Business transformation stories are powerful, but some companies take the leap from “good” to “great” while others remain stuck in mediocrity.

After diving into Good to Great by Jim Collins, the clear difference lies not just in strategy, but in the core principles that define a company’s purpose and ability to endure. Understanding these principles can help businesses of all sizes make that leap.

Let’s take a closer look at the key takeaways from this book and explore how companies like Hewlett-Packard, Boeing, and even high school sports teams exemplified greatness by focusing on what really matters.

What Defines “Great” Companies?

What sets a company apart and makes it truly great? The answer is not simple, but Jim Collins and his research team provide several critical insights into what allows companies to make the jump from good to great.

Collins introduces several key concepts, each of which has proven to be foundational in the journey toward greatness. These ideas transcend industries, applying to all kinds of businesses from tech giants to small startups.

Level 5 Leadership

One of the most pivotal elements in this transition is Level 5 Leadership. Collins explains that these leaders are more than just successful managers—they embody a unique combination of personal humility and professional will.

They do not seek to boost their own egos; instead, they focus on the success of their organization as a whole. Hewlett and Packard, founders of Hewlett-Packard, exemplified this by remaining humble in their triumphs, never taking sole credit for their company’s successes.

Level 5 Leaders build companies that thrive beyond their personal leadership. These leaders care more about creating lasting greatness than basking in the glory of their achievements. In a world full of self-promotion and personal branding, this focus on humility is refreshing.

Core Ideology: Values That Endure

Another key aspect of enduring greatness is the idea of core ideology.

Collins emphasizes that great companies hold on to a set of core values that guide their decision-making process. These values extend beyond just profits; they speak to the company’s purpose and its contributions to society.

Take Merck, for example, which chose to distribute a life-saving drug for river blindness, despite the fact that the afflicted populations were impoverished and unable to pay. Merck’s core ideology, focused on helping people, drove this decision.

These companies understand that while profits are necessary for survival, they are not the ultimate goal.

True greatness comes when a company pursues a higher purpose that aligns with deeply held values. Companies like Hewlett-Packard built their success on a foundation of respect for individuals, technical contribution, and responsibility to the community—principles that outlived any single product cycle.

Preserving the Core While Stimulating Progress

While core values remain steady, it’s crucial for companies to embrace change.

Collins introduces the principle of “Preserve the Core/Stimulate Progress,” a concept that highlights the balance between holding on to core values and adapting to new challenges and innovations.

Walt Disney Company, for example, has maintained its core value of creating happiness while continuously evolving its business model, from animated films to theme parks to cruise lines.

This duality—of staying true to core values while evolving strategies—has kept Disney relevant for decades.

First Who, Then What: Getting the Right People on the Bus

Many companies focus on strategies, goals, and business plans, but Collins argues that none of that matters unless you have the right people in place first.

His principle of First Who, Then What emphasizes the importance of getting the right people on board before deciding the direction of the company. Once the right team is assembled, everything else falls into place more naturally.

This concept applies to all industries and business types. A powerful example comes from a high school cross-country team, where the head coach focused on recruiting the right athletes and building a culture of discipline. The result?

A state championship-winning team that ran with purpose, not just for individual accolades but for each other.

Confronting the Brutal Facts (Stockdale Paradox)

Facing reality is a cornerstone of greatness. In what Collins calls the Stockdale Paradox, companies must learn to confront brutal facts while maintaining unwavering faith that they will prevail in the end.

This means looking at tough situations squarely in the face and acknowledging the challenges without losing hope.

Leaders who can inspire their teams to do this not only foster resilience but also help the company avoid the pitfalls of over-optimism. This paradox allows companies to stay grounded, while pushing forward toward greatness.

The Flywheel and the Doom Loop

One of the most visual and memorable concepts in the book is the Flywheel and the contrasting Doom Loop.

Companies that go from good to great do so through small, incremental steps that build momentum over time—just like turning a heavy flywheel. With consistent effort, the wheel starts spinning faster, and soon the company reaches breakthrough performance.

On the other hand, companies that fail to achieve greatness tend to fall into the Doom Loop.

They attempt dramatic changes without the foundational groundwork, and each failure leads to further frantic changes. Instead of building momentum, they experience a cycle of disappointment and short-term fixes, ultimately stalling progress.

The Flywheel concept is incredibly relevant today. In an age where quick wins and overnight success stories dominate the business narrative, Collins reminds us that sustainable greatness comes from methodical progress.

BHAGs: Big Hairy Audacious Goals

A critical part of stimulating progress, according to Collins, is the concept of the BHAG (Big Hairy Audacious Goal).

BHAGs are ambitious, long-term goals that challenge companies to push beyond what they think is possible. The difference between a good BHAG and a bad one is understanding. Great BHAGs are set with deep knowledge of what the company can become the best at, while bad ones are driven by bravado and guesswork.

Boeing’s decision in the 1950s to build commercial jets is an iconic example of a good BHAG.

At the time, Boeing had no presence in the commercial market, but the leadership team recognized their capability in aircraft manufacturing and saw a clear path forward. Boeing’s decision to build the 707, 727, and eventually the 747 transformed them into the world leader in commercial aviation.

Why Greatness? The Search for Meaning

At its core, Good to Great is not just about achieving success; it’s about finding meaning in the work a company does.

The book repeatedly comes back to one essential question: Why greatness? The answer isn’t always about making more money or dominating an industry. Instead, it’s about creating something that matters—something that has a lasting impact.

When companies align their purpose with the values that drive them, they achieve more than financial success—they create a lasting legacy.

That’s why leaders, entrepreneurs, and teams should strive for greatness, not just as a business objective but as a way to leave a mark on the world.

Get your copy of Good to Great on Amazon and start your journey toward building something that truly lasts.

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.

What separates companies that achieve greatness from those that remain just “good”? The answer isn’t in chasing the latest tech trends or jumping on every innovation.

As Jim Collins reveals in Good to Great, the true key lies in how companies strategically apply technology—using it as an accelerator, not the starting point.

The Role of Technology: It’s Not What You Think

It might come as a surprise, but in the research for Good to Great, 80% of executives from the most successful companies didn’t cite technology as a primary factor in their transitions from good to great.

The truth is, technology can’t make a company great on its own. It’s simply an accelerator that helps push a company forward once it has a strong foundation.

So, the real question becomes: how can businesses use technology effectively? The answer lies in aligning it with a company’s core values…

Why Technology Should Fit Your Hedgehog Concept

To get the most out of technology, it needs to align with the Hedgehog Concept—a central theme in Good to Great.

The Hedgehog Concept focuses on what a company can be the best at, what drives its economic engine, and what its people are passionate about. For technology to act as an accelerator, it must support and enhance these goals.

Take Walgreens, for example. Rather than rushing to adopt the newest technologies, Walgreens strategically used the internet to enhance its existing business model.

They didn’t view technology as a shiny new toy but as a tool to support their mission: delivering convenience to customers. They linked online ordering with inventory and distribution systems, making customer service seamless while increasing efficiency across stores.

Why It’s Not About Being First—It’s About Being Strategic

One of the biggest lessons from Good to Great is that being an early adopter of technology doesn’t necessarily lead to success.

In fact, many of the great companies Collins studied weren’t first to innovate. They watched, learned, and waited for the right moment. IBM wasn’t the first to develop a commercial computer; Remington Rand did that. Boeing didn’t introduce the first commercial jet; De Havilland did. But it was the thoughtful, strategic adoption of technology that allowed IBM and Boe…

In contrast, companies that react out of fear or excitement without a clear strategy often fail.

The technology bubble of the late 1990s serves as a reminder of how many companies chased new innovations without understanding their long-term fit. The winners, like Walgreens and Nucor, stayed patient, keeping their eyes on their core competencies rather than the hype of the moment.

Use Technology to Accelerate, Not Distract

Companies like Nucor provide a strong example of how technology can be a game-changer—but only when applied with discipline.

Nucor’s mini-mill steel manufacturing revolutionized the industry, yet it wasn’t the technology itself that created Nucor’s success. It was their disciplined management, simple structures, and focus on their workforce.

Technology was only part of the equation, helping to accelerate what was already a well-oiled machine.

This concept is vital for businesses today. It’s easy to be tempted by shiny new technologies—AI, blockchain, automation—but smart companies recognize that technology should never be a distraction from their core purpose.

Instead, platforms like Teamly help teams organize, collaborate, and stay on track while they build the disciplined processes that support their goals. Only once these processes are in place should technology be introduced to…

Technology Without Strategy: A Liability, Not an Asset

Technology in the wrong hands can accelerate a company’s decline just as quickly as it can propel it forward. In Good to Great, the Vietnam War is cited as a cautionary tale for businesses.

The United States had the most technologically advanced military in the world—fighter jets, helicopters, sophisticated communications. However, lacking a coherent strategy, the U.S. failed to win the war, despite its technological superiority.

On the other hand, the North Vietnamese had far inferior technology but succeeded by adhering to a simple, clear concept of guerrilla warfare.

This lesson applies directly to businesses: without a solid strategy, no amount of technology will save a company. It will only accelerate its problems.

What the Data Really Says

Throughout Good to Great, one theme is clear: technology must follow strategy, not the other way around. The great companies didn’t focus on technology first.

They understood their mission, set their goals, and used technology to enhance their efforts—not lead them.

The companies that excelled were those that applied technology to accelerate momentum, not to create it.

By following this philosophy, businesses can avoid the common pitfalls of chasing after the latest tech trends and focus on what truly matters—delivering consistent value to their customers.

For those wanting to understand how companies like Walgreens, Nucor, and others leveraged technology as an accelerator, Good to Great offers a roadmap for success.

If you’re ready to dive deeper into the principles that drive lasting business success, grab your copy of Good to Great on Amazon today.

One of the most compelling aspects of Good to Great is its focus on disciplined people, disciplined thought, and disciplined action. These three components are the pillars that hold up a great company, according to Jim Collins.

The companies that made the leap from good to great were those that had leaders who were not just ambitious for themselves but were driven by a deep desire to make their companies successful.

These leaders, whom Collins refers to as “Level 5 leaders,” combined personal humility with professional will, setting their companies on the path to greatness.

These Level 5 leaders are at the core of what differentiates a good company from a great one.

They are not the celebrity CEOs who make headlines, but rather the quiet, determined leaders who focus on building something that lasts. Their ambition is first and foremost for the company and its success, not for their personal gain or fame.

This humility combined with an unwavering commitment to the organization is a recurring theme throughout Good to Great.

A Culture of Discipline: The Backbone of Great Companies

In Chapter 6, Collins delves into the importance of cultivating a culture of discipline within an organization.

This doesn’t mean implementing strict rules or micromanaging employees. Instead, it’s about creating an environment where disciplined action becomes second nature.

In these companies, every team member understands the company’s goals and their role in achieving them. There is a freedom to innovate within the bounds of the company’s core values and objectives.

This culture of discipline is one of the key differences between companies that are merely good and those that become truly great.

For instance, companies like Kimberly-Clark made bold decisions, such as completely exiting the paper business, to focus on consumer products.

This move required not just strategic insight, but also the discipline to stick with a decision that may have seemed risky at the time but was necessary for long-term success.

Another crucial element of discipline is knowing when to say no. Collins emphasizes the importance of a “stop doing” list, which is just as vital as a to-do list.

In the pursuit of greatness, these companies recognized that not all opportunities are worth pursuing. They understood the power of focus and the dangers of spreading themselves too thin.

By eliminating activities that did not align with their long-term goals, these companies could channel their resources and energy where they would have the most impact.

The Hedgehog Concept: Simplicity and Focus

One of the most powerful concepts in Good to Great is the Hedgehog Concept.

This idea, borrowed from an ancient Greek parable, is about focusing on one big thing—your Hedgehog—rather than trying to do everything.

Collins explains that great companies find the intersection of three key areas: what they can be the best in the world at, what drives their economic engine, and what they are deeply passionate about. This intersection is their Hedgehog Concept, and they pursue it with relentless focus.

Take the example of Nucor, a steel company that rose to greatness by focusing on producing low-cost steel.

Nucor didn’t try to be all things to all customers. Instead, it honed in on its Hedgehog Concept—harnessing technology and culture to produce steel more efficiently than anyone else.

This clarity of focus allowed Nucor to outpace much larger and more established competitors, ultimately becoming one of the most successful steel companies in the world.

Collins argues that the Hedgehog Concept is not just about finding what you are good at, but about disciplined execution.

Companies that achieve greatness understand their Hedgehog Concept and commit to it fully, saying no to anything that does not fit within those three circles.

This focus prevents them from being distracted by short-term opportunities that could derail their long-term success.

Budgeting as a Strategic Tool

Budgeting in most companies is about allocating resources to different departments or projects based on immediate needs.

However, in Good to Great, Collins redefines budgeting as a strategic tool for discipline. He argues that the most successful companies use budgeting not just to manage costs, but to ensure that resources are fully aligned with their Hedgehog Concept.

In other words, budgeting becomes a way to enforce discipline by fully funding what is critical and eliminating what is not.

This disciplined approach to budgeting is evident in how Kimberly-Clark handled its transition from the paper business to consumer products.

The company didn’t just reduce its investment in paper; it completely exited the industry, selling off its paper mills and investing all its resources into the consumer side of the business. This bold move required not just strategic vision but the discipline to follow through and fully commit to the new direction.

This approach to budgeting is a powerful example of how companies can use discipline to drive growth.

Rather than spreading resources thinly across multiple areas, great companies focus their investments on the areas that will deliver the most significant returns.

By doing so, they maximize their impact and ensure that every dollar spent is a step towards achieving their long-term goals.

The Role of Teamly in Modern Business

In the fast-paced and ever-evolving world of business, tools like Teamly can play a crucial role in helping companies maintain the kind of discipline that Collins describes in Good to Great.

Teamly’s software is designed to streamline operations and keep teams focused on what truly matters. By providing a platform where goals are clear, progress is tracked, and communication is seamless, Teamly helps organizations stay aligned with their Hedgehog Concept.

Whether you’re a small business looking to grow or a larger company striving to maintain your edge, integrating a tool like Teamly into your operations can make a significant difference.

It’s about creating an environment where discipline becomes part of the culture, helping your team stay focused on the activities that will drive long-term success.

Jim Collins’ Good to Great offers invaluable insights for anyone serious about taking their company to the next level.

The lessons on disciplined people, disciplined thought, and disciplined action are timeless and applicable across industries.

Whether you’re a CEO, a manager, or an employee looking to contribute to your company’s success, the principles in this book can help you understand what it takes to go from being good to being great.

If you’re ready to dive deeper into these concepts and apply them to your business, get your copy of Good to Great here.

Imagine that your business isn’t just good. It’s great. And not just great in a fleeting way, but consistently, undeniably great.

The kind of great that makes competitors nervous and customers loyal. Sounds pretty awesome, right? That’s exactly the kind of transformation Jim Collins explores in his game-changing book, Good to Great.

And in Chapter 5, Collins shares the secret sauce to this level of success: the Hedgehog Concept.

So, what’s the Hedgehog Concept all about? It’s a simple, powerful idea that will change the way you think about business strategy.

Inspired by the ancient Greek parable about the fox, who knows many things, and the hedgehog, who knows one big thing, Collins argues that true greatness comes from focusing on a single, clear, overarching vision—your own Hedgehog Concept.

The Three Circles of the Hedgehog Concept

The Hedgehog Concept is based on three interlocking circles that guide you to understand what your business can be the best in the world at, what drives your economic engine, and what you are deeply passionate about.

It’s at the intersection of these three circles that your Hedgehog Concept is found.

• First, ask yourself: What can you be the best in the world at? This isn’t about being good at something; it’s about being the best. Collins emphasizes that this doesn’t mean your company is currently the best in the world at something, but rather that you have the potential to be the best at it. It’s not just about competence, but about having the unique capability to excel beyond all others.
• Second, consider what drives your economic engine. This is the one denominator that has the most significant impact on your business. For some companies, it might be profit per customer, for others, it could be profit per geographic region or even profit per employee. The goal is to identify the key metric that fuels your business’s financial success.
• Finally, reflect on what you are deeply passionate about. Passion is the fuel that drives sustained effort and creativity. It’s not about trying to get passionate about something; it’s about discovering what you and your team are already passionate about. When your work aligns with this passion, it becomes more than just work—it becomes a mission.

Real-World Applications: Companies That Got It Right

What does this look like in the real world? Collins gives us several examples of companies that discovered their Hedgehog Concept and used it to transform from good to great.

Take Walgreens, for instance. By shifting its focus from profit per store to profit per customer visit, Walgreens capitalized on the convenience factor—opening stores on practically every corner and making it easy for customers to visit frequently.

This subtle shift in focus led to a massive increase in profitability, aligning perfectly with Walgreens’ economic engine.

Another great example is Wells Fargo. When deregulation hit the banking industry, many banks scrambled to expand their offerings, but Wells Fargo took a different approach.

They identified profit per employee as their economic denominator and streamlined operations, focusing on being the most efficient bank rather than the biggest. This focus allowed Wells Fargo to thrive in a challenging environment.

The Process of Discovery: It Takes Time

One crucial takeaway from Collins’ research is that discovering your Hedgehog Concept isn’t something that happens overnight.

On average, it took the companies Collins studied about four years to clarify their Hedgehog Concept. This process involves rigorous debate, deep reflection, and a willingness to confront brutal facts.

Collins suggests forming a “Council” within your organization—a group of key people who engage in continuous dialogue, guided by the three circles, to explore and refine your Hedgehog Concept.

The Council’s role is not to make quick decisions but to engage in an iterative process that leads to greater clarity over time. This approach is a key part of disciplined thought, one of the pillars of the Good to Great framework.

Why Simplicity Wins

At its core, the Hedgehog Concept is about simplicity. In a business world often obsessed with complexity, the ability to distill everything down to one simple, guiding principle is incredibly powerful.

This simplicity not only provides clarity but also aligns your entire organization toward a common goal.

But simplicity doesn’t mean it’s easy. It requires a deep understanding of your business and a willingness to make tough decisions.

It might mean cutting out areas where you’re merely good to focus on where you can be the best. It might also mean rethinking how you measure success or what truly drives your business’s growth.

In fact, Teamly, our project management software, embodies a similar approach to simplicity by offering a tool that streamlines project management and team collaboration, helping companies focus on what they do best without getting bogged down by unnecessary complexities.

The Road from Good to Great

The journey from good to great is not about making sudden leaps or implementing flashy strategies. It’s about understanding the core of what makes your business tick and building your operations around that insight.

It’s about having the discipline to stay focused on what you can do better than anyone else, what drives your success, and what you are passionate about.

Jim Collins’ Good to Great provides a roadmap for businesses willing to embark on this journey. By embracing the Hedgehog Concept, you can steer your company towards greatness with clarity, focus, and passion. And that’s a journey worth taking.

Ready to discover more about how to transform your business from good to great? Grab your copy of Good to Great on Amazon today.

 

In the world of business, the difference between a good company and a truly great one often seems intangible. What makes one company soar while another merely survives?

This is the core question Jim Collins explores in his bestselling book, Good to Great. If you’re serious about leading your company to greatness, understanding the principles in this book is essential.

Let’s dive into some of the key concepts that Collins and his team of researchers uncovered during their extensive study of companies that made the leap from good to great.

The Brutal Facts: Facing Reality Head-On

One of the standout findings from Collins’ research is the importance of confronting the brutal facts of your current reality.

Every company faces challenges, but those that go from good to great are the ones that don’t shy away from the tough truths. They understand that facing reality—no matter how harsh—is the first step in making the right decisions. Collins illustrates this with the story of Pitney Bowes, a company that rose above its competitors by consistently addressing the brutal facts rather than ignoring them.

This willingness to confront reality doesn’t mean succumbing to pessimism. Instead, it’s about creating a culture where people are encouraged to speak up and where data is valued over ego.

Leaders in these companies don’t shy away from the tough conversations. Instead, they dig into the details, challenge assumptions, and use the insights they gain to make informed decisions that drive the company forward.

Unwavering Faith Amid Challenges

Alongside confronting the brutal facts, great companies possess a unique blend of unwavering faith and realism.

Collins refers to this as the Stockdale Paradox, named after Admiral Jim Stockdale, who survived eight years as a prisoner of war in Vietnam.

Stockdale’s approach—never losing faith that he would prevail, while simultaneously accepting the brutal realities of his situation—is mirrored in the leadership of great companies.

For example, when Fannie Mae was on the brink of collapse, its leadership team faced a seemingly insurmountable challenge: a $56 billion portfolio of loans that were losing money.

Instead of succumbing to despair, they tackled the problem head-on. They didn’t sugarcoat their situation, nor did they lose faith in their ability to turn the company around. Over time, they transformed Fannie Mae into a powerhouse, proving that even the most dire circumstances can be overcome with the right mindset.

This duality—having both faith in eventual success and the discipline to confront the harshest realities—is a hallmark of companies that achieve greatness. It’s not just about optimism; it’s about pragmatic, disciplined action in the face of adversity.

The Power of Dialogue and Debate

Another critical factor that sets great companies apart is their ability to engage in productive dialogue and debate.

These companies foster a culture where open, honest discussions are not only encouraged but expected. This approach ensures that all perspectives are considered before making significant decisions, leading to more robust and well-thought-out strategies.

Take Nucor, for instance. When it was transitioning from a struggling company to one of the most profitable steel manufacturers in the world, its leaders didn’t shy away from heated debates.

In fact, they encouraged them. Ken Iverson, Nucor’s CEO, would often engage his team in intense discussions, believing that the best ideas would emerge from this kind of rigorous debate.

By allowing room for conflict and ensuring that every voice was heard, Nucor was able to innovate and grow even in the face of fierce competition.

For businesses using tools like Teamly, fostering this kind of open communication can be the key to unlocking innovation and driving growth.

Teamly’s software, designed to enhance team collaboration and communication, can help create the environment necessary for these critical debates and dialogues to take place, ensuring that your company stays on the path to greatness.

Learning from Failure: Conducting Autopsies Without Blame

One of the more surprising insights from Good to Great is the importance of learning from failure without assigning blame. In great companies, when something goes wrong, the focus is not on pointing fingers but on understanding what happened and why.

This approach, termed “conducting autopsies without blame,” allows companies to learn from their mistakes and avoid repeating them.

Philip Morris provides a powerful example of this principle in action. After acquiring the Seven-Up Company and later selling it at a loss, the leadership at Philip Morris didn’t sweep the failure under the rug.

Instead, they openly discussed the mistakes that were made, dedicating time to dissect the decision in a clinical, non-judgmental manner. This thorough analysis enabled them to avoid similar pitfalls in the future and continue their growth trajectory.

By focusing on learning rather than blaming, companies can create a culture where continuous improvement is valued and where people feel safe to take calculated risks. This mindset is essential for innovation and long-term success.

The Importance of Red Flag Mechanisms

Finally, Collins emphasizes the need for companies to establish “red flag mechanisms”—systems that ensure critical information reaches the right people in real time, so it cannot be ignored. In an era where information overload is common, the ability to identify and respond to crucial data points quickly can make or break a company.

An interesting example from the book involves a simple tool used by Jim Collins himself when teaching at Stanford Business School.

He handed out red sheets of paper to his students, encouraging them to raise the “red flag” whenever they felt something crucial was being overlooked in class.

This simple mechanism ensured that important issues were addressed immediately, preventing them from being buried under less critical matters.

In the business world, similar mechanisms can be vital.

Whether it’s a system for reporting customer complaints directly to the leadership team or a platform like Teamly that facilitates transparent communication across departments, these tools help ensure that no critical information falls through the cracks.

Creating these red flag mechanisms allows companies to turn data into actionable insights, helping them stay agile and responsive in a fast-changing market. It’s not enough to have information; great companies know how to act on it effectively.

The lessons from Good to Great are as relevant today as they were when the book was first published.

Whether you’re leading a Fortune 500 company or a small startup, the principles of confronting brutal facts, maintaining unwavering faith, encouraging open dialogue, learning from failure, and creating red flag mechanisms can set you on the path to greatness.

Ready to dive deeper into these concepts? Get your copy of Good to Great and start your journey towards transforming your company from good to great.

When it comes to transforming an ordinary company into a great one, Jim Collins’ book Good to Great is an absolute must-read.

Collins and his research team spent years studying companies that successfully made the leap from being good to truly great, and the lessons they uncovered are invaluable.

The book provides a roadmap for achieving sustained success, focusing on the importance of leadership, discipline, and most importantly, people.

Below, you’ll find some key takeaways from Chapter 3 of the book, which is all about getting the right people on the bus before anything else.

It’s All About the People

One of the most significant lessons from Good to Great is that people are the foundation of greatness.

Collins emphasizes that great companies are built not by a single genius but by a team of talented individuals who work together toward a common goal.

It’s not enough to simply have smart people on your team—you need the right people.

The good-to-great companies that Collins studied began their transformations by focusing on getting the right people on the bus and removing the wrong people.

They didn’t waste time figuring out where to drive the bus until they were sure they had the right team on board. This “who” before “what” philosophy is a crucial part of achieving sustained success.

The Danger of the “Genius with a Thousand Helpers” Model

Many companies fall into the trap of relying on a single genius leader surrounded by helpers.

While this can lead to short-term success, it often falls apart when the genius departs. Collins calls this the “genius with a thousand helpers” model, and it’s a recipe for failure in the long run.

In contrast, great companies build deep, strong executive teams that don’t rely on any one person.

Leaders in these companies focus on assembling a superior management team and making sure that the team can function effectively even when the leader is no longer present. This approach ensures that the company can sustain greatness over time.

First Who, Then What

The good-to-great companies consistently applied a disciplined approach to getting the right people on the bus before deciding on the company’s direction.

They focused on making rigorous selections from the beginning.

This strategy ensured that when it came time to make significant decisions, they had a team of people who were not only capable but also aligned with the company’s values and mission.

In fact, one of the key disciplines Collins outlines is to avoid hiring until you’re sure you’ve found the right person. It’s better to keep looking than to settle for someone who isn’t a perfect fit.

This is particularly relevant when companies are experiencing rapid growth. It’s essential to maintain the right balance between hiring quickly to meet demands and ensuring that each hire is a strong, long-term fit for the company’s culture and goals.

Rigorous, Not Ruthless

One of the common misconceptions about great companies is that they have to be ruthless to succeed.

However, Collins’ research shows that great companies are not ruthless—they’re rigorous. This means they apply consistent, high standards at all times and across all levels of the organization.

A great example of this is how Wells Fargo handled its acquisition of Crocker Bank. Rather than trying to integrate all of Crocker’s management into Wells Fargo’s culture, they quickly made the decision to let go of those who didn’t fit.

While this may seem harsh, it was actually an act of kindness in the long run—both for the company and for the individuals involved. Wells Fargo wasn’t interested in making slow, painful cuts; they were rigorous in ensuring that only the right people stayed on board.

Practical Disciplines for Greatness

Collins identifies three practical disciplines that are crucial for ensuring the right people are in the right roles:

1. When in doubt, don’t hire—keep looking. This is all about maintaining a high bar for talent and not compromising when it comes to bringing someone new onto the team.
2. When you know you need to make a people change, act. Holding onto the wrong person for too long can be a drain on the entire organization. If you know someone isn’t a good fit, it’s essential to make the change sooner rather than later.
3. Put your best people on your biggest opportunities, not your biggest problems. This principle is about leveraging your top talent where they can have the most impact, rather than using them to put out fires. This ensures that the company is always moving forward, rather than just staying afloat.

These disciplines highlight the importance of being deliberate and thoughtful in how you build and maintain your team. The focus is on ensuring that every person in the organization is in the right role, contributing to the company’s success in meaningful ways.

Unexpected Findings

Collins’ research also uncovered some surprising insights. For example, there was no systematic pattern linking executive compensation to a company’s shift from good to great.

Many companies assume that high salaries and bonuses are necessary to motivate top performance, but Collins found that it’s more important to have the right people in place from the start.

Compensation should be designed to attract and retain the right talent, rather than simply to incentivize certain behaviors.

Additionally, the old adage that “people are your most important asset” was challenged.

Instead, it’s the right people who are your most important asset.
Whether someone is the right person has more to do with their character and innate abilities than their specific knowledge or skills.

If you’re looking for a blueprint on how to build a great company, Good to Great is a fantastic resource. The book is filled with actionable insights and real-world examples of companies that successfully made the leap to greatness.
You can grab your copy on Amazon here.

In Jim Collins’ seminal book, Good to Great, the concept of leadership reaches an entirely new level with the introduction of Level 5 Leadership.

Collins’ research, which analyzed companies that made the leap from good to great, identified key traits that separated these companies from their competition.

What stood out the most was the consistent presence of Level 5 leaders at the helm during pivotal moments. But what exactly is a Level 5 leader, and how can businesses today benefit from these findings?

Level 5 Leadership is the highest level in a hierarchy of executive capabilities. It combines two seemingly contradictory traits: personal humility and professional will.

These leaders possess an extraordinary resolve to achieve long-term results, yet they do so with a quiet, understated demeanor.

Unlike the more flamboyant, celebrity-style leaders we often see today, Level 5 leaders are more like ‘plow horses’ than ‘show horses.’ They work diligently and consistently, prioritizing the success of their companies over personal fame.

What makes Level 5 leaders so effective is their ability to blend ambition with humility. They are fiercely driven to produce great results but do so for the sake of the company, not their own ego.

They shun public adulation and are often described as reserved, modest, and even shy. This humility, however, does not detract from their determination. In fact, it enhances it.

Level 5 leaders demonstrate an unwavering resolve to do whatever it takes to make their companies great, even if that means making tough decisions or firing underperforming employees, including family members.

One of the most notable aspects of Level 5 leaders is their willingness to set up their successors for even greater success.

Unlike ego-driven leaders who often leave behind weak successors to ensure their own legacy remains untarnished, Level 5 leaders build a foundation that allows the company to thrive long after they are gone.

This selfless approach is what sets them apart and contributes to the long-term sustainability of the business.

For example, in Collins’ study, every good-to-great company had a Level 5 leader during the critical transition period, while the comparison companies often suffered from egocentric leadership that led to their decline.

The data from Good to Great shows that one of the most damaging trends in recent leadership is the tendency to select larger-than-life, celebrity leaders, especially by boards of directors.

These high-profile leaders may bring short-term gains, but they often fail to create the lasting impact that Level 5 leaders achieve. In contrast, Level 5 leaders are fanatically driven by an almost stoic determination to produce results, regardless of the challenges they face.

They are not in it for personal glory; they are in it to build something great that will endure.

At Teamly, we believe that the principles of Level 5 leadership can be applied to any business, no matter the size or industry.

Our software is designed to help leaders and their teams work more efficiently and effectively, allowing them to focus on what truly matters: achieving great results.

Just like the Level 5 leaders in Good to Great, we encourage our users to prioritize long-term success over short-term recognition. By fostering a culture of humility and determination, businesses can build a strong foundation for future growth.

Another fascinating finding in Collins’ research is how Level 5 leaders attribute much of their success to factors outside of themselves.

They look out the window to give credit to their team, external circumstances, or even luck, while looking in the mirror when things go wrong. This behavior contrasts sharply with the comparison leaders, who often did the opposite—taking credit for success and blaming others for failure.

This pattern, known as the ‘window and the mirror,’ is a powerful reminder of the importance of humility in leadership.

The journey to becoming a Level 5 leader is not always straightforward. Collins acknowledges that there is no simple formula or ‘Ten-Step Plan’ to achieving Level 5 leadership.

However, the research suggests that many people have the potential to develop into Level 5 leaders under the right circumstances.

Significant life experiences, such as overcoming adversity or personal development, can often trigger this transformation.

Additionally, having a mentor or engaging in self-reflection can help unlock the traits that define Level 5 leadership.

While not everyone will reach the heights of Level 5 leadership, the lessons from Good to Great are valuable for any leader looking to improve their company’s performance.

By embracing the dual traits of humility and fierce resolve, leaders can create lasting change within their organizations.

Whether it’s setting up successors for success, focusing on long-term goals, or fostering a culture of accountability, the principles outlined in the book offer a blueprint for building a great company.

If you’re looking to take your leadership to the next level, Good to Great is a must-read.

The insights on Level 5 leadership alone are worth the investment, but the book offers so much more.

It’s a treasure trove of research-backed strategies that can help any company, big or small, move from being good to truly great. To get your copy, visit Amazon today.

Why do some companies succeed in becoming truly great, while others remain merely good?

This is the core question Jim Collins explores in his book, Good to Great, and the answer may surprise you.

The central argument of the book is this: “Good is the enemy of great.” Many businesses and individuals settle for being good, and that comfort zone can be the biggest obstacle to achieving greatness.

Collins argues that one of the main reasons we don’t have more great companies, schools, or even lives, is that it’s far too easy to settle for being good.

It’s comfortable. But that comfort comes at a cost— the cost of never realizing full potential.

The book delves into why so many people and institutions accept good as the standard and how this mindset prevents them from becoming truly great.

Why Good Isn’t Good Enough

Early in the book, Collins recounts a pivotal conversation he had with Bill Meehan, managing director at McKinsey & Company.

Meehan pointed out that Collins’ previous work, Built to Last, focused on companies that had always been great, but what about companies that weren’t great from the start? Could a company that was merely good transform into something great?

This question spurred Collins and his research team into a five-year deep dive into what separates the companies that make this leap from the rest.

The outcome? A comprehensive study of businesses that made the leap from good to great and sustained that greatness for at least 15 years.

The Research Behind the Theory

To fully understand what makes a company great, Collins’ team didn’t just look at successful companies.

They compared them to a control group of companies that started in similar circumstances but didn’t make the leap. The comparison allowed them to isolate the variables that drove greatness.

The results were remarkable. Companies that successfully transitioned from good to great achieved stock returns nearly seven times higher than
the general market over a 15-year period. This isn’t a small edge—these companies consistently outperformed the market and their peers.

What Sets Great Companies Apart?

One of the standout examples in the book is Walgreens.

For decades, Walgreens had been an average performer, tracking along with the general market. Then in 1975, something changed.

The company began a steady, long-term climb that far outpaced not only its peers but also some of the biggest names in the business world, like Intel and General Electric.

By 2000, Walgreens had delivered stock returns that dwarfed even the most celebrated tech companies.

But how did they do it? Collins reveals that the leap from good to great isn’t about adopting the latest business trend or hiring celebrity CEOs.

It’s about adopting a disciplined approach and making the tough decisions that most companies shy away from. Great companies don’t just drift into success—they get there through deliberate, consistent actions that build momentum over time.

Level 5 Leadership: The X-Factor

One of the key factors Collins highlights is something called “Level 5 Leadership.”

These leaders are humble yet determined, with a fierce commitment to the company’s long-term success. They prioritize the organization’s future over their personal gain, which sets them apart from the flashy, charismatic leaders often glorified in the media.

In fact, humility is a recurring theme in the book. Level 5 leaders aren’t about taking all the credit or showing off. They focus on putting the right people in the right positions and fostering an environment where everyone can thrive.

This is in stark contrast to many leaders who seek personal glory, often at the expense of the company’s well-being.

Building a Culture of Discipline

Great companies aren’t just led by great people—they’re also built on a culture of discipline. Collins explains that these companies create systems that encourage disciplined thought and action.

They set high standards, but they also give employees the freedom to meet those standards in their own way.

This combination of autonomy and accountability helps these companies maintain their momentum and continue to thrive, even as they grow larger and more complex.

For example, consider how Teamly software fosters this type of culture by allowing teams to collaborate seamlessly while tracking performance
metrics.

By integrating goal-setting with real-time feedback, Teamly helps businesses cultivate the kind of disciplined, high-performing teams
that Collins describes in his book.

The Flywheel Effect

Another powerful concept in Good to Great is the Flywheel Effect. Collins explains that great companies don’t rely on one big moment of success or a sudden breakthrough.

Instead, they build momentum slowly and steadily, like a flywheel.

It takes a lot of effort to get the flywheel moving at first, but once it starts spinning, it’s hard to stop.

Great companies keep pushing in the right direction until that
momentum becomes unstoppable.

This idea contrasts sharply with the “quick fix” mentality that many organizations fall into. Too often, companies chase the latest trends or
try to solve their problems with a single big initiative.

But according to Collins, lasting greatness is built on the back of consistent,
incremental progress. It’s about staying focused on what truly matters and being relentless in pursuing excellence.

The Hedgehog Concept: Simplicity Wins

One of the most actionable insights from Good to Great is the Hedgehog Concept.

This idea is all about simplicity. Great companies don’t try to be everything to everyone.

Instead, they focus on what they can be the best in the world at, what drives their economic engine, and what they are deeply passionate about.

By narrowing their focus to the intersection of these three elements, great companies achieve clarity and purpose that guides every decision they make.

The Hedgehog Concept is a powerful reminder that complexity often leads to mediocrity.

Trying to do too many things usually results in doing none of them well.

But by focusing on a single core strength, businesses can achieve the greatness that eludes those who spread themselves too thin.

If you’re interested in learning more about how companies make the leap from good to great, get your copy of Good to Great on Amazon.

In Part 4 of “The Five Dysfunctions of a Team,” we continue the fable of Kathryn and her team at DecisionTech.

After identifying the team’s major dysfunctions and working through them, this part of the story shifts to a more practical phase: gaining traction.

Kathryn’s team has moved past the theoretical and into the nitty-gritty of implementing real changes.

This is where the rubber meets the road, and the lessons here are valuable for any team leader or manager looking to push their team to the next level.

The Transition to Traction

As the section titled “Traction” begins, we see Kathryn once again leading her team in an off-site meeting.

Although the atmosphere is different, the challenges remain the same: how to turn insight into action.

The key here is that Kathryn is not just giving pep talks—she’s engaging her team in reflection, asking them to reassess where they stand and what still needs to be done.

This is an important lesson for any leader: progress isn’t just about moving forward, but also about taking the time to evaluate your current position and recalibrate if necessary.

One of the standout moments in this part of the book is the team’s reflection on their trust levels.

Trust had been a major issue in the earlier sections, and now, after months of work, Jeff acknowledges that they trust each other more than they did a month ago.

This small, yet significant, admission shows that trust isn’t built overnight, but through consistent effort and progress. Leaders should remember that building trust is a gradual process, but when it begins to take hold, it lays the foundation for deeper collaboration.

Gut Checks and Hard Decisions

Later in this section, the team faces a critical decision that acts as a gut check for their commitment. A company they once considered buying, Green Banana, suddenly offers to buy them out. This unexpected offer tests the team’s resolve.

The key lesson here is that every team, at some point, will face a moment that tests their dedication. Whether it’s a tempting offer or a major challenge, these moments force teams to evaluate their priorities and make tough choices.

The team debates the offer seriously, weighing the financial implications against their passion for making DecisionTech a success.

Ultimately, they reject the offer, choosing to stay the course and continue building the company. This is a powerful reminder that while short-term gains can be attractive, long-term vision and commitment to the team’s mission are often more rewarding.

Kathryn guides her team through this process, reinforcing the importance of alignment around shared goals.

Maintaining Momentum

After rejecting the buyout offer, Kathryn’s team doesn’t rest on their laurels. Instead, they double down on their efforts, continuing to address their dysfunctions and strengthen their teamwork.

Kathryn wisely restructures the team to accommodate the company’s growth, showing that leadership is about adapting to new realities and making necessary changes to keep the momentum going.

The restructuring includes moving Jeff, a key leader, to report to Nick, the new COO.

This decision underscores the theme of trust and selflessness that runs throughout the book. Jeff, who could have resisted the change due to his status as a founder and board member, willingly steps down from reporting directly to Kathryn.

This act of humility and commitment to the team’s success is a powerful example of how real leadership isn’t about titles, but about doing what’s best for the team.

This is a lesson that resonates with the philosophy behind tools like Teamly, which encourages leaders to empower their teams through collaboration and trust, rather than relying on rigid hierarchies.

Just as Kathryn encourages her team to constantly reassess and adapt, Teamly helps businesses manage teams in a flexible, responsive way, ensuring that everyone stays aligned and focused on the bigger picture.

The Long March to Success

As the team continues to work through their dysfunctions, DecisionTech starts to see real progress. Over the course of the next year, the company dramatically improves its sales and meets revenue goals in three out of four quarters.

This sustained success highlights the importance of persistence and discipline. Change doesn’t happen overnight, but with consistent effort, even the most dysfunctional teams can turn things around.

One of the key takeaways from this part of the story is that leadership isn’t just about fixing problems in the short term.

It’s about guiding a team through continuous improvement and making adjustments as necessary. Kathryn’s decision to restructure her team is a perfect example of this.

Even as the team achieves success, she recognizes that they need to keep evolving to handle the company’s growth.

The fable of DecisionTech is a powerful reminder that team success is built on a foundation of trust, commitment, and the willingness to adapt.

Part 4 of “The Five Dysfunctions of a Team” drives home the importance of maintaining momentum and making the hard choices that ultimately lead to long-term success.

For leaders and managers looking to build stronger teams, this book is an invaluable resource.

Ready to learn more? Get your copy of “The Five Dysfunctions of a Team” and start transforming your team today!