A Book Review- Good to Great: Why Some Companies Make the Leap and Others Don't by Jim C. Collins

Good to Great: Why Some Companies Make the Leap... and Others Don't is a management book by Jim C. Collins that describes how companies transition from being good companies to great companies, and how most companies fail to make the transition. The book was a bestseller, selling four million copies and going far beyond the traditional audience of business books. What is a "Great" company? "Greatness" is defined by Collins by a company that achieves financial performance several multiples better than the market average, over a sustained period. Collins and his research team identified a set of elite companies that had made the transition from good to great - and sustained that performance for at least fifteen years. Performance of Good to Great companies After the leap, the good-to-great companies generated cumulative stock returns that beat the general stock market by an average of seven times in fifteen years, better than twice the results delivered by a composite index of the world's greatest companies, including Coca-Cola, Intel, General Electric, and Merck. Methodology Collins used a large team of researchers who studied "6,000 articles, generated more than 2,000 pages of interview transcripts and created 384 megabytes of computer data in a five-year project Seven characteristics of "Good to Great" companies Level 5 Leadership: Leaders who are humble, but driven to do what's best for the company. First Who, Then What: Get the right people on the bus, then figure out where to go. Find the right people and try them out in different seats on the bus (different positions in the company). Confront the Brutal Facts: The Stockdale paradox—Confront the brutal truth of the situation, yet at the same time, never give up hope. Hedgehog Concept: Three overlapping circles: What lights your fire ("passion")? What could you be best in the world at ("best at")? What makes you money ("driving resource")? Culture of Discipline: Rinsing the cottage cheese. Technology Accelerators: Using technology to accelerate growth, within the three circles of the hedgehog concept. The Flywheel: The additive effect of many small initiatives; they act on each other like compound interest. Collins found that the main reason certain companies become great is they narrowly focus the company's resources on their field of key competence.