Good to Great

by

Jim Collins

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Good to Great: Chapter 3 Summary & Analysis

Summary
Analysis
Collins notes that he expected the study to show that good-to-great companies first set a new vision to guide their transformation, then found people to support that vision. However, the study actually revealed the opposite: good-to-great companies found the right people before deciding what to do with them. He refers to this pattern as “getting the right people on the bus” before deciding where the bus is going.
Here, Collins introduces the idea that the right people are not just important to a company; rather, they are the very foundation on which greatness is built.
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The example of Wells Fargo illustrates this point. Former CEO Dick Cooley foresaw in the 1970s that the banking industry would likely go through major changes in the coming decades, but because he could not know what these changes would look like, he focused on hiring a talented team that would be able to weather any change. When banking deregulations arrived soon thereafter, Wells Fargo did indeed show much better returns than any other company in its sector. In contrast, its competitor Bank of America focused on hiring strong leaders and weak executives, and the company subsequently struggled while Wells Fargo succeeded.
This specific example reiterates just how far successful companies sometimes go in prioritizing wise hiring decisions over everything else. This section also reinforces the idea that a person can be “right” without being an exceptional leader; the good-to-great idea of the right people has more to do with building strong teams than with finding one-of-a-kind individuals. 
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Collins emphasizes that the point of the chapter is not just the importance of having the right people, but rather the importance of getting them first, before making other strategic plans. He notes that many of the comparison companies focused on hiring “genius” leaders who helped the companies succeed but did not prepare them to keep succeeding without the individual genius. This pattern shows up especially in the unsustained comparisons, which often did well under one exceptional leader but could not sustain those successes over time.
Here, Collins deemphasizes the value of “genius,” again hinting to readers that anyone can achieve greatness without possessing outsize inherent gifts. Again, rightness has to with effective matchmaking between individuals and organizations; anyone can be “right” in the right context. This matching process is so important that it takes precedence even over strategic planning, something that’s usually considered essential to a company’s success.
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Additionally, Collins reports that patterns of executive compensation were not clearly linked with the transitions from good to great, even though conventional business wisdom often emphasizes the importance of payment structures. Collins concludes that “it’s who you pay, not how you pay them.”
This note makes greatness even more attainable, indicating that companies need not offer complicated or especially high compensation in order to become great. They just need to be committed to finding the right people, who will push the company toward success regardless of the specifics of their pay.
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Finally, Collins notes that even though good-to-great companies are generally demanding workplaces, their processes of finding and keeping the right people can always be characterized as rigorous rather than ruthless. That is, good-to-great companies were relentless in laying off employees who weren’t good fits, but this rigor actually led to better outcomes for everyone, since those employees didn’t waste time in a place where they wouldn’t succeed in the long run. However, Collins also notes that good-to-great companies didn’t fire people as a primary strategy; they did so only when it was necessary for the success of the company.
Here, Collins clarifies that focusing on individuals’ “rightness” does not mean judging them harshly as individuals. Instead, it means paying close attention to the long-term best interests of both the individual and the company and making sure that they align. This rigorous approach also echoes the theme relentless of focus and discipline that Collins develops further in the coming chapters.
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Collins sums up this rigorous approach as three “practical disciplines”: don’t settle for hiring the wrong people; don’t wait to make changes in personnel; assign the best people to the biggest opportunities in the company, rather than the biggest problems. Additionally, he suggests that following these disciplines to staff the right people is also the key to allowing top-level executives to have great companies and great lives. With the right people in place, the good-to-great data indicate, CEOs are freed up to work reasonable hours, tend to their families and personal lives, and enjoy long-term camaraderie with their colleagues.
The link between finding the right people and being able to combine good companies with good lives adds a new perspective to Collins’s definitions of greatness. This perspective opens up the accessibility of greatness even more: it’s not just for people prepared to sacrifice their lives to the cause. The enviable work-life balance described here is also a form of duality, and though it may seem paradoxical, Collins shows how good-to-great principles can help these two seemingly opposite realities—a great company and a great personal life—coexist.
Themes
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The Importance of the Right People Theme Icon
Focus and Consistency Theme Icon
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