Posted in New Articles
ARTICLE 0 comments
11/28 2012

From Good To… NOT So Great?

Good to Great:  Why Some Companies Make the Leap… And Others Don’t has been one of the most successful books ever, selling in excess of 10 million copies.   Authored by Jim Collins in 2001, Good to Great presented research-based findings on companies that made substantial improvements in their performance over time — including 15 years of increased profits.

In Great, Collins and his research team analyzed data from over 1,400 companies, eventually whittling-down the “best of the best” companies, which were then subject to further analysis (including interviews with company leaders).   The resulting findings have become the lore of management gurus everywhere, with terms like “Level 5 Leadership” (leaders who are humble, but driven to do what’s best for the company) and the “Hedgehog Concept” (finding what your company can excel at, and what it is passionate about) becoming everyday terms.

In the end, Collins and company identified 11 companies that met their definition of “greatness” — and among the names were well-recognized firms such as  Abbot Laboratories, Kimberly Clark, and Walgreens.   Unfortunately, Collins’ list also includes some firms that have not fared so well, including the folllowing:

  • Circuit City — bankrupt and closed its doors in 2009
  • Fannie Mae — bankrupt, placed in conservatorship, and received government bailouts of $100 billion
  • Nucor — has experienced a stock and revenue crash of over -50%
  • Wells Fargo — needs another $15 billion dollar government bailout
  • Pitney Bowes — stock and revenue crash of -15%
  • Gillette — company is no longer independent

So, much like 1982’s In Search of Excellence — a book by Tom Peters and Robert Waterman which also attempted to distill best practices from top-performing companies — not all of the companies listed in Good to Great continued to produce stellar results.

So, does this mean that Collins’ conclusions are faulty — or that his recommended practices to become a ‘great” company are not important?

Not so fast — as it turns out, there are a multitude of reasons why some of these companies have dropped off of the top-performers list.   First, the market value of companies is very cyclical — the list of top American companies changes significantly every 10-15 years, for example, so some churn is to be expected.  Second, Collins and his research team did apply some subjective criteria when funneling-down their initial list of 1,400+ companies to those who were studied in detail — so Good to Great never was a wholly empirical exercise to begin with.   Finally, the economic crisis over the past 2 years has certainly affected all companies — resulting in some of the financial difficulties outlined above.

So, much like its In Search of Excellence predecessor, perhaps the greatest value one gets from reading Good to Great is a simple reminder of the types of activities all companies — and all leaders  — should be focusing on.

Perhaps the final read on Collins’ work is best summarized by a recent Wharton Review: ” Collins asks an interesting question. Unhappily, the methodology he used to formulate an answer is questionable and the answer is almost disappointing in its simplicity: Great companies become great by staying focused: focused on their products, their customers and their businesses. They aspire to higher levels of excellence, are never content to become complacent and are passionate about their products. They have leadership that is not ego-driven, and have organizational cultures that embrace constant change. That’s the book.”

And how could any leader disagree with that?

Social poster

delicious digg reddit technorati facebook twitter google yahoo wikio blinklist simpy spurl 


  • No documents for download.