How To Make A Great Company
Good To Great uses extensive research to describe what takes a mediocre company into greatness, with chapters focusing on leadership, team assembly, company culture, identifying core value, and breaking through to greatness. It’s one of the most popular business books of the 21st century.
The reason we as a culture don’t aim for greatness is because everything is already good enough. We’re not completely satisfied, but we’re comfortable with what we got and don’t have the work ethic, talent, or know-how to take our lives or our business to the next level. Most of us will live a life of complete mediocrity, never finding a deep passion that acts as a seed for greatness. This book distills organizational greatness into compelling rules that you can immediately apply to your own business. Here is what I learned:
1. Great leaders work for the organization, not for personal glory or riches. They ask themselves what will make the company great, and then don’t take credit for their company’s success.
2. Hire smart people, not the position.
3. Never compromise on hiring. You must wait for the good person to come.
4. Don’t worry about motivating people. Hire self-motivated people instead.
5. Don’t teach discipline. Hire disciplined people. Disciplined people leads to disciplined thought leads to disciplined action.
6. You know you have the right people when you greatly respect your staff, and stay in touch with them after you part ways.
7. Great leaders constantly check their vision against reality and the needs of customers. They have their ear to the ground and can sense change. They don’t double down when a plan is failing to get customer responses.
8. Always think of the scary things that may impede future results, and how you can counter them before it hurts your business.
9. A big weakness of being a charismatic leader is that people will not want to tell you bad news. You have to make a conscious effort to discover the facts.
10. Debate is important for the company. It’s okay if there are heated arguments.
11. Accept reality, no matter how brutal it may be, and then maintain unwavering faith that you can overcome it.
12. Your business should be built around a simple idea, that when pursued fanatically, causes huge growth.
13. Company strategy should be the intersection of three questions: (1) What are you deeply passionate about? (2) What can you be best in the world at? (3) What drives your economic engine?
14. If you have to motivate yourself to work, you’re not passionate about what you’re doing. Growth comes from passion.
15. If you can’t be the best in the world at what you do, you will never be great. “It’s not just about building on strength and competence, but about understanding what your organization truly has the potential to be the very best at and sticking to it.” It actually takes a lot of courage to only stick to your core competency.
16. The competitiveness of your industry doesn’t matter. You should be able to beat others by being the best. If you can’t be the best, then get out.
17. Ignore competitors and simply be the best at what you do.
18. Identify one key metric (e.g., revenue per customer) that would give you insight into the performance of your business.
19. Institute a corporate system but let staff have liberty to apply their own creativity and strengths to it.
20. Do not be seduced by unrelated business ventures or deal making.
21. Corporate hierarchies demotivate while simultaneously creating a privileged class that is resented by the workers.
22. Technology can only enhance a great business, but it can’t make a bad business great.
23. It’s important to have a core value beyond money that acts as an anchor to your company. Your company has to exist for a reason beyond just getting paid.
24. Failing companies keep grasping at straws, acquiring other companies in a desperate attempt at growth instead of focusing on their core value.
And here are my nine favorite quotes from the book:
The good-to-great companies did not focus principally on what to do to become great; they focuses equally on what not to do and what to stop doing.
You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be.
One good-to-great executive said that his best hiring decisions often came from people with no industry or business experience. In one case, he hired a manager who’d been captured twice during the Second World War and escaped both times. “I thought that anyone who could do that shouldn’t have trouble with business.”
The moment you feel the need to tightly manage someone, you’ve made a hiring mistake. The best people don’t need to be managed. Guided, taught, led—yes. But not tightly managed.
The good-to-great companies made a habit of putting their best people on their best opportunities, not their biggest problems. The comparison companies had a penchant for doing just the opposite, failing to grasp the fact that managing your problems can only make you feel good, whereas building your opportunities is the only way to become great.
The moment a leader allows himself to become the primary reality people worry about, rather than reality being the primary reality, you have a recipe for mediocrity, or worse. This is one of the key reasons why less charismatic leaders often produce better long-term results than their more charismatic counterparts.
Most companies build their bureaucratic rules to manage the small percentage of wrong people on the bus, which in turn drives away the right people on the bus, which then increases the percentage of wrong people on the bus, which increases the need for more bureaucracy to compensate for incompetence and lack of discipline, which then further drives the right people away, and so forth.
The single biggest danger in business and life, other than outright failure, is to be successful without being resolutely clear about why you are successful in the first place.
The single most harmful step you can take in a journey from good to great is to put the wrong people in key positions.
What I liked about this book is that it doesn’t only apply to corporations, but to any type of personal business or goal that involves other people. It gives you a great framework for high achievement that you can start applying as you read. Highly recommended.
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