Good to Great by Jim Collins: Why Some Companies Make the Leap (Book Summary & Discussion)

The Daily Drive Book Club | Episode 2 

📖 Good to Great: Why Some Companies Make the Leap and Others Don't by Jim Collins

Episode Summary

What separates companies that stay good from the ones that become truly great — and stay that way? In this episode, we dig into Jim Collins' Good to Great, unpacking five years of research, 11 companies, and the surprisingly humble, disciplined, and intentional patterns behind lasting greatness. Spoiler: it's not charisma, and it's not luck.

In This Episode

• Why the best leaders are humble, not flashy — and what Level 5 Leadership really means
• Getting the right people on the bus (and off it, and maybe into a different seat)
• The Stockdale Paradox: holding brutal honesty and unwavering optimism at the same time
• The Hedgehog Concept — finding your one big idea at the intersection of passion, excellence, and economic engine
• Why technology accelerates greatness but can't create it
• The Flywheel vs. the Doom Loop: slow, steady momentum vs. chasing the next big win
• Our Gas Tank rating for the book

Our Rating

⛽ Gas Tank: 3/4 (both hosts) Same rating as our last book — but for completely different reasons. More nuggets, fewer stories, and we both wanted more on the how.

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Transcript

0:02

You're listening to the Daily Drive Book Club. A leadership audiobook experience where two leaders turn their commute into a classroom. I'm Vanessa. I'm Yanet. Sit in traffic with us as we drive, learn, and lead together. All right. Well, I-95, three right lanes blocked before 836. Whoo, we're gonna be on here for a while. good morning. How are you? Good, good, good. Already on my way, so let's get it. today we are discussing our second book, which is Good to Great: Why Some Companies Make the Leap and Others Don't by Jim Collins. So Yanet, why don't we start with you giving a brief overview of what the book was about, and then we'll get into the questions. Sure thing. There was a team of over 20 researchers, over five years of research, looking at companies and what made them go from good to great companies. They had a rigorous process. After looking at hundreds of publicly traded companies, because their finances are much more readily available, they honed in on 11 companies and their comparables. These companies were companies that consistently beat out the market by 6.9% over 15 years Wonderful. That's the most serious you're not, you're ever gonna get, right? Like, that was it- Yeah right? That's the research part. Now I can just be me. I'm very, very impressed. Thank you very much. So this book had a lot. Let's start with what, hit for us. What did you like? What stood out? Well, I think overall greatness is disciplined, is intentional, it's slow, and usually it's not over the top. That stood out to me. Strong leadership, the right people in the right spaces or places at your company, sustainable momentum, great cultures, technology that amplifies, and that's an interesting one we'll get into 'cause it doesn't solve your problems but it can amplify, and meaningful work and satisfaction. So those are some of the themes that I jotted down that stood out. Yeah. I think it had a lot of nuggets, right? I'm just gonna kinda run through them and then we can take them one by one. But there was- Sure the whole level five leadership concept. Wow. Yeah. Yeah. Then there was the first who then what idea. Yep. The Stockdale paradox, the hedgehog concept. Hedgehog, hedgehog. I've been practicing how to say hedgehog. Very good. Thank you. Thank you. There was the culture of discipline which you mentioned. Mm-hmm. The technology accelerators, and then the flywheel and the doom loop. These were the- key concepts that they identify that help take a company from good to great. Absolutely. Level five leadership. Wow. I mean, they talked about... So first of all, 10 out of the, 11 companies that went from good to great, their CEOs, their leaders came up through the ranks. They were from inside. So sometimes it really shows how boards look for these, over-the-top personalities to lead companies, and many times those people are absolutely brilliant, but their brilliance dies with them. And after they leave a company, a company falls apart. And as he's explaining these great leaders, but those are usually level four leaders, which we probably all have seen in our lifetime, it was like, wow, yes, they really didn't have the successor. They didn't plan well. They didn't, build the company to last after them. So in a level five leader, it really is someone much more humble, low-key, and zero tyranny. However, they were disciplined, and they knew exactly what excellence looks like, in the book he mentions they would fire their own brother, and that's important. And the way that they talked about it was that what takes you from a four to a five is putting the organization above yourself. Oh, that's incredible. Yeah. The- Absolutely the, the abil- and that's kind of like fi- firing your brother, right? That concept. Like- Yeah you will do what you need to do for the benefit of the company, even if it doesn't personally benefit you. That's what helps you make that jump from a level four leader is good, but what takes you- It's good to level five, which are the kinda leaders that take an organization from good to great, is that piece of putting the organization before yourself. Like you were saying, it's not about these big charismatic personality types, which was also referenced in,- Leaders Eat Last. Uh-huh I think they talked about the Kimberly-Clark, CEO they said was very awkward and unremarkable, and, I think that was the one that made the decision to sell the paper mills. Yes. Remember? Yes, absolutely. And- it completely changed the organization. But, that person didn't have this, charismatic personality. They were kinda quiet, just doing their thing., You don't have to have all this charisma and big personality, as you said. You can just be humble and really focused on the success of the company. But the paradox for me was humble, yet working toward excellence. Those two are not opposites. Right. And some people might think that just because you're humble, you're not working toward excellence. And, it reminded me of certain leaders that I've worked with that, someone will say, "Oh, this person is a difficult personality," or whatever. And sometimes it's that they are working toward excellence all the time, and when you don't give it to them, they see it. It is clear- Right as a beautiful blue day. You know? They really, they can sniff through you being mediocre. Right. And that stood out to me because not accepting someone who is mediocre is very important. However, it's very difficult. We're both leaders, and when you see that in someone, you know what? Leads me to the, your next bullet that you mentioned, the bus. Right. Getting the right people on the right seats on the bus. As a younger leader, if you were on the seat on the bus and you just were not doing a great job, I would probably start pushing for you to get out, because I could not. However, it, he went into sometimes you have to move people around the bus. Maybe they're just in the wrong role, and that really makes you dig deep as a leader. You don't have to carry the person, and trust me, a level five leader will try different things with you, and then, ask you to leave the bus. But it was an interesting concept of having the right people on the bus, and letting them guide the bus. I don't know about how that landed with you, because it was like, oh, don't figure out what you wanna do. Get the right people on the bus. But then I'm like, "Pero, pero esperate." If, if I don't have a strategy of where I wanna take the bus, how do I know who's right for the bus? Well, I think he's talking about just having people who are independently- Good, excellent, are disciplined, know what they're doing, have great ideas. And if you get all those types of people on the bus, then they help you build a strategy that's beyond what you could have thought up yourself, by yourself. You know, you just, you just mentioned something. He talks about disciplined self, disciplined thought, and disciplined action. And people who have this is innate. You don't have to motivate someone who has this, who brings this to the table, and that's a beautiful thing. I think it's hard to find, but we have found it, and I've changed the way I ask interview questions because of it. That's exactly, I was just gonna say, as soon as I read that part I immediately changed the questions that I was asking to try to get at some of that. So yeah, make sure you have the right people on the bus. Make sure you get the wrong people off the bus, and you may have to shuffle around some seats on the bus. But it was clear that, making sure that people are in the right positions was critical for going from good to great. Absolutely. So then there was the Stockdale Paradox. Do you wanna tell that story? Stockdale. There was, prisoners of war. They were captured, and some people, in trying to stay sane, they kept saying, "We're going to go home by X. We're going to go home by Christmas. We'll be home by Christmas. And they almost start, writing it on the walls. However, Christmas comes, you don't go home, and the point of depression was so big that some of those people did not make it. They were so honed in on the clock and putting a date on their success that they were so defeated that their bodies and their minds could not deal with it. What was his name again? Stockholm? Stockdale. Stockdale, sorry. That's a whole other syndrome. Stockdale, Stockdale said, "Oh, we're gonna go home." And in his mind, he was disciplined that he knew that he would get out. However, he was not going to disappoint himself by putting a timestamp and a clock on something that he could not control. Right. So the idea was- Right having that paradox of being real about what the situation is, but also being unwaveringly optimistic about the potential outcome. So he was like, "I don't know when this is gonna end, but I know it's going to end, and we're gonna go home." So, being able to hold that paradox 'cause you don't wanna be so focused on positivity that you're ignoring the real issue that needs to be dealt with, you know, when you take this into a- Mm company perspective, right? You don't wanna ignore the, the hard truths that need to be dealt with, but you also wanna have that unwavering optimism that, it can get better. Absolutely. Absolutely So then we have, what's the one that you love to say? Oh, hedgehog? Yeah. Are you messing with me? You're messing with me. Hedgehog. The hedgehog concept. Do you wanna talk about that? No, because I'm more of a fox, so you're gonna have to go with the hedgehog. So the hedgehog concept comes from, an essay about the hedgehog and the fox, where the fox knows many things, but the hedgehog knows one big thing. And it was saying that great companies found their one big idea at the intersection of three circles. The first circle being what can you be best at in the world? Not just good, but what can you be the best at? Uh-huh. The second circle was what drives your economic engine. And the third circle was what are you deeply passionate about? So when you find the thing that sits at the intersection of those three circles, that's your hedgehog concept. So instead of trying to be good at everything, like the fox, then, you focus in on the one big thing, which is the hedgehog. And then I think they use Walgreens as an example for this one, so in the Walgreens case, it was profit per customer, and you think, "Wow, yeah, that's simple," but it isn't. And some companies, it takes them up to four years. By the way, you know, I'm a fox. After one year, I'm already running around like, "Forget this," "let me go find something else." But in the hedgehog, you find you have to hone in. Is it what are we really doing, and to them, was profit per customer. Put a store on every corner if you have to. Just make it easier for that customer to spend more money. We're gonna spend a lot to get that customer, so how do we help them, spend money with us? And it's interesting because this one eventually led to how you get technology to accelerate that. I think many of us when we were kids and you went to the pharmacy, your pharmacist had your prescription. You couldn't pick up that prescription in Wisconsin if you were from Miami. And eventually Walgreens got technology to accelerate their hedgehog concept, meaning I can pick up my medication in Florida or in Washington, DC, or New York City. And that is to make sure they kept me as their customer. Yes. Ba, ba, ba, bow. Ba, ba, ba, bow. I was ready. I was ready. Yeah. So that, that's a good segue, into, the technology accelerators yes, technology accelerators, because interesting, out of all the CEOs they interviewed, most of them... I think only, like, one mentioned technology in his top five things. Believe it or not, the word luck- Mm came up hundreds of times more than technology, yet in our day-to-day we talk about technology one million times more than we talk about being lucky. And luck does have something to do with it. Let's not fool ourselves. Right. Um- But I think that this is where the idea of them following companies that had been great for at least 15 years, because luck will help you be great for a little while, but it doesn't keep you great- Yeah for 15 years. And so yeah, luck plays a part. No, it doesn't. Luck plays a part, for sure, but- Mm-hmm you can't lean on luck alone. So technology has to be an accelerator, not a primary mean. Okay? That's what I got from the whole technology part. It's not going to s- solve your problems, it's not going to make you go from good to great, but it will help you accelerate your business. Right, like it can't be the answer- So- but it can help- It's not, yeah accelerate the answer. Right. It can absolutely help accelerate the answer, and it has to help support your hedgehog concept. It can't take away from it, it can't derail from it, et cetera. You know, something I wanna mention, because I don't wanna forget it, is when you're great, you usually don't know it Whether you're in the middle of a company being great and they're going from good to great, and changes are happening, but usually very slow at first. We're gonna get there, and then you pick up momentum, and then you're feeling good, right? But usually is when you look back that you can say, "Oh, wow, yes, we did go from good to great." Right. Or that company went from good to great. In this case, it was very tied to finances, and other industries, it's tied to other things. But I wanted to mention that because most people, they knew it was somewhat special, but they didn't know, oh, this is the exact plan. No, they didn't make a plan to go from good to great. That leads into the, last concepts of the flywheel and the doom loop. The flywheel was exactly what you were just talking about, right? It's not this one big idea or this one big decision or this one big action that takes you from good to great. It's about the constant daily turning of that wheel over time that builds momentum, and then you don't even realize that it's happening. You can't always feel it in every moment, but then all of a sudden there comes a moment where you kinda look back and you're like, "Wow, this wheel went all the way from there to here, and now we're great." You know what? I wanna stop you for a second about the flywheel, because first I had to Google flywheel. I was like, "What in God's name is a flywheel?" I was like, "Is he fishing? What is a flywheel?" It could be metal, it could be wood, but anything that is mechanical or turns something, but they're usually very huge, so if I'm the only person who didn't know what a flywheel was, fine. But, I really had to look into it and- What I captured from this and from very personal experience, when you are starting something new, and in your mind you know it will be excellent, right? Because you've made up your mind. I am that kind of leader. No matter what, I do see the potential in people, I see the right in people, and in my mind, I might not have everything ironed out, but we're gonna be great, right? You told me once, I don't know how to fail. Oh, I fail, but I'm gonna pick myself up and we're gonna be great. At first, you almost feel when you're pushing this flywheel, when you're pushing this wheel to turn, it's so hard. It's like... my mom had a car without power steering. Oh, yeah. Oh my God, to turn... To turn that wheel, what in God's name? So at first it feels that way, It feels like you're bringing your team along or you are showing people something, and you have to put so much of yourself and, it almost hurts in your gut and you're pulling or pushing that wheel, trying to bring people along. And then you start seeing breakthroughs. Right. And then you start seeing breakthroughs in your team, of those people you have on the bus, right? Right. And little by little, people start turning the wheel with you. And all of a sudden, little by little, y- you feel your muscles relax a little, and then it starts picking up. And then it starts picking up to the point that, sometimes you have to work to slow it down and maintain it and, and change strategies because now your wheel is turning. And I'm a visual person, so as he was talking, I really felt it and I imagined it, it was good. You wanna talk about the... What was it? The circle of doom or...? The doom loop. The doom loop. The cir- You would say the doom loop. Yes, the doom loop. He talked about that the comparison companies, instead of functioning with this flywheel were functioning in a doom loop. And the doom loop... well, we were listening to the audiobook, but they were referencing that in the book there are all these diagrams and so I Googled them after so that I could see the diagrams. But the doom loop was basically when, a company kept jumping from, one initiative to another looking for, that big win. And so they didn't have that, anchoring identity. They didn't stay at something, chipping away at it, turning the wheel slowly over time. They kept jumping around trying to find that one big win that was gonna, take them over the top. And so that kept them in that doom loop of jumping around and never really being successful at anything. It makes you think because sometimes, you have your Hedgehog Concept, and some of the things you're doing you have to keep asking yourself, "How does this affect X?" To someone outside they might think, Oh, they don't have a strategy." And they do, but they're just trying to get there a different way. I think in hindsight it's easier to see where you were in a doom loop. Because if you're in the doom loop, many people might be thinking, Oh, no, we are turning toward something great." I think deciding when to call it and say, "No, this isn't our hedgehog. No, this isn't our thing. Sell the mills," it's really hard to call it. Those leaders, Some people really doubted them when they said, Yeah, you know what? This is not for us." I think in all of this, of the flywheel and the doom loop, I think it all goes hand-in-hand with the Hedgehog Concept, right? So I think you have to be turning the flywheel connected to whatever that Hedgehog Concept is. But I definitely think that means that underneath you may be testing out different things, to get you to that Hedgehog Concept, but it's about not giving up on the Hedgehog Concepts, and abandoning it and finding another Hedgehog Concept the next day. You may try different strategies but you have to stay turning that flywheel for that overall goal. I have two more things to add, because I wanna take something back that ties this book with the last book that we, that we discussed. Small, meaningful encounters comes up again- Oh, yes in this book. Yes. The fact that speeches and slogans do not make culture. It makes you reflect on yourself, and it talks about charismatic leaders, that charismatic leaders have to have checks and balances in place to check themselves so that they can become level fives. It doesn't mean that if you're charismatic you won't be a level five. It means it's a little harder. Because you have to level set, and maybe you like the big speeches and the big parties and things like that. If you have a big personality, you have to have your leadership around you that can tell you how it is, what it is, that can check your ego at the door so that you can ultimately be a level five leader. I mean, some people strive for that. Some people don't care, and they wanna stay as a level four, and that's, you know, good for them. But definitely everyday conversations, repeated interactions, consistency, and how leaders make people feel does come up. I think that's really important because we all have blind spots no matter how wonderful we are, right? And we have to make sure that we have the right people, on the bus around us if your leadership team isn't strong you might not necessarily wanna listen to their input. But, you have to make sure that that, team around you is strong, and then make sure that you're listening to them to check you because we all have blind spots, and if we're not open to being checked, then we're functioning from ego and not from that level five concept of putting the organization before your own ego. Absolutely. Which leads me to the last one, which reminded me of you, and it's satisfaction. Oh. The fact that you don't have to be, if you don't want to be, an investor, an investment banker, and make a gazillion dollars a year. If you choose your path and you are great at what you do, and this is you, Vanessa, when you go to sleep at night you are proud, and you put your head on your pillow and you're proud of the work you've done, the teams you have built, what you have done for the community, that, is golden. And the book does talk about that, that you have to feel satisfied because you could be in the greatest job ever, making all the money in the world, and not be satisfied, and that's sad. First of all, thank you for saying that that reminds you of me. But I think that's very important and that's what's driven me through every job I've had, every leader I've worked under, whatever project I was working on. I have to make sure that I feel good with the effort that I put in today and with the work that I'm producing, period. if I have that, I can deal with anything else. I can deal with someone correcting me. I can deal with someone pushing me. I can deal with, a failure and learn from it. But if I don't have that feeling of satisfaction and feeling good about what I'm doing every day, then it's gonna be hard for me to manage all those things that are coming at me. And I'm not trying to pretend like I have that feeling every single day, and I definitely, have made mistakes throughout the years. But I'm always willing to look at myself and see, where did I not meet my own expectations and how can I do better? Which is part of why I'm reading all these books, because I wanna be the best professional that I can be so that we can do the best work that we can do. Wow. That was exciting. So we talked about all of the main concepts in the book, and I think we both agree that they were all really great. But what didn't hit for you? What didn't land? I think, the first chapter, the science chapter, the methodology chapter was really long, and it took away a little bit from let's get started. And I understand it has to be there. But in an audio book, give me the CliffNotes of the research, maybe put it toward the back. I definitely think hearing about the methodology was important to really substantiate the validity of the findings, right? These nuggets that they're giving us- Mm-hmm right? There was strong research backing this. So very important to know that, not so exciting to listen to. So I agree on that. I think the one thing that was lacking for me was with the hedgehog concept, because it seems so critical, to go from good to great. I would've liked to have seen how you can take yourself through a process of figuring out what the hedgehog concept should be. I know they have those three questions and those three circles, but those are big questions, how within each of those questions can you go about figuring that out for yourself? You know, and a couple questions that we had, when we were reading through it, and at the end he did go into it, is some of these companies eventually failed. Circuit City, right? Yes. So if you read the book he does talk about that at the end. He wrapped that one up pretty well Right, because there's many factors that could lead to that, but the fact that a company lasted as great for over 15 years is still success regardless of what happened to an industry or a company later on so what is- What else? the one thing that you can use Monday morning? To me, honestly, is the bus. Having the right people on the bus to move everything forward. I look at everyone and start shifting a little bit their positions and their work and, and working to their strengths is having the right people. Right people in the right places is the magic for me of this book, and what I can implement every day. Yeah, agreed. The first thing I started doing while reading this book, was changing the interview questions, reassessing the team and the distribution of work and all of that to, hopefully get the right people on the bus so what was your one idea from the book that you would put on a billboard? And you know, I thought about this, 'cause I wanted to come at you with a really strong billboard idea, but I have to say for this one, I'm going to skip the billboard, and I'm going to give you my favorite quote from the book. Here it is. Inner compulsion for unadulterated excellence, not fear. Now that is a billboard concept. Yeah, that was it. Okay, Yanet, it's time to rate the book. What's your rating on a gas tank scale? I have to give it, uh, three-fourths of a tank. Same for me. I'm also giving it three-fourths of a tank, and I know we gave Leaders Eat Last three-fourths of a tank, but, while I'm rating it the same, it's for completely different reasons. I think Leaders Eat Last had a lot of great stories and a lot of great points. This book didn't have as many stories, but I feel like it had more nuggets. Um, but they both fell short for me a little bit on the, uh, you know, just missing some, some more pieces about the how that I would've liked to have seen Absolutely. It's for different reasons for me as well. I think the very, very, very heavy start with science as a communicator, it turned me off. I understand it's rigorous," but I wasn't there for the science. It was a little too long. And, the other one kind of felt like in retrospect, it's so much easier to look at companies, and luck had so much to do with it that, you know, it's how in God's name do I find the hedgehog? I was missing that. Yeah, yeah. I was missing that. Me too. You know? It took me four years. Jesus. You know? In Miami time, four years is like 45 years. You know? But it was absolutely good. It's worth it. There's things in there that that should drive you, that should absolutely drive the way you lead. Absolutely another book to add to your leadership library for sure. And with that, I literally just pulled into my parking spot. All right, everybody, so that's it for today. Next up we have Multipliers by Liz Wiseman: How the Best Leaders Make Everyone Smarter. All right, dale. I'll see you in the parking lot. Bye. Bye. That's our commute for today Got a question, a book suggestion, or something on your mind? Email us at thedailydrivebookclub@gmail.com. Show notes for this episode are in the description. Thanks for driving with us on The Daily Drive Book Club. Keep driving, keep learning, keep leading. We'll see you on the next one. And by the way, no laws were broken during this recording. That's a whole nother podcast.