Good to Great

“Good is the enemy of great.” This book asks: How can companies leave mediocrity behind and achieve enduring greatness?

1. The Power of the Hedgehog Concept

Achieving greatness isn’t about trying everything; it’s about focusing relentlessly on what truly matters. The hedgehog concept refers to defining your company’s strategy by answering three questions: What can you be the best in the world at? What are you deeply passionate about? What drives your economic engine?

The name comes from a metaphor with a hedgehog and a fox: while the fox constantly changes strategies to get the hedgehog, the hedgehog sticks to one simple trick—curling into a spiky ball. Good-to-great companies follow this same principle of simplicity and focus. After years of self-analysis and debate, great companies settle on their own hedgehog concept and use it as a compass for all decisions.

For example, Walgreens asked how they could make the drugstore experience more profitable and convenient. By tying this question to their passion for better customer service and focusing on community-based economic indicators, Walgreens pivoted effectively and grew significantly. This simple focus guided all their operations.

Examples

• Walgreens aligned their online business strategy to make drugstores even more convenient.
• Nucor decided to become the best steel company by mastering mini-mill technology, sticking to their hedgehog concept for decades.
• Other companies flailed by trying many strategies instead of focusing on one driving principle.

2. Small and Steady Progress Builds Greatness

Transformations aren't achieved by grand gestures but by steady, small improvements over time. Collins compares this process to a flywheel—turn it slowly at first, and with consistent effort and direction, the momentum builds for a breakthrough.

Nucor, once on the brink of bankruptcy, didn’t rely on bold acquisitions or risky gambles. Instead, they built mini-mills, made better steel, earned more customers, and repeated the cycle. Over years, each small step added momentum, culminating in them being one of the most profitable steel manufacturers in the US.

In contrast, competitors that relied on flashy transformations often struggled. Their lack of follow-through and constant shifts in direction kept them from building momentum. Consistency, not quick fixes, separates good companies from great ones.

Examples

• Nucor’s two-decade transformation from bankruptcy to outperforming the market fivefold.
• Kimberly-Clark’s steady focus on competing with Procter & Gamble, turning challenges into opportunities.
• Comparison companies floundered by frequently switching strategies instead of committing to a direction.

3. Technology is a Tool, Not a Destination

Good-to-great companies understand that technology accelerates progress toward their goals; it isn’t the end goal itself. While many firms adopt technology out of fear or as an attempt to play catch-up, great organizations strategically assess whether a new technology aligns with their core vision.

Take Walgreens during the e-commerce boom. While competitor hype grew around online drugstores, Walgreens paused and asked how the technology could reinforce their goal of better customer experiences. This led to features like online prescriptions that delivered real value. Meanwhile, others like Drugstore.com leaped into the trend without a clear plan and lost much of their value within a year.

Successful companies don’t pursue tech for its own sake. They prioritize alignment with their hedgehog concept, adopting technology only when it furthers their purpose rather than distracts.

Examples

• Walgreens developed an online platform tailored to customer needs, rather than blindly chasing trends.
• Great companies pioneered useful technologies by aligning them with their overarching strategy.
• In contrast, comparison companies often flopped by chasing tech fads without clear goals.

4. Humble Leaders Make Great Leaders

A common thread among good-to-great firms is strong, selfless leadership. These “level 5 leaders,” as Collins defines them, prioritize the success of the company over personal ego. They’re driven to achieve results but remain humble and credit their teams instead of claiming glory.

Darwin Smith, the CEO of Kimberly-Clark, exemplified this kind of leadership. Despite transforming the company into a consumer goods powerhouse, he avoided celebrity CEO culture. Instead, he worked quietly, dressing modestly and preferring the company of ordinary workers over elites.

On the other hand, leaders with big egos often derailed their companies. Rubbermaid’s CEO Stanley Gault micromanaged and sought personal acclaim. When he left, the lack of strong groundwork led Rubbermaid to rapidly lose value and be acquired by a competitor.

Examples

• Darwin Smith’s low-profile yet transformational leadership at Kimberly-Clark.
• Rubbermaid’s post-Gault collapse due to lack of sustainable leadership.
• Level 5 leaders focus on long-term company success rather than personal accolades.

5. Prioritize People Over Processes

Before deciding on the “what” of their business, great companies focus on the “who.” They ensure the right people are on their teams and the wrong people are not—with no exceptions. The right people bring the character, drive, and adaptability needed to face challenges effectively.

Dick Cooley of Wells Fargo didn’t know how deregulation would change banking, but he believed his talented, innovative employees would adapt and lead the company to success. Wells Fargo thrived under this principle. Meanwhile, comparison companies suffered from hiring based on immediate needs or failing to remove underperformers.

Good-to-great companies also avoid overmanaged environments. With motivated and disciplined individuals in place, employees operate effectively without needing micromanagement.

Examples

• Wells Fargo thrived under a people-focused culture, earning Warren Buffett’s praise.
• Great companies fire underperformers quickly or relocate them where they can succeed.
• Comparison companies often hired based on short-term needs and struggled to adapt long-term.

6. Confront the Unvarnished Truth

To move ahead, organizations must face facts—even when those facts are unpleasant. Collins calls this balancing act the Stockdale Paradox: Leaders confront brutal realities while maintaining faith in eventual success.

Kimberly-Clark didn’t shy away from competing with Procter & Gamble, even as other companies tried diversifying to avoid a fight. Their bold decision to face competition head-on resulted in market dominance. By contrast, Scott Paper avoided conflict and was eventually bought out.

The ability to embrace tough truths—paired with optimism—builds resilience and drives progress.

Examples

• Kimberly-Clark’s moment of silence for P&G, symbolizing their resolve to compete with strength.
• Scott Paper avoided market challenges and lost their competitive edge.
• Companies that balanced reality and hope adapted better to market shifts.

7. Create Space for Tough Conversations

Leaders must foster open, honest environments where employees feel safe sharing truths. This minimizes decision-making blind spots and ensures harsher realities aren't avoided but addressed.

In meetings, effective leaders act as moderators, asking thoughtful questions rather than making declarations. Debate is encouraged, mistakes are treated as learning opportunities, and employees have mechanisms to raise concerns without fear of blame.

Good-to-great companies don’t have “more” information than others; they engage with it better. They dive into facts, unafraid of pushback, to make thoughtful choices.

Examples

• Leaders in great companies act as listeners and facilitators during meetings.
• Blame-free post-mortems encourage employees to openly reflect on failures.
• Mechanisms like “red flag” alerts give staff a way to quickly identify problems.

8. Real Discipline, Not Tyranny

Successful companies practice disciplined, consistent adherence to their hedgehog concept. Rather than relying on strict authority figures, discipline is embedded in company culture through aligned goals and values.

Wells Fargo lived this principle when they streamlined operations in preparation for industry regulation changes. They cut executive perks, like private jets and plush dining rooms, to center attention on efficiency. By living these values, the team stayed unified behind their hedgehog goal.

Tyrannical management may temporarily force discipline, but it rarely lasts. After Stanley Gault left Rubbermaid, the company’s culture of discipline disintegrated without his oversight.

Examples

• Wells Fargo executives embraced efficiency, cutting extravagant perks.
• Workers at great companies naturally aligned with shared, disciplined goals.
• Rubbermaid crumbled after losing its tyrannical leader’s sharp enforcement of rules.

9. Success Takes Time and Patience

Greatness isn’t instant. It takes years—or even decades—to consistently apply the right habits and principles. Good companies commit to methodically pursuing their strategy without rushing outcomes or seeking shortcuts.

The hedgehog concept and flywheel process are long-term approaches. Focus, persistence, and faith in the process keep teams motivated, even when results aren’t immediately obvious.

Sustained greatness isn't a product of coincidence or luck—it’s the result of steady dedication.

Examples

• Nucor’s decades-long process of building mini-mills and growing market share.
• Kimberly-Clark’s patience while establishing dominance in competitive categories.
• Comparison companies faltered by losing faith and frequently switching strategies.

Takeaways

1. Build your hedgehog concept by asking: What can we be the best at? What are we most passionate about? What drives our economic engine?
2. Hire the right people, and don’t delay in removing the wrong ones—they determine your long-term success.
3. Maintain discipline and perseverance in pursuing your goals, even when results take time to materialize.