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

“Good is the enemy of great” intones author Jim Collins in the beginning of his book Good to Great: Why Some Companies Make the Leap…And Others Don’t. And for the next couple of hundred pages he explains why that’s true – as well as why many good companies never reach that next level.

A lot of it has to do with accepting what is rather than looking at what could be. It’s difficult to argue with success. If your company is humming along, doing well in its market, perhaps even leading it, there’s a temptation to take an attitude of “if it ain’t broke, don’t fix it.” But that’s not what great companies do, according to Collins. Instead, they’re always looking at their business model and their competition to see if there’s a better way to do what they’re doing – or if they should be doing something else.

Collins says one of the key mistakes companies that fall short of greatness make is they start with the vision, and try not to do anything important until after the vision is established. But the 10 companies Collins studied didn’t focus there. They focused on the management team first.

He contends that the first step in the road to greatness is getting the right people “on the bus” – his euphemism for the company. He said CEOs and other top managers who aspire to greatness look for talent and hire it when they find it. They may not even have a job for the person at the time; they just know they want what that person can offer.

The second step is putting the people on the bus in the right seats – in other words, finding the right roles for them. Once you have the right people in the right seats, then it’s time to figure out where the bus is going to go.

I found a lot of what Collins said makes sense, not just in the business world but in any type of organization. Grandiose visions don’t mean much if you don’t have the wherewithal to execute them. Every sports team wants to win the championship, but few are willing to put in the work to make it happen.

Of course, since the book was written nearly 10 years ago history gives us a nice, extra perspective on the companies Collins chose to profile. For example, one of the companies singled out as achieving greatness is Circuit City. Oops.

The electronics retailer was cited for its outstanding supply chain, innovative policies and practical management. Of course, they’re now out of business having gone bankrupt a couple of years ago. While one of Collins’ criteria for “greatness” was sustainability, somewhere along the way Circuit City lost that and essentially had their lunch handed to them by Best Buy.

On the plus side, he also profiled Walgreens, which has done nothing but grow over the last 30 years. They hired good people, figured out what to do with them (as well as what the company could do well to serve its customers) and have executed that plan with a passion. There’s nothing flashy about Walgreens; you don’t hear much about their charismatic leaders or their brilliant innovations. But that is by design. They just go about their business, and do it very well.

One last point about great companies that bears noting: Collins contends that greatness means being able to sustain a high level over a long period of time. And that means having CEOs and other top managers who are more focused on the company than on their personal glory. In fact, he shows that while the Lee Iacoccas and Jack Welshes of the world – the business icons – can achieve success while they’re in charge, often their companies struggle after their leave. The leaders of truly great companies take pride in setting up a company that can continue to grow and succeed – sometimes even better – after they leave.

Good to Great is definitely a good read. You don’t even have to be that interested in the business world to get something out of it – although it helps. In the current economy, where opportunity abounds for leaders smart enough to take advantage of everyone else pulling back, it can really help set a foundation for future, sustainable growth.

– by Ken Krause