Lately I’ve been on a search to read more about business, success, strategy and performance. I just read Good to Great, by Jim Collins, which came out in 2001.
Although I had certainly heard of it (it was a huge publishing success) I didn’t read it at the time. When I ran across it a few weeks ago I grabbed it at the library. He and his team did significant research to identify those public companies that had been good performers and became great performers for at least 15 consecutive years. The team then tried to identify common factors that lead to this success.
The 11 companies they identified as manifesting Good to Great were:
- Abbott Labs
- Circuit City
- Fannie Mae
- Gillette Company
- Kimberly Clark
- Philip Morris
- Pitney Bowes
- Wells Fargo
This book starts on a solid data-driven foundation. It found those companies that met a (very rational) definition of great performance. Once those companies were identified, the team looked for commonalities in performance considering people, strategies, technology, finances, and everything else they could imagine. They came up with some very basic factors that correlated across these 11 during the time period of their greatness. They also compared these factors to other similar, but less successful, companies and determined that these factors did not correlate with those organizations.
A few of the 11 companies listed above are obviously known to us as having gone through some problems since the book was published. This can lead a reader to question whether the basic findings are at all relevant since not all of the companies were able to sustain their success. Some have questioned the nature of this type of research — looking at past performance as a basic premise for identifying good performers.
Here’s my opinion. Of course they are backward looking. I think that’s our only real option for gathering data. The challenge is to find correlations between actions and success. I think that this book does it admirably. Did some of these companies fall on hard times? Sure. But no matter how healthy you eat and how much you exercise, you can still get sick. Perhaps more to the point, if you stop your healthy activities and start new, unhealthy activities you can decline quickly. The trick is to recognize which activities are healthy ones, and which are unhealthy ones. It’s up to you to do the right things and avoid the wrong things. Mr. Collins points out the need for this discipline throughout the book. If the reader somehow missed this very clear point, that’s not the fault of the author.
In my next few posts I’ll write more about the individual factors. Let me just say that they strongly resonate as being solid common sense that we all too often forget when we’re trying to create the next ‘killer’ strategy.
For me: Good to Great is still an A+ read.