Good to Great: Why Some Companies Make the Leap… and Others Don’t by James C. Collins
My rating: 3 of 5 stars
I read Jim Collins’ “Good to Great” because it was a huge bestseller when it came out in 2001, and I was curious to see a) what made for a good-to-great company; and b) if the companies in the book had maintained their greatness.
Well, the ensuing two decades haven’t been kind to many of the 11 companies profiled in the book.
Circuit City went bankrupt. Fannie Mae was caught in the 2008 financial crisis and was eventually delisted. Gillette is still a great name in personal grooming, but now it’s no longer an independent name, but part of an even bigger company, Procter & Gamble. Pitney Bowes, maker of postage meter technology, was trading at about $80 when the book was published; the stock is now in the single digits. Wells Fargo – well, you know what happened to Wells Fargo.
So were these companies never great to begin win? Was the definition of “great” too narrow?
It’s hard to say. Business is always changing, of course; there was no guarantee that business leaders who read the book and aimed at improving their lot would find greatness simply based on Collins’ anecdotal observations. His principles, which include “Level 5” leadership (a combination of focus and humility), truth-telling, and discipline, could simply serve as traps as much as jumping-off points.
“Good to Great” has faltered, I think, because Collins generally used financial success as a proxy for greatness. He wanted to find out how companies that had been muddling along suddenly surged, with their stock value handily beating the market over the course of at least 15 years (without Enron-type chicanery) while their competitors kept muddling – or spiked, only to fall back. So even though he brings up other factors, success ends up coming back to the bottom line. Other aspects of greatness — working conditions, employee treatment, corporate culture – seem secondary.
Of course, I can’t help but be skeptical. I’ve read too many “Dilbert” collections. I’m not a big consumer of business books, but it seems that Collins wrote “Good to Great” with rose-colored glasses; not for him the no-bullshit tone of my favorite business book, “Up the Organization,” where Avis rejuvenator Robert Townsend described the way things too often are at large corporations. (Summary: The lower-level employees are ignored, even though they’re on the front lines. Townsend is big on communication and fair treatment, one reason I like his book so much.)
Also, I wish Collins had discussed greed more. He notes greed IS a factor at poorly run companies, such as former Nucor competitor Bethlehem Steel, in which Collins describes — with justifiable sneers — its monumental office building and cushy executive perks. I used to be able to see the building from my house before it was imploded last year, a vestige of a once-great company.
But in today’s era (and even the ‘90s, when Collins was compiling his research), greed is a big deal. We live in a world where, more than ever, the idea is to come up with a killer app, build up to an IPO, make a few people rich, create a dazzling C-suite, and take over competitors. Or simply play vulture. Wall Street likes those double-digit profit margins instead of steady success, Warren Buffett notwithstanding. So is there even a place for Collins’ brand of greatness?
In fairness, even if some of the book seems anachronistic, I did find things to like in “Good to Great.” Look past the model companies, and the principles – though common sense – still hold up. Don’t spend your profits on an edifice complex. Be honest about your problems. And don’t get caught up in celebrity culture: “The recent spate of boards enamored with celebrity CEOs … is one of the most damaging trends for the long-term health of companies,” Collins wrote 19 years ago.
Still, good companies would do these things anyway. Right?
I hope so. We could use just as many good companies as “great” ones.
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