Good to Great – Why it’s still one of the most important business books.

Good to Great by Jim Collins is one of the key books in the Cameron-Brooks Reading Program because the principles he outlines are enduring for leaders and leading organizations.  In the past few months, several candidates have pointed out that there might be errors to his ideas because a few of the companies he cites have failed.  In fact, one candidate e-mailed me today pointing this out.  In my opinion, the fact that these companies DID FAIL only underscores his points. Below is my e-mail response to the candidate.


“Collins argues a set of enduring time tested principles of what it takes to move from a good company to a great company.  Because a few of the companies have failed doesn’t mean that these principles are no longer valid.  In fact, they prove his point.  They have to keep following these principles in order stay great or to move from great to Built to Last (the title of his first book).  The companies that failed moved away from these core principles. By arguing that the companies failed somehow lessens his principles, I feel you completely miss the point of the book.  By the way, the title of his last chapter is “From Good to Great to Built to Last.”  Companies can’t just assume because they achieved greatness that they are somehow entitled to stay there.

Interestingly in April 2008, Collins did an interview with Fortune magazine titled, “The Secrets of Enduring Greatness.”  Notice the date, this is before the fall of Circuit City and troubles for Freddie Mac/Fannie Mae.  Collins says, “Firms don’t fail because of what the world does to them but because of what they do to themselves.”  Just because Collins wrote a book about the principles they followed up until 2001 (publishing date of Good to Great), it didn’t make them obligated to continue to follow them.  Circuit City over-leveraged (too much debt) by buying another company, increased inventories and didn’t respond to Wal-Mart’s entry into electronics.  Fannie Mae/Freddie Mac focused too much on short-term profits by lending to sub-prime.  In other words, they did it to themselves.”

 

Joel Junker