Reviewed by Molly Davis
Good to Great is a book about how to use different management and leadership strategies to transform a “good” company into a “great” one. Curious about how a company can become great, Jim Collins and his research team decided to compare and contrast 28 companies in a five year long research experiment. The team identified the companies that took the leap from good to great, and compared them to companies that either failed to make the leap, or failed to sustain it. Of the 28 companies involved in the research, the team chose only 11 companies they considered to be good-to-great companies. The good-to-great companies are Abbott Laboratories, Circuit City, Fannie Mac, Gillette, Kimberly Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens and Wells Fargo. These companies made three times the market for a period of 15 years and were able to sustain these great results beyond the initial transition point. The team then compared the strategies and tactics of the good-to-great companies to 11 direct comparison companies and 6 unstained comparison companies. The direct comparison companies were in the same industry as the good to great companies and had similar resources and opportunities, but did not become great. The six unstained comparison companies were able to make a short term leap into the good-to-great category but were not able to sustain these results. After analyzing the similarities and differences between all 28 companies Collins and his team were able define the transformation from good-to-great as “a process of buildup followed by breakthrough, broken into three broad stages: disciplined people, disciplined thought, and disciplined action” (Collins 12)
In all three of these stages, Collins focuses on the key concepts that enable the process from buildup to breakthrough. The research team discovered that the key concepts of the process were as follows: Level 5 leadership, finding the right people confronting the brutal facts of reality, establishing a culture of discipline and understanding the Hedgehog and Flywheel concepts. Collins describes a successful buildup as getting the right people, in the right positions and then deciding on a plan of action. He acknowledges that although people are an important asset to the company, the right people are the crucial factors in becoming great. As a transition from buildup to breakthrough he emphasizes the importance of making the right decisions for the company as a whole, and this means confronting the harsh realities of their current situation. Collins makes the point that by confronting reality the right decisions will become clear, even if the company is not currently headed in the direction in which it has the potential to be the best. To go from good-to-great a company must have an understanding of the three intersecting circles of the Hedgehog concept: what they are deeply passionate about, what drives their economic engine, and what they can be the best in world at. Collins suggests that the company’s understanding of these three circles is necessary if the company is to make the leap from good-to-great. Each chapter of the book is dedicated to explaining how all of these concepts play a role in the transformation process from good to great. Throughout the book, Collins compares and contrasts similar situations between the good-to-great companies and the comparison companies by analyzing the steps taken by each company that either lead to success or failure.
I think that Collins offers a great approach to management and leadership in Good to Great. Collin’s explanation of the transformation process offers new and interesting insight to the management and leadership fundamentals discussed in class. Collins notes that good-to-great companies have several similar characteristics of the process team or “new management” system. He found that companies who redesigned their management systems using horizontal organization often became good-to-great companies. By flattening the hierarchy but not completely disregarding it, companies were able to effectively combine related tasks and get rid of irrelevant ones. Collins found that good-to-great companies also compiled management teams of the best people for the company and worked as team to become successful. For example, when David Maxwell, CEO of Fannie Mae, completely reorganized his management team, he hired whomever he thought was best for the position, including those who had previously been lower level employees. Assuming that employees in a company have multiple competencies, Maxwell demonstrates another characteristic of horizontal organization. In Good- to-Great Collins states, “Great management teams consist of people who debate vigorously in search of the best answers, yet who unify behind decisions, regardless of parochial interests.” The comparisons of the success and failures of the different companies made it relatively easy to understand the importance of a company’s management structure. After reading Good to Great, I have a better understanding of the management systems discussed in class and how each system can work differently for individual companies.
I would definitely recommend Good to Great by Jim Collins for other PR students to read. The way he explains the key concepts can be easily understood by people who aren’t necessarily business savvy. Although the main focus of this book is how to become a good-to-great company from a management perspective, Collins also emphasizes the importance of public relations practices. The ideas and concepts explained in Good to Great gave me additional insight to the administrative side of how a company works, and as a PR student it is crucial to understand your company inside and out. Good to Great would be a beneficial book to read for any PR student because Collins talks about PR practices and how good management strategies are important to maintaining an effective relationship.