This paper is a book review of the book, Jim Collins’s “Good to Great.” Jim Collins has published books such as “Made to Last,” where he is the best selling he discussed the causes for why companies achieve the sustainability and scalability that are so essential to their success in the contemporary business world. The present book is about the differentiators that determine whether a company is “good” or whether it has made the transition to the excellent or the “great.” Hence, the transformation from mediocre to excellent is the subject that is discussed in this book. This paper discusses the reasons that Jim Collins puts forward and analyzes how the author has made his points. Further, I detail some aspects of the book that I like and others that I do not like.
Before starting on the central premise of this book, it is worthwhile to examine the contemporary business conditions that separate the grain from the chaff. When applied to modern organizations, we get a distinctive feeling that merely being good is not enough to survive the uber-competitive markets. The company has to be great at making full use of the available opportunities. Hence, the author and his team uncover the secrets of what makes the companies great and draws upon case studies and hard data to make his point. The companies surveyed in the book include Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and Wells Fargo.
Further, the book also mentions the companies that have made the transition from good to excellent but failed to maintain a competitive advantage. It is a parable and an article of faith in the contemporary business environment that you are as good as your last performance. Hence, making the transition to high is not enough, and one has to maintain the position of supremacy to ensure that companies use Jim Collins’ favorite phrase are “built the last.’ And one part of the book is all about the change, and the other half is all about the survival of business advantage.
The author and his team use two approaches to differentiate between transitional and non-profit organizations. The first category is the direct comparisons where the companies in the same industry and the same opportunities, along with having the same resources as the good-to-great ones but did not show any leap in performance. Industries including Upjohn, Silo, Great Western, Warner-Lambert, Scott Paper, A&P, Bethlehem Steel, RJ Reynold, Eckerd, and Bank of America. This group included Upjohn and other businesses.
The other group is the one in which companies that have made the transition to “great” but could not sustain their performance are listed. These companies include Burroughs, Chrysler, Harris, Hasbro, Rubbermaid, and Teledyne. The author and his team list these companies to make the point that reaching peak performance alone is not enough in this uber-competitive business environment. The companies that have made the transition have to ensure that they “stick” or sustain their competitive edge. The point here is that the saying, “you are as good as your last performance,” is valid and relevant. Haven’t we all heard of the companies that have flattered only to deceive? The companies listed above fall into this category.
The other notable aspect of the book is that Jim Collins has identified a set of factors that differentiate the good companies from the great ones and how the latter category companies have managed to sustain their performance over time. The set of factors that Jim Collins presents are:
- The CEO’s of most of the great companies have risen through the ranks of the companies and are from “within” rather than outside. This should seal the debate over whether outsiders bring more value to the table or people groomed within are that much more effective.
- The point about technology being overrated in its ability to transform the companies from good to great. This is something that I wholeheartedly agree with since I have always believed that the people and their innovative abilities drive the use of technology rather than the other way around.
- Mergers and Acquisitions are limited in their value to effect the transformation. This point can be debated as evidence shows that M&A usually helps companies achieve economies of scale that are otherwise out of reach of many companies. Further, the issue of organic growth versus inorganic growth is something that just cannot be wished away, and this factor does indeed help in the transformations of companies from good to high.
- The most crucial point that Jim Collins makes is about the people factor. In his opinion, there are Five Levels of leaders. Level 1 leaders are Highly capable individuals; Level 2 leaders are contributing team members, Level 3 is the competent managers, Level 4 is the active leader and finally, and this is where the book is worth the read, Level 5 leaders are executives who drive the transformation from good to high.
- The Level 5 leaders are genuine leaders who possess humility and are self-effacing to the point of being modest. As the author puts it, the companies that did not achieve the greatness tag are those whose leaders had huge egos and a sense of vanity leading to friction between the top management and the rest and hence are a recipe for failure.
The point here is that the book clearly shows the factors that make companies great as opposed to merely good. However, the undue emphasis on Level 5 leadership alone is contradictory as the fact that is idolizing such leaders and creating a culture of “larger than life” figures out of people, no matter how modest they are, is bound to have some repercussions on the morale of the workforce.
Further, the author rubbishes the claim that “people are the most important asset” by pointing out that the right people are the most critical asset. The implication here is that the companies need to concentrate only on those performers and ignore the rest who are considered not right enough. However, truly great companies achieve their position by taking everyone on board, and the attitude should be towards inclusivity rather than exclusion. I am not saying that the right people should be ignored. Instead, the people who can make a difference given the chances must be encouraged as well.
As though the author has read my mind, he makes it clear elsewhere that comparison companies resorted to more layoffs than the ones that made it to the greatness list. Hence, the point about nurturing people has been acknowledged belatedly in the book. This is why I recommend this book to management enthusiasts: The author’s sheer ability to be ahead of the reader and anticipate the responses about what it takes to make the transition from good to great. And this, I believe, is the cause behind the transformation: the ability to stay ahead of the curve and lead the pack.
In conclusion, the book is a good read, though, like all books on management and leadership, there is a bit of hyperbole about some aspects. If one ignores the hype and concentrates on the book’s meat, i.e., the portions where the author describes the factors and causes of the transformations, then there is a lot to learn from what he is saying. The book is well researched, and data is used to back up the claims of the author.