Good To Great - Good To Great

Good to Great: Why Some Companies Make the Leap... and Others Don't is a management book by Jim C. Collins that describes how companies transition from being good companies to great companies, and how most companies fail to make the transition. The book was published on October 16, 2001. "Greatness" is defined as financial performance several multiples better than the market average over a sustained period. Collins finds the main reason certain companies become great is they narrowly focus the company’s resources on their field of key competence.

The book was a bestseller, selling four million copies and going far beyond the traditional audience of business books.

Writing

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".Top members of this research team were

• Brian J.Bagley
• Lane Hornung
• Vicki Mosur Osgood
• Scott Cederberg
• Christine Jones
• Alyson Sinclair
• Anthony J.Chirikos
• Scott Jones
• Peter Van Genderen
• Jenni Cooper
• Stefanie A.Judd
• Paul Weissman
• Duane C.Duffy
• Brian C.Larsen
• Leigh Wilbanks
• Eric Hagen
• Weijia (Eve) Li
• Amber L.Young
• Morten T.Hansen
• Nicholas M.Osgood

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 paradoxâ€"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.

Great companies

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:

Unsustained Companies

Collins includes 6 examples of companies that did not sustain their change to greatness. These companies, "... are looked at separately as a clump":

Response

The book was "cited by several members of The Wall Street Journal's CEO Council as the best management book they've read."

Publishers Weekly called it "worthwhile", although "many of Collins' 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 gotten 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."