Jim Collins during his study was surprised to know that some companies suddenly made a leap to greatness but some were left behind. In his book “Good to Great” published in 2001, Jim Collins explained the results of his five years study, where he examined the key reasons behind the success of those public companies which led them to achieve success leaving behind the other companies.
In this book Jim Collins explained the five major concepts which according to him led these companies to stand out from the rest,
- The Hedgehog Concept
- Role of Level 5 Leaders
- Getting Right People
- The Stockdale Paradox
- Building Culture of Self Discipline
The Hedgehog Concept
According to Jim Collins, Good to great companies were able to find their own hedgehog concept by answering these three simple 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?
And the intersection of these circles described their own hedgehog concept. After they discovered their own hedgehog concept all their policies and efforts were focussed on that.
Let us take an example of drugstore chain Walgreens.
They discovered that to become a most convenient drugstore they need a high customer profit per visit.
This simple hedh]gehog concept pushed them to outperform the general stock market by a factor of seven
Role of Level 5 Leaders
In his Book Jim Collins explained the importance of Level 5 leaders as he described that all the good to great companies flourished under the guidance of level 5 leaders.
Here are some key characteristics of level 5 leaders which helped their companies to become Good to Great
- Level 5 leaders are team members, managers, and leaders,
- Level 5 leaders were found ambitious on behalf of the company.
- Level 5 leaders remain humble with the people around them
- Level 5 leaders were driven towards results and wanted to leave a culture of continuous performance even after they leave
Let’s take an example Level 5 leader Darwin Smith, who helped Kimberly-Clark to emerge as one of the leading paper consumer goods companies in the world.
Getting Right People
According to Jim Collins, getting right people in the team is the foundation of every company to transform from Good to Great. Companies not only need to get right people but also they need to get rid of wrong people.
When companies recruit right people they no longer need to define a clear path for them as they will eventually find a right path to success.
Let’s take an example of Wells Fargo, when their CEO Dick Cooley realized that getting best and passionate people into the organisation is the only way to prevail from the imminent deregulations of the banking industry.
The Stockdale Paradox
Stockdale Paradox is a concept of confronting hard facts while maintaining faith. Stockdale Paradox was first introduced by the US Admiral who was captured during Vietnam War. During that time he was continuously tortured by the enemy and he was not sure whether he will be able to see his family again. But under hostile circumstances he never loose hope and he knew one day he will see his family again but didnt know when.
But one thing which kept him alive and didn’t allow his spirit to die down was the fact that he never indulge himself in foolish optimism like his fellow soldiers.
Building Culture of Self Discipline
Jim Collin has described the importance of Self Discipline in following the Hedgehog concept.
For Eg: Former triathlete Dave Scott was self disciplined to rinse his daily cottage cheese meal before eating to minimize his daily fat consumption even after the his daily routine of 75 miles of biking, 17 miles of run and 12 miles of swim.
- You can also find your simple hedgehog by asking three simple questions explained above
- Being humble and modest in the foundation of becoming a leader
- Right people are not required to motivate by the management
- We must accept the hard and nasty facts without losing hope
- Simple discipline is the foundation of following the Hedgehog concept