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Good to Great, Why Some Companies Make the Leap…and Others Don't (Hardcover)
by Jim Collins
| Category:
Management, Leadership, Business, Corporate excellence |
| Market price: ¥ 280.00
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¥ 238.00
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 Good for Gifts |
| MSL Pointer Review:
A profound and powerful book that is destined to be a timeless management classic. One of the Top Ten business reads recommended by MSL. |
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Author: Jim Collins
Publisher: Collins
Pub. in: October, 2001
ISBN: 0066620996
Pages: 320
Measurements: 9.5 x 6.5 x 1.1 inches
Origin of product: USA
Order code: BA00002
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- Awards & Credential -
An overwhelmingly popular business book across the world ranking #76 in books on Amazon.com as of December 6, 2006. One of the top ten business books of 2001. Amazon.com's Best of 2001. |
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- MSL Picks -
This book has already become a business classic and will remain talked about and influential for years to come. Its greatness lies in the quality and quantity of the data and the analysis, and in the author's own personality, brilliance and drive.
Collins starts with the question, "Can a good company become a great company, and, if so, how?" To answer this question, he assembled a team of 20 researchers and launched a six-month "death march of financial analysis," looking for fortune 500 companies that exhibited a particular pattern: fifteen-year cumulative stock returns at or below the general stock market, punctuated by a transition point, then cumulative returns at least three times the market over the next fifteen years.
The team identified 11 companies that averaged greater than 6.9 times the average market return after their transition points, and 17 comparison companies. They performed over 10 person-years of research, collecting all articles published on the 28 companies dating back 50 years or more, and interviewing most of the good-to-great executives who had key positions of responsibility during the transition era.
Collins says of the effort: "For each of the 28 companies... I would make a presentation to the team on that specific company, drawing potential conclusions and asking questions. Then we would debate, disagree, pound on tables, raise our voices, pause and reflect, debate some more, pause and then discuss, resolve, question, and debate yet again about 'what it all means.'"
This collaboration is the key to the success of the book. Collins clearly enjoyed the process and the team tested each other's conclusions and collectively came up with a view that could stand intense scrutiny. The book needed a leader and an intellect like Collins, but without the team it would have been a shadow of what it became. In other words, the making of the book was a reflection of its subject, by taking a concept that had potential to be great and developing it incrementally until it was transformed inexorably from a good idea into a great book. Cumulative returns on this book are surely many times the average.
The particular power of the process is that it unearthed some results that defy conventional wisdom as well as Collins' own preconceptions. For example, Collins was surprised by what he didn't find in good-to-great companies:
- No charismatic, celebrity leaders
- No link to executive compensation
- No correlation with strategic planning efforts
- No focus on actions - success was more dependent on deciding what not to do
- No innovative technology
- No mergers and acquisitions
- No change efforts or initiatives
- No fortunate positioning
Instead Collins and his team found that the 11 companies had 7 key concepts in common:
1) Level 5 Leadership - "We were surprised, shocked really, to discover the type of leadership required for turning a good company into a great one... these leaders are a paradoxical blend of humility and professional will. They are more like Lincoln and Socrates than Patton or Caesar."
2) First Who... Then What - "We found that they first got the right people on the bus, the wrong people off the bus, and the right people in the right seats - then they figured out where to drive it."
3) Confront the Brutal Facts (Yet never lose faith) - "Every good-to-great company embraced what we came to call the Stockdale Paradox. You must maintain unwavering faith that you can and will prevail in the end, regardless of the 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. It must be replaced with a simple concept that reflects deep understanding of three intersecting circles [What you can be the best in the world at, what you are deeply passionate about, and what makes enough money]"
5) A Culture of Discipline -- "When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance."
6) Technology Accelerators - "Good-to-great companies...never use technology as the primary means of igniting a transformation. Yet, paradoxically, they are pioneers in the application of carefully selected technologies."
7) The Flywheel and the Doom Loop - "There was no defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. Rather the process resembled relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough, and beyond."
All the data and all the research are summed up in these seven concepts. The central idea, however, is even simpler. The key to the book is that in order to go from good to great, you need to have a selfless leader who builds a great team that goes on relentlessly to pursue a simple goal over a long period of time. The central goal, or Hedgehog Concept, has to have certain characteristics: the goal must be economically viable, and the team needs to care about it deeply and have the capability of being best in the world at it. This concept may not be easy to find, or may not exist at all for any given company, but once discovered it is always remarkably simple.
The book is successful because this simple idea emerges clearly from the data. The book starts with what seems like a relatively uninteresting financial analysis of large successful companies, but ends up with a set of principles that seem obviously correct. Moreover, the findings are interesting because they are surprising and they touch on the motivation and drive that make people achieve extraordinary things in many fields.
As Collins puts it, "This book... is ultimately about one thing: the timeless principles of good to great...I see my work as being about discovering what creates enduring great organizations of any type." But it is more than this; it is ultimately about the unquenchable thirst of the human spirit for great accomplishment and mastery.
This helps explain why the book has meaning for everyone - not just the few leaders of Fortune 500 companies. The concepts apply to all human endeavors, and so have resonance and applicability for everybody.
In all respects, this is an excellent book. It's exceedingly well-written and easy to read (or to listen to on tape), the content is solid and useful, and the conclusions are presented in a very clear and memorable way. The messages of the book will stay with you long after you finish reading it.
Target readers:
Executives, managers, entrepreneurs, government and nonprofit leaders, professionals, and MBAs.
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Jim Collins has authored or co-authored four books, including Built to Last and Good to Great. Driven by a relentless curiosity, Jim began his research and teaching career on the faculty of Stanford’s Graduate School of Business, where he received the Distinguished Teaching Award. In 1996, he returned to his hometown of Boulder, Colorado, to found his management laboratory, where he conducts research and works with leaders in the corporate and social sectors. More about Jim and his works can be found at his e-teaching site, where he has assembled articles, audio clips, a recommended reading list, discussion guide, tools, and other information. The site is designed to be a place for students to study and learn.
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From the Publisher:
The challenge: Built to Last, the defining management study of the 90s, showed how great companies triumph over time and long-term sustained performance can be born engineered into the DNA of an enterprise from the very beginning. But what about the company that is not born with great DNA? How can good companies, mediocre companies, even bad companies achieve enduring greatness?
The study: For years, this question played on the mind of Jim Collins. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? And if so, what are the universal distinguishing characteristics that cause a company to grow from good to great?
The standards: Using tough benchmarks, Collins and his research team identified a set of elite companies that made the leap to great results and sustained those results for at least 15 years. How great? After the leap, the good-to-great companies generated cumulative stock returns that beat the general stock market by an average of 7 times in 15 years, better than twice the results delivered by a composite index of the world’s greatest companies, including Coca Cola, Intel, General Electric, and Merck.
The comparisons: The research team contrasted the good-to-great companies with a carefully selected set of comparison companies that failed to make the leap from good to great. What was different? Why did one set of companies become truly great performers while the other set remained only good? Over 5 years, the team analyzed the histories of all 28 companies in the study. After sifting through mountains of data and thousands of pages of interviews, Collins and his crew discovered the key determinants of greatness – why some companies make the leap and others don’t.
Findings: 1) Level 5 Leaders. The research team was shocked to discover the type of leadership required to achieve greatness. 2) The hedgehog Concept (Simplicity within the Three Circles): To go from good to great requires transcending the curse of competence. 3) A Culture of Discipline: When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great results. 4) Technology Accelerators: Good-to-great companies think differently about the technology. 5) The Flywheel and the Doom Loop: Those who launch radical change programs and wrenching restructurings will almost certainly fail to make the leap.
Words from the author: “The surprising good-to-great list included such unheralded companies as Abbott Laboratories (3.98 times the market), Fannie Mae (7.56 times the market), Kimberly-Clark Corp.(3.42 times the market), Nucor Corp. (5.16 times the market), and Wells Fargo (3.99 times the market). One such surprise, the Kroger Co. - a grocery chain - bumped along as a totally average performer for 80 years and then somehow broke free of its mediocrity to beat the stock market by 4.16 times over the next 15 years. And it didn't stop there. From 1973 to 1998, Kroger outperformed the market by 10 times. In each of these dramatic, remarkable, good-to-great corporate transformations, we found the same thing: There was no miracle moment. Instead, a down-to-earth, pragmatic, committed-to-excellence process - a framework - kept each company, its leaders, and its people on track for the long haul. In each case, it was the triumph of the Flywheel Effect over the Doom Loop, the victory of steadfast discipline over the quick fix. And the real kicker: The comparison companies in our study - firms with virtually identical opportunities during the pivotal years - did buy into the change myths described above - and failed to make the leap from good to great.”
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Good is the enemy of great.
And that is one of the key reasons why we have so little that becomes great.
We don’t have great schools, principally because we have good schools. We don’t have great government, principally because we have good government. Few people attain great lives, in large part because it is just so easy to settle for a good life. The vast majority of companies never become great, precisely because the vast majority become quite good - and that is their main problem.
This point became piercingly clear to me in 1996, when I was having dinner with a group of thought leaders gathered for a discussion about organizational performance. Bill Meehan, the managing director of the San Francisco office of McKinsey & Company, leaned over and casually confided, “You know, Jim, we love Built to Last around here. You and your coauthor did a very fine job on the research and writing. Unfortunately, it’s useless.”
Curious, I asked him to explain.
“The companies you wrote about were, for the most part, always great,” he said. “They never had to turn themselves from good companies into great companies. They had parents like David Packard and George Merck, who shaped the character of greatness from early on. But what about the vast majority of companies that wake up partway through life and realize that they’re good, but not great?”
I now realized that Meehan was exaggerating for effect with his “useless” comment, but his essential observation was correct - that truly great companies, for the most part, have always been great. And the vast majority of good companies remain just that - good, but not great. Indeed Meehan’s comment proved to be an invaluable gift, as it planted the seed of a question that became the basis of this entire book – namely, Can a good company become a great company and if so, how? Or is the disease of “just being good” incurable?
Five years after that fateful dinner we can now say, without question, that good to great does happen, and we’ve learned much about the underlying variables that make it happen. Inspired by Bill Meehan’s challenge, my research team and I embarked on a 5-year research effort, a journey to explore the inner workings of good to great.
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David Rouse, USA
<2006-12-19 00:00>
Collins is coauthor of Built to Last: Successful Habits of Visionary Companies (1994), the widely heralded book that was the result of a six-year research project conducted by Collins and Jerry Porras. They identified 18 companies that met their rigorous standard for long-term performance. They looked for companies that had outperformed the stock market by a factor of 15 starting from 1926. Then they went about the task of identifying what these companies had in common. Now Collins turns his attention to companies that have made the transition from "good to great." This time the findings are backed by five years of research and data analysis. Starting with every company that ever appeared in the Fortune 500, Collins identifies 11 companies that had 15-year cumulative stock returns at or below the general stock market when, after a transition point, they then demonstrated cumulative returns of at least three times the market over the next 15 years. Collins then looked for similarities among the companies. What he found would both surprise and fascinate anyone involved in management. |
Peter F. Drucker, USA
<2006-12-19 00:00>
This carefully researched and well-written book disapproves most of the current management hype – from the cult of the superhuman CEO to the cult of IT to the acquisitions and merger mania. It will not enable mediocrity to become competence. But it should enable competence to become excellence. |
Jason Greer, USA
<2006-12-19 00:00>
Jim Collins groundbreaking leadership book, Good to Great, Why Some Companies Make the Leap and Others Don't attempts to answer the question of how an organization can be led to resounding success and to the achievement of all its goals. The author's premise is that being simply good enough is acceptable to most individuals and that organizations need determined and focused leadership to grow into a great organization that maximizes all the potential that its members can muster. Good to Great was the result of a five year study into what makes effective leadership and organizations.
Within this book, Collins attempts to profile exactly what type of leaders lead the transformation from a merely good to a great organization. In the process, he dismisses some common fallacies and assumptions about what is needed to advance an organization to a great organization. While Collins mostly uses case studies of large American businesses, he proposes that the principles he has studied can be used by any organization; government, school or church.
Collins strongly advocates that the central element to move an organization forward is not delineating goals or policies, but discovering individuals with talent who can lead an organization from all levels. The common assumption that an inspiring leader who takes an organization further is charismatic and is able to make sudden changes to push an organization are shown by his research to not be consistent with the profile of great leaders. Most great leaders, showing what he calls Level 5 Leadership, are humble, quiet, disciplined, placing the organization above their own personal egos, and have a relentless search for outstanding subordinate leaders.
Great leadership requires passion and discipline that are constantly looking to improve today and to slowly move towards the future. No one charged in an organization's turnaround can look for a quick fix, or some other event that lacks real substance. Tools, like technology, are never solutions; but are simply products that aid the discipline process.
Collins found that all great leaders make a habit of properly ascertaining intelligence about their present situation and are able to make calm decisions based on the brutal truth. He case that great leaders operate on the "hedgehog concept", or that concepts must constantly be refined to their simplest, nominalist objective is consistent with his concepts of disciplined, humble leadership.
Collins' concepts encourage a constant push towards quality discipleship and initiative. Humility and kindness at the top of the leadership will go a long way towards encouraging subordinate leaders to show the same traits to others. While rigor and exacting details in leadership are always required, ruthlessness and throwing the weight of leadership around to assert authority never are.
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Chad Oberholtzer, USA
<2006-12-19 00:00>
I don't have a bone in my body that is inclined toward business. I was a high school chemistry teacher and now work for my church. So, I didn't read this book to learn about business. I read it to learn about leadership. And what a great choice it was.
I was surprised that my first foray into the world of business books was so utterly readable. Though I didn't understand every single point, Collins manages to write in a very digestible way, while maintaining sufficient intellectual rigor. I was absolutely fascinated by many of the observations that he made in light of his group's research and admired the fact that they clearly avoided the temptation to work the data to produce an intended result. Instead, they allowed the research to drive the conclusions, which makes the take-home messages that much more legitimate.
What I loved about the book is that its applications seem to be almost universal. Though there are clearly realities that separate the smallest minutiae from everyday application in my worlds of education and church work, I am confident that I will be able to use this book to shape the way that I lead. I hope to continue to develop toward Level 5 leadership, and I will endeavor to lead my church to confront the brutal facts (which many people don't like to do in the church) and identify our Hedgehog Concept (which many people also don't like to do in the church).
I am glad that Collins labored through this research project, as the potential benefits pervade all sectors of society. I look forward to reading his follow-up monograph to see how he distinguishes these findings for non-profit organizations. In any case, I would recommend "Good to Great" to any leader in the corporate world or social sector. There is much to be learned from his work.
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