Good to Great
JIM COLLINS
Reviewed by Todd
No one in the last fifteen years has had a greater impact on the discussion of organizational success than Jim Collins. Good to Great has sold over two million copies since its 2001 publication, and when you ask chief executives about the books that made a significant impact on their decision making, this book is referenced more often than any other. With Good to Great, Collins introduced a new lexicon into management meetings, using memorable metaphors like “the hedgehog concept” and “the flywheel.” Most important, he changed the conversation.
Collins’s previous book, Built to Last, detailed the habits of century-old institutions that had long since established their reputations. Collins wrote Good to Great in response to business leaders who wanted to know if they could alter the course of their average companies and achieve the greatness won by the titans characterized in Built to Last. He spent five years searching for the answer . . . and the answer was yes.
Collins and his team looked for companies that showed a period of average (or below-average) market returns followed by a run of sustained success. These good-to-great companies were required to return 300 percent over and above the S&P 500 and to have sustained those results over a fifteen-year period. Only eleven Fortune 500 companies passed Collins’s strict criteria.
The good-to-great companies were notable for another reason: they were not notable. The list lacked blue chip stalwarts (and media darlings) like General Electric and Coca-Cola. Missing were firms from fast-growth, high-tech sectors, like Intel. Instead, readers will find a steelmaker, three retailers, a couple of financial services providers, three well-known consumer package goods companies, a health-care product company, and another that sold postal meters. This was exactly the message that leaders wanted to believe: if Pitney-Bowes and Fannie Mae can do it, so can we.
Comparing good-to-great companies with a set of peers, Collins discovered a series of practices that were put in action even before the companies transitioned to greatness. During this time, companies identified and promoted leaders who were ambitious—not about their careers, but rather about the overall success of the company. These modest leaders then spent unusual amounts of time selecting the right team before deciding where to take the company, and may have allowed for limited growth until the right talent could be found. Then, these leaders created an environment that allowed employees to voice opinions and take on responsibility.
When companies finally made the transition, they built upon those preparation practices and brought a focus to their efforts. To bring concreteness to this idea, Collins references the ancient Greek fable “The Hedgehog and the Fox,” using essayist Isaiah Berlin’s analysis, “The fox knows many things, but the hedgehog knows one big thing.” The Hedgehog Concept sits at the center of three intersecting circles:
- What you can be best in the world at
- What drives your economic engine
- What you are deeply passionate about
To illustrate the “Hedgehog Concept” at work in business, Collins points to Walgreens. Pharmacists founded and still run the drugstore chain today, which lends authenticity and passion to its mission. The company altered its measurement for economic success by shifting its focus from profit per store to profit per customer visit, because management had the insight that winning loyal customers was about more than being a chain store and having a brand name. Being the most convenient drugstore was the company’s differentiator and what it could be best at in the world. This focus now informs all aspects of Walgreens’ strategy, from determining the street intersections for store locations to choosing products that best serve their customers.
“Good is the enemy of great.”
All good-to-great companies have just such a deliberate nature. Collins describes a disciplined culture that provides constraints while still letting individuals decide the best course of action. Also, he finds that in these companies, technology is assistive, not a driver. Collins compares these efforts to pushing on a gigantic flywheel; the initial efforts are difficult, but the companies slowly build momentum and the ever-increasing rotations propel them forward. This slow and steady mind-set stands in stark contrast to the Tom Peters technicolor “dream big or go home” view of the world.
The book’s rational approach to success finds a welcome home on the bookshelves of accountants, lawyers, MBAs, small-business owners, and entrepreneurs. With never-ending pressure from customers and shareholders, every manager is on a quest to find a path to success, but Good to Great offers more than that. Collins writes an inspirational tale that gives readers permission to believe they and their companies can achieve what the limited few can do. TS
Good to Great: Why Some Companies Make the Leap . . . and Others Don’t, HarperCollins, Hardcover 2001, ISBN 9780066620992
WHERE TO NEXT?
Here for
a supporter of good 
Here for
more strategic methodology 
Here for
how to get started | EVEN MORE: Good to Great
and the Social Sectors by Jim
Collins; Built to Last
by Jim Collins and Jerry I. Porras;
Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne