Resources for Humans

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

M. Lee Smith President Dan Oswald reviews the book Good to Great by Jim Collins. Review highlight’s books theories on leadership, people (employees), discipline, and technology in business.

Why Some Companies Make the Leap and Others Don't book review
Of all the business books I’ve read throughout my career, Good to Great: Why Some Companies Make the Leap… and Others Don’t has had the greatest influence on the way I think about management. Drawing conclusions from his research of some of the most successful companies of the 20th Century, Collins identifies key areas that he believes are essential for a company to be great, including:

Leadership — In the book, Collins identifies the common traits of the executives who run hyper-successful companies and creates a profile of the type of leadership it takes to run a great company. Much of his focus is on how they have both a personal humility and a professional will. These two traits make for an interesting combination that Collins argues is crucial for this level of success. According to Collins leaders in great companies “channel their ego needs away from themselves and into the larger goal of building a great company . . . their ambition is first and foremost for the institution, not themselves.”

People — Collins also consistently focuses on the employees in the business. It is his contention that companies become great because of the employees they have working for them. The book talks a lot about “getting the right people on the bus (and the wrong people off the bus)”— his term for making sure you hire and retain only the right employees. His research shows that a rigorous approach to hiring and evaluating employees is another core trait of great companies. He writes, “If you have the right people on the bus, the problem of how to motivate and manage people largely goes away.”

Discipline — Collins contends that great companies are disciplined companies:
1) They create processes that are well defined and consistent throughout the organization.

2) They face the facts of the situation regardless of what they are. (No sugarcoating or glossing over facts that might be unflattering to the business or management.)
3) They have a disciplined approach to hiring so they get the right people.
4) They focus on what is essential to be successful and ignore the rest.
“The good-to-great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of that system. They hired self-disciplined people who didn’t need to be managed, and then managed the system, not the people.”

Technology — Collins maintains that technology, when used properly, is likely to accelerate a company’s momentum not create it. Great companies aren’t great because of technological advances; they’re great because they know which technologies to employ in their businesses that will truly make a difference in their success.

One of the main arguments of the books is that a company needs three things to be great. First, it must have an understanding of what it can (and can’t) be the best at. Second, a company and its’ employees must be deeply passionate about what they are doing. Third, it must know what drives the business’ economic engine. If you can find something that you do better than everyone else and are passionate about doing it and understand what allows you to generate cash flow and profitability, you have what it takes to create a great company.

The final conclusion in the book is that “the good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no wrenching revolution. Good to great comes about by a cumulative process — step by step, action by action, decision by decision, turn by turn of the flywheel — that adds up to sustained and spectacular results.”

Do I agree with everything Collins writes in Good to Great? No. In fact, I question many of the conclusions he draws from his research. He sometimes seems to stretch to categorize the research results in to major categories or traits that all great companies share in an effort to fit them into his book, leaving me wondering, “Did he come up with his theory based on the research, or did he have a theory that he tried to prove through his research?”
Overall, though, I think the exercise of researching some the world’s leading companies and looking for what makes them great is a worthwhile endeavor and the result is a book that I think is not just good, but great.

I give this book 4.5 out of 5 stars.

Dan Oswald is president of M. Lee Smith Publishers LLC. The Nashville-based company publishes more than 70 newsletters, most of them state-specific legal newsletters and many of them jointly with law firms. Dan was previously president of Lawrence Ragan Communications, Inc., publisher of newsletters in the fields of public relations, corporate communications, human resources, interactive media and IT manuals, reports, audio conferences and Webinars, and sponsor of seminars and conferences for communications executives. Prior to joining Ragan in 1995, Dan spent four years with Aspen Publishers as a marketing manager and three years with Center for Management Systems, a privately held information company based in Iowa. Dan serves on the boards of directors of the Newsletter & Electronic Publishers Association (NEPA) and the Newsletter & Electronic Publishers Foundation (NEPF), and he is the immediate past president of NEPA.

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1. The Practice of Management by Peter Drucker
2. Built to Last by Jim Collins & Jerry Porras
3. Re-Imagine! Business Excellence in a Disruptive Age by Tom Peters