Good to Great

Citation

Dietz, J. (2002), "Good to Great", Journal of Consumer Marketing, Vol. 19 No. 6, pp. 524-526. https://doi.org/10.1108/jcm.2002.19.6.524.1

By way of full disclosure, I admit to a conflict of interest about Good to Great. I read Built to Last, Jim Collins’ 1994 book that remains a bestseller today. It is one of the most important books I have ever read, and thus my confession that I came to this book with a predisposition to be similarly inspired. His methodology in presenting a blueprint for attaining and maintaining success in running companies is rigorously researched and supported in a manner that assures the reader of the timeless nature of this book.

In Built to Last, Collins and Jerry Porras identified a set of companies that had stood the test of time and compared them with companies in the same industry, of the same vintage, that had also stood the test of time, but were not in the same league. After the book became successful, Jim Collins was told that it was useless because the companies he and Porras wrote about were always great. What about companies that became great after years of mediocrity? Thus the start of the five‐year project to produce Good to Great, with the objective of identifying companies that had made the transition from “good” to “great” and the factors that identified them.

The criteria that qualified companies to join the “good‐to‐great” list were:

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  Fifteen‐year cumulative stock returns at or below the general stock market.

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  A transition point, after which the accumulated stock returns were at least three times the general market during the following 15 years.

Collins and his team of 21 people then found comparison companies, in order to answer the question “What did the good‐to‐great companies share in common that distinguished them from the comparison companies?” (p. 7). The resulting “good‐to‐great” companies included: Abbott Laboratories, Circuit City, Fannie Mae, Gillette, Kimberly‐Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and Wells Fargo,

One of the most interesting results from this research was that the leaders of these companies did not exhibit a “larger than life” persona, and indeed seemed to possess very modest outside personalities. Collins uses Darwin Smith as an example of his “Level 5 leadership.” Smith, who became CEO of Kimberly‐Clark in 1971, turned Kimberly‐Clark into the leading paper‐based consumer products company in the world, beating Scott Paper and Procter & Gamble, yet he was “a man who carried no airs of self‐importance” (p. 18). At Gillette, Colman Mockler had the reputation of a “gracious, almost patrician gentleman” (p. 23). Yet, he fought three takeover battles, emerging victorious, even though he would have personally benefited financially from a capitulation to the raiders.

The book contains nine key chapters:

1. 1.

   (1) Good is the enemy of great. Here we learn just how dangerous it is to be satisfied with mediocrity. “The vast majority of companies never become great, precisely because the vast majority become quite good – and that is their main problem” (p. 1).

2. 2.

   (2) Level 5 leadership. A Level 5 executive “builds enduring greatness through a paradoxical blend of personal humility and professional will (p. 20).” “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company” (p. 21).

3. 3.

   (3) First who … then what. These companies “first got the right people on the bus (and the wrong people off the bus), and then figured out where to drive it” (p. 41). Collins’ point is to build the right team before strategic decisions are made.

4. 4.

   (4) Confront the brutal facts (yet never lose faith). In explaining the need to confront the brutal facts, Collins uses Admiral Jim Stockdale, who was the highest‐ranking US military officer in the “Hanoi Hilton” prisoner‐of‐war camp during the Vietnam War (p. 83). Stockdale told Collins that “you must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be” (p. 85).

5. 5.

   (5) The hedgehog concept (simplicity within the three circles). Hedgehogs “simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything” (p. 91). One of the examples used is Walgreen’s, whose concept of “the best, most convenient drugstores, with high profit per customer visit” (p. 92) contributed to their enduring success. Collins uses three circles when describing how their intersection has been critical to the good‐to‐great companies:

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  Where you can be the best in the world;

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  What drives your economic engine;

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  What you are deeply passionate about (p. 96).

  As the reader learns throughout the book, the hedgehog concept is critical to those companies which make the transition from good to great.

1. 1.

   (6) A culture of discipline. The discipline to say “no” to opportunities that failed the three‐circle “Hedgehog” test has been one of the hallmarks of the good‐to‐great companies. Collins’ main point: “Build a culture full of disciplined people who take disciplined action within the three circles, fanatically consistent with the hedgehog concept” (p. 124).

2. 2.

   (7) Technology accelerators. “When used right, technology becomes an accelerator of momentum, not a creator of it” (p. 152). The research team found that good‐to‐great companies “avoid technology advertisements and band‐wagons, yet they become pioneers in the application of carefully selected technologies” (p. 162).

3. 3.

   (8) The flywheel and the doom loop. “ No matter how dramatic the end result, the good‐to‐great transformations never happened in one fell swoop” (p. 165). Collins uses the image of a massive metal disk mounted on an axle and asks the reader to imagine pushing the flywheel to move an inch, and then watching it build momentum. Kroger is one of the examples used in this chapter, where Jim Herring (a level 5 leader) “understood that the way to get people lined up behind a bold new vision is to turn the flywheel consistent with that vision” (p. 176).

4. 4.

   (9) From good to great to built to last. The research team decided to conduct the research for this book as if Built to Last did not exist (p. 189). That way, they could find out if the two studies relate. In the end, Collins concludes that Good to Great is really a prequel to Build to Last, not the other way around. The good‐to‐great concepts covered here are necessary to develop and maintain the built to last concepts that contribute to an enduring great company.

At the end of every chapter, there are “key points” and “unexpected results”, which are good for leading a group discussion about the book. Although I see this as primarily a book for corporations (large and small, by the way) to use in strategic planning, I will talk extensively about it in my marketing and strategic management classes. I also think that finance people could use this book for examples in several ways. In short, the concepts are timeless and not limited to any one industry or size. There are a lot of examples, but the book does not drag or become bogged down with detail. Good to Great is a book you will never be sorry you purchased, and one that will give you workable tips for accomplishing growth and consistency.