Good to Great
|Author||James C. Collins|
|October 16, 2001|
|LC Class||HD57.7 .C645 2001|
Good to Great: Why Some Companies Make the Leap... and Others Don't is a management book by James C. Collins that aims to describe how companies transition from being average companies to great companies and how companies can fail to make the transition. The book was published on October 16, 2001 by William Collins. "Greatness" is defined as financial performance several multiples better than the market average over a sustained period. Collins finds the main factor for achieving the transition to be a narrow focusing of the company’s resources on their field of competence.
The book was a massive bestseller, selling four million copies and going far beyond the traditional audience of business books.
Collins used a large team of researchers who studied "6,000 articles, generated more than 2,000 pages of interview transcripts and created 384 megabytes of computer data in a five-year project".
Seven characteristics of companies that went from "good to great"
- Level 5 Leadership: Leaders who are humble, but driven to do what's best for the company.
- First Who, Then What: Get the right people on the bus, then figure out where to go. Finding the right people and trying them out in different positions.
- Confront the Brutal Facts: The Stockdale paradox—Confront the brutal truth of the situation, yet at the same time, never give up hope.
- Hedgehog Concept: Three overlapping circles: What lights your fire ("passion")? What could you be best in the world at ("best at")? What makes you money ("driving resource")?
- Culture of Discipline: Rinsing the cottage cheese.
- Technology Accelerators: Using technology to accelerate growth, within the three circles of the hedgehog concept.
- The Flywheel: The additive effect of many small initiatives; they act on each other like compound interest.
Collins finds eleven examples of "great companies" and comparators, similar in industry-type and opportunity, but which failed to achieve the good-to-great growth shown in the great companies:
|Circuit City Stores (bankrupt in 2009)||Silo|
|Fannie Mae (involved in home mortgage scandal)||Great Western Bank|
|Gillette Company (now a Procter & Gamble brand)||Warner-Lambert Co|
|Kimberly-Clark||Scott Paper Company|
|Kroger||A&P (declared bankruptcy in 2010)|
|Philip Morris||R. J. Reynolds|
|Wells Fargo (received $25B from the Troubled Asset Relief Program (TARP) in 2008)||Bank of America (received $45B from TARP in 2008)|
Publishers Weekly called it "worthwhile", although "many of Collins's perspectives on running a business are amazingly simple and commonsense". Similarly Holt and Cameron state the book provides a "generic business recipe" that ignores "particular strategic opportunities and challenges."
Steven D. Levitt notes that some of the companies selected as "great" have since got into serious trouble, such as Circuit City, while only Nucor had "dramatically outperformed the stock market" and "Abbott Labs and Wells Fargo have done okay". He further states that investing in the portfolio of the 11 companies covered by the book, in the year of 2001, would actually result in underperforming the S&P 500 Levitt concludes that books like this are "mostly backward-looking" and can't offer a guide for the future."
Collins reaffirmed that "The books never promised that these companies would always be great, just that they were once great."
- Bryant, Adam (May 23, 2009). "For This Guru, No Question Is Too Big". New York Times.
- "GOOD TO GREAT: Why Some Companies Make the Leap... And Others Don't (Review)". September 3, 2001. Retrieved 2012-07-13.
- Alan Murray (2010). The Wall Street Journal Essential Guide to Management. New York: HarperCollins. p. 11. ISBN 978-0-06-184033-3.
- Holt, Douglas; Cameron, Douglas (2010). Cultural Strategy. Oxford University Press. ISBN 978-0-19-958740-7.
- Levitt, Steven D. (2008-07-28). "From Good to Great … to Below Average". Freakonomics.
- Clint Greenleaf (September 14, 2009). "Paranoia: Your Best Friend". Inc. (magazine). Retrieved 2015-07-17.