Wednesday, August 16, 2006

"Good to Great" by Jim Collins

This book has been on BW and other best seller lists for a while. Jim Collins was also the co-author of an earlier best seller "Built to Last".

This book is a result of an exhaustive study where the author and his team tried to identify companies which changed from good to great. Greatness is determined by a set of parameters which are quite stringent. Some of the parameters include 15 year span, 3 times the returns of broad market average among others.

What stands out is among 11 companies that met good to great criteria, there are no technology companies. No Intel. No IBM. No Microsoft. It is not surprising that a few technology companies remain without significant change for 15 years and technology is much more volatile than regular companies.

Most of the companies that figure in the book include 'boring' companies such as paper manufacturers, steel, medicine etc. GE, Walmart etc. do not figure.

The book provides a nice framework for anyone to build any part of their lives from good to great.

Although the other book by the same author "Built to Last" came first, now the author thinks that 'Good to Great' comes first. Once you build a great company, using the principles from 'Built to Last', one can create enduring companies which last for centuries.

I think some of the other things that stand out and  refreshing are.

1) Many 'Good to Great' CEOs were neither charismatic nor very strong personalities. In fact, many thought they could never be successful as i is a common perception is that you need strong willed, aggressive, ruthless task master and Type-A personalities to be successful. It is true that such personalities many times become CEOs but fail to take good companies to greatness. Some examples given are of Al 'Chainsaw' Dunlop who was notorious for cutting down the workforce to save companies only to sell them off. Lee Iacocca who saved Chrysler from bankruptcy but that went straight into his head and company did not become great and was soon gobbled up by German Daimler group.

2) Being able to be best at what you do is key (Hedgehog concept)

3) Three circles leading to greatness - what you are best at, what drives your economic engine and what you are passionate about.

All in a really nice book. Audio book ready by the author is also very good and author tries to make it as personable as possible. It may help to read thru the paper version after listening to the audio book first. There is a lot of good material which is hard to absorb fully by mere listening.


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