From good to great: 5 core lessons from Jim Collins for founders

There are books you think are nice and never open again. And there are books that change how you look at building a business entirely. Good to Great by Jim Collins falls in the second category.

The book is based on a major study of Fortune 500 companies over a long period. Most of those companies showed average growth. But a handful rose far above. And when Collins went looking for what those companies had in common, he found a number of patterns that turned out to be universal.

Here are the five lessons I took most from it.

Lesson 1: Get the right people on the bus

Collins uses the bus metaphor: before you decide where the bus is going, you first need to get the right people on it. Sounds simple. It is not.

American steel company Nucor has implemented this principle to the smallest detail. Their model is built on attracting and retaining committed people who think like owners. They do this through decentralised management and a performance bonus that can run high. Result: a loyal team that puts heart and soul into the business, and one of the most profitable companies in its industry.

The other side is Nortel, the Canadian telecom company. Brilliant products, poor people mix. An arrogant culture that drove top people away. Eventually a company that went under because the right people were no longer there.

A strong vision or innovative product is not enough. Without the right team to execute the vision, the company falls over sooner or later.

Lesson 2: Confront the brutal facts

Collins says: look reality straight in the eye, no matter how bleak. It sounds cliché, but it is precisely what most founders avoid.

Kimberly-Clark did do it. At a certain point they saw their core activity (paper mills) was a dead end in the long run. So they did something bold: they sold the mills and went all-in on consumer brands like Huggies. A radical shift, but they understood where the market was heading.

Kodak saw it too, but too late. They were once world market leader in film rolls, they even developed the first digital camera themselves, but did not dare to commit fully. The company was too deeply intertwined with the old revenue model to make the leap. That proved fatal.

Today the rise of AI is a brutal fact no one can ignore. Copywriters, translators, agencies, lawyers, designers — all face the choice to radically rethink their business model. Whoever looks away becomes the next Kodak.

Lesson 3: The Hedgehog Concept

In the fable the fox tries every angle to attack the hedgehog, while the hedgehog always uses the same simple solution: roll up. And yet the hedgehog wins every time.

Collins translates this to business. Find the one thing you can excel at, are passionate about and can build a healthy business model around. Then commit fully. No distractions, no side tracks.

Booking.com is the textbook example. Competitors like Expedia offer everything: flights, cars, total packages. Booking chose one thing: online hotel reservations. And became global market leader.

The counter-example is the Dutch retailer V&D. Mediocre at many things, brilliant at none. When e-commerce arose, they had no distinctive edge to fall back on. It ended in bankruptcy.

Founders are foxes by nature. We see opportunity everywhere and want to grab it all. But there comes a moment in every growth story where you have to become a hedgehog, and that moment is harder than it looks.

Lesson 4: Cultivate a culture of discipline

A culture of discipline means every colleague consistently does what the culture prescribes, even when no one is watching. No heroic acts, just daily consistency.

At Coolblue the credo "anything for a smile" is implemented all the way down to the delivery driver. Everyone understands their work and customer interaction contribute to the overall reputation of the company. No big campaigns, just daily discipline.

Wirecard, the German payments company that was once a serious competitor of Adyen, did the exact opposite. A fraternity culture, new hires got to know the company in nightclubs, clients were paid escorts to their hotels. No checks and balances, no boundaries. The company eventually collapsed in a fraud scandal, while Adyen, with its much more professional culture, became the largest payment service provider in Europe.

Culture is not what you say is important. Culture is what you tolerate.

Lesson 5: Use technology as an accelerator

Technology does not automatically make a company great. But if you have a strong foundation and use technology the right way, at the right moment, it can be the accelerator that takes you to another level.

TomTom is the example Collins would have cited: the right technology at the right moment, on a market ready for it. Blockbuster is the warning on the other side: they had the scale and brand recognition to make the shift to streaming, but believed too long in their store model. By the time they moved, Netflix had already taken the market.

Technology without strategy is a toy. Strategy without technology is a handicap. The combination is what makes the difference.

From good to great

Most companies stay in the "good" category their whole life. They deliver decent work, have satisfied clients, make reasonable profit. And yet they never become truly great.

Collins shows that the difference lies in five principles which are not revolutionary in themselves, but in combination make the difference. The right people, honest confrontation, focus, discipline and the right technology at the right moment.

Whether you are just starting out or have been at it for years, these principles remain relevant. They are just not always easy to apply. Which is precisely why most companies stay good and never become great.