Rethinking Good To Great

By Mike Myatt, Chief Strategy Officer, N2growth

I don’t want to burst anyone’s bubble, but I’m not one who has drunk the “Good To Great” Kool-Aid. Bottom line… Jim Collins got is wrong with “Good To Great.” Jim Collins profiled Fannie Mae as a company that made the leap from good to great. If Jim’s definition of a great company is an entity whose fraud, corruption, mismanagement, and poor leadership can run so rampant as to require a bail-out by the government, then I would submit there may be a problem with his business logic. In the text that follows, I’ll share the politically incorrect book review you’ve probably never read on “Good To Great.”

Not only do I believe that most people should rethink “Good To Great,” but they should also reevaluate many best selling business books that use biased statistical data as a substitute for common sense business wisdom. The simple truth is that anyone can prepare a chart or graph to support virtually any premise or position at a given point in time. However when one expands the window of time under which static data is observed, and the static data has to withstand the test of time as it is becomes subject to the fluidity of changing markets, the results are rarely as constant as many authors would have you believe. I would submit that Fannie Mae won’t be the last of Jim’s picks to falter.

The first thing that readers need to keep in mind is that there is very often a huge difference between a commercial best seller, and a book that provides real value. Being a commercial best seller is about buzz, hype, and branding…it is about book sales rather than the root value of the content. In being true to my contrarian self, and with rare exception (Peter Drucker, Adam Smith, etc.), I believe that the more popular a non-fiction business book is the more likely it is proffer fluff over substance. 

Before I go any further, let me begin by stating that there are valuable nuggets to can be taken away from most books so long as you are capable of discerning the fictional hype from the factually substantive. While I believe there is an element of quality information to be gleaned from the pages of “Good To Great,” I also believe there are some potentially dangerous and misleading concepts/principles that can cause great harm to a business if taken out of context.

Jim Collins and his research staff are truly dedicated and talented professionals who have completed volumes of quality research on what it takes to build an enduring and successful enterprise. That being said, the key to understanding, validating, and appropriately applying any form of research is to understand the context in which it was developed, as well as the business logic that was used to frame it.

The problem with “Good To Great” is that the reader is left with the false impression that the principles contained in the book can be universally transferred to their individual situation without regard for context. The reader is led to believe that if they apply the principles contained in the book to their business that the results will mirror those of the companies examined in the book, and that their business will in turn make the leap from good to great and enjoy sustaining good fortune. This is simply not true. You see all research, even good research, must be evaluated contextually. There are very few universal truths in business that can be applied in a vacuum.

In the text below I will examine what I believe to be three of the most critical flaws in business logic contained in “Good To Great”:
1. The Study Itself: The study in and of itself has a bias in that Jim’s research staff focused their efforts on 22 Fortune 500 Companies. The study compared and contrasted 11 companies that made the transition from good to great, and 11 peer companies that did not. The problem with this study is that it applies to a very small universe. How many of you reading this post are currently CEO’s of Fortune 500 companies? Fortune 500 companies are mature, well branded, well capitalized, already successful companies. To assume that a start-up, small, mid-size, or even relatively large company can universally adopt and apply the business practices of Fortune 500 companies is just not realistic. Adopting this line of thinking in a vacuum can actually send a company into a death spiral.

2. Level Five Leaders: Jim refers to a hierarchical matrix of leadership that describes 5 different types of leaders and suggests that only with rare exception can anything other than a level 5 leader take a company from good to great. While I agree with many of his suppositions on what makes a great leader, I vehemently disagree that only one leadership style can work effectively. I have personally witnessed just about every style of leader both succeed and fail. While I find some leadership styles more pleasant than others, to adopt a “one size fits all” mentality toward what it takes to lead a company is a huge mistake. It is not the leadership style in a vacuum that is as important as selecting the right leader based upon aligning style with the environmental, situational and contextual circumstances of the time along with the mission at hand.

3. The Flywheel and the Doom Loop: Jim’s theory here is that “those who launch radical change programs and wrenching restructurings will almost certainly fail to make the leap” (from good to great). While I am a strong believer in the flywheel principal as a general practice, there are also times when radical change is in fact the critical element needed to move a company to the next level of success. It is not change or reengineering that are the evils, rather it is ill-conceived or poorly implemented change that can cause harm. Beware the change agents for the sake of change, but embrace change by design (radical or otherwise) for the good of the enterprise.

There are two primary differences between Jim’s view of the world and mine: 1) Jim’s conclusions are drawn largely from historical research conducted in the classroom and think-tank, and my conclusions are drawn from hands-on, in the trenches experience, and; 2) Jim believes that his data is applicable to virtually any situation in business, and I believe everything must be evaluated against the situational, environmental, and contextual aspects of any given scenario. Assuming that all formulas are made up of constants, without consideration for the inevitable set of variables that always come into play, is just not sound thinking.

Just because a book or an author is popular, doesn’t mean the opinions espoused within the covers of the book are synonymous with fact. Remember…Challenge everything!