Good to Great: Why Some Companies Make the Leap... and Others Don't

To find the keys to greatness, Collins's 21-person research team 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. Many readers will be surprised by the results, and some will undoubtedly be angry as well.

The Challenge

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 business that doesn't have exceptional DNA from birth? How can businesses—whether they are excellent, medium, or even terrible—become really great over time?

The Research

Jim Collins was plagued by this question for years. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? If so, what are the common traits that set a business apart from the competition and propel it from excellent to great?

The Requirements

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 wonderful? Following the jump, the good-to-great firms produced cumulative stock returns that, over a fifteen-year period, outperformed the overall stock market by an average of seven times. These results were superior to those produced by a composite index comprising some of the greatest corporations in the world, such as Coca-Cola, Intel, General Electric, and Merck.

The Likenesses

The study team compared a carefully chosen group of comparator firms who were unable to transition from excellent to great with the good-to-great companies. What had changed? Why did one set of companies become truly great performers while the other set remained only good?

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:

Level 5 Leaders: The research team was shocked to discover the type of leadership required to achieve greatness.

The Hedgehog Concept (Simplicity within the Three Circles): To go from good to great requires transcending the curse of competence.

A Culture of Discipline: When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great results. Technology Accelerators: Good-to-great companies think differently about the role of technology.

The Flywheel and the Doom Loop: Those who launch radical change programs and wrenching restructurings will almost certainly fail to make the leap.