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| Source: Amazon.com |
From the book’s cover:
The Challenge
Built to Last, the defining management study of the nineties, showed how great companies triumph over time and how long-term sustained performance can be 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 preyed 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 go 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 fifteen 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 seven times in fifteen 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 five years, the team analyzed the histories of all twenty-eight 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.
The Findings
The findings of the Good to Great study will surprise many readers and shed light on virtually every area of management strategy and practice. The findings include:
- Level 5 Leaders: The research team was shocked to discover the type of leadership required to achieve greatness.
- The Hedgehog Concept (Simplicity within the Three Circles): To go from good to great requires transcending the curse of competence.
- A Culture of Discipline: When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great results. Technology Accelerators: Good-to-great companies think differently about the role of technology.
- The Flywheel and the Doom Loop: Those who launch radical change programs and wrenching restructurings will almost certainly fail to make the leap.
Perhaps, but who can afford to ignore these findings?
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| The author, Jim Collins / Source: ExactTarget.com |
The Review:
You know you're in trouble when a synopsis from the book itself is that long, I think.
The economics side of Good to Great is sometimes oblique (for those not in the industry, I'd assume - since I'm not, I'm showing observer bias here), but the concepts are strong. So I'll just point out what I took away from it, and leave the rest to minds more attuned to such details as they may find.
Up front, on the economics side of things, the book discusses several businesses that the author considers to have gone from being simply "good;" i.e.: capable of doing what they advertise and turning a modest profit, to "great;" with market shares higher than their competitors and getting great returns in the stock market for their trouble. This was very interesting to read for me (as I dabble in a lot of varied subjects - those who have read my other reviews will notice that), but my question is, how do these businesses stack up today? The book appears to have been written when the economy was doing fairly well, but I know for myself that Circuit City - one of the companies named in the list - has suffered from both a bad economic forecast and from the rise of internet sales. Just looked it up - they went bankrupt in 2009. So the book is out of date.
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| The distinctive storefront of a Circuit City, now standing abandoned. / Source: Pintrest.com, photographer credit: Brandon Schulman |
So my question is, what are these businesses doing now? Some, like Walgreens in particular, appear to be weathering the storm of current economic times fairly well. Others, like Circuit City (mentioned above) and Wells Fargo (hit with a good share of the market crash in 2008) aren't so well off. I'd be interested in seeing what the author says about these businesses in a post-recession world (if you can honestly call 2013 - when these notes to be reviewed were first penned - "post" recession). Perhaps the Wikipedia article will shed some light on it. Ah, yes, there is a blurb from Steven J Levit about how the only business of the "great" group still doing great is Nucor.
Now to more useful matters. I think there is something to be said for some of the ideas the book puts forward. They aren't sure-fire methods to make a business, organization, or even a social group (down to families or even individuals) great, per-se, but they seem viable options to me just the same.
I liked the part about Stockdale Paradox. This is: "Be assured that you will come out of hard times in a winning position, no matter how long it takes." That's a strong sense of optimism. The other side of the paradox (and what makes it a paradox in the first place) is that you must look unflinchingly at the facts as they are. Don't sugar-coat it. Stockdale's experiences in the war are worth recounting, but I will leave the reader to do so at his or her own leisure.
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| Stockdale was shot down over Vietnam and spent a long time in a POW camp. After his eventual release, he would go on to become a United States senator. / Source: Wikipedia.com (image of Stockdale next to his aircraft) / strategicdiscipline.positioningsystems.com (graphic of the paradox) |
Then there is the Hedgehog Principle (I believe it is called a principle, but am not sure that is the right phraseology... I looked it up later, and it is Hedgehog Concept). The idea is: a fox is great at lots of things, including being crafty and swift, but a hedgehog can keep winning the fight if it just sticks to what it knows best, and not losing perspective on that. Don't try to outfox the fox. Just be the best hedgehog you can be. It's a defensive strategy in this analogy, but can be adapted to many themes.
The author says that the person trying to apply it should figure out where they best fit in the hedgehog circles (what you can do well, what you love to do, and... something else - I forget), and then do that, even if it doesn't fit with what you happen to be doing at the moment. Go for what you can be best at. Don't run off and do other things just because they look like conveniently quick fixes. Do what works best for you, and do it to the best of your ability,
The author also talked about having passion in what you do. Do it because you love it, not just because it is a paycheck. And cultivating a culture of diligence (I think that was the word). He related about how the Phillip Morris execs were passionate about their products. He contrasted this with the Camel parent company, which was not so much, and were later bought out.
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| The Hedgehog Concept. Seems pretty straight forward, but according to Collins, most businesses struggle to really find that middle niche where they can not only survive, but thrive and innovate. / Source: JeromeCastaneda.com |
Overall, this was a good book, though admittedly a backwards looking one. So the best thing is to apply the lesson, and then go form there. I also liked how it the author pointed out the nature of the fifth level execs who were relentlessly dedicated, but self-effacing and quick to take mistakes to themselves. Rockstar-type CEOs were just not as effective as they look. Lee Iacoca was the prime example Collins used.
Final word: worth the read if you want to learn more about how to improve your business, and what it takes. A bit dated now, but such books easily fall victim to that, if they use real-world analogies. I'm glad I read it.
Here is another perspective on Good to Great. Worth reading.
Learn more about Good to Great: Why Some Companies Make the Leap...And Others Don't on Amazon.com
The parting comment:
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| Source: LOLSnaps.com |
If you want to read the details of this photo, I'm afraid you're just going to have to click on it and see it up close for yourself, as the picture wouldn't enlarge any bigger in the body of the blog as it is. Some pretty strange things have been confiscated by airport security. My personal favorite? The wild birds strapped to the guy's legs. Now that's dedication to your cause, in my book.
Interesting.
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