Jim Collins (6) (1958–)

There appear to be some interesting ideas in this book, but overall, it seems to be a case of the author simply choosing a set of companies that happened to meet some criteria, then looking for similar facts about those companies, and calling them causes that the companies met the criteria.

Maybe I've been reading too many books about biases and fallacies in statistics and behavior lately, but I think this is all luck. See http://www.happen.com/article/good-to-great-or-just-lucky/ for another show more similar view.

As Steven Levitt (http://www.freakonomics.com/2008/07/28/from-good-to-great-to-below-average/) says, these companies have done worse than the overall market since this book was written. I understand Jim Collins has written a later book studying why companies fail, to somewhat try to explain this.

But the simpler explanation is that it's all luck. It was interesting to me to read in Good to Great that when the company CEOs were asked about what they have done to make their companies great, a lot of them said they were lucky. Collins did not take them at face value, but rather, decided that a characteristic of good CEOs is that they are humble and explain their successes as good luck. And similarly, bad CEOs blame their failures on bad luck.

But what if it just is all luck? Isn't that a simpler explanation.

I'm not saying there are factors that make a company successful or not, but this book hasn't convinced me of what any of them are by its use of data, which seems to fail many common tests. show less

Why Built to Last Endures

The book resonates because people are deeply inspired by the idea that it is possible to build something truly enduring. In a world obsessed with short-term wins, the notion of creating a great company that lasts across generations feels both rare and meaningful.

Thoughtful readers are drawn to the book’s emphasis on time-tested fundamentals. While the world changes at an accelerating pace, Built to Last reminds us that not everything should change. Core principles show more matter precisely because they outlast trends and management fads.

The book is especially valuable for organizations in transition. Rather than asking, “How should we change?”, it urges leaders to begin with a more fundamental question: “What do we stand for, and why do we exist?” Productive change, the authors argue, must be built on a preserved core.

Visionary companies themselves find validation in the book. Many organizations already operating with strong values and long-term thinking recognize their own practices reflected in its pages.

Preserve the Core, Stimulate Progress

The central idea of the book is the balance between continuity and change. Visionary companies protect their core values and purpose while allowing everything else—strategies, structures, and practices—to evolve.

This principle extends beyond business. Nations, societies, families, and individuals all require an inner core to remain stable in a chaotic world. When people rely only on external structures for security, they risk losing their sense of self when those structures collapse.

The book suggests that it is more important to understand who you are than where you are going, because direction will almost certainly change over time.

What Defines Visionary Companies

They are leaders in their industries and widely admired by knowledgeable peers.

They leave a lasting imprint on the world.

They survive multiple generations of leadership and product cycles.

They endure setbacks and mistakes, yet display exceptional resilience.

Over the long term, these companies significantly outperform both the general market and their comparison peers, demonstrating that purpose-driven organizations are not only idealistic, but highly successful.

Challenging Common Myths

Great companies do not necessarily begin with great ideas; many start with uncertainty or even failure.

Charismatic visionary leaders are not required and can sometimes harm long-term continuity.

Profit maximization is not the primary objective; visionary companies pursue profit alongside a deeper purpose—and often achieve superior financial results because of it.

There is no single “correct” set of values. What matters is how deeply values are believed and consistently lived.

Change is constant, but core ideology should remain remarkably stable over time.

Core Ideology

Core ideology consists of core values and purpose.

Core values are enduring principles that are not compromised for short-term gain.

Purpose is the organization’s fundamental reason for existence beyond making money.

In visionary companies, these elements do not require external justification and do not bend to trends.

From Ideas to Action

Visionary companies translate values into concrete mechanisms rather than relying on good intentions.

They promote leaders from within to preserve culture.

They embrace continuous improvement and deliberately create discomfort to prevent complacency.

Alignment across goals, systems, and behaviors reinforces both stability and progress.

Big Hairy Audacious Goals (BHAGs)

BHAGs are bold, clear, and emotionally engaging goals that people immediately understand.

They focus energy and provide long-term direction.

They may take the form of ambitious targets, defeating a common enemy, emulating a respected role model, or transforming an organization from within.

Evolution Over Time

Visionary companies grow through experimentation and selection, adding new initiatives while pruning what no longer serves them.

Change is typically driven from within rather than imposed by external leadership.

The goal is not comfort, but sustained vitality and renewal.

Final Reflection

Visionary companies endure because they know who they are.

They preserve their core while stimulating progress.

This lesson applies as powerfully to individuals as it does to organizations: true stability comes from a strong inner core and the courage to adapt everything else. show less

Such an excellent book on how a business can become great! Collins and his team researched companies that had transitioned from good performance relative to the general market to a sustained period of great performance. By comparing those companies to others that were similar during the good period but remained merely good, they came away with a set of principles that can move a company from good to great.

The most important lesson, and the theme that's common throughout, is that it's no one show more thing or moment. All of the good to great principles take a long time to get results (think years, not months). They require sustained effort; stop practicing the principle and a company will lose its greatness.

So what are the principles?

First, great companies are ambitious with respect to the company's success but personally humble. They're willing to make big bets and dramatic changes (as well as small bets and incremental changes), and they always keep the company's long term success in mind as they do so. They aren't driven by ego, external pressure, or short term profit. They also tend to be personally humble, seeing failures as opportunities for improvement and successes as outside themselves -- either due to the effort of others or, if there's no obvious cause, due to luck. Compare this to leaders who fail to lead their companies to greatness. These leaders tend to attribute success to their own virtues and failures to bad luck or others.

Great companies focus on making sure that they have the right people in the right positions. They don't compromise on hiring because they need someone now. Having the right people, rather than the people with merely the currently relevant skills, makes a company more able to adapt to change. It also reduces the need for explicit motivation -- the right people in the right positions will be intrinsically motivated to help the company succeed. But who are the right people? The right people are the people whose core values align with your company's core values. There is no single right set of core values, but without alignment to those values, whatever they are, a person won't be the right person, no matter how otherwise qualified. Collins cautions against using this as an excuse to fire people though. If someone isn't a fit, then it's better for the company and for them if the situation is dealt with as promptly as possible, but don't be too quick to confuse the company being a bad fit with the particular role being a bad fit. Also, this rigor has to be applied more strictly the higher up you go in a company hierarchy, not less. The wrong person at a higher level will have a much broader negative influence than the wrong person at the leaves of the org chart.

The third principle for a great company is the delicate balance between confronting reality and keeping faith in the company's ability to succeed. Success comes when a company repeatedly makes good decisions. The way a company makes good decisions is by always being strictly committed to the brutal facts of reality. Looking at the "scary squiggly things" under the rocks, as one executive put it. Most companies spend a lot of time discussing opportunities or what they think they're doing right, but they don't spend a lot of time talking about the scary things, the things they fear will lead to their failure. Focusing on the positive isn't the only way companies avoid reality. Another one, and a particularly toxic one, is when pleasing particular leaders becomes more important than facing external reality. The book goes on to give a number of tips for how to keep those brutal facts coming in the face of people wanting to please those in charge.

This steadfast focus on facts, however, needs to be balanced by faith that the company can prevail. Not that it can necessarily prevail by doing what it's currently doing, but faith that whatever may come, the company can make it through and come out stronger than before. This balance is illustrated with what Collins calls the Stockdale Paradox, after Admiral Jim Stockdale. Stockdale credited getting through an 8 year imprisonment in Vietnam under bad conditions to this balance. As he put it, "This is a very important lesson. You must never confuse faith that you will prevail in the end -- which you can never afford to lose -- with the discipline to confront the most brutal facts of your current reality, whatever they might be."

The fourth principle is that great companies have a hedgehog concept, a simple idea that drives everything they do. This clarity keeps the company from going off on tangents but also opens the company to possibilities that may look very different from what they do today, but which align with their core idea. Not just any idea makes a good hedgehog concept. To be successful at driving a company, the concept should be at the intersection of what the company can be the best in the world at given it's capabilities (notably, this may not be something the company is currently doing), be something which drives a successful economic engine, and be something which the people at the company can feel deeply passionate about. When an idea hits all three of these, then it can drive a virtuous circle of hard work, profit, and new ideas which leads to greatness. One of the core points of the chapter is that "A Hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best, a plan to be the best. It is an understanding of what you can be the best at" -- facing the brutal reality emphasized in the previous principle.

Next is a culture of internalized disciple. Discipline doesn't mean bureaucracy, strict leadership, or inflexibility. Rather, Collins sees those as an outgrowth of a lack of internalized discipline. Rather, the important discipline is the internal discipline of people at all levels of the company to always take actions aligned with the Hedgehog Concept and core values of the company. This is the sort of discipline that allows people to say "no" to a good opportunity if it isn't aligned with the company's core mission. This sort of discipline is accomplished by putting disciplined individuals in a system that is manged to align people's incentives with the company's goals. Note, in particular, that it's the system that is manged, not the individuals.

The last principle is really more of an anti-principle. Collins and his team found that technology does not cause greatness. It can accelerate the rise to greatness of a company that's already on its way, but technology is not a magic bullet. It can even be a danger. One ways companies lose their way on the path to greatness or fall from greatness is to get too worried about chasing the latest technological trend before understanding how (or if) it fits into the company's Hedgehog Concept.

Collins then discusses the flywheel, which isn't so much a principle as a common theme underlying all of the principles. Good to great companies are not overnight successes. They don't have an "aha!" moment. Rather, their greatness is built off of consistent small actions, which build momentum over time. This isn't to say their actions don't change over time. Rather, it's that the actions that seem to have propelled a company into greatness are inseparable from what came before. They focused on continued improvement and consistent delivery of results aligned with an overall goal that the people in the company believe in. A corollary of this is that people at a company with the potential for greatness don't need to be explicitly motivated; their goal is motivating in its own right.

I really enjoyed reading this. The challenge is that these principles are challenging to apply in practice. They require consistency and discipline, both of which can be hard to maintain in the face of ever changing pressures. Which is why, as Collins points out, in the end, very few companies are great, less stay great, and few make the transition from merely good to great. show less

As far as business books go, Good to Great sets a high standard for methodology and seldom falls back on the palaver that's so representative of the genre. It's an enjoyable, easy read and Collins and his team pull some fine principles from their research.

That said, it still strikes me that the methodology employed in business research, as evidenced in Good to Great, has a long way to go. The conclusions are based on survivorship bias, very broad induction, and tiny sample sets. There's show more little attempt, as I remember, at creating falsifiable hypotheses, and then falsifying them. The conclusions are based more on comparisons of a few examples and loose correlations.

Now with *that* said, business may never be broken down to a science, so Collins' level of accuracy may be sufficient, as long as readers interpret the conclusions as flexible, guiding principles. The limiting factor there of course is the average business reader, who has far more to improve on in critical reading than good business authors (like Collins) have to improve in the way of critical analysis. show less