BEFORE he wrote the book Good to Great Jim Collins, author of the classic Built to Last (about the success factors of enduring, visionary companies) was asked: If youre not an enduring, visionary company, but want to become one, how do you do it?
It was a question which Collins had asked himself as well five years ago; whether a good company could become a great company and if so, how? And in Good to Great he concludes that it is after all possible but finds there is no silver lining in the clouds.
Collins and his team of researchers began their quest by sorting through a list companies, looking for those that made substantial improvements in their performance over time.
After establishing a definition of a good-to-great transition that involved a 10-year fallow period followed by 15 years of increased profits, Collins's crew combed through every company that had made the Fortune 500 (approximately 1,400).
Over five years, the team analysed the histories of companies in the study. After much sifting and interviews, Collins and his crew felt that they had discovered the key determinants of greatness and why some companies made the leap and others didn't.
And they found 11 that met their criteria, including Wal- greens, Kimberly Clark and Circuit City. Fannie Mae, Gillette, and Wells Fargo.
To find these keys to greatness, Collins's 21-person research team (at his management research firm) read and coded 6,000 articles, generated more than 2,000 pages of interview transcripts and created 384 megabytes of computer data in a five-year project.
Collins then looked for similarities among the companies. What he found would surprise and also fascinate anyone involved in management.
He goes on to make a suggestion that making the transition from good to great doesn't require a high-profile chief executive officer (CEO), the latest technology, innovative change management, or even a fine-tuned business strategy.
While some of the overall findings are counterintuitive (e.g., the most effective leaders are humble and strong-willed rather than outgoing), many of Good to Great's perspectives on running a business are simple yet refreshing.
The research team also went on to contrast the good-to-great companies with a carefully selected set of comparison companies that failed to make the leap from good to great.
And what was different?
Why did one set of companies become truly great performers while the other set remained only good?
The findings include:
·Hedgehog concept: A product or service that leads a company to outshine all worldwide competitors, that drives a company's economic engine and that a company is passionate about.
·Level 5 leaders: Channel their needs away from themselves and into the larger goal of building a great company.
·A culture of discipline: You get the magical alchemy of great results when you combine a culture of discipline with an ethic of entrepreneurship.
·Technology accelerators: Good-to-great companies think differently about the role of technology.
·The flywheel and the doom loop: Those who launch radical change programs and wrenching restructurings will almost certainly fail to make the leap.
Collins says: Some of the key concepts discerned in the study fly in the face of our modern business culture and will, quite frankly, upset some people.
Collins, an avid rock climber and author/co-author of four books, started teaching at Stan- ford Graduate School of Business, where he received the Dis- tinguished Teaching Award in 1992.
In 1995, Collins founded a management laboratory in Boulder, Colorado, where he invests a significant portion of his energy in research projects often five or more years in duration to develop key insights and then translate these findings into books, articles and lectures.