Good to Great

CHAPTER 1

Reading Check

1. Built to Last (Chapter 1)

2. 11 (Chapter 1)

Short Answer

1. Collins claims individuals settle for good enough rather than striving for greatness. He believes companies and organizations tend to view good as an acceptable achievement and become complacent—never striving for greatness. (Chapter 1)

2. Collins describes the four phases he uses to assess a company’s greatness. In the first phase, “the Search,” Collins identifies companies that have drastically increased their stock for a period of 15 years or more. In his second phase, “Compared to What,” Collins selects underperforming companies that may reasonably serve as a comparison to his great company selections. In Collins’s third phase, “Inside the Black Box,” he develops an analysis of his selected great and good companies. In his fourth phase, “Chaos to Concept,” Collins combines and interprets his data. (Chapter 1)

CHAPTER 2

Reading Check

1. Darwin E. Smith (Chapter 2)

2. The window (Chapter 2)

Short Answer

1. Collins defines a Level 5 leader as an individual who, with humility and resolve, works toward the profitability of the company rather than for personal glory or gain. Additionally, Collins notes that good leaders function under the understanding that they may at some point be replaced. (Chapter 2)

2. Collins claims the leaders of good companies are quick to take credit for success and tend to have big egos, while companies who are great have leaders who are humble, often claiming to have had good luck. Collins uses the analogy of a mirror and a window to build upon the comparison. A competent leader will look into a mirror if there is a problem and look out the window—to other individuals in the company—if there is a success; Collins indicates that poor leadership does the opposite. (Chapter 2)

CHAPTER 3

Reading Check

1. The “first who” strategy (Chapter 3)

2. David Maxwell (Chapter 3)

Short Answer

1. Collins found the Wells Fargo business model to be superior to the Bank of America business model because Wells Fargo sought employees who aligned best with the company vision and could provide the company with productive feedback to inform decision-making, while Bank of America was heavily dependent upon their CEO to make decisions. Collins cites that because of these reasons, Wells Fargo outperformed Bank of America 5:1 in the stock market in 1995. Collins further explores the success of companies that rely on a team to make decisions rather than a CEO to create a strategy for the company. (Chapter 3)

2. The “first who” approach is dependent upon building the right team of people to make important company decisions. Additionally, these companies are open to adversity and robust debate in a productive way. The benefits of this approach include improved company performance, unity, and inadvertently, lifelong friendships. (Chapter 3)

CHAPTER 4

Reading Check

1. Consumer data (Chapter 4)

2. A&P (Chapter 4)

Short Answer

1. Collins explains that companies with a culture in which individuals can openly communicate are likely to discover the root cause of problems within the company. Leaders can create such a culture by leading with questions, engaging in dialogue and debate, conducting “autopsies” without blame, and building red-flag mechanisms. (Chapter 4)

2. Good-to-great companies seek to recognize and understand problems within the company regardless of the difficulty. Collins uses the Stockdale Paradox as an example that can be used to face difficult problems. Stockdale, a POW, faithfully believed that, while he may never be released from the POW camp, his circumstances would improve. This paradox, according to Collins, is used in good-to-great companies that understand the seriousness of their problem while holding out faith for an improvement. (Chapter 4)

CHAPTER 5

Reading Check

1. Hedgehogs (Chapter 5)

2. Kimberly-Clark (Chapter 5)

Short Answer

1. Companies that are good at what they do tend to be competent at many different things while companies that are great focus on one central vision and work toward being the best. Walgreens, for example, is described by Collins as a company that believes it can be the best convenient drugstore in the world. Their centralized vision contributes to their success as a company. (Chapter 5)

2. Collins describes three understandings that are essential to simplifying and clarifying a company’s goal. These include recognizing what the company can be best in the world at, what the company is passionate about, and what drives the economic engine. (Chapter 5)

CHAPTER 6

Reading Check

1. George Rathmann (Chapter 6)

2. “Stop-doing” lists (Chapter 6)

Short Answer

1. A culture of discipline has high expectations and rigorous standards while also encouraging employees to be creative in overcoming problems—all while aligning with company expectations. In a culture of discipline, employees have a clear understanding of company processes. In contrast, Collins explains that a culture of discipline is different from companies that have CEOs who enforce discipline. Collins uses the example of Lee Iacocca, a former CEO of Chrysler, who is known for being egotistical and tyrannical. (Chapter 6)

2. A culture of discipline is closely tied to the Hedgehog Concept because ideas, expectations, and company policies must align and be justifiable in the face of the company’s common goal—the Hedgehog Concept. Additionally, Collins notes that companies that have a culture of discipline that aligns with the Hedgehog Concept have “stop-doing” lists along with to-do lists to ensure they are consistently working toward their goal. (Chapter 6)

CHAPTER 7

Reading Check

1. Fear (Chapter 7)

2. Walgreens (Chapter 7)

Short Answer

1. Collins explains that technology is not enough to overcome the obstacles of toxicity, ineffective leadership, or the lack of a Hedgehog Concept within a company. Technology is a tool that should be used in alignment with the company’s vision. To emphasize his point, Collins describes the difference between Walgreens and drugstore.com. Initially, drugstore.com was successful because of its innovative use of technology, but Walgreens, with a clear vision in mind, gradually made changes to adapt to technological advances, enabling its stock to increase. (Chapter 7)

CHAPTER 8

Reading Check

1. Timing (Chapter 8)

2. The flywheel (Chapter 8)

Short Answer

1. The concept of the flywheel emphasizes the benefits of persistence in achieving momentum in companies. Collins explains that small changes made with consistency eventually lead to company breakthroughs. Companies, according to Collins, should depend on applying the Hedgehog concept, a culture of discipline, Level 5 leadership, and the Stockdale Paradox with regularity to bring gradual change. (Chapter 8)

2. Collins describes companies that are disorganized and hurried in their execution of concepts as being in a doom loop. This doom loop, according to Collins, fails to make a gradual change and therefore causes the company to lack progression. Collins states that many times companies make this mistake in relation to acquisitions. (Chapter 8)

CHAPTERS 9

Reading Check

1. Built to Last (Chapter 9)

2. Purpose (Chapter 9)

Short Answer

1. Collins explains that great companies are driven by purpose as well as profit and that highly profitable companies may remain for a time but are not enduring if they lack a core ideology. (Chapter 9)

2. Collins proposes that the principles in Good to Great are applicable to personal goals. He asserts that a high school cross-country team is able to achieve greatness by applying the Hedgehog Concept. Using this example, Collins explains that meaning, or meaningful work, is essential in achieving greatness. (Chapter 9)