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Exploring the Principles of “Good to Great” by John Collins – Chapter 8
Jim Collins’ bestselling book, “Good to Great”, offers timeless lessons on how companies transition from mediocrity to long-lasting success.
These aren’t overnight success stories, but examples of businesses that slowly and methodically pushed their way to greatness. If you’re part of a growing company, or simply fascinated by the mechanics behind some of the most successful brands, these insights are must-know.
Here’s what makes the leap from good to great—and why it’s not as mysterious as it might seem.
The Flywheel Effect: Turning Slow Progress into Big Breakthroughs
One of the most important ideas from “Good to Great” is the concept of the Flywheel Effect.
Collins describes the flywheel as a heavy, cumbersome wheel that takes a tremendous amount of effort to get moving. However, as you keep pushing it in the same direction—turn by turn—eventually it gains momentum and moves effortlessly on its own.
For companies, this means that progress doesn’t happen overnight. Small, incremental efforts over time create lasting success.
There is no single dramatic moment of breakthrough for these businesses, but a series of compounding decisions and actions that eventually tip the scale in their favor. Take Abbott Laboratories, for example. Their stock took off after years of steady progress, while their competitor Upjohn faltered by chasing quick fixes.
Consistency is Key
The flywheel gains speed only when you push it consistently in one direction. This means that great companies don’t lurch from one flashy program to another. Instead, they focus on disciplined action that fits within their overarching strategy (what Collins calls the “Hedgehog Concept”—more on that in a moment).
For any organization, including growing teams using tools like Teamly, the lesson is to stay the course. Rather than chasing every new management trend, stay grounded in what you know works for your business.
No Miracle Moment: Success Comes from Consistent Effort
Another key lesson from the book is that there’s no “miracle moment” that catapults a company from good to great.
While outsiders may see dramatic change in a company’s performance, leaders inside those organizations often don’t even notice the transformation happening.
Why? Because great companies build success through small, consistent actions over time.
The Importance of Disciplined Leadership
Great companies are led by what Collins calls “Level 5 Leaders.” These leaders aren’t flashy or ego-driven. They’re humble, determined, and extremely disciplined.
Level 5 Leaders understand that leading a great company means putting the organization’s long-term interests above personal gain or recognition. They’re more interested in achieving results than in taking credit for them.
Kimberly-Clark, one of Collins’ key examples, had such leadership when it took the bold step of going head-to-head with Procter & Gamble.
The press thought it was a terrible idea at first, but the disciplined, long-term vision of the company’s leadership allowed Kimberly-Clark to succeed against the odds.
The Hedgehog Concept: Focusing on What You Do Best
Collins introduces the “Hedgehog Concept,” which is a guiding principle for how great companies focus their efforts.
The idea is based on an ancient Greek parable: “The fox knows many things, but the hedgehog knows one big thing.”
In business terms, great companies focus on what they can be the best at in the world. They don’t spread themselves thin trying to chase every opportunity.
Every good-to-great company that Collins studied developed a clear understanding of their “one big thing” and aligned their entire strategy around it.
For example, Walgreens recognized its core strength in convenience and accessibility. Instead of trying to compete on the front lines with other retail giants, they doubled down on their pharmacy business and strategically placed stores in prime locations.
The Three Circles of the Hedgehog Concept
At the heart of the Hedgehog Concept are three questions that businesses must answer:
- What can you be the best in the world at?
- What drives your economic engine?
- What are you deeply passionate about?
Only by answering these questions can a company gain clarity on where to focus their energy. The most successful companies hone in on these three areas, aligning every decision they make with their Hedgehog Concept.
Avoiding the Doom Loop: Why Some Companies Fail
On the flip side of the Flywheel Effect is the “Doom Loop.” This occurs when companies fail to build momentum because they lack a consistent direction or strategy.
Rather than pushing the flywheel steadily forward, these companies lurch from one initiative to another, hoping for a quick fix. When those efforts fail to deliver, they change course again—repeating the cycle without ever gaining traction.
Warner-Lambert is a prime example of the Doom Loop in action. In the late 1970s, Warner-Lambert shifted its focus back and forth between consumer products and healthcare.
Each new CEO came in with a new strategy, only to change direction after poor results. Instead of pushing the flywheel in a consistent direction, Warner-Lambert reacted impulsively to short-term setbacks and ultimately fell behind competitors like Gillette.
Why Consistency Matters More Than Innovation
One of the biggest takeaways from “Good to Great” is that companies don’t need to reinvent themselves to achieve greatness.
In fact, many of the great companies Collins studied were not the most innovative in their industries. What set them apart was their ability to stay focused on their core competencies and build momentum over time. When companies jump from one innovation to the next without a clear direction, they fall into the Doom Loop.
The Role of Acquisitions in Greatness
Acquisitions are a common strategy for companies looking to expand, but Collins warns that they can easily derail a company’s momentum if done without a clear purpose. In his research, Collins found that the most successful companies used acquisitions to accelerate their already-spinning flywheel, not to create momentum from scratch.
For example, companies like Abbott and Fannie Mae only pursued acquisitions after they had developed a strong, clear Hedgehog Concept. These acquisitions were not seen as a means to achieve greatness, but as a tool to enhance an already successful strategy.
In contrast, comparison companies often relied on acquisitions to “buy” growth, only to find that two mediocre companies joined together still don’t make a great one. This is why it’s so critical for companies to have their strategy solidified before turning to acquisitions.
Faith in the Process: How to Keep Pushing Towards Greatness
What’s clear from “Good to Great” is that building a truly great company takes time, discipline, and faith in the process. It’s not about flashy leadership or quick wins.
It’s about getting the right people on the bus, developing a clear strategy through the Hedgehog Concept, and steadily pushing the flywheel forward. The transformation from good to great is often so gradual that leaders don’t even notice it’s happening until they’ve hit their breakthrough.
As a leader or manager, whether you’re working with a tool like Teamly to streamline operations or simply trying to build a better workplace culture, the lessons from “Good to Great” can offer a road map for long-term success. Consistency, discipline, and a clear focus will get you much further than chasing the latest management fad.
Ready to dive deeper into the Flywheel Effect and more? Get your copy of “Good to Great” here.
