WHO can argue with five years worth of research by a team composed of 21 researchers headed by “Built to Last” co-author, Jim Collins? The findings are controversial, to say the least, and described in Collin’s “a spade is a spade” type of prose.
I am referring to Jim Collin’s latest book, “Good to Great,” which he says is not a sequel to “Built to Last” but a prequel. When Jim Collins gave me a copy of the manuscript months ago (but it has since been released last October in the US and is now available at National Book Store), I knew I was holding a precious treasure trove of wisdom. When I read it, it felt like it was everything we wanted to tell our CEO’s but didn’t have the nerve or the proof to do so. And now, we had.
Collins was right in pondering, “How much would someone pay me not to publish Good to Great?” as he related in the book’s preface. For it debunked much of the gloss of the flashy leaders and shiny companies frequently written about in business newspapers and magazines nowadays.
Just coming up the with the list of good-to-great companies took much work and courage. Consider the criteria: the companies should have made the leap from good results to great results and sustained those results for at least 15 years.
The final list included companies that averaged cumulative stock returns 6.9 times the general market in 15 years following their transition from good-to-great. And surprise– the final list had companies that, in the words of Collins, were “utterly unremarkable.”
And what companies made the list? Don’t wonder if the names are unfamiliar. They are: Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroeger, Nucor, Phillip Morris, Pitney Bowes, Walgreens and Wells Fargo.
These companies were compared with other companies that were in the same industry as the good-to-great companies with the same opportunities and similar resources at the time of transition but made no leap from good to great. Coming out with this list again took much work and courage. I am sure none of these companies would have wanted to be categorized as such. And what companies made this list? Don’t be amazed if the names are familiar. They are up John Silo, Great Western, Warner Lambert, Scott Paper, A&P, Bethlehem Steel, RJ Reynolds, Addressograph, Eckerd and Bank of America.
Because of its groundbreaking findings, Collins has taken care to state that “..we developed all the concepts in this book by making empirical deductions directly from the data. We did not begin this project with a theory to test or prove. We sought to build a theory from the ground up, derived directly from the evidence.”
The Good-To-Great Framework developed by Collins contains seven basic concepts that intertwine people, thoughts and actions with discipline (a favorite word) in what he calls a “flywheel” that brings the good company from buildup to breakthrough.
The first one on leadership is a shocker ( but I think this is what we know to be true really based on gut feel from those below the organizational ladder). Collins says that the type of leadership that is required for turning a good company into a great one is one based on humility and professional will. In fact, the high profile leaders seem not to have good chance at leading great companies. He calls this type of leadership “Level 5 Leadership.”
The second concept is somewhat like putting the cart before the horse type of logic. He writes that good-to-great companies first concentrated on getting the right people with the organization and then determined where to go.
The third concept is so basic that one may be tempted to say it’s a motherhood statement. Only that this one is supported by a lot of documents. Collins writes that a good-to-great company “never loses faith” and has the discipline to “confront the brutal facts.”
The fourth concept is, in layman’s terms, being dogged. Collins calls this “The Hedgehog Concept.” He writes that a good-to-great company determines what it can do best in the world and then sticks to it. Passion, a word now slowly entering the language of business management, is key to this concept.
The fifth concept is about having a culture of discipline. With discipline, good-to-great companies have no need for bureaucracy.
The sixth concept is about technology accelerators. Unlike the usual trend of thought, Collins points out that technology does not ignite a corporate transformation. But a careful selection of the appropriate technologies can accelerate growth.
The last concept is about change management. Collins notes that dramatic organizational programs “almost certainly” will guarantee that a good company will not turn great. Rather, he points out that becoming good to great is a relentless pushing step by step towards breakthrough. These are intriguing findings indeed–discoveries that even Collins and his team found hard to accept, considering that we are often enamored with the latest management fads and pet projects of the time. But with every concept put forward or statement given, Collins takes pains in outlining all the detailed work and evidence behind these.
The wonder of it all is how Collins was able to distill such insights from a huge mountain of data over such an extended period of time. And to credit the whole work appropriately to the whole team who created this monumental work. There lies his greatness, perhaps.
Author: Regina Galang Reyes. First published in the Philippine Daily Inquirer October 27, 2002
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