Lessons from “Good to Great” that hold up 15 years later

Sep 28, 2016

Lessons from “Good to Great” that hold up 15 years later

Sep 28, 2016

This October marks the 15th anniversary of “Good to Great” by Jim Collins, one of the most influential business books in history. It has sold millions of copies, and many of its phrases have become regular elements of the management lexicon, making it essential reading for leaders and young professionals alike.

Its popularity has also made it a target of critics.

For one, it will be immediately obvious to today’s readers that some of the organizations it hails as great are decidedly not so great anymore. (RIP, Circuit City.) “Freakonomics” co-author and economist Steven Levitt pointed this out, in a post titled “From Good to Great … to Below Average,” asking whether this fact calls into question the book’s basic premises.

Criticism like this lead Collins to not only address these points in subsequent editions of his book, but also to write another follow-up, “How the Mighty Fall: And Why Some Companies Never Give In,” which looked at some of the same companies he first profiled. In essence, he says that there’s still merit in analyzing what made a company great, even if it doesn’t stay great forever. What if it’s downfall was ignoring the strategies that made it great in the first place?

There are many other criticisms as well, which we think a thoughtful reader should certainly consider. In fact, instead of devaluing the contribution of Good to Great, we think the criticism serves to advance the conversation. Questions like, “Is this the right criteria for greatness?” and “What companies did the same thing and didn’t become great?” are fantastic for the thinking professional to consider. That type of critical thinking should be welcomed.

However, we completely disagree with the criticism that the book’s insights are obvious. The book tries to dispel a number of management myths that are unfortunately still alive and well today.

Our culture still reveres celebrity leaders, despite Collins’ numerous examples of humble executives who saw great results. Executives still fantasize about overnight transformation, whereas Collins provides many case studies of companies who found greatness through gradual, incremental change. Companies are still scattered in their focus, they still view technology as a strategy rather than an accelerator, and they are still lazy about hiring, settling for employees who are simply good enough.

To see how this classic stands up today, we asked some of our young professional interns to read it and explain what ideas stood out most to them. Here’s what they had to say.

Hannah Harity

Apprentice Storyteller

The idea that resonated with me the most was the importance of “getting the right people on the bus (and the wrong people off) and then figuring out where to drive it.”

It seems like common sense that having good employees would be important, but Collins’ emphasis that this supersedes all else really drove home the point to me. It’s a fantastic point that having the right people on board will save effort in the long-run, because the right people will require less work to motivate.

By the same token, hearing stories about executives who genuinely asked for employee input showed me how truly great CEOs act.

For example, former Circuit City CEO Alan Wurtzel – who retired long before Good to Great, but who wrote his own book about the company’s history called “Good to Great to Gone” – would often ask his employees probing questions that might reveal unpleasant truths, like “What should we be worried about?”

That’s not a trait we commonly equate with strong leadership, but it certainly should be.

Jamie Peritt

Apprentice Storyteller

One of the most important points for me was the concept of “rinsing your cottage cheese.” Collins uses the phrase in referencing Ironman triathlete Dave Scott who would wash the excess fat off his cottage cheese, believing it would help give him an edge in competition. While we can’t be sure the shaving off of a few calories was help enough for him to win six titles, it’s definitely a demonstration of his self discipline and his willingness to do whatever it takes.

It seems a little dated now after the financial crisis, but Collins used the example of Wells Fargo vis-a-vis Bank of America to demonstrate the importance of discipline. The CEO of Wells Fargo believed that his company would be strengthened by banking deregulation, but only if they were disciplined. Executives had salaries frozen, corporate jets sold, and an elimination of management Christmas trees. At B of A, the CEO and executives had the same desire to get stronger, yet they lacked the discipline to cut unnecessary spending and reduce the amount of wasteful purchases, i.e. to rinse their cottage cheese. While Wells Fargo executives had salaries frozen, corporate jets sold, and an elimination of management Christmas trees, B of A executives did not. The near-term result was the B of A lost billions.

The most important takeaway for me was that discipline is not something that can be forced, but rather is a culture that must be maintained and supported by the executives and higher-ups. A good leader will hire employees with the self-discipline necessary to rinse their cottage cheese. A great leader will not only do this, but will also be the first to rinse off the fat and show the same self discipline and passion for the company they seek in all their employees.

Colin Castro

Apprentice Storyteller

I was fascinated by the hedgehog concept,which Collins coins it by telling the story of the hedgehog and a fox.

If the fox wants to attack the hedgehog, he says, it should have no problem – the fox is agile, cunning and deadly. However, when the fox makes its move, the hedgehog simply balls up, becoming a sphere and protruding its needle-like spines. The fox must retreat and try again later. The hedgehog’s defense mechanism is tried and true.

Collins uses this to illustrate the idea that holding one unifying idea or principle has lead to excellent performances by well-known brands like Walgreens, Wells Fargo and Kroger. He says their strong suit has been being focused on answering three very important questions:

  • What can you be best in the world in?

  • What is your economic engine?

  • What are you passionate about?

Lacking answering to those questions can be a serious impediment to greatness. To put another way, I think about NFL teams. Analysts use “identity” as a buzzword, which means that teams understand what they can do well, and how to maximize that strength. If a team has great offensive and defensive linemen, they should dominate the line of scrimmage. They can be best at running the ball. The team’s engine and performance is tracked by wins that they’re most likely earning with a physical, methodically style of play. Lastly, if they can embrace and find passion in their strengths at the line of scrimmage they have a chance to be great.

Whether it’s the Philadelphia Eagles or your local business, Collins’ hedgehog concept shows us honing in and building off a unique strength is a proven path to strong results.

This article is part of our B On The Books series, in which Braithwaite staff explain their favorite ideas from the best business and marketing books. Read more in this series.

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