Good to Great
By Jim Collins
HarperCollins, 2001 - 320 pages

Jim Collins, co-author of Built To Last, has done it again!  This time he spent 5 years trying to find out what differentiates good companies from great companies.  This study can be applied to entrepreneurial ventures and to current corporate America .  After reading this book you may see your company from a much different perspective than in the past and it may have you thinking about the effectiveness of senior managers within your company.  I believe it is a book that business executives will read and keep handy for reference.

This book is a study of companies that exceed their industry, the overall stock market and produce PHENOMENAL returns over a 15-year period (15 of them are very “normal” years and the next 15 years are full of explosive growth).  Some key points you will take away from this book include:

1)  Growth in most companies came after years and years of trying to adapt / mold a concept into something the company truly believed in.  Once this happened the growth engine got going.

2)  Great managers worry more about getting the right people on board and the wrong people off board BEFORE they establish a corporate strategy.

3)  Most great CEOs came from within their own ranks and weren’t recruited from the outside.

4)  Executive compensation didn’t appear to be a key driver of corporate performance

5)  The respective great companies exceeded the overall stock market in creating shareholder value by at least 3x during their 15 year run measured (some for many more years).  While some may say this is not much think about the steel industry and how many are filing for bankruptcy.  Nucor Steel still managed to beat the S&P by more than 3x.

6)  The great companies in this book blew away their comparable peer group.  Wells Fargo vs. Bank of America, Kroger vs. other grocery chains, Walgreens vs. Eckerd, etc.

7)  Collins describes a Level 5 leader.  After reading this section I was amazed at how many CEOs I recognized as not being Level 5 leaders.  This may, in the near future, shake up executive compensation plans, CEO searches and potentially affect corporate governance.

8)  Technology accelerated a transformation but was regarded as a tool.  It didn’t define the company.

9)  M&A activity played virtually no role in going from good to great.

That is all I will write about the book.  I could write on and on about how good this book is.  Read it.  It will change the way you think about business.  Other very good books on the principles of business and entrepreneurship are Leading at the Speed of Growth by Catlin and Mathews and The 22 Immutable Laws of Marketing by Jack Trout and Al Ries.

 

About the Author: Jim Collins is a student and teacher of enduring great companies -- how they grow, how they attain superior performance, and how good companies can become great companies. Having invested over a decade of research into the topic, Jim has co-authored three books, including the classic Built to Last, a fixture on the Business Week bestseller list for more than five years, generating over 70 printings and translations into 16 languages. His work has been featured in Fortune, The Economist, Business Week, USA Today, Industry Week, Inc., Harvard Business Review and Fast Company. Driven by a relentless curiosity, Jim began his research and teaching career on the faculty at Stanford Graduate School of Business, where he received the Distinguished Teaching Award in 1992. In 1995, he founded a management laboratory in Boulder, Colorado, where he now conducts multi-year research projects and works with executives from the private, public, and social sectors. Jim has served as a teacher to senior executives and CEOs at corporations that include: Starbucks Coffee, Merck, Patagonia, American General, W.L. Gore, and hundreds more. He has also worked with the non-corporate sector such as the Leadership Network of Churches, Johns Hopkins Medical School, the Boys & Girls Clubs of America and The Peter F. Drucker Foundation for Non-Profit Management. Jim invests a significant portion of his energy in large-scale research projects -- often five or more years in duration -- to develop fundamental insights and then translate those findings into books, articles and lectures. He uses his management laboratory to work directly with executives and to develop practical tools for applying the concepts that flow from his research. In addition, Jim is an avid rock climber and has made free ascents of the West Face of El Capitan and the East Face of Washington Column in Yosemite Valley.