Are Criticisms of Good to Great Fair?

jim collins inspiring ideas

Good to Great has always been one of my favourite business books – when I first read it, it was like an illumination of clarity; the mistakes of the company I worked for at the time suddenly came into sharp focus. I recently went back to read it again, and it remains a compelling read (full write up here). However, this time I had a look over some of the prominent criticism of the book, and it was interesting to see how many people now shun the book, as if it was the work of a charlatan.

The great companies didn’t stay so great

The biggest issue with the book is what happened to the 11 selected ‘great’ companies post publication. Here’s a reminder of those companies again:

  • Abbott
  • Circuit City
  • Fannie Mae
  • Gillette
  • Kimberly-Clark
  • Kroger
  • Nucor
  • Philip Morris
  • Pitney Bowes
  • Walgreens
  • Wells Fargo

Circuit City, who had the best return on beating the market in the original study, has crashed and burned – it filed for bankruptcy in 2009. Gillette was acquired by P&G in 2005. Fannie Mae was central to the subprime mortgage crisis in 2008, and required a Federal Takeover to save it. Nucor is perhaps the only company that has continued to remain great. Philip Morris and Pitney Bowes have done OK, as has Abbott. The rest have struggled.

If you did the same research for the past 15 years, it’s most likely that none of these companies would be listed again – and we’d probably have new players such as Apple, Google, and Samsung (I’m taking a wild guess here). I for one wouldn’t mind seeing exactly the same study done again for 2000 to 2015.

Is it fair to say that what happened subsequently to those 11 companies, somehow discredits the book? I don’t think so. As Steven Levitt points out, these sort of books are backwards-looking, and since we cannot predict the future, understanding the past is a valuable exercise.

It could be argued that Collins is claiming his lessons are a system for companies to use to become and remain great. It certainly does feel as if the book is proclaiming a breakthrough in the way we understand corporate ascent to greatness. But that is always open to the interpretation of the reader, you should never read a book and take its claims as absolute – a book is full of ideas, and you take some parts that might work for you, and leave others.

Some of the criticism seems rather harsh to me; a book doesn’t have to be entirely accurate for it to be in someway useful to you. The chapter on Technology Accelerators, for example, doesn’t work that well for me (and I subscribe more to the view of Peter Thiel in Zero to One, that a technical / engineering insight is more fundamental than ever before to driving great success). But nevertheless, many good books are full of holes, half truths, and intuitions, but remain incredibly valuable. The chapter on Technology Accelerators is still an interesting read.

Complex causes

There are good arguments that point out how vastly complicated companies actually are, and trying to understand their rise to greatness through a set of simple rules, is vastly over-egging the conclusions. I would agree, and I would also say that luck plays an even bigger role than most of the key factors Collins cites. All in all, everything in Good to Great comes down to two things: the quality of the people, and the amount of luck they enjoyed. Everything else is just anecdotal, albeit interesting and insightful.

Perhaps those failed companies above actually continued with their patterns of greatness which Collins describes, but luck simply ran out, and luck being what it is, overrides everything else in its way.

Large organizations are incredibly complicated, and attempts to boil them down to a few key moments, decisions, or strategy choices, is misleading. But what else can you do? You cannot grapple with the entire complexity, especially not in a single book, and who would want to read it anyway? Books like Good to Great are not so much about fact and precision, but more about inspiration and ideas. You take what you can from them, and do the best you can in your own situation. The ideas themselves have tremendous merit, for energizing people to think differently. I’d be surprised to find any serious manager who expects to cut and paste the lessons from a business book directly into their own organization.

One interesting criticism is that Collins should have taken his lessons, and found companies which also implemented them, but were not successful. This would tell us whether those are the actual causes of greatness, or just a pattern which is also shared with companies who are absolutely not great.

Level 5 leader?

The Level 5 leader is the centerpiece of the book – without that in place, the other elements are virtually impossible to implement. Yet it is a vague concept. Collins was once asked if Jack Welch was a Level 5 leader, and he ducked the question, eventually saying only Welch can know the answer to that. Given Welch is famed as one of the greatest CEOs ever, you’d expect Collins to have a more confident view on the matter.

Looking more closely, it is hard to judge whether somebody is a Level 5 leader. Judging humility and determination is tricky, especially at the start of a working relationship. How do you tell recruiters to go out and find a Level 5 leader? As a how-to guide, it is practically useless.

We might actually benefit from a more in-depth look at the non-level 5 leaders, and why they are not, as such. That at least might help us to avoid bad hiring. Lee Iacocca had a gargantuan ego, which led him to repeated distractions from the day job at Chrysler (renovating the Statue of Liberty, writing books, writing a regular newspaper column, buying an Italian villa and bottling his own wine and olive oil, and much more), but would Chrysler not have lured him from Ford because he lacked a little humility? Chrysler was going out of business, they needed an extremely strong leader. It’s incredibly hard to say that a more humble individual would have saved Chrysler, and actually taken them to greatness.

Innovation and radical change

There is a lot of talk today about disruption, the need to constantly innovate, and many business gurus proclaim strategies which rip the heart out of a company, and dramatically reshape the way it works. They might well be right, but given how many competing strategies there are, it’s a scary (and risky) game to pick one and run with it.

In this sense, Collins is quite refreshing. There is very little mention of innovation in Good to Great, and it even proclaims that looking for a big breakthrough innovation is a poor way to skip the hard work that is really required, and can instead lead a company to ruin. His ideas advocate stable – even dated some might say – practices. Sticking to what you are the best at, slowly turning the flywheel, taking the time to hire only the right people, avoiding trigger happy acquisitions, and not hiring rockstar CEOs. The ideas in Good to Great are vague and abstract, open to a wide array of interpretation, but they are relatively safe and prudent. And in this sense, perhaps we are lucky, it could have been a lot worse.

A list of recommended reading for alternative views on Good to Great:

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