Good to Great: Why Some Companies Make the Leap... and Others Don't

The Challenge
Built to Last, the defining management study of the nineties, showed how great companies triumph over time and how long-term sustained performance can be engineered into the DNA of an enterprise from the verybeginning.

But what about the company that is not born with great DNA? How can good companies, mediocre companies, even bad companies achieve enduring greatness?

The Study
For years, this question preyed on the mind of Jim Collins. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? And if so, what are the universal distinguishing characteristics that cause a company to go from good to great?

The Standards
Using tough benchmarks, Collins and his research team identified a set of elite companies that made the leap to great results and sustained those results for at least fifteen years. How great? After the leap, the good-to-great companies generated cumulative stock returns that beat the general stock market by an average of seven times in fifteen years, better than twice the results delivered by a composite index of the world's greatest companies, including Coca-Cola, Intel, General Electric, and Merck.

The Comparisons
The research team contrasted the good-to-great companies with a carefully selected set of comparison companies that failed to make the leap from good to great. What was different? Why did one set of companies become truly great performers while the other set remained only good?

Over five years, the team analyzed the histories of all twenty-eight companies in the study. After sifting through mountains of data and thousands of pages of interviews, Collins and his crew discovered the key determinants of greatness -- why some companies make the leap and others don't.

The Findings
The findings of the Good to Great study will surprise many readers and shed light on virtually every area of management strategy and practice. The findings include:

• Level 5 Leaders: The research team was shocked to discover the type of leadership required to achieve greatness.
• The Hedgehog Concept (Simplicity within the Three Circles): To go from good to great requires transcending the curse of competence.
• A Culture of Discipline: When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great results. 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.

“Some of the key concepts discerned in the study,” comments Jim Collins, "fly in the face of our modern business culture and will, quite frankly, upset some people.”

Perhaps, but who can afford to ignore these findings?

This book is a study of companies that exceed their industry, the overall stock market and produce PHENOMENAL returns over a 15-year period (15 of them are very "normal" years and the next 15 years are full of explosive growth). Some key points you will take away from this book include:

1) Growth in most companies came after years and years of trying to adapt / mold a concept into something the company truly believed in. Once this happened the growth engine got going.
2) Great managers worry more about getting the right people on board and the wrong people off board BEFORE they establish a corporate stategy.
3) Most great CEOs came from within their own ranks and weren't recruited from the outside.
4) Executive compensation didn't appear to be a key driver of corporate performance
5) The respective great companies exceeded the overall stock market in creating shareholder value by at least 3x during their 15 year run measured (some for many more years). While some may say this is not much think about the steel industry and how many are filing for bankruptcy. Nucor Steel still managed to beat the S&P by more than 3x.
6) The great companies in this book blew away their comparable peer group. Wells Fargo vs. Bank of America, Kroger vs. other grocery chains, Walgreens vs. Eckerd, etc.
7) Collins describes a Level 5 leader. After reading this section I was amazed at how many CEOs I recognized as not being Level 5 leaders. This may, in the near future, shake up executive compensation plans, CEO searches and potentially affect corporate governance.
8) Technology accelerated a transformation but was regarded as a tool. It didn't define the company.
9) M&A activity played virtually no role in going from good to great.

That is all I will write about the book. I could write on and on about how good this book is. Read it. It will change the way you think about business. Other very good books on the principles of business and entrepreneurship are Leading at the Speed of Growth by Catlin and Mathews and The 22 Immutable Laws of Marketing by Jack Trout and Al Ries.


Fundamentally Great   January 16, 2002
A.Trendl HungarianBookstore.com (Glen Ellyn, IL USA)
14 out of 54 found this review helpful

"Good to Great: Why Some Companies Make the Leap... and Others Don't" shows us good old fashioned principles are what differentiate the winners from the also-rans. Buy this book and help your company rise to the top.

He proves his thesis through intense research, solid numbers, and uses companies as examples which have transformed from mediocre to the top of their market.

James Collins makes a stand to say what most business writers are afraid to say... that to work hard, retain your integrity, and apply the things that have made companies great for many, many years still works.

Examples shown here are not anecdotes from Collins' consulting career, trying to establish his credibility. Instead, Collins gives us genuine research, genuine examples. In connecting today's great leaders from the past, he says plainly, "We're no different from people in the 1500s."

Puffing up many a CEO's bookshelf are books of avante gard management techniques. It is as if whoever knows the most chic terms for change management will win the race.

"Good to Great: Why Some Companies Make the Leap... and Others Don't" isn't avante gard. It is pragmatic, honest, thorough and hard-hitting.

I fully recommend "Good to Great: Why Some Companies Make the Leap... and Others Don't" by James Collins.

Anthony Trendl


Beyond hero worship   July 1, 2002
R. Walker
10 out of 22 found this review helpful

Possibly the best business book I've ever read, or at least the best that wasn't a journalistic narrative or a history. Most business "advice" books really just amount to hero worship (how to be like Jack Welch, or whoever), and Good to Great is a strong antidote to all that rot. While we gravitate toward big personalities and dramatic stories, the real roots of greatness like elsewhere -- the CEO names in Good to Great won't be familiar to most readers, but their successes are real, and Collins and his team do a nice job of extracting meaning from the data they've assembled. One among many surprising conclusions is that charismatic leaders might actually be a *detriment* to their firms. Then again, after Ebbers, Skilling, and others, maybe we won't find that news so surprising any more... Anyway, the book is clearly written and thoughtfully organized, and well worth reading if you're interested, for whatever reason, in what makes some companies thrive and others fail. A wise book.


Outstanding Book   October 18, 2007
Elijah Chingosho (Nairobi, Kenya)
9 out of 9 found this review helpful


This is an outstanding book that is very interesting and fascinating reading. The fact that the book is based on five-years of research makes the research findings and conclusions credible and believable. This book answers a fundamental question: "Can a good company become a great company?" I also enjoyed the case studies inside it which greatly reinforced the author's message.

I especially enjoyed the topics on hiring (having the right people on the bus and on the right seats and the wrong people off the bus) and the Hedgehog Concept. The Hedgehog Concept basically says that if you can't be the best in the world at your core business, then it can't be the basis of a great company. You need to have a deep understanding and incredible simplicity. You need Big Hairy Audacious Goals (BHAGs) sitting in the middle of your three circles. Another interesting finding is on leaders that drive great companies. Jim Collins identifies the Level 5 Leadership who typically is self-effacing, quiet, reserved, shy and have a blend of personal humility and professional will. They are ambitious for the company and what it stands for and do not seek personal glory or self-aggrandisement.

From the middle manager to the CEO, anyone involved in business management can find valuable leadership and business strategy tips, ideas and advice from this seminal work. Students or business persons seeking to truly understand what it takes to be a successful leader must read this book. The book teaches how even individuals can make the leap to outperform the market or the current market leaders. If you don't have time to read, get the audio book and listen. Jim Collins is extremely lively, interesting and easy to listen to.

One possible weakness is that the study and its conclusions could be dated. The rate of change in the business world is so rapid in the past 5 or so years that it is quite possible that there could be a shift on what makes good companies great. So the argument by Jim Collins that he has uncovered basic facts about human organizations that will be unchanging may ultimately prove not to be totally correct.

In case you have not yet done so, I recommend that you also read Jim Collins' other classic "Built to Last" which he authored with Jerry Porras.



Well grounded research, with practical application for nearly everybody.   July 16, 2006
C. Gilbert (Amsterdam, the Netherlands)
3 out of 5 found this review helpful

Jim Collins (and research team) have written a book that combines the best of the different kinds of business books out there. It is for good reason that this book is a business school classic, and would unhesitatingly recommend it to almost anybody in business.

Collins describes Great to Good as a prequel to Built to Last. I actually found it a much more interesting work, because I believe that the leadership principles in Great to Good also capture and/or explain a lot of the findings in Built to Last.

The book studies eleven companies that went from Good to Great and stayed there for at least 15 years. It compares them with similar companies which did not achieve the same results. Collins and his team went in search of the magic "black box" which caused a company to make the jump. They found some ideas about leadership which they never expected to find. These ideas should shed a critical light on a lot of the notions about successful businesses that we still have today.

In many similar business books, the research remains theoretical. It is interesting to read, useful for studying trends, possibly useful for strategy consultants-- but nothing else. Great to Good is as inspiring as it is interesting, and communicates ideas of leadership which resonate with common sense. I took away a lot of ideas that could help with my own career.

Definitely worth reading!