Good to Great

Jim Collins and a team of twenty-one researchers spent five years on one question: can a good company become a great one, and if so, how? Among the companies that appeared on the Fortune 500, the list of America's largest companies, between 1965 and 1995, they searched for a rare pattern: fifteen years of stock returns at or below the general market, then a turning point, then at least three times the market over the next fifteen years. Only eleven companies passed, among them Walgreens, Kimberly-Clark, Gillette, Wells Fargo, Nucor and Circuit City. The team compared each with a company in the same industry that had similar chances and resources but did not make the leap, and with six more companies that rose for a while and then fell back, and asked what was different.

The answers are set out as a framework in three stages: disciplined people, disciplined thought and disciplined action. Each stage has two concepts, and all of them are held together by the image of a huge, heavy flywheel that turns a little faster with every push. The book has nine chapters: one on the study itself, one for each of the seven parts of the framework (Level 5 leadership; first who, then what; confronting the brutal facts; the Hedgehog Concept; a culture of discipline; technology accelerators; and the flywheel and the doom loop), and a last chapter that links it to Collins's earlier book, Built to Last. A section of frequently asked questions and the research appendices follow.

Notes: the findings are reported here as Collins's own, from a study that ended in 2000, and the figures are his. Several of the eleven companies did not stay great: Circuit City went bankrupt in 2008 and closed all its stores in 2009, and Fannie Mae was placed under the control of the US government in September 2008. Critics have also questioned the method. Phil Rosenzweig, in The Halo Effect (2007), argued that the study leaned heavily on press articles and interviews written after success was already known, which can make the results of success look like its causes. A 2008 study by Bruce Niendorf and Kristine Beck found that over the long term the companies' stock returns did not differ significantly from the average of the S&P 500 index. In the book, Collins offers his findings "for your thoughtful consideration, not blind acceptance." This summary follows the first edition, of 2001. The Dari quotes are our own translation of Collins's English.