Good To Great, by Jim Collins, tries to answer why some companies become wildly successful while others don’t. The book’s attempt to scientifically analyze top performing companies and identify common traits is no doubt interesting and revealing, yet it shouldn’t be viewed as a “business bible.” There are many skeptics of Collin’s findings, but more people, including myself, think some of the data simply cannot be ignored. In fact, many business majors are required to study this book.
An example question from the book: Why was Walgreens able to make the leap when other companies in the same industry with the same opportunities, such as Eckerd, did not make the leap?
In order to locate great company traits, Collins had to not only identify those “great” companies but also gather comparison companies. His researchers selected public companies that were performing average to below-average for at least fifteen years followed by fifteen or more years extraordinarily outperforming comparison companies. Keep in mind, the companies reviewed in the book had to already have a minimum of 30 years existence under their belt, so companies such as Microsoft, at the time of the writing, would not make the cut. Not because Microsoft is not a “great” company, but rather the research only looked at companies with enough history that included an amazing transformation.
Collins notes some astonishing findings: For example:
1. Celebrity leaders, who are hired from outside of the company, negatively impact a company’s likeliness of becoming great.
2. Structure of executive compensation has no impact as a key driver of corporate performance.
3. Strategy does not separate good and great companies since both good-to-great and comparison companies seemed to have well-defined strategies and long-range plans.
4. Good-to-great companies focus on what not to do rather than what to do to become great. They focused equally on what to not do and what to stop doing.
5. Technology can accelerate transformation, but cannot cause a transformation.
6. Mergers and acquisitions play virtually no role in igniting a transformation.
7. Good-to-great conditions play scant attention to managing change, motivating people or creating alignment. Under the right circumstances, those problems melt away.
8. Good-to-great had no name, tag line, launch event or program to signify their transformations. Most great companies reported being unaware of the magnitude of the transformation at the time; only later did it become clear.
9. In no case was there a company that just took off by sitting on the nose of a rocket when it took off. Greatness is not a function of circumstance. Greatness is largely a matter of conscious choice.
These finding helped Collins define a concept of building a great company.
1. Level 5 Leader – Self-effacing, quite reserved, even shy, these leaders are a paradoxical blend of personal humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar.
2. First Who…Then What – Connors had expected to find leaders setting up a new vision or strategy. He found that companies for the right people on the bus, the wrong people off the bus, and the right people in the right seats – and then they figured how to drive it. People are not your asset. The right people are.
3. Confront the Brutal Facts (yet Never Lose Faith) - You must maintain unwavering faith that you can and will prevail in the end, regardless of difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality.
4. The Hedgehog Concept (Simplicity within the Three Circles) - If you cannot be the best in the world at your core business, then your core business absolutely cannot form the basis of a great company.
5. A Culture of Discipline - When you have disciplined people, then you don’t need hierarchy or bureaucracy or excessive controls. When you combine culture of discipline with an ethic of entrepreneurship, you get a magical alchemy of great performance.
6. Technology Accelerators – Good-to-great companies think differently about the role of technology. They never use technology as the primary means of igniting a transformation. Paradoxically, they are pioneers in the application of carefully selected technologies.
7. The Flywheel and Doom Loop - There is no single transformation or dramatic program change or killer innovation or miracle. The process resembles pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a pint of breakthrough and beyond.
The above findings are staggering especially in a digital age of tech companies continuously acquiring companies trying to dominate their market. This book will clearly change your thinking about how a business should run. When I read it years ago, Good To Great inspired me to rethink everything and for good reason. Some things, you may disagree with, but Collins offers numerous evidence and tells great business success stories worth reading. Check it out.
Some of these principals have become essential to our print business. Most notably, trying to better understand what NOT to do, providing only what we’re best at and trying to create a culture of perfection. Also, it has been helpful, and inspiring, in our quest to find and keep the right people on board.
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