Book review – The Goal (Eli Goldratt)

Book notes – The Goal

Author: Eliyahu M. Goldratt and Jeff Cox

Link for Current English Edition on

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This post is a short review of the book and its’ plot. If you are interested in engaging into an exchange on the contents, please contact me.

If you like this review, rate + like it, please! 

“The Goal” is a long standing best seller in the field of increasing productivity.

Written in the form of a novel, it is actually a good to read tale about continuous improvement processes. Goldratt introduces the now “classic” Theory of Constraints (ToC), now standard element of methods like six sigma.

Goldratt is a manufacturing and production guru. The principles apply also to service firms like banks or insurances or others like hospitals etc. In the interview at the end of the book, he says that the thinking processes have to be very significantly modified and adapted to fit individual services.

But it has been applied basically everywhere: from retail over press, hospitals to being taught to elementary school children (sic!) to solve conflicts.

The sequel to The Goal is called It’s not Luck. It explains the processes and techniques in detail, methods like current and future reality trees (basically tree diagrams of possible positive and negative outcomes – applicable to track consequences of actions, or root cause analysis) or the conflict cloud.

Later, Goldratt also made a very significant contribution to the field of project management with the Critical Chain method. A method still not nearly wide enough known lest applied on projects.

In the book, a physicist and manufacturing consultant only called “Jonah” is really the alter ego of Goldratt in real life.

I personally could have done without much of the surrounding story and drama, the troubles with Rogo’s marriage and all the drama – it takes time to read, and doesn’t add to gaining knowledge. But it may make it more fun to read to many people.

Least of all, what a cover design! :-// *shudder!* Only american paperbacks can mix design elements so confusingly, using a score of different font styles and sizes.

Anyway, let’s go into the contents and the story. Literary warning: compressing the contents so much makes it somewhat cryptic and certainly takes all the fun out of the story… go read the book afterwards!

The Goal is the story of plant manager Alex Rogo.

… and things are not going well. There is always chaos in the plant, things are out of order and out of sync, and thus production always late.

Rogo gets an ultimatum by his vice president to turn the plant around inside three months, or he’s going to have to close it.


On a flight transit, he meets a former university prof of his, Jonah, who happens to work on improving production processes and reducing inventory.

He postulates that introducing robots hasn’t improved Alex’ plant’s efficiency at all but raised inventories.

Jonah asks Alex what productivity is, and isn’t satisfied by the several tries Alex makes.

In the discussion they agree that everything is productive that brings a company closer to it’s goal. Which leads to the next question Alex cannot answer: what the goal is. The one same goal for every company.

Following this encounter, Alex thinks on what the goal is.

Quality is important, but not the reason for the existence of the factory. So is giving people work. Making products in itself isn’t. Low cost is important, too, but not everything. Innovation? Technology? Sales?

Well, in most cases, the biggest goal is to make money.

(Note/personal opinion: yes… well… yes. But: we do have CSR and there is the Balanced Scorecard with important goals like employee satisfaction, right? So let’s be a little more european-social-market-economy, how’s that sound?) 

Back at the plant, Alex goes into a discussion with his accountant Lou on what the minimum measurements would be to know if the company is making money.

Lou expresses his strong dissatisfaction with the common cost accounting methods and measurements.

They come up with net profit, ROI and a sufficient positive cash flow for liquidity.

The three measurements are interrelated. You need all three to be good.

Alex decides to not give up but try in the three months before the factory will be closed down all that he can think of. And to get help from Jonah.

He manages to find where he is at the moment and to get in contact with him.

Alex tells him about his problems to translate the three financial indicators to measurements that are meaningful on the production floor and useful for steering the plant and production.

Jonah responds that for that, he should use the three figures throughput, inventory and operational expense.

  • Throughput is the rate at which the factory generates money through sales.
  • Inventory is all the money that is bought for production but not yet sold. It also includes all assets, like machines, buildings etc.
  • Operational expense is all three money spent to turn inventory into throughput.


Everything can be split into one or more if these three categories.

Even “soft” costs like consulting expenses can be attributes, depending on what the consulting is for, for producing sellable products or assets, or not. Patents are sellable, so they are inventory.


Alex Rogo then starts to think and work this through with his key staff.

One item is robots that simply produce to many parts, getting production and assembly of other parts out of sync. The inventory stock increases carrying costs for the inventory, which are  operational expenses.


In a discussion with Jonah, he says that a balanced plant where every resource capacity is equal to demand all of the time is not a good goal. The optimum lies far away from a balanced plant.

Because of his workload, Alex Rogo has severe trouble at home with his wife who feels neglected. After some discussion, they agree that at least he will be home for dinner and bring his paperwork with him to work on at home in the evenings, and that she might even be able to help him with some of it.

On the weekend, Rogo leads a group of his son’s boy scouts during a hike.

The boy scout hike parable:

They experience problems with staying together as a group and keeping the pace and spaces right. This makes him think of the production steps in his factory, and how small differences and delays delay every dependent step afterwards. These small decisions do not statistically average out, they only add up.

The dice parable:

During lunch break, he invents a chain-game with match sticks that he plays with some of the boys where everyone can pass along as many matches as they throw pips on a dice. But only as many as the boy before has.

They find out that the farther down the line, the boys don’t have a chance, because someone up the line will have had a bad throw by chance and so only have few matches. This limits the rest of the steps.

It is a balanced system, but throughout goes down, and inventory asking the way goes up. Opex go up, too (the carrying costs).

Mathematically, it has to do with the covariance -the impact of one variable upon other connected variables in a dependent group. The variance of all variables down the line will fluctuate around the maximum deviation created by any preceding variable.

The slowest element in the chain determines and limits the throughout of the whole system!

This is the key element of the Theory of Constraints (ToC).

You need to work on your slowest part of the production.

The reason the balanced model does not work out in a linear depending system is the missing of reserves in the mentioned system, to make up for slow-downs up the line.

Meanwhile, his wife has enough and takes off, leaving the daughter with his mother.

Now he has two more problems. Worrying where his wife may be and getting through with the two deeply unsettled kids.

Alex’ mom jumps in to help.


During the next phone call with Jonah, Alex and his core team learn the two types if capacity: bottleneck capacity and non bottleneck capacities.

Bottlenecks have less capacity than the demand put upon them.


Jonah explains that the flow of products through the bottleneck should equal the demand from the market.

The important thing is not to balance capacity with demand, but flow with demand.


Following this, the team and the data people spend days analyzing all the processes, products and demand trying to find “Herbie” – the bottleneck, named after the slowest boy scout on the hike.


They have the good ideas to ask the expeditor and other experienced people in the plant for where usually they go looking when parts are late.

Also, the bottlenecks should have the biggest work in progress (WIP) and backlog of inventory.


They find their most advanced cn machine is one of two bottlenecks. It’s awesome, but complicated, and they only have one.

Another one is the heat treatment unit. It is just a slow process taking a lot if time.

They can’t figure out what to do about these two bottlenecks. They need to be in the middle of the process, and they don’t seem to be able to be substituted.

So Jonah decides to fly in. Three first thing he does is tell them that their bottlenecks must run as often and as efficiently as possible.

One hour lost on a bottleneck is lost everywhere.

One possibility to increase the nc machine’s runtime turns out to be to reschedule the set up team’s break times to when the machine is working on parts.

Then they discover that not all parts made are necessary to produce orders in the backlog , so they can postpone them.

With the help of third parties doing the heat treatment to their inventory parts, they can get rid of their backlog there.

Then Alex turns their attention to scrap parts.

By focusing on taking out defective parts before the bottleneck through Q.C. and not before final assembly, they prevent their bottlenecks working on scrap parts.

And to put special emphasis on process control on bottleneck parts, so that they have the least possible scrap rate.

If one of your bottlenecks is not working for one hour, it is the same as your whole factory standing still for one hour!

And only process those parts in the bottlenecks that absolutely must be processed there – everything else somewhere else.

Meanwhile, Julie, Alex’s wife moved to her parents’ house.

Alex talks to her and has a good idea: while she makes up her mind, he asks her out for a date.


In the factory, they sort all late orders by due date and which need posts from the bottleneck machines. Then they start producing them with priority on the orders that are most late.

They figure out a system to tell other machinist’s which parts are bottleneck and thus important and have priority.

One of the lead workers managed to acquire an old machine that together with two other machines can produce the same kind of parts their bottleneck nc machine does, extending bottleneck capacity.

They start incentivizing workers for improving output of the most important parts. That way and with a clear idea why these items are important, they start to get good process improvement ideas from foremen and others.

All the while, Alex and Julie continue to date from time to time.


One day, Alex’ team surprises him with champagne: they broke all factory records on orders shipped and sales value the last month, and work in progress inventory went down. And best of all, his boss Peach calls to say a customer called him to say how the factory made good on a number of late orders. They have a party …

Things are working so good at the factory that they get into new trouble with formerly non bottleneck equipment. So they decide to have Jonah fly in once more.

Only three bottleneck machines must run with as much quality output as can be made.

All other machines need to be idle when they meet demand. Otherwise you just build inventory again for no reason.

The bottlenecks determine release of material for all machines in the factory, and for final assembly.

At the end of this month, the Bearington plant makes the turn around and is the only factory in UniCo to have a substantially better quarter result, being the reason of the first positive net result of UniCo this year.

All the overdue orders have been shipped.

The next step Jonah tells them to take is cut their batch sizes in half on all the noon bottleneck parts. This means more vendor deliveries of smaller quantities, less work in progress at any given time, but also more setups.

He distinguishes four kinds of time for a piece of material:

  • Setup time – waiting for the resource preparing to process the material
  • Process time – being processed itself
  • Queue time – time waiting for a resource that is busy working on another part
  • Wait time – waiting for another part to be assembled together

With halfed batch sizes, time to delivery can be half, too. This means orders can be delivered twice as fast! Setups will take more time and money, but there is still enough idle time.

For a special order they cut their batch sizes in half once more to get the capacity, and reschedule some other orders so that they are not as early before due date, but delivered on due date.

Alex gets ordered to a meeting at headquarters to justify the changes he has made that do not look good in some of the old metrics like cost per part, and that go against corporate policies. The corporation’s Efficiency Manager wants to stone him for that and does not try to understand the faults in the common practice and beliefs.

But Alex is stubborn and goes to the division leader. There he learns that his own accountant had a nice long talk with him and explained the interrelations of the metrics and active taken to him and convinced him.

That way, when this manager gets promoted to a C level position, he promotes  Alex to his position as division manager.

… A new challenge for Alex. He also promote several of his key staff from the plant.


Alex wants to hire Jonah for more help, but he declines, saying Alex should figure it by himself how to manage, what is important in managing in general.

Alex’ accountant tells him of an interesting effect that he discovered: it is mandatory practice for accounting to list inventory under assets, because they represent a value and could be liquidated.

In the ToC thinking though, inventory is a liability.

So the factory is actually financially a lot better off with low inventory, though by mandatory accounting and balancing, the asset position goes down.


To get a plan on how to turn around the division, Alex takes his experienced factory team to the task.

One thing they dismiss as useless is the usual reorganization.

Going more centralized to raise synergies and reduce double effort, or going more decentralized to shorten administration and to become more entrepreneurial…

the usual oscillating movement every five to ten years.


After several meetings, they say that improvement should not be aimed mainly at lowering operational expenses (costs) as usually, but to increase throughput.


What helped the factory was to change the order of importance: putting throughput first, inventory second, and operational expenses third.


To improve the performance of the factory, they followed this process:


  1. Find the bottleneck (s)
  2. Find ways how to improve the bottlenecks’ usage and output
  3. Change everything else to the bottlenecks’ lead
  4. If output of bottlenecks improves, check if other resources are now the next bottleneck and treat them from step 1.

(note: actually, Goldratt splits it in 5 steps; I put two together to form improve the bottlenecks’ usage and output) 

This is a continuous improvement process.

The more general term for bottleneck would be constraint. And it can be anything from a machine or people, skills to material release planning or market demand.

Bottlenecks often change in what part of the process they occur: from being a machine or resource in the first round of TOC optimization to probably being other resources, or engineering, or the market demand, and probably back again in further improvement rounds.


While thinking about their process, they realize that now that the factory doesn’t have any late orders, the red and green tag system is contra productive, creating a false priority. Leaving them away is much better.

Also they introduce accepting orders in foreign markets to fill idle capacities above material cost but below full production cost.

While thinking about what it takes to manage, they come up with that a manager should find and focus on the core problem, even in a complex situation.

Then he needs to find answers to the questions: what to change? What to change to? And how to cause the change (without causing resistance but enthusiasm).  The solutions implemented should solve the acute negative effects without creating new ones.

The book finished by stating that we should and can all learn to think for ourselves and be our own Jonah’s.


The sequel to The Goal is the book It’s Not Luck.

The Lean and Six Sigma methods fit the ToC thinking and method of analyzing and optimizing very well.

If you like this review, rate + like it, please! 

Buch – Innovationsprozesse erfolgreich machen (Hrsg. B. König, M. Reißer)

Buch Notizen – Innovationsprozesse erfolgreich machen

Grundmuster erfolgreicher Innovationsprozesse in KMU

Autoren: verschiedene; Hrsg.: Bertram E. König, Martin Reißer

ISBN: 3-00-007171-7

Erscheinungsjahr: 2000

Eigene Bewertung: 2 ** nur wenig nutzbringend

Der gesamte Buchtext liegt als freies edok (PDF) vor Innovationsprozesse-erfolgreich-machen_Buch_2000_mittelmäßig_edok-tib-unihann

oder link:

Das Buch entstand aus den Studienergebnissen “Grundmuster erfolgreicher Innovationsprozesse in KMU” des BMBF am Forschungszentrum Karlsruhe (Karl-Heinz Wagner) und der Universität Magdeburg (Mario Kuhn, Prof. Hermann Kühnle, Hrsg.).

Es wendet sich an Praktiker mit Methoden und Anwendungsbeispielen für verschiedene Branchen und Firmengrößen.

Meine Meinung: Wenn das  Buch doch das halten würde, was es anstrebt! Mir hat sich jedenfalls der Nutzwert nicht erschlossen. 

Meine “Take aways” aus dem Buch (s.  Notizen unten) waren also sehr überschaubar…

Der Aufbau war für mich eher verwirrend. Dies lag u. a. daran, dass mehrere beteiligte Wissenschaftler in den beteiligten Firmen parallel mit unterschiedlicher Methodik gearbeitet haben.

Dies wird als drei verschiedene Möglichkeiten, Innovationsprozesse in KMU zu erarbeiten und zu bewerten vorgestellt: je nachdem, was zum Unternehmen passt vorwiegend mit Checklisten, mit Matrizen (2×2) oder mit “Wirkungsgefügen” (Bewertung der Abhängigkeiten der verschiedenen Erfolgsfaktoren untereinander, also eher netzartig als nur linear).

So weit, so gut… der Grundgedanke der Abhängigkeitsbewertung ist ja einleuchtend; aber gerade die Ausführungen über diese  “Wirkungsgefüge” wirkten auf mich wie die praxisferne erste Bachelorarbeit von zwei Studenten… ich kann nicht bewerten, ob sie es sind. Viele wissenschaftlich klingende Worthülsen der Verständnisleere. Ärgerlich. Oder ich bin einfach nicht der richtige Leser hierfür… auch ansonsten für mich viele Selbstverständlichkeiten, auf die man sofort auch von selbst kommen würde.

Es mag sein, dass die 2. Hälfte des Buchs, in dem die beteiligten Unternehmen exemplarisch, aber für mich auch ohne tieferen übertragbaren Nutzwert, einzelne Projekte aus dem Innovationskontext erläutern, für einige Leser doch als Beispiele von Interesse sind.

Trotz interessantem Titel und Cover ist das Buch auch von der Inhaltsgestaltung und der Präsentation her nicht befriedigend.

Ich werde nach deutlich besseren Büchern zu Innovationsmanagement Ausschau halten…

Notizen aus dem Inhalt:


“Business hat nur zwei Basisfunktionen: Marketing und Innovation.” Peter Drucker


Das Buch besteht aus folgenden Teilen:


1 Erfolgsfaktoren und Grundmuster sowie ihre Wirkungsbeziehungen als entscheidende Einflussgrößen für den Erfolg

2 Drei pragmatische Vorgehensweisen, um Innovationsprozesse zu optimieren

3 Acht Fallstudien und Praxisbeispiele für Innovationsprojekte mit Erfolgsbilanzen

Der Innovationsprozess ist weniger standardisiert als die Produktionsprozesse in einem unternehmen. Er ist vom Ablauf und von den Ergebnissen her zwangsläufig individueller.

Daher ist der Beherrschungsgrad geringer, und Zeit-und Kostenvorstellungen werden regelmäßig deutlich überschritten.


“Es gibt zu viele Wissensriesen und Umsetzungszwerge.”


In 3 Schritten Innovationsprozesse optimieren:


1 Erfolgsfaktoren identifizieren

2 Erfolgsfaktoren bewerten



3 Maßnahmen umsetzen


Als Vorgehen für jeden Schritt schlagen die Autoren die Anwendung von Checklisten, Matrizen oder Wirkungsgrafen vor.


Teil 1

Dauerhafte Innovationsfähigkeit

Mario Kuhn und Björn Söndgerath


Definition: Eine Innovation ist die erstmalige wirtschaftliche Anwendung von Produkten, Prozessen oder Dienstleistungen.


In Bezug auf Produkte müssen diese also immer einen Marktbezug haben.

Es handelt sich um neuartige Problemlösungen oder neuartige Kombinationen von Zweck und Mitteln.


Das Buch unterscheidet die Innovationshöhe:

Anpassung, Verbesserung, Basis- oder Sprunginnovationen.


Innovationsgrad/-höhe, Rendite und Risiko steigen zueinander exponentiell.


Gerade in Krisenzeiten ist eher Rückzug und Verteidigung statt Innovation zu beobachten. Kosten Einsparungen und Effizienz sind aber keine Basis für langfristiges Wachstum und Zukunftsfähigkeit.


Innovationen können neben Produkten auch Prozesse umfassen.


Je nach Branche kann es für ein Unternehmen sehr wichtig sein, eine Vielzahl an unterschiedlichen Innovationen in kurzem Abstand hervorzubringen. Ein Beispiel ist die Telekommunikation.


Es bestehen verschiedene Innovationsbarrieren;

diese können z. B. sein:

– innovative Ideen von Mitarbeitern werden hierarchisch abgeblockt;

nur die Führungskräfte meinen, sinnvolle Ideen zu haben oder zu dürfen

– Es werden nicht genug Zeit und Ressourcen für ungewisse Vorhaben gewährt

– Fehlschläge bei Versuchen werden bestraft

– Unkonventionelle Ansätze werden ausgeschlossen

– Mangelnde Zusammenarbeit verschiedener Bereiche

– Notwendiges Wissen und Qualifikation wird nicht aufgebaut

– Bequemlichkeit: es ist einfacher, mittelfristig nicht zu innovieren

– Unsicherheit, wie man sinnvoll Innovationsprozesse umsetzt

– Fehlende Finanzmittel

– Technologische Hürden

– Komplexität

– …


Die Misserfolgsquote bei Markteinführungen liegt bei über 80 %!

Andere Quellen nennen fast 2000 Ideen auf 10 wirkliche Erfolge.


Weitere Bücher zu Erfolg von Innovationsprozessen: u. a. Kotzbauer, 1992.


Für die Umsetzung von Erfolgsfaktoren gilt:

– Wie interpretiere ich Erfolgsfaktoren (in meiner Branche, Situation,…)?

– wie arbeite ich mit ihnen?

– wie beeinflussen sie sich gegenseitig?


Dem Erfolgsgeheimnis auf der Spur

Karin Bockelmann und Ulrike Ligges


Die Autorinnen unterscheiden einen technologie-getriebenen linearen Innovationsansatz und einen systemischen ganzheitlichen Innovationsansatz und suchen hier nach Innovationsgrundmustern in Unternehmen. Für diese reichen einfache lineare Ursache-Wirkungsketten oft nicht aus. Einzelne Erfolgsfaktoren für sich ergeben nicht in Summe einen erfolgreichen Innovationsprozess.


Teil 2 Erfolgsfaktoren richtig nutzen


Für jeden Bedarf den richtigen Weg

Martin Reißer und Mario Kuhn


Die Firmen, mit denen für die Studie am Intensivsten zusammen gearbeitet wurde waren

  • SERO Pumpen
  • WILO
  • FER GmbH
  • Trumpf
  • ETR
  • Lundin Filter
  • Phönix Klangsäulen

einige davon sind sehr klein/jung, andere international tätig und große Mittelständler. Die betrachteten Aspekte von Innovation waren sehr … heterogen.


Die als relevant erachteten Erfolgsfaktoren wurden im Unternehmen selbst erarbeitet und gebündelt. Hierfür wurden Interviews anhand eines Fragebogens durchgeführt.


Die Innovationsdiagnose (Ist-Zustand) nahm folgenden Ablauf:


Information der Mitarbeiter


Auswertung Fragebögen

Präsentation der Ergebnisse


Im Fragebogen sollte nicht nur nach Skalen bewertet werden, sondern jeweils auch mit einer textlichen Begründung konkretisiert werden.

Aus den Ergebnissen werden Verbesserungsmöglichkeiten abgeleitet und priorisiert und anschließend umgesetzt, der Erfolg gemessen etc.


Zur Ermittlung der Erfolgsfaktoren eines Unternehmers wurde dem Unternehmen auch ein Spektrum möglicher Faktoren als Grundlage an die Hand gegeben, das sich aus verschiedenen Studien in der Literatur ergeben hat. Diese mussten an das jeweilige Unternehmen angepasst werden.


Anforderungen an die Faktoren waren

Eindeutiger Bezug zum Innovationsprozess




Zusammengefasstes Ergebnis der Metastudie zu Erfolgsfaktoren von Innovationsprozessen:

Die folgenden 12 Erfolgsfaktoren:

Konzentration auf Kunden-und Marktbedarfe

Lösungen mit Kunden und Lieferanten

Analyse der Chancen und Risiken

Innovationsorientiertes Managementsystem

Vorhandensein von Innovatoren-Persönlichkeiten

Innovationsfördernde Unternehmenskultur

Aufbau und Nutzung von Qualifikationen

Aufbau und Nutzen von Kernkompetenzen

Schützen von Know-How und Wissen

Einsatz von Projektmanagement Methoden

Innovationsförderliche Organisation

Internes Marketing, interne Kommunikation


Aus anderen Betrachtungswinkeln wurden in den anderen Unternehmen teilweise ganz andere Erfolgsfaktoren erarbeitet, wie z. B. Verfügbarkeit über eigene Patente, Aufbau eines Referenzkunden, Entwicklungszusammenarbeit mit Kunden, Verbreitung einer Innovation in verschiedenen Anwendungen/Märkten, …


In einem Workshop wurden die Faktoren auf das Unternehmen angepasst und konkretisiert sowie gewichtet.

Relevanz und Ausprägung können in einer 4 Feld Matrix dargestellt werden.

Soll-Positionen können eingetragen werden.


Das Wirkungsgefüge

Karin Bockelmann und Ulrike Ligges


Die Wechselwirkungen der einzelnen gefundenen Faktoren lassen sich noch in einem Gefüge analysieren und darstellen. Dies kann hilfreich sein bei der Abschätzung, welche Maßnahmen besonders erfolgreich sein werden, und welche Auswirkung man sich erhofft.


Teil 3 Aus der Unternehmenspraxis lernen

Hier werden einzelne Beispiele aus den Unternehmen dargestellt.

Mehrere der Firmen sehen z. B. ihr Projektmanagement als eines der wichtigen Elemente ihrer Innovationsprozesse.

Trumpf aus Stuttgart definiert auch verschiedenen Arten von Innovatoren:




 Die Rolle der Innovatorenpersönlichkeit, i. d. R. höheren Führungskräften, wird wie folgt beschrieben:

Visionär und Marktkenner

Vorbild und Sponsor, schafft Freiräume

Moderator und Machtpromotor

Projekt Initiator und -Begleiter

 Primäre Aufgabe ist die Kommunikation.

Auch hier bestehen hohe Parallelen zum Projektmanagement (s. Rolle eines Sponsors oder des Auftraggebers).



book review – From Good To Great (Jim Collins)

book review – From Good To Great

What does it take for an average company to become a great company 

Author: Jim Collins

This post is a short review of the book. I took extensive personal notes on the book. So if you are interested in engaging into an exchange on the contents, please contact me. The extensive notes cannot be
published due to copyright of the original content author/Publisher.

If you like this review, rate + like it, please! 

Link for Current English Edition on

Link for Current German Edition (Der Weg zu den Besten) on

– Despite linking to Amazon, there are different choices available on  where to buy new or used books –

Being from 2001, Good to Great is still a very interesting read.  

There are quite a few surprising findings about the companies Collins’ research team analyzed. Food for thought. Among them that if you get your concept right, you don’t need much change management, and not much strategy. 

Collins was Coauthor on the previous book Built to Last on the characteristics of great companies: the elements that were built in from the start to make them great. 

He also wrote several more very well-rated books on company success, among them Great by Choice and How the Mighty Fall. 

The 11 “good to great” companies analyzed and compared to average-performing companies (from the same industry) contain several that I don’t even really know, like Walgreens, Kroger, Abbott, Pitney Bowes, and also the companies Gillette, Philip Morris, Nucor steel, Wells Fargo, Kimberly-Clark, Circuit City and Fannie Mae.


In a nutshell, the team developed a model from the date consisting of a Buildup Phase and the following Breakthrough improvements.

They are based on three pillars with two parts:

  • Disciplined people – Level 5 Leadership and First Who… Then What
  • Disciplined Thought – Confront the Brutal Facts and The Hedgehog Concept
  • Disciplined Action – Culture of Discipline and Technology Accelerators

These elements made up a “Flywheel” building momentum for the company.


There were several surprising findings contrary to the assumptions the team had about important factors:

They did NOT find any of the following

No Larger-than-life charismatic star leaders

– The CEOs came from inside the company;

outside CEOs were strongly negatively correlated.

The CEOs who made the biggest changes actually were self-effacing, quiet, reserved, some really shy, but with a very strong professional will.

No Specific forms of executive compensation


No Special emphasis on strategy

– all the companies had well-formulated strategies.

They did not differ from the comparison companies in their approach or emphasis.


No principal focus on what to do

-they equally focused on what not to do and what to stop doing

No technology-driven change

– technology was used deliberately to accelerate transformation, but it did not cause the leap

No massive use of mergers and acquisitions

– they do not make a company great

No emphasis on change management

– under the right conditions, commitment, alignmen and motivation come by themselves.


No big program, laugh event, tag line to signify the transformation

– there was no revolutionary new concept or process

No specifically attractive industries

– some were even in terrible industries


Greatness it seems is not a function of good chances and circumstances, but largely a matter of conscious choice. And following a rigorous, sensible path. 


Another central concept  introduced by the book is “Level 5 Leadership” – from Level 1 (highly capable individual) over Team Contributor – Competent Manager – Effective Leader – to the Level 5 Executive.  

With “Level 5” comprising of a blend of personal humility and an unyielding professional will to make the company enduringly great for the next generation. 

Collins’ team found that among the not-so succesful comparison companies, there were quite a few CEO’s from outside, with strong egos – people like Lee Iacocca or Jack Welch.  


The three “circles” of the hedgehog concept are: 

  1. What Can you be best at in the world?

And what you cannot be best at. (Make explicit use of stop-doing and not-to-do lists!) 

  1. What drives your economic engine?

You need deep insight into how to most effectively generate sustained and robust cash flow and profitability. What single parameter has the highest impact on your returns.

  1. What are you deeply passionate about? 


Some other important aspects of the book are: 

– Look for self-disciplined people who can work in teams and for whom the best results are important! 

– Compensation should never be used to influence behavior, but to keep the right people on board (by compensating them well). 

– If you have “wrong people”, get them off the bus! The faster, the better! 

– Put your best people on your biggest opportunities, not your biggest problems! 

– The best CEOs were not workaholics, rarely working evenings and retaining a familiy life and volunteer work. 

– The essence is freedom and responsibility within a framework and the three circles of the hedgehog concept.

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