world. He refused to cultivate an image of himself as a hero or celebrity. He dressed like a farm boy, spent his holidays working on his Wisconsin farm and often found his favorite companions among plumbers and electricians.

By contrast, two out of three comparison company CEOs had gargantuan egos that were counterproductive for the long-term success of the company. This was most evident in the lack of succession planning.

For example Stanley Gault, the legendarily tyrannical and successful CEO of Rubbermaid, left behind a management team so shallow that under his successor, Rubbermaid went from Fortune Magazine’s most admired company to being acquired by a competitor in just five years.

Level 5 leaders drive successful transformations from good to great.

Asking “who” must take precedence over asking “what.” The transformation from good to great always began with getting the right people into the company and the wrong people out of it, even before defining a clear path forward.

The right people will eventually find a path to success. When Dick Cooley took over as the CEO of Wells Fargo, he realized he could never understand the major changes that would follow from the imminent deregulation of the banking industry.

But, he reasoned that if he got the best and the brightest people into the company, somehow together they would find a way to prevail. He was right. Warren Buffett subsequently called Wells Fargo’s executives “The best management team in business,” as the company prospered spectacularly.

Good-to-great companies focused more on finding people with the right character traits rather than professional abilities, reasoning that the right people can always be trained and educated.

With the right people, companies did not need to worry about how to motivate them. They focused on who they paid, not how they paid, and created an environment where hard workers thrived and lazy workers left. In top management, people either jumped right off or stayed for the long run.

Good-to-great companies never hired the wrong person even if the need was dire, but hired as many right people as were available, even without specific jobs in mind for them.

When good-to-great companies did see they had the wrong person, they acted immediately. They would either get rid of them or try to cycle them to a more suitable position. Delaying dealing with the wrong people only frustrates the rest of the organization.

The right people in the right place are the foundation of greatness.

Success requires confronting the nasty facts, while never losing faith.

Good-to-great companies constantly walked the line of the so-called Stockdale paradox, named after a US admiral captured during the Vietnam War.

As a high-ranking officer detained at the infamous “Hanoi Hilton” prison, Stockdale was tortured repeatedly by the enemy and did not know if he would ever see his family again. Despite the dire circumstances, he never lost faith that somehow he would get home.

Neither did he indulge in foolish optimism like some of his fellow prisoners, who believed they would be home by Christmas, and were heart-broken when it did not happen. Later, Stockdale credited his survival to his ability to confront the facts of his situation while still retaining faith.

In the same manner, good-to-great companies confronted the brutal facts of their reality, and yet still retained unwavering faith that somehow they would prevail in the end.

Whether they faced stiff competition or radical regulatory changes, good-to-great companies dealt with the facts head-on instead of burying their heads in the sand, and still managed to keep their spirits up. For example, when Procter & Gamble (P&G) invaded the paper-based goods market, the two major existing players reacted very differently.

The market-leader, Scott Paper, felt that their game was up and that they could never compete against a giant like P&G. They tried to diversify and stay in categories where P&G did not compete.

At the same time Kimberly-Clark relished the opportunity to compete against the best, and even held a “moment of silence” for Procter and Gamble in one of their executive meetings.

The result: two decades later, Kimberly-Clark actually owned Scott Paper and dominated P&G in six out of eight product categories.

Success requires confronting the nasty facts, while never losing faith.

Leaders must create an environment where the brutal facts are aired without hesitation.

A strong, charismatic leader can be more of a liability than an asset if it means others wish to hide the unpleasant truth from him.

In management meetings, leaders must take the role of a Socratic moderator, asking questions to uncover truthful opinions, not giving ready answers. Leaders must also encourage debates to rage in the meetings so the best possible decisions are reached.

Consider Pitney Bowes, which went from being a postage meter producer about to lose its monopoly to being a major document handling solution provider and outperforming the general stock market by a factor of seven. Regardless, management at Pitney Bowes spent most of its time in meetings discussing worrying facts, like “the scary squiggly things that hide under rocks” rather than celebrating their successes.

When mistakes are made, they must be studied carefully to understand what went wrong, but blame must not be assigned, since it would discourage people from airing the truth.

Red flag mechanisms which raise alerts at critical business signals can force managers to pay attention to the harsh facts.

Good-to-great companies did not have more or better information than the comparison companies, they merely confronted it and dealt with it more honestly.

Leaders must create an environment where the brutal facts are aired without hesitation.

A culture of rigorous self-discipline is needed to adhere to the simple Hedgehog concept.

Dave Scott is a former triathlete who used to bike 75 miles, run 17 miles and swim 12 miles every single day. Despite this grueling regime, he still had the self-discipline to rinse his daily meal of cottage cheese before eating it to minimize his fat consumption.

Good-to-great companies were filled with people with the same level of diligence and intensity as Dave Scott, working toward the simple strategy, the Hedgehog concept, which their company was following.

Consider Wells Fargo, a bank which understood that operating efficiency was going to be an important factor in the deregulated banking world. They froze executive salaries, sold the corporate jets and replaced the executive dining room with a cheap college-dorm caterer. The CEO even began reprimanding people who handed in reports in fancy, expensive binders. All of this may not have been necessary for Wells Fargo to become a great company, but it demonstrates they were willing to go the extra mile.

A culture of discipline is not the same as a single disciplinary tyrant. Tyrannical CEOs did sometimes manage a temporary spell of greatness for their companies, but they soon crumbled after the tyrant left.

Take for example Stanley Gault, the CEO of Rubbermaid who admitted he was “a sincere tyrant” and expected his managers to work the same 80-hour weeks he did. Once he left, Rubbermaid lost 59 percent of its value in just a few years, as no enduring culture of discipline was left behind.

A culture of rigorous self-discipline is needed to adhere to the simple Hedgehog concept.


A leader in a good company should know that it takes no additional effort to go from good to great. It requires greater focus, greater discipline, and better people, perhaps, but it does not require greater effort. Greatness in organizations is always built on the exact same foundation. When an organization consistently combines level-five leadership with disciplined people working in accordance with their passion, something special occurs.

Of course, this breakthrough to greatness does not occur overnight, but when it does happen, the momentum can’t be stopped. And one of the greatest benefits is that people who work in companies like this report vastly higher work and life satisfaction. Work is such a large part of everyone’s lives, so when a company improves, so do the lives of its workers. Beyond profit, this is perhaps the single most compelling reason to go from good to great. Just remember the seven key principles:

  1. Level-five leadership. Truly great leaders — what Collins and his team call “level fives” — are as humble as they are hardworking.
  2. First who…then what. The good-to-great companies got the right people in and the wrong people out before addressing strategy.
  3. Confront the brutal facts (but never lose faith). No company can succeed by ignoring financial reality.
  4. The hedgehog concept. This is your company’s single idea that ties together your company’s values, its economic engine, and the thing it can be best at.
  5. A culture of discipline. In business, there’s no more powerful combination than disciplined people, disciplined thought, and disciplined action.
  6. Technology accelerators. Good-to-great companies make smart implementations of technology based on testing and insight, never based on panic.
  7. The flywheel. A flywheel is a big, heavy metal plate used to store energy and increase momentum. It builds speed slowly at first, but then, with the same amount of energy input, it gains momentum. This is how companies went from good to great: first buildup, and then breakthrough.

The key message in this book is:

Companies can make the leap from mediocrity to greatness by pursuing a simple strategic concept with the right leaders and people working in a culture of rigorous self-discipline.

The questions this book answered:

In this summary of Good to Great by Jim Collins,Why were good-to-great companies identified and studied?

  • Good-to-great companies can teach others how to make the same leap.

How does strategic management differ at good-to-great companies versus mediocre ones?

  • Finding a simple “Hedgehog concept“ provides a clear path to follow.
  • Success comes from many tiny incremental pushes in the right direction.
  • New technology should be viewed only as an accelerator toward a goal, not as a goal itself.

How do the people and culture differ at good-to-great companies versus mediocre ones?

  • Level 5 leaders drive successful transformations from good to great.
  • The right people in the right place are the foundation of greatness.
  • Success requires confronting the nasty facts, while never losing faith.
  • Leaders must create an environment where the brutal facts are aired without hesitation.
  • A culture of rigorous self-discipline is needed to adhere to the simple Hedgehog concept.

About the author

Jim Collins is a researcher, teacher, and writer who began his career at Stanford Graduate School of Business in 1992 before going on to author or coauthor six books. Today, Collins spends his time in Boulder, Colorado, consulting with leaders in a variety of fields, teaching, and conducting research.

Jim Collins is a student and teacher of what makes great companies tick, and a Socratic advisor to leaders in the business and social sectors. Having invested more than a quarter-century in rigorous research, he has authored or coauthored six books that have sold in total more than 10 million copies worldwide. They include Good to Great, Built to Last, How the Mighty Fall, and Great by Choice.

Driven by a relentless curiosity, Jim began his research and teaching career on the faculty at the Stanford Graduate School of Business, where he received the Distinguished Teaching Award in 1992. In 1995, he founded a management laboratory in Boulder, Colorado.

In addition to his work in the business sector, Jim has a passion for learning and teaching in the social sectors, including education, healthcare, government, faith-based organizations, social ventures, and cause-driven nonprofits.

In 2012 and 2013, he had the honor to serve a two-year appointment as the Class of 1951 Chair for the Study of Leadership at the United States Military Academy at West Point. In 2017, Forbes selected Jim as one of the 100 Greatest Living Business Minds.

Jim has been an avid rock climber for more than forty years and has completed single-day ascents of El Capitan and Half Dome in Yosemite Valley.

Learn more about Jim and his concepts at his website, where you’ll find articles, videos, and useful tools.


Business Development, Entrepreneurship, Management, Leadership, Self Help, Personal Development, Finance, Change Management, Systems and Planning, Business Management, Motivation

Table of Contents

Good is the enemy of great
Level 5 leadership
First who … then what
Confront the brutal facts (yet never lose faith)
The hedgehog concept (simplicity within the three circles)
A culture of discipline
Technology accelerators
The flywheel and the doom loop
From good to great to built to last
Epilogue: Frequently asked questions.


The Challenge:
Built to Last, the defining management study of the nineties, showed how great companies triumph over time and how long-term sustained performance can be engineered into the DNA of an enterprise from the verybeginning.

But what about the company that is not born with great DNA? How can good companies, mediocre companies, even bad companies achieve enduring greatness?

The Study:
For years, this question preyed on the mind of Jim Collins. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? And if so, what are the universal distinguishing characteristics that cause a company to go from good to great?

The Standards:
Using tough benchmarks, Collins and his research team identified a set of elite companies that made the leap to great results and sustained those results for at least fifteen years. How great? After the leap, the good-to-great companies generated cumulative stock returns that beat the general stock market by an average of seven times in fifteen years, better than twice the results delivered by a composite index of the world’s greatest companies, including Coca-Cola, Intel, General Electric, and Merck.

The Comparisons:
The research team contrasted the good-to-great companies with a carefully selected set of comparison companies that failed to make the leap from good to great. What was different? Why did one set of companies become truly great performers while the other set remained only good?

Over five years, the team analyzed the histories of all twenty-eight companies in the study. After sifting through mountains of data and thousands of pages of interviews, Collins and his crew discovered the key determinants of greatness — why some companies make the leap and others don’t.

The Findings:
The findings of the Good to Great study will surprise many readers and shed light on virtually every area of management strategy and practice. The findings include:

  • Level 5 Leaders: The research team was shocked to discover the type of leadership required to achieve greatness.
  • The Hedgehog Concept: (Simplicity within the Three Circles): To go from good to great requires transcending the curse of competence.
  • A Culture of Discipline: When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great results. Technology Accelerators: Good-to-great companies think differently about the role of technology.
  • The Flywheel and the Doom Loop: Those who launch radical change programs and wrenching restructurings will almost certainly fail to make the leap.

“Some of the key concepts discerned in the study,” comments Jim Collins, “fly in the face of our modern business culture and will, quite frankly, upset some people.”

Perhaps, but who can afford to ignore these findings?


Five years ago, Jim Collins asked the question, “Can a good company become a great company and if so, how?” In Good to Great Collins, the author of Built to Last, concludes that it is possible, but finds there are no silver bullets. Collins and his team of researchers began their quest by sorting through a list of 1,435 companies, looking for those that made substantial improvements in their performance over time. They finally settled on 11–including Fannie Mae, Gillette, Walgreens, and Wells Fargo–and discovered common traits that challenged many of the conventional notions of corporate success. Making the transition from good to great doesn’t require a high-profile CEO, the latest technology, innovative change management, or even a fine-tuned business strategy. At the heart of those rare and truly great companies was a corporate culture that rigorously found and promoted disciplined people to think and act in a disciplined manner. Peppered with dozens of stories and examples from the great and not so great, the book offers a well-reasoned road map to excellence that any organization would do well to consider. Like Built to Last, Good to Great is one of those books that managers and CEOs will be reading and rereading for years to come. –Harry C. Edwards

In what Collins terms a prequel to the bestseller Built to Last he wrote with Jerry Porras, this worthwhile effort explores the way good organizations can be turned into ones that produce great, sustained results. To find the keys to greatness, Collins’s 21-person research team (at his management research firm) read and coded 6,000 articles, generated more than 2,000 pages of interview transcripts and created 384 megabytes of computer data in a five-year project. That Collins is able to distill the findings into a cogent, well-argued and instructive guide is a testament to his writing skills. After establishing a definition of a good-to-great transition that involves a 10-year fallow period followed by 15 years of increased profits, Collins’s crew combed through every company that has made the Fortune 500 (approximately 1,400) and found 11 that met their criteria, including Walgreens, Kimberly Clark and Circuit City. At the heart of the findings about these companies’ stellar successes is what Collins calls the Hedgehog Concept, a product or service that leads a company to outshine all worldwide competitors, that drives a company’s economic engine and that a company is passionate about. While the companies that achieved greatness were all in different industries, each engaged in versions of Collins’s strategies. While some of the overall findings are counterintuitive (e.g., the most effective leaders are humble and strong-willed rather than outgoing), many of Collins’s perspectives on running a business are amazingly simple and commonsense. This is not to suggest, however, that executives at all levels wouldn’t benefit from reading this book; after all, only 11 companies managed to figure out how to change their B grade to an A on their own.

Collins is coauthor of Built to Last: Successful Habits of Visionary Companies (1994), the widely heralded book that was the result of a six-year research project conducted by Collins and Jerry Porras. They identified 18 companies that met their rigorous standard for long-term performance. They looked for companies that had outperformed the stock market by a factor of 15 starting from 1926. Then they went about the task of identifying what these companies had in common. Now Collins turns his attention to companies that have made the transition from “good to great.” This time the findings are backed by five years of research and data analysis. Starting with every company that ever appeared in the Fortune 500, Collins identifies 11 companies that had 15-year cumulative stock returns at or below the general stock market when, after a transition point, they then demonstrated cumulative returns of at least three times the market over the next 15 years. Collins then looked for similarities among the companies. What he found would both surprise and fascinate anyone involved in management. David Rouse

One of the top ten business books of 2001 — Business Week

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