How to analyze companies!?
There are many ways to perceive this book. You could say, the author is using his own biases, the ‘why’s he suggests are not revolutionary or you could take another approach.
I heard about this book on ‘The Investors Podcast’ — https://www.theinvestorspodcast.com/podcast/ wherein the podcast host said he would recommend this book as a way to analyze companies!. Boy, wasn’t that a great perspective?
My Notes
“That’s what makes death so hard — unsatisfied curiosity “ — Beryl Markham
That’s a great quote to have at the start of the book! Wow! loved it!
“Good is an enemy of great. And that is one of the key reasons why we have so little that becomes great!” It is about the question, can a good company become a great company and, if so, how?
The good-to-great companies did not focus principally on what to do to become great; they focused equally on what NOT to do and what to STOP doing!
Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice.
Level 5 Leadership
Level 5 leaders have Ferocious resolve to do whatever it takes to make the company great. While, while while, being humble and modest.
Mirror and Windows
When a level 5 leader is given the credit for success, he looks out of the window and points to the people outside for the success. At the same time when a level 5 leader faces a failure, he looks into the mirror and blames himself for the failure. Other levels of leaders, do the vice versa!
Who? before what?
Great leaders, first got the right people on the bus and most importantly in the right seats, and the wrong people off the bus, and only then they figured out where to drive!
When you have the right people in the right seats, two things happen.
You don’t have to motivate them to win
Even if you change directions, they will be with you and still be motivated to achieve what it takes to make the company great
Put your best people on your biggest opportunities, not your biggest problems! — Another gem of a quote!
Stockdale Paradox
An un-wavering faith, that you can and will prevail in the end, regardless of the difficulties, while also having the discipline to confront the most brutal current reality, whatever they might be.
How do you do that? How do you create a climate where truth is heard?
Lead with questions, not answers. Ask the right people on your bus, those questions!
Engage in dialogue and debate, not coercion. Be a moderator of great debates
Conduct autopsies, without blame. Understand and learn rather than assign blame
Build red flag mechanisms. You don’t need better information, but you need information on information that cannot be ignored!
For example: Bruce Woolpert instituted what was called, ‘short pay’ Short pay, gives customers full discretionary power to decide whether and how much to pay on an invoice based upon his own subjective evaluation of how satisfied he feels with a product or service. You can always ignore customer surveys on one pretext on another, but simply cannot ignore short pay!
Hedgehog concept
Hedgehogs see what is essential, and ignore the rest.
I find this single concept to be worth half the price of the book!
What you can be the best in the world at?
I feel that I was just born to be doing this!
Equally important, what you CANNOT be the best in the world at?
Core competence, doesn’t mean you can be the best in the world at it
Conversely, you may not be engaged in something that you can be best at! In that case, you have to move away from even your core business, in pursuit of that part which you are best in the world at.
What drives your economic engine?
I get paid to do this!
How to most effectively generate sustained and robust cash flow and profitability? Discover the single denominator — profit per x. What is your x?
If you could pick one and only one ratio — profit per x to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?
What you are deeply passionate about?
I look forward to getting up and throwing myself into my daily work and I really believe in what I’m doing.
What activities ignite your truest passion?
“A Hedgehog concept is not a goal to be the best, a strategy to be the best, an intention to be the best, a plan to be the best. It is an understanding of what you can be the best”
Culture of discipline
Anything that does not fit with out Hedgehog Concept, we will not do. Have people, who take disciplined action within the three circles consistently.
Start a STOP DOING LIST to be disciplined!
Flywheel
Picture a big, big, wheel that you have to rotate. It takes a whole lot of effort, to rotate the wheel one full circle. Then you huff and puff and manage the second circle. You keep doing it over and over again, gradually the momentum of the wheel works in your favor and the wheel gains speed and spins more faster with little effort!
Similarly, have a Level 5 leader, who gets the right people on the bus in the right seats, have unwavering faith while confronting the current reality, and have a discipline to stick to your Hedgehog concept, the flywheel takes off and the results would gradually show up!
Good to Great by Jim Collins available here at Amazon.com
https://www.amazon.com/Good-Great-Some-Companies-Others-ebook/dp/B0058DRUV6/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=1508791310&sr=8-1
