By Jim Collins
300 pages
http://www.amazon.com/Good-Great-Companies-Leap-Others/dp/0066620996
I have read quite a few management-related books lately: 21 Irrefutable Laws of Leadership, IT Manager’s Handbook, The Fred Factor, The Five Dysfunctions of a Team, Fish, The One Minute Manager, etc. and this one is clearly a cut above the rest. I like it because it was extremely analytical (like me), and was based on hard evidence drawn from exhaustive research.
The content in this book is based on a five year research project in which Jim Collins and his 21 person team looked at over 1,400 companies, read 6,000 articles, and conducted an absurd amount of interviews. Unlike other books of this type, the team didn’t go into it with preconceived ideas or theories about business they were looking to prove. Instead they tried to simply conduct the research with clear minds and then make “empirical deductions directly from the data.” This fresh approach yielded some surprising results.
Collins and his team combed through every company that ever made the Fortune 500, looking for those who had made a “good-to-great transition.” They clearly defined that transition as a companies’ having “fifteen-year cumulative stock returns at or below the general market, punctuated by a transition point, then cumulative returns at least three times the market over the next fifteen years. We picked fifteen years because it would transcend one-hit wonders and lucky breaks (you just can’t be lucky for fifteen years) and would exceed the average tenure of most chief executive officers (helping us separate great companies from companies that just happened to have a single great leader). We picked three times the market because it exceeds the performance of most widely acknowledged great companies. For perspective a mutual fund of the following ‘marquis set’ of companies beat the market by only 2.5 times over the years 1985 to 2000: 3M, Boeing, Coca-Cola, GE, Hewlett-Packard, Intel, Johnson & Johnson, Merck, Motorola, Pepsi, Procter & Gamble, Wal-Mart, and Walt Disney.”
The research team found 11 companies who made this transition, and picked them apart to find the comment elements. I won’t give away the ending, but trust me … this one is worth the time. No wonder Collins has sold a gazillion copies.