Saturday, March 20, 2010

Book: Good to Great: Chapter 1: Good is the enemy of great!

Jim Collins Says "Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice"
It is possible to turn good to great in the most unlikely of situations.
Jim included these companies in his book: Criteria of selection was 15 year cumulative stock returns at or below the general stock market, punctuated by a transition point, then cumulative returns at least times the market over the next fifteen years.













Good to Great Companies / Direct Comparison Companies
  1. Abbott / Upjohn
  2. Circuit City / Silo
  3. Fannie Mae / Great Western
  4. Gillette / Warner-Lambert
  5. Kimberly-Clark / Scott Paper
  6. Kroger / A&P
  7. Nucor / Bethlehem Steel
  8. Philip Morris / R.J Reynolds
  9. Pitney Bowes / Addressograph
  10. Walgreens / Eckerd
  11. Wells Fargo / Bank of America
Let's see what's inside the black-box
  1. After serious soul searching and analysis Jim's team found some astonishing fact about Good to Great companies. Read below the findings.
  2. 10/11 (10 out of 11) CEOs of Good to Great companies came from the inside.
  3. Jim's research team did not find any specific pattern of executive compensation in good to great companies.
  4. Strategy planning in Good to Great companies was no different than Direct comparison companies. Both set of companies had well-defined strategies.
  5. Good to Great companies focused on what no to do rather than what to do.
  6. Technology could not cause of transformation, it can only accelerate a transformation.
  7. Mergers and acquisitions played no role in igniting a transformation from good to great. Two big mediocrities join together never make one Great company.
  8. Good to Great companies did not put serious efforts to managing change or motivating people.
  9. The good-to-great companies had no name, tag line, launch event or program to signify their transformation. Yet they produced revolutionary results, not by a revolutionary process.
  10. Good to Great companies were in terrible industries.
Chaos to Concept
After many days of analysis of data and chaos, Jim's team found that their findings hung together in a coherent framework of concepts. Each primary concept in the final framework were rigorously tested again and again and they showed up as a change variable (transformation factor) in 100% of the good-to-great companies and in less than 30% of the comparison companies.
Transformation in Good to Great companies was brought together because of following factors.
1. Disciplined people, Disciplined thought and Disciplined action.
2. A shocking discovery was found about the leadership that turned a good company into a great company. Unlike high-profile leaders and with celebrity like status who made headlines, the true leaders where a paradoxical blend of personal humility and professional will.
3. They first got the right people on the bus, the wrong people off the bus and the right people in the right seats and then they figured out where to drive it.
4. Jim's team learnt that the former prisoner of war had more to teach us about what it takes to find path to greatness than most books on corporate strategy. They followed what Jim call is a Stockdale Paradox: You must maintain unwavering faith that you can and will prevail in the end, regardless of difficulties, AND at the same time have a discipline to confront the most brutal facts of your current reality, whatever they might be.
5. Just because you have been doing it for decades or years, does not mean that you are the best in the world. If you cannot be best in the world at your core business, then your core business cannot form the basis of a great company.
6. In Good-to-Great companies, there was a culture of discipline. With disciplined people, you do not need hierarchy, neither bureaucracy and require less control. When you combine a culture of discipline, with an ethic of entrepreneurship, you get a magic alchemy of a great performance.
7. Technology was never a primary means of igniting a transformation. Yet Good to Great companies were pioneers in selection and implementation of different technologies.
8. Jim's team found no single defining action, no grand program, no one killer innovation or single break of luck that caused the transformation.
9. Jim's concepts of transforming a good company to a great one are fundamentally like 'timeless' laws of physics, that will prevail forever, irrespective of any kind of economic conditions and other changes in the world. The timeless and immutable principals of Good to Great.

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