Good to Great The Power of Habits - Book Report/Review Example

Good to Great: The Power of Habits Key Insights This section discusses three key ideas from the book ‘Good to Great’ by Jim Collins. The first key idea is that success in the long term can be viewed in terms of momentum and habit. By this is meant that success happens over a long period of sustained effort that builds enough momentum to propel companies to greatness. The implication is that drastic efforts to improve overnight will not work. It is the daily things that the company does that determine whether the company prospers in the long term or does not. What this also implies is that there is a way to guarantee success that embeds a drive to excellence within the firm DNA, done everyday rather than done in one shot, like a wonder medicine. Those companies who are great too make the incremental changes that can be sustained over the long term. Collins refers to this reality of momentum in terms of what he calls the “flywheel effect”. This insight is key to understanding why some companies for instance are able to propel themselves to success on a sustained basis. For instance, one can say that Toyota’s quality levels for its cars are a product of sustained excellence achieved through years of effort. The quality flywheel once set in motion is not easily duplicated by other car manufacturers, who are unable in their turn to incorporate daily excellence to their processes in the same manner as Toyota. For other manufacturers to approach the level of quality that Toyota has achieved, they have to do the work too, of daily improving all aspects of their businesses, not just manufacturing itself but the many other processes that feed into quality, from procurement to personnel hiring and training, and others. Efforts to ramp up quality can either reinforce one another or derail a company’s efforts at improving oneself in a doom loop, the opposite of the flywheel effect. This idea of sustained efforts leading to excellence in the long term makes a lot of sense. Silver bullets never work in personal life and in organizations too. Shoddy quality cannot be improved overnight. No amount of quick fixes and short-term management interventions can make a lemon car manufacturer turn around and produce cars with the high quality of Toyota or Ford. Excellence is gained over years and over sustained effort (Collins, 2001, pp. 164-187). The second key idea tied to the first above is the idea that companies need to focus on a few things that it does well, rather than becoming too diffuse in their efforts that they are unable to rise beyond mediocre. This makes sense too, in that a company who is able to excel at a few things is able to differentiate itself from the rest of the competition. A related idea is to focus one’s efforts on activities that one is already good at, rather than diffusely working at things that one is not. From a business perspective this makes sense too, in that expending efforts in this way achieves the most bang for the buck so to speak, and allows a company to get a leg up on competition and the market. From the point of view of doing certain things with sustained excellence too, this second idea makes sense. It is easier to excel at a few things, knowing what things the market needs and delivering those things with excellence, is a far more sane approach to greatness than scattering efforts and resources on things that will lead a firm from being mediocre to average, for instance. No one will buy goods made in an average manner, and the market will not reward average output, no matter the cost in terms of time and money that was incurred to achieve average. The world only recognizes excellence, and the rewards go to the firms that are able to excel at providing its needs (Collins, 2001, pp. 90-119). The third key idea is that getting the right people is key to success and to greatness. This is easy enough to understand, but the key insight tied to this is that from a management perspective, slotting the right people in the right roles can spell the difference between management success an management failure. In a way, management failures are personnel management failures, and no amount of management science can help an organization with mediocre people. What Collins is saying here is that great companies who made the transition from being merely good were able to attract great people and were able to extract their best efforts and cooperation through time. Another way to see this is that great people are what lies behind great processes, and allows the company to pursue excellence on all fronts on a daily basis. This idea is important because it goes back to basics and recognizes that great people make up a fundamental pillar of greatness that cannot be ignored. It is great people in the end that enable great organizations to come into being, The further insight is that when things go wrong, a good place to look is people quality, and that with the right people, organizations can be flexible in the how and what of their pursuits. Organizations with great people can leverage their people’s greatness to become flexible in what they want to achieve and how they want to achieve them, in essence (Collins, 2001, pp. 41-64). Critical Analysis This section details a critical analysis of the book. There are several things discussed in the book with which I disagree. One is with regard to the flywheel effect and how doing the wrong things excellently can backfire too. For instance, an emphasis on making high quality phones, and building an organization that has a zealous focus on quality phones, did not save Nokia from oblivion. Sure it had an excellent organization built around that, but over time they missed important innovations that ultimately disrupted their business model and rendered their quality differentiation capabilities obsolete. Simply put, the world stopped buying well-built feature phones and Nokia was unable to shift its paradigm from making quality feature phones to making the kinds of smart phones that people have come to prefer. You have in this case the flywheel effect working to marginalize Nokia. The shortcoming therefore that I can see with some of Collins thoughts relating to the flywheel effect is that his ideas fail to factor in the role of innovation in sustaining great companies. Where does innovation fit in Collins’ larger framework for understanding great companies who transitioned from just good companies? (Collins, 2001; Cheng, 2014). There are some things missing from the book too. One is, as discussed above, a proper treatment of innovation’s place in catapulting companies to greatness. One can argue for instance that it was innovation that allowed Apple to turn the phone industry on its head and ultimately pave the way for the rise of the iPhone, felling the likes of Nokia in the process. How does innovation factor into long-term success? To be more specific, how does a study of what has happened in the past determine how the companies will fare in the future, given the changing nature of business and the impact of innovation on companies? It seems to me that many companies who were excellent in the past can suddenly find themselves blindsided by shifts in technology and user preferences. The examples are legion. Nobody uses Kodak films anymore for instance. It seems to me that a more in-depth look at the role of innovation in great companies can yield more insights into the nature of greatness, and how companies can use those insights to make themselves great and sustainable (Collins, 2001; Cheng, 2014). Another thing missing is a prospective look at how the chosen companies fare over time. Looking forward, are the chosen companies able to sustain their success? If I were a book editor I would recommend that Collins include chapters that discuss a method for tracking the chosen firms going into the future, to see how they would fare given changing economic conditions. I would also recommend specific sections on innovation and their role in excellent firms. Can innovation be bottled and thought to organizations or not? (Collins, 2001; Cheng, 2014). Applications This section details three practical applications of the book in my personal life circumstances. Basically, one can imagine people as being organizations and glean insights into personal lives applying the methods and analytical framework presented by Collins in the book, together with the lessons and insights. For instance, the flywheel effect has practical applications to my daily life. If I hope to be excellent in my chosen field, I cannot rely on one superhuman effort done in the span of a day to achieve that excellence. The time to start is now, and I have to be able to apply myself in a sustained manner over long stretches of time. The idea of the flywheel effect is that momentum towards personal excellence builds as one exerts more effort at work for instance, religiously, over long periods of time (Collins, 2001). The second application relates to focus and overlaps with the idea of sustained effort too. What Collins is implying here, which I can apply to my own life and my own career, is that excellence is a marathon, rather than a short sprint, and that sustained focus on a few things is key. I need to understand that I have to be in it for the long term, and to ready myself to get better in small ways that build up into excellence over time. I cannot rely on shortcuts, magic pills, and silver bullets to get my life and my career in order. In fact, in all important areas of my life, including my relationships with other people and my health, the same set of insights work too. In my own health I need to understand that I cannot rely on medical quick fixes, but must work on fundamental things that contribute to my overall wellness over time, such as diet, resting well, and keeping my body moving and in tune. Health is a long-term process of excellence, can be viewed too in terms of the flywheel effect. In general, I need to be able to work and invest on these important things on a sustained basis to have a shot at a great life in the future (Collins, 2001). The third application is with regard to discernment. Collins prescribes that organizations need to spend resources on things that they excel at. This can make the difference between companies that are able to excel and to survive through the ups and downs of business conditions, and those that fail. Specialization is great, and the idea is that one ought to specialize in things that one is good at, rather than spend time and money on things that are beyond one’s competencies. This is a wise strategy in a world where different companies excel at different things, and the market rewards those who are excellent in their particular fields of endeavor. From an economics point of view this makes sense too. Those who are great at doing certain things will be able to turn out products and services of better quality and at optimal prices and profits compared to others, and so the market will reward them for that, with higher sales and profits. In my own life, I need to be able to discern where I can make the best use of my talents and where I can create the biggest impact, for my own personal advancement and to best help my organization and other people. This is very relevant given that I am living with some limitations in terms of time and resources. From a very large perspective my time on earth is limited, and that therefore I need to maximize that time by employing my talents and being employed in things that I am interested in and that I am excellent at. From an economics point of view it makes excellent economic sense to pursue those things for which I can be excellent and for which I will have a greater chance of thriving, economically and in terms of my overall career. It takes discernment and some guidance in order for me to realize my full potential, working on things that I am truly engaged in and excellent at (Collins, 2001). 1 References Cheng, R. (2014). Farewell, Nokia: The rise and fall of a mobile pioneer. CNet. Retrieved from http://www.cnet.com/news/farewell-nokia-the-rise-and-fall-of-a-mobile-pioneer/ Collins, J. (2001). Good to Great: Why Some Companies Make the Leap...And Others Don’t. New York: Random House Business Books Read More