It’s an intriguing question: “What makes good companies great companies?” Actually, all of the things you normally think of are in there, plus a few others, with some careful analysis.
Good to Great, by Jim Collins, is written without a lot of marketing speak or buzzwords. It takes a hard, centrist look at several large companies that were considered “good”, in that they were profitable, but at one point became “great”, by beating market expectations. In most cases, these “great” companies later deflate to being “good” again. Generally after the departure of a CEO or manager. Some of the companies they followed include Circuit City, Gillette, Fannie Mae, Walgreens, Wells Fargo and Philip Morris, among others.
The gist of the book is that good companies hire someone who either helps the company re-focus its attention, simplify to a core set of duties they can excel in or provide some level of discipline.
Much of it is common sense: be disciplined, work hard, make the right decisions instead of the easy decisions and so on. Although, the act of becoming a simplified company caught my attention.
Collins focused on Walgreens as an example, saying that the original Walgreens franchise had included small restaurants in the stores (my guess is to bring the era of small town apothecaries with them), and while they were profitable, they realized they could be a good convenience store with a restaurant, or they could be a great convenience store by refocusing their energy. Clearly, becoming a great convenience store worked well for them. I never shop there or CVS because I’m too cheap to pay the extra dollar for a gallon of milk, but I guess some people are just impatient and it works for them.
In short, it’s a good read, but ironically not a great read. The focus is clearly on large companies and corporations, which puts it out of my league for gaining any earth shattering insight. But, it’s easy to skim with chapter summaries and clearly defined titles, which makes it a great weekend read.