Jim Collins‘s work has influenced me quite a bit when I was working at Capgemini. I remember one of the partners/principals in our Houston office actually having a book club session on one of Jim’s book Good to Great: Why Some Companies Make the Leap…And Others Don’t right after it was released. Good to Great is a great book, it clearly outlines the strategies that have worked in the past for some companies that transformed themselves for the changing times. I am a big believer in principles, principles are natural laws they don’t change and the consequences of those natural laws also don’t change. I think Good to Great catalogues some great principles for building and running companies. So, why I am writing about this now? I believe those principles apply to any size of company or startups.
I get wide eyed expressions when I say a Startup is not a Company! A Startup is an experiement or a hypothesis, when you are going through the first phase of startup creation i.e figuring out the Product to Market fit, you do not know whether the startup can actually create a product or service that addresses a market need and fulfill a value proposition, when you are in that stage why bother calling yourself a company? A Company has figured out a product to market fit and has figured out how to do the repeated value creation part. When a startup is going through these two stages it is in the valley of death, typically when the startup figures out those two stages they are usually out of the valley and can be called a Company.

I really like two diagrams that is used to explain a couple of concepts in the Good to Great book, the first one is the Hedgehog Concept. I think this quite obvious for a startup but not always. So it is important to ask the questions that are in the circles:

  1. What are you DEEPLY PASSIONATE about?
  2. What can you be the BEST IN THE WORLD at?
  3. What drives your ECONOMIC ENGINE?

I believe every startup and every team member of a startup need to ask these questions for the company and for themselves. If you are unable to come up with answers to these questions you have a problem with the startup and what you are doing with your startup.

Another diagram that is used in the book communicates an important path every company and startup need to take and that is the Culture of Discipline. Typically, startups start in the bottom right corner and move towards the upper left corner. 

The Great companies that were startups to start with moved straight up. This communicates an important message, i.e High Ethics of Entrepreneurship is not nice to have but a must have to build sustainable companies but great companies have High Ethics of Entrepreneurship AND High Culture of Discipline. That is a tough act to follow. So when you are building a startup focus on how you can create a culture of discipline while you have high ethics of entrepreneurship. It is chaotic in a startup, the billing and invoicing does not work, the system is breaking down when a new customer wants to try something, your next release is 2 weeks away and you are fire fighting with your existing customers on the previous release. Your lead developer is putting on temper tantrums because he has some external issues, you are running out of funds in 6 months so you better get your traction up and also get new investors… the problems and issues are endless, how can you build a culture of discipline with all these things going on? well that is what great teams and companies do. So ask yourself how do you strike this balance and execute?

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