Good to Great Book Summary

Most businesses in the world aren’t that great, but how do you go from good to great? What do they do that’s different from their mediocre competition?

Jim Collins and his team studied three groups of US companies in a span of 5 years.

The first, good-to-great companies. Companies that transitioned to greatness after performing below the average market performance, garnering cumulative returns three times the normal stock market for 15 subsequent years.

The second, direct comparison companies. Companies that stay mediocre despite having the same possibilities as the first group of companies in the time of transition.

And lastly, unsustained comparison companies, ones who had a short-lived transition to greatness, but slid back to performing below market average.

The research had Collins perusing over 6,000 articles and 2,000 pages of interviews. The goal was to know what the cream of the crop companies did differently, and he was determined to teach high-potential companies to make the same leap. The leap that upgrades your job description, truly.

The Simple Hedgehog Concept

Imagine a fox hunting a hedgehog, coming up with so many curve balls and tactics to eat the tiny mammal. The hedgehog’s defense is always to curl up in a ball. This strategy has allowed the hedgehog to survive daily.

Companies that have moved on from good to great have all gone through the Hedgehog concept. It’s merely asking yourself these 3 questions:

1. What can we be known as the best in the world for?

2. What can we get passionate about?

3. What economic indicator can you focus on?

Good to great companies have transitioned mainly because of perfecting the answers to these questions. All decisions in the company just had to be in line with these, and success follows soon enough.

Walgreens followed this strategy and they’ve certainly cemented their name among the greats. By focusing on being the best and most convenient drugstore for people, they’ve earned high profits from each customer visit. By pursuing this slogan obsessively, they were able to outperform the general stock market by a mile.

Eckerd Pharmacy, their competition, simply fell short with answering the Hedgehog concept, and expanded without much prudence, and the company eventually died.

Success Can Come From Incessant Small Pushes In The Right Direction

Looking back, companies that go from good to great go through a transformation of sorts, sometimes unbeknownst to them. The transformation just happened even without an intentioned slogan.

Their success was simply a sum of tiny little pushes in a forward direction. These small improvements motivated people to keep going forward until a breakthrough is made. Sticking to the Hedgehog concept was continuously powered by gains.

Nucor, a steel manufacturer, outperformed the stock market by a lot even after a looming bankruptcy in 1965, because they knew to their deepest core that they make good and cheap steel. They stayed afloat following this given.

Their CEO, Ken Iverson, knew that if they just continued operating, they would become the number one steel company in the US, and eventually they achieved the title.

Many of Nucor’s competitors went in too many directions–major changes, misguided acquisitions–that Nucor was able to achieve the top spot simply by keeping on moving forward. Many of Nucor’s competitors’ acquisitions yielded poor products, and had to do many do-overs.

New Technology Is An Accelerator And Not The Goal

Companies that went from good to great knew that they were working not to keep adding new technology, those additions merely added variety in the inherent formula of the company.

Companies that never took off, however, never really purchased new technologies.

Companies that went from good to great knew the value of thinking about whether an additional technology will really improve the company’s bottomline. Factors like, whether or not they would be pioneers of the piece of tech, otherwise it would be ignored. If the industry can catch up to the new addition almost instantaneously, it’s almost always not availed.

Walgreens harnessed new technology. When e-commerce happened, Walgreens saw the value of adapting the method. They launched and raised profits-per-customer. They also became known for online prescriptions., the original pioneer, lost its original value, while Walgreens, which put attention to the right marketing, stayed behind.

Level 5 Leaders Get Transformations from Good to Great

Level 5 leaders are single-mindedly ambitious for the sake of the company. They’re driven by results and want nothing but progress for the company.

Far from being driven by ego, level 5 leaders aren’t usually credited in companies. They share credit for achievements, downplay their important role, and are quick to take blame when problems arise.

Darwin Smith, for example, turned Kimberly-Clark into one of the top paper consumer manufacturers in the world. He didn’t want people to paint him as a celebrity, or a hero, he dressed simple, and spent his days working in a farm, and found his best companions to be electricians, and plumbers.

In contrast, two out of three company CEOs had huge egos that just put a company backwards. It was nothing short of counterproductive for the company, and it showed in their lack of planning.

Stanley Gault, CEO of Rubbermaid, for example, left behind a management team so shallow that the company went from recognized in Fortune Magazine to being bought by competition after a couple of years.

What’s Next?

Now that you know what the Good to Great book is all about, let’s take a deep dive into the biggest key insights and how you can apply them to get the results you truly want in your life.


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