Jim Collins’ Good to Great: Business Leadership Management Investment Book Review

There aren’t many authors who have written two great business books. Jim Collins can make that claim. The first one, co-authored with Jerry Porras was Built to Last: Successful Habits of Visionary Companies. In that book, the authors took a look at companies who’d had long-term success , drew some conclusions about what they had in common and compared them with other companies who were good, but not great.

That was good. It just wasn’t enough. Built to Last didn’t tell us how companies moved from mediocrity to greatness. That’s what Collins chose to study and to write about in his second book, Good to Great.

In both books, Collins�¢ research follows a strict regimen, using the public record, to identify companies that meet specific criteria. For this book, those criteria help Collins identify eleven companies made that switch from mediocrity to greatness. The ultimate measure of mediocrity and stunning success is stock price.

Each company that Collins studied went along for years with ho-hum stock performance. Then, all of a sudden, the curve shot upward. The question Collins asks for us is: “What did they do that made such a dramatic and long term difference in the stock price?”

With the list of companies established, Collins and his research team start looking at the histories of the companies, searching for clues about what the companies did to generate the change in their performance. The major tool here is coverage in the business press.

This gives us two very different kinds of research. The first phase, where companies are identified based on specific criteria that are solid and easy to verify. Stock price is the measure. The price was this and then it shot up to that. You might join me in wishing another measure of success had been used, but there it is.

The second phase is informed interpretation. The research involved reading everything the team can find about the key companies and then talking about what they find. Patterns began to emerge. Those patterns turn into “findings.” Most of them make sense to me.

For example, “A Culture of Discipline” and “The Hedgehog Concept” make sense based on his team’s analysis but they also makes sense to me based on my experience, working with companies for over thirty years.

A couple of the findings seem to owe as much to the fads of the day as they do to research. The material on technology accelerators, for example, probably wouldn’t have been in the book if it had been written in 1981. Today, though, if you write a book about business, technology is one of the lenses you look through.

Then there is Collins’ material on Level Five Leadership. This seems like the part of the book where the consultant comes up with some “system” to base workshops, licensed training and other such profit builders upon. The “findings” are solid, but nothing radically different from most of writing about good leadership. The one exception is also the part I have a problem with.

Collins identifies “humilityÃ?¤ as a characteristic of a Level Five Leader. I don’t think his data support that. The people he describes seem no more or less humble than any other group of high achievers. Where they differ from many of today’s most celebrated CEOs is that they clearly are more concerned with how their company does, than they are with how they look on the cover of Business Week. I would have been more comfortable if he’d described the CEOs of his eleven companies as “results-focused” or “company-focused” and then compared them to star-type CEOs.

These are small nits to pick on an excellent work. If you’re looking for a book that will give you some solid clues about how companies have changed from mediocre performers to stars, this is the book for you.

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