The Saxton Group

Good to Great is the culmination of another impressive research project by Built to Last coauthor Jim Collins. Collins, along with a 21-person team, sought to answer the question posed by Built to Last fans “[W]hat about the vast majority of companies that wake up partway through life and realize that they’re good, but not great?”

Presented as a prequel to Built to Last, Good to Great is amazingly well-written, thought provoking, and engaging. Collins’ ability to make simple, yet insightful observations based on complex information transforms his comprehensive findings into a remarkably easy read.

To be classified as “good to great,” companies were selected that fit a simple pattern: 15 years of cumulative stock returns at or below the general market followed by 15 years of returns at least three times above the market. The “good to great” companies were then compared to direct competitors, as well as companies that made short-lived shifts into greatness, but failed to stay the course.

Through comparison it becomes clear why some companies became great and others have names that are hardly recognizable today (Addressograph?) At each turn some of the most interesting findings are those that were unexpected, and in many cases contradictory to the way in which most businesses function.

Here are a few key factors that had a profound impact on companies that went from good to great:

• The Bus. Regardless of what direction the company will take, hiring the right people, positioning them properly, and removing the wrong people is critical to success. Once you have the “right people in the right seats, and the wrong people off the bus, then [you can] figure out how to take it someplace great.” This is in contrast with the misconception that the destination is more important than the people, or that the wrong people can be motivated into conformity.
• The Stockdale Paradox. Admiral Jim Stockdale was a POW during the Vietnam War. Despite torture and imprisonment lasting eight years, he never gave up faith that in the end he would prevail and that the experience would become a defining event in his life. During his imprisonment Stockdale dealt head-on with his circumstances. By never losing sight of the current (brutal) facts and by never losing faith in how the story would end, Stockdale triumphed where others crumbled. Companies that embraced this paradox also triumphed.
• The Hedgehog Concept. Determine what your company can be the best in the world at. Also determine what your company can NOT be the best in the world at. Go with the former and cut out all diversions towards the latter. If this means abandoning a current path, that’s OK. Great companies focus on one big thing that they know they can win at.

Not surprisingly, in the end, no single action or indicator was discovered that could predict a company’s rise to greatness. Additionally, the process of moving from good to great can best be described as one of slow, steady determination, rather than a rocket ride to overnight success. With that in mind, Good to Great provides an excellent guide for evaluating a current company and determining if it’s progressing closer to greatness or to obscurity. If you find you’re moving in the wrong direction this book provides the keys to getting on the right track.

The end of the book ties in neatly with its predecessor and “sequel” Built to Last, which I highly recommend as well.