Good to Great

by

Jim Collins

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Good to Great: Chapter 7  Summary & Analysis

Summary
Analysis
Collins relates the story of drugstore.com, an early internet pharmacy that gained a high market valuation as soon as it went public in 1999, despite having little concrete evidence that it would provide returns to its investors. Because its technology was so new and exciting, the conventional wisdom of the time held that the company was destined for success. Pressure mounted on Walgreens to dive into internet business with the same speed, but Walgreens instead proceeded slowly and methodically, introducing web features deliberately over time. While Walgreens’s stock steadily climbed, drugstore.com lost most of its initial market value.
Extending the importance of Hedgehog Concepts to the exciting field of technology, Collins makes the case that focus and consistency are still necessary even—and especially—when broad changes in the world create new opportunities. The good-to-great concepts, he argues, apply regardless of context. He also begins to hint at another aspect of the idea that anyone is able to work toward transformation, since greatness is not reserved for those on the cutting edge of technology.
Themes
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The contrast between Walgreens and drugstore.com illustrates the core idea of this chapter: good-to-great companies show that technology is only an asset when it is applied methodically in service of the company’s Hedgehog Concept. Collins points out that this principle applies not just to the internet, but to any new technology; such innovations are never valuable just for their own sake. Walgreens, for example, showed similarly wise adoptions of other new technologies in the past. Good-to-great companies are technologically sophisticated, but in unique and careful ways that tie closely to their Hedgehog Concepts.
Collins reiterates his point that Hedgehog Concepts must extend to the use of technology, just as they determine all the other actions a company takes. This discussion also suggests a new form of duality, in that Collins presents technology as neither good nor bad. Rather, it can have positive and negative aspects simultaneously, and great companies know how to balance those opposing facets.
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Collins lists the ways that each good-to-great company embraced new technology methodically, from Kroger’s early adoption of bar code scanners to Gillette’s devotion to excellence in manufacturing razors. In each case, technology accelerates the company’s momentum but, crucially, does not create that momentum in the first place. The good-to-great companies began their transformations by developing sound Hedgehog Concepts to create momentum, and only then did they use technology to support those efforts.
Here Collins foreshadows the symbol of the flywheel, which creates momentum over time rather than through one dramatic change, like adoption of a new technology.
Themes
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Good-to-great companies often became pioneers in the use of technology, when that technology tied closely to their Hedgehog Concepts. In contrast, comparison companies did not usually become pioneers in technology. Those who did were unsustained comparisons, which shows, as Collins writes, that “technology alone cannot create sustained great results.” Collins notes that this data-based conclusion is at odds with media coverage of technology and business, which often suggests that technology-driven change is more important than anything else.
By showing how the unsustained comparison companies used new technology but nonetheless failed, Collins frames technology as a tool rather than a necessary precondition for success. This point offers a new piece of evidence for the idea that anyone can work toward greatness; tech savvy is not necessary to build momentum.
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Additionally, most of the good-to-great executives the researchers interviewed did not emphasize technology as a key to their success, even though it was usually important in their companies’ transformations. Instead, they emphasized factors like company culture and consistency of purpose. Again, technology supported their positive changes but did not cause them. Collins also points out that technology (or its absence) was never single-handedly responsible for the failure of a comparison company. Instead, it was short-sighted reliance on technology as a replacement for strategy that often accelerated these failures.
The perspective of the Level 5 Leaders on technology highlights the way that technology should serve more as a tool than as a guiding principle. These anecdotes also link technology to the idea of the right people, suggesting that part of being “right” for a given company is a willingness not to chase technological advances at the expense of focused strategy.
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Collins notes that some members of his research team were against including a chapter on technology, because it seemed like a subset of the idea of disciplined action already covered in other chapters. However, the team ultimately decided to include the chapter because of the way technology use illuminates the good-to-great companies’ devotion to achieving excellence for its own sake. In contrast, the comparison companies were more worried about avoiding being left behind; their use of technology was motivated by fear rather than creativity. Over and over, Collins and his team noted how good-to-great companies respond to change slowly, carefully, and with attention to their Hedgehog Concepts, while comparison companies acted frantically and fearfully.
Bringing in very human emotions like fear and the desire not to be left out, Collins connects this discussion again to the idea that greatness is based on an essentially human foundation that anyone might access. Readers might not be able to make themselves tech pioneers overnight, but they can manage their emotions and attempt to act out of strategy rather than fear. Again, the possibility of greatness remains achievable without special assets.
Themes
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