Built to Last, the defining management study of the nineties, showed how great companies triumph over time and how long-term sustained performance can be engineered into the DNA of an enterprise from the very beginning.

But what about the company that is not born with great DNA? How can good companies, mediocre companies, even bad companies achieve enduring greatness?

The Study

For years, this question preyed on the mind of Jim Collins. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? And if so, what are the universal distinguishing characteristics that cause a company to go from good to great?

The Standards

Using tough benchmarks, Collins and his research team identified a set of elite companies that made the leap to great results and sustained those results for at least fifteen years. How great? 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 worldÕs greatest companies, including Coca-Cola, Intel, General Electric, and Merck.

The Comparisons

The research team contrasted the good-to-great companies with a carefully selected set of comparison companies that failed to make the leap from good to great. What was different? Why did one set of companies become truly great performers while the other set remained only good?

Over five years, the team analyzed the histories of all twenty-eight companies in the study. After sifting through mountains of data and thousands of pages of interviews, Collins and his crew discovered the key determinants of greatness why some companies make the leap and others don't.

The Findings

The findings of the Good to Great study will surprise many readers and shed light on virtually every area of management strategy and practice. The findings include:

In what Collins terms a prequel to the bestseller Built to Last he wrote with Jerry Porras, this worthwhile effort explores the way good organizations can be turned into ones that produce great, sustained results. To find the keys to greatness, Collins's 21-person research team (at his management research firm) read and coded 6,000 articles, generated more than 2,000 pages of interview transcripts and created 384 megabytes of computer data in a five-year project. That Collins is able to distill the findings into a cogent, well-argued and instructive guide is a testament to his writing skills. After establishing a definition of a good-to-great transition that involves a 10-year fallow period followed by 15 years of increased profits, Collins's crew combed through every company that has made the Fortune 500 (approximately 1,400) and found 11 that met their criteria, including Walgreens, Kimberly Clark and Circuit City. At the heart of the findings about these companies' stellar successes is what Collins calls the Hedgehog Concept, a product or service that leads a company to outshine all worldwide competitors, that drives a company's economic engine and that a company is passionate about. While the companies that achieved greatness were all in different industries, each engaged in versions of Collins's strategies. While some of the overall findings are counterintuitive (e.g., the most effective leaders are humble and strong-willed rather than outgoing), many of Collins's perspectives on running a business are amazingly simple and commonsense. This is not to suggest, however, that executives at all levels wouldn't benefit from reading this book; after all, only 11 companies managed to figureout how to change their B grade to an A on their own. (Oct.) Copyright 2001 Cahners Business Information.

Soundview Executive Book Summaries
In his previous bestseller, Built to Last, Jim Collins explored what made great companies great and how they sustained that greatness over time. One point kept nagging him, though - great companies have, for the most part, always been great, while a vast majority of good companies remain just that: good, but not great. What could merely good companies do to become great, to turn long-term weakness into long-term supremacy?

Collins and his team of researchers used strict benchmarks to identify a group of 11 elite companies that made the leap from good to great and sustained that greatness for at least 15 years. The real surprise of Good to Great is not so much what good companies do to propel themselves to greatness - it is why more companies have not done the same things more often.

The author and his team of researchers established these good-to-great benchmarks:

When the dust cleared and the good-to-great companies were identified, the author and his researchers found distinct patterns of behavior in those who led each company and the people who followed them - patterns that concerned disciplined people, thought and action.

Level 5 Leadership
One of the most surprising results of the research was in the discovery of the type of leadership required to turn a good company into a great one. One might think that such companies are led by high-profile leaders with big personalities who make headlines and become celebrities.

Yet, Collins found that those leaders who seek and thrive in the spotlight do not exude what can be termed "Level 5 Leadership" behaviors. (The term Level 5 refers to the highest level in a hierarchy of executive capabilities.) Leaders of this type -those who combine extreme personal humility with intense professional will - shun the attention of celebrity, channeling their ambition toward the goal of building a great company. Collins explains that these leaders all set up successors for success, are compellingly modest, and have unwavering resolve.

He also found that good-to-great leaders understand three simple truths:

1. If you begin with the "who," rather than the "what," you can more easily adapt to a changing world.
2. If you have the right people on the bus, the problem of how to motivate and manage people largely goes away.
3. If you have the wrong people, it doesn't matter whether you discover the right direction - you still won't have a great company.

All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality. Collins found that when a company starts with an honest and diligent effort to determine the truth of its situation, the right decisions often become self-evident.

One of the primary tasks in taking a company from good to great is to create a culture wherein people have a tremendous opportunity to be heard and, ultimately, for the truth to be likewise heard. Collins writes that, to create a culture of discipline, successful leaders:

Collins also found that good-to-great organizations think differently than mediocre organizations about technology and technological change. They avoid the fads and bandwagons that typically arise from new technology, instead becoming pioneers in the application of carefully selected technologies. Leaders of good-to-great companies respond with thoughtfulness and creativity, driven by a compulsion to turn unrealized potential into results. They act in terms of what they want to create, and how to improve their companies, relative to an absolute standard of excellence.

Good-to-great transformations often look like dramatic, revolutionary events to those observing from the outside, but they feel like organic, cumulative processes to people on the inside. Collins writes that good-to-great companies had no name for their transformations; there was no launch event, no tag line, no programmatic feel whatsoever. Collins explains that each company went through a quiet, deliberate process of figuring out what needed to be done to create the best future results, then simply took those steps, one by one over time, until it hit breakthrough moments.

Why Soundview Likes This Book
Collins has taken exemplary research and turned it into a book that redefines what it takes to become a great company. His eye-opening insights and sharp historical perspective support the valid and important conclusions he reaches. By debunking many myths about what it takes to make a company succeed, he points leaders in the right direction to turn competence into excellence. Copyright (c) 2002 Soundview Executive Book Summaries