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Rethinking Good To Great

If you’re a frequent reader of this blog you know from time-to-time I’ll take aim at a sacred cow and pull the trigger. I’ve had issues with some of the concepts contained in Jim Collins book Good To Great since it was first released. Given the legions of those who have drunk the Good to Great Kool-Aid, I realize today’s post might be akin to spitting into the wind. That said, it is nonetheless my hope to burst a few bubbles and bust a few myths. The issue that finally placed the theories purveyed by Collins squarely into my cross-hairs was a recent conversation I had with a very intelligent man who referenced Good To Great as if he was quoting scripture, and referred to Jim Collins as if he were the Almighty Himself – enough was finally enough…

Let me be clear – I have nothing against theories so long as they’re presented as such. But when theories are marketed as fact, I begin to lose patience rather quickly. Just because an opinion is expressed boldly, and even when data can be developed to support the opinion, opinion doesn’t become fact – it’s still an opinion. I’ve been around far too long, and cleaned up far too many messes that resulted from theory being applied as fact to be lulled into stepping on this very slippery slope. Let me put this another way – not all business logic is good business logic.

Not only do I believe that most people should rethink aspects of 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 becomes subject to the fluidity of changing markets, and the results are rarely as constant as many authors would have you believe.

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 acknowledge there are valuable nuggets to can be taken away from most books so long as the reader is 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. 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 over a time period certain as judged by growth in stock returns. 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. There is NO perfect leader – just the right leader for a given situation at a given point in time.

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.

The primary differences between Jim’s view of the world and mine: is that Jim believes 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. Bottom line – 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!

Thoughts?

 

Image credit: International Olympic Committee

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    Mark Oakes

    June 8, 2011 at 12:39 pm

    Mike
     
    As always, this is an excellent post. I agree with each of your propositions and echo your cautions relative to blindly applying principles without sensitivity to context, management styles or environmental factors. Collins’ focus on method is in opposition to one of my favorites quotes by Ralph Waldo Emerson.. “As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble”.

    With that being said, your readers are most likely left with the question… “If I can’t universally apply Collins methods, then what should I do?” What are some of the principles? The answers to that question certainly can’t be fully addressed in this short response but here are a couple of thoughts…

    Principle 1: Leverage Trends

    Understand that the context within which “Good to Great” is set focused on a business cycle (albeit a long one. We have to adjust our thinking to our unique situations (market, environment, etc) and recognize that cycles ebb and flow and are poor predictors of future success. Collins gleaned statistics from an industrial-era, statistical subset with established rules and very little change. As we all know, that era is at an end and the rules which drove historical success no longer insure future continuity. As Mike highlighted, there are universal truths in Collin’s work but the wise leader is adept as separating the wheat from the chaff (e.g. Level 5 Leaders ~ Passion for business, commitment to growth, etc.). Hyper-change is the new norm and the principle of recognizing and leveraging trends will serve your readers well. Read ‘Flash Foresight’ by Daniel Burris, understand the difference between cycles, soft trends and hard trends and apply this newfound wisdom to your life and business.

    Principle 2: Commit to Mastery

    Recognize the difference between “Good to Great” and “Competence to Mastery”. This, perhaps, is one of the key areas that Collins didn’t divine in his statistical manipulations. As leaders, organizations, key stakeholders, et al, we need to understand that ‘Competence’ used to insure success. Today, it’s often tantamount to irrelevance and extinction. Those who survive are growth-minded and have committed themselves to Mastering their discipline (e.g. leadership, accounting, etc, etc.). The world rewards specialists and discounts generalist. This applies equally to individuals and corporations alike. Make the irrevocable commitment that you’ll invest whatever time is necessary to be the ‘best’ at what you do. This commitment to mastery embodies a mindset that is flexible and adapts to changing conditions. Longitudinally this insures ‘Great’ in the long run.

    Keep up the great work, Mike

    M  

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      Mike Myatt

      June 8, 2011 at 2:01 pm

      Hi Mark:

      I always appreciate comments that add value to the thought stream by proposing solutions, which your comment does. Staying ahead of the market and the pursuit of excellence are clearly two endeavors worth immersing yourself in. Thanks for sharing your thoughts Mark.  

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    Mark Oakes

    June 8, 2011 at 12:53 pm

    Excellent points, Bret! I agree with you

    M

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    Gordon Clogson

    June 8, 2011 at 12:56 pm

    Mike,

    I too have been around the horn a few times and I am always amazed at the onslaught of books who present formulaic methodologies for success. As you so clearly stated, “there are valuable nuggets that can be taken from most books…” it is also true that there is no panacea to leadership. Yes, there are things that we all can and should do that will improve our chances, but if it were truly possible to model the Fortune 500 models so precisely, then we would not have any differentiation in companies by size, we would all be running ‘Great’ companies with equal success limited only by the physical demand for our products and services.

    I believe we should all keep reading and learning, but all of our learning must be processed through a filter of common sense. Going blindly forth in ignorance is one of my favorite sayings and I believe it comes in many forms. Accepting any study, book, or model as the gospel is one.

    ‘Great’ job as always, Mike.
    Gordon Clogston

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      Mike Myatt

      June 8, 2011 at 1:54 pm

      Thanks for your insights Gordon. I agree with your statement: “I believe we should all keep reading and learning, but all of our learning must be processed through a filter of common sense.” Thanks again for stopping by Gordon…

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    Mike Myatt

    June 8, 2011 at 2:09 pm

    Hi Bret:

    Thanks for your comment. I concur with your thinking on all accounts, and appreciate you expanding the areas that fans of the book need to place under the microscope. Again, I think we’re on the same page by poking not at philosophy, but at methodology.  Thanks Bret. 

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    Mike Myatt

    June 8, 2011 at 2:10 pm

    Hi Oarabile:

    Thanks for pointing out the need to consider geography and culture when filtering for context and approach. I appreciate your insights as always.

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    Rod Santomassimo

    June 8, 2011 at 3:17 pm

    Mike, I recall a time when “In Search of Excellence” created a similar buzz and loyal following of that I too have witnessed with Collin’s literary business bible.

    This is human nature. Follow the flock. I personally enjoyed both books, and feel both have nuggets of information, strategies and tactics I have or could have applied.

    I found the same to be true w/ your book “Leadership Matters”.

    There is never just one right approach, we must all remember there are several versions of the Bible itself.

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      Mike Myatt

      June 8, 2011 at 6:11 pm

      All good points Rod. Thanks for sharing and I appreciate the book plug:).

      I agree that there is rarely just one right approach, but there are always bad approaches. Even more important – there is usually a best approach. The sad part is most people settle for something far less than what could have been achieved with a better effort. Thanks again for sharing Rod.

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    Greg Waddell

    June 8, 2011 at 4:28 pm

    Some great points Mike. Seems like everyone wants to find the silver bullet. Simplifies life and makes us all have to think less. Unfortunately life is much too complex for that.

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      Mike Myatt

      June 8, 2011 at 6:01 pm

      Hi Greg:

      Thanks for the comment. I agree that life isn’t fair, it’s very complex, and it’s ever changing. That’s why everyone wants a simple solution for a complex challenge. It’s the right goal, but difficult to achieve which is why everything needs to filtered through discerning eyes. Thanks for sharing Greg.  

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    Elliot Ross

    June 8, 2011 at 6:07 pm

    Lovely as usual Mike,

    I need to second Brets’ comment, working backwards from historical data is a prime candidate for confirmation bias, placing more emphasis on data points that may support our point of view while neglecting, or minimizing those that may not.

    As you state, and other comments have echoed, context is key, I won’t re-iterate what you have already written with the exception of one example: Winston Churchill was a wash-out and arguably a failure in the context of a peace time leader. My opinion is that history demonstrates that in the context of a war time leader, he stands at the top of the list.

    I must add that I believe that the flywheel principle itself can be dangerous – in your words, when ‘used as holy writ.’

    Yes, momentum is required based on the unique circumstance, but at the same time, that momentum keeps on going long after the external forces are no longer applied. Another analogy may be waves, each needs to build its own momentum, but then it dies while the new ones surge in behind.

    Have you also noticed that many critics of Good To Great also ignore the critical sense of context? “Company X was great now it isn’t”

    Business history is littered with organizations that were market leaders and no longer exist. Hindsight always shows us which new technology or trend that was missed – but again – that is looking in the rear view mirror. Decisions made are only useful within the context of the environment and time they were made.

    To use the waves again, if you are on the crest of one, as a business leader, you better be building the momentum on the next one, because a cresting wave is the end….

    To that end, as Mark Oakes states above, you need commitment to mastery, but you need a few ‘generalists’ that may be able to point out the next area (or trend) that you need to start building a new competency.

    Thank you again,

    Elliot

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      Mike Myatt

      June 8, 2011 at 6:12 pm

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    Mike Henry Sr.

    June 8, 2011 at 10:49 pm

    Mike,

    Excellent post as always.  I got swept up in some of the Built to Last and Good to Great hype years ago, but my challenge with Good to Great paralleled Scott McKain’s in Collapse of Distinction.  I had a problem with the definition of “great.”  Phillip Morris?  Circuit City?  Fannie & Freddie?  I wondered then about how narrow the “great” definition must have been.

    One day, we will all a share a definition of “great.” Until then, I like Mark’s Competence to Mastery illustration.  I want to be my best individually, as a team member and as a leader.  My definition of “best” should differ from yours, and at my “best” my results will differ from others who are at their “best.” Our time “on top” will vary and our impact will be different.

    Authors and their books are inputs, and ideas.  I hope we never stop learning, and discerning.  I love ideas.  But ideas have a time, place and context.  Some of the best ones I’ve ever heard didn’t come from successful authors or people who led huge crowds.  So I’m not going to reduce my inputs, but, like you said, try to be discerning and challenge everything.

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    Dave Brock

    June 8, 2011 at 10:57 pm

    Awesome post and comments!  Looking more broadly at many of the “best sellers,” “fashionable trends,” etc., it’s amazing to me that so many seemingly smart people search so hard for (and attempt to blindly apply) the silver bullets and simplistic (as opposed to simple) solutions.  They think these magic principles enable them to skip the hard work of execution — getting to the same result as portrayed in the books.

    There are great nuggets in many of these books, but the real magic is in the hard work of figuring out, what does our organization face, what stands in the way of achieving our goals, what are the right strategies for our circumstances, how do we execute with precision. 

    The quest for magic solutions that shortcut the critical thinking, hard work and attention to 10,000 details.

    I read all these books, I take all of them with several grains of salt, from each I may extract an idea or two, but it still gets down to a lot of hard work and focused execution.

    Thanks so much for raising an issue that I know frustrates many of us. 

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    Ben Goss

    June 9, 2011 at 2:09 am

    Hello, Mike!

    I appreciate your perspective on G2G and the points of others on the comments section, but I disagree with a number of your points here.

    First, the study did NOT focus on 22 companies only. Collins began with ALL 1435 publicly traded companies that
    appeared on the Fortune 500 listings from 1965-1995. Accordingly, this
    does not constitute a sample; instead, it examines an entire population.

    Second, while I totally agree with your assessment on matching the right kind of leader with the right kind of situation (Fiedler’s Contingency Model, et. al), I don’t think you place your opinion precisely within the context of what Collins meant here. Collins said that a Level 5 leader was necessary for a company to have high levels of sustained success, which is a totally different scenario than, say, a turnaround scenario in which the organization is in the toilet and must be salvaged. Collins never stated in essence, “It’s Level 5 or else.” In fact, he said the Level 4 leader would work, but only for the period of time in which s/he was in that position; after that, Collins said, the magic would be gone.

    Third, while again I totally agree with your assessment that radical changes are sometimes just what the doctor ordered, again, a reader must be careful to interpret Collins’ comments within the context of what he’s saying when he writes about radical change. What he means here is that radical change is detrimental once a company has hedgehogged its way to success by determining it’s passion, what it can be best at doing, and what drives its economic engine, then drawing great success from that.

    I’d respectfully ask you and your readers to examine my assessment of G2G critiques in my blog here: http://drbengoss.com/drbengoss/Bettermgt.com/Bettermgt.com.html

    I welcome your comments and again submit mine with all due respect to your writings as you certainly have a massive pedigree.

    Best,

    Ben Goss
    http://www.drbengoss.com

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    Deborah Nixon

    June 9, 2011 at 4:46 am

    Excellent post, and I completely agree. I’ve always had a problem with all of these ‘theories’ brought forward by consulting types.  The goal is to convince potential clients you have the silver bullet and they should come to your holy grail.  By definition, all business books, especially best sellers, are usually light in content and pithy in concept. After all, they are written for the masses.  An author recently told me a story about how his published insisted he dumb down his best seller to a grade 9 level- otherwise the book was unpublishable.

    The point of writing a book is to leverage the exposure to gain entry into the high priced world of speaking engagements and juicy consulting contracts.  Wonder why so few get that?  All of these books and theories are far too simplistic to make much sense or have long-lasting impact. But then, that is not their purpose

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    Wally Bock

    June 9, 2011 at 11:39 am

    Thanks for another thought-provoking post. I’m a little late
    to the comment party, so I’ll try not to repeat too much. For me the key
    takeaway from a post like this is that there is no magic technique that will
    magically transform your business. You have to look at what’s out there, take
    what seems to work, adapt it to your system, and try it.

     

    The critiques of the research are valid. I was much more
    comfortable with the approach of Tom Peters and Bob Waterman who presented
    their book as, “here’s what we’ve observed and here’s how we’ve made sense
    of it” than I am with Collins’ “this is what research shows.”

     

    I also had problems with Collins’ tendency to present
    individual situations as universal truths. He presents Jim Stockdale’s opinion
    as if it represented the practice of all POWs for example.

     

    To expand Rod’s point, I think the main value in books like
    this is often their inspirational quality. Good to Great has energized a lot of
    people who’ve then used the book as a starting point for trying things in their
    own organization.

     

    I have to add an observation about the “Level 5
    Leader.” My take is that it was a concept bolted on to the book to sell
    consulting services and other products.

     

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    Anonymous

    June 9, 2011 at 11:42 am

    Mike, I think it’s good to challenge especially what has become for many CEO’s the “Bible”.

    Whilst I agree with you that many CEO’s can be effective at a certain level, my belief is that there really needs to be a very special kind of CEO to make the organisation great.

    I’ve not applied the tests in Collins’ book to Steve Jobs or Bill Gates, but I’d be interested to know how they compare. Because on the face of it both leaders have been phenomenally successful, but only one of them is widely heralded as “God”.

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      Mike Myatt

      June 9, 2011 at 2:16 pm

      Hi Matthew:

      Thanks for your comment and your insights. I think you’ll find that many successful leaders don’t fall so neatly into the Level 5 box. Both Jobs and Gates have displayed a bit of hubris over the years, and I would say that particularly in the case of Jobs, he is a classic definition of a charismatic leader, who by the way, has also used radical change to his advantage. Thanks for stopping by Matthew.

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    Tanveer Naseer

    June 9, 2011 at 3:35 pm

    Hi Mike,

    When it comes to
    research, it’s important that we take into consideration the fact
    that research is not free from politics or personal agendas. Indeed,
    it’s fairly common for researchers to focus on developing studies that serve more to reinforce their own bias/perceptions of the material in question, if not to also ensure a
    steady stream of grants and other forms of funding. Just look at how
    much contradictory information we get about what we should eat and
    what we should avoid.

    In this light, it’s not surprising to see
    Collins’ relying on data that serves to reinforce his model for
    successful leadership. That’s why I agree with you that it’s
    important that we examine any research with a critical eye and place
    it within a proper context to appreciate its real-world applications.

    As for the reason why
    Collins’ work remains such a sacred cow for many, one thought that
    came to mind is how it provides its own form of ‘safety in numbers’.
    That is, trying to take uncertainty out of the equation in order to
    make processes and the act of leading people more predictable and
    safe.

    Aside from the obvious
    problems this creates, the other concern this should draw is how it
    encourages leaders to lose their sense of curiosity, of questioning
    whether yesterday’s solutions still hold true for today’s challenges.
    Perhaps in its own way, it’s this form of circular logic which is
    helping to build and reinforce people’s perception of Collins’ work.

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    Info

    June 9, 2011 at 6:36 pm

    See also ‘The halo effect’ by Paul Rosenzweig. Jim Collins his research is completely flawed. Thanks for your article!

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    Coert Visser

    June 13, 2011 at 6:45 am

    Mike, There is one additional principle issue with respect to the study. That the concept ‘great’
    is operationalized in a financial way is easily understood from a practical
    standpoint. This criterion is clear and rather easily obtained and makes it easy
    to compare the companies scientifically. But is ‘great’ the best word to
    describe spectacular financial success? Does their financial success necessarily
    make GTG’s ‘great’? Wouldn’t that be like saying that Bill Gates en Silvio
    Berlusconi are great people while implying Martin Luther King and Mother Theresa
    are not?
     

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    Mike Ziemski, M.Ed.

    June 15, 2011 at 6:42 am

    Like all things, I believe that every work is a great start.  If every book that came out presented the be all and end all solution, there would be no need for any other strategy to be crafted or book to be published.  Successful works such as G2G serve to inspire, and, to the educated person, should raise some flags.

    I am a great fan of the Hedgehog Concept, in that there are always at least three elements that work together to provide a framework for a particular outcome.  More recently, Simon Sinek penned a significant contribution to the literature titled “Start With Why,” which says we’ve been looking at things all wrong when we start with mission statements that describe “What” we are, and focuses on the three stage of “Why,” “How,” then “What” for organizational success.

    I hold to a philosophy that 3 leads to 4 leads to 5, in that there are at least 5 elements that complete “the system,” and recently received validation of that theory by being introduced to Peter Senge’s “The Fifth Discipline.”  The task is finding what that fourth and fifth element are.  Once they are found, there is an emergent principle that is the result of the successful interaction of the five elements.

    If I ever publish something that provides concrete examples of such systems (such as earth, wind, and fire + water + gravity), I fully expect someone who reads it to say, “Yes, but there is still something missing.”  Of course there’s something missing.  Everything in this life is imperfect.  Our challenge is to keep trying to bring whatever we’re working with or working on as close to perfect as possible.

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    Andrew Cross

    June 22, 2011 at 2:29 pm

    “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.”. Amen!

    I’m currently reading Good To Great for the first time and while I agree that some points of his are valid, especially the hedgehog concept, it’s a bit much to generalize that it’s applicable for everyone. As a hi-tech entrepreneur, I NEED to be a visionary leader, which probably disqualifies me from level 5 leadership. Also, if I can’t pivot and change direction on a dime, my company will probably fail.

    Well written and ballsy, nicely done. 

    Andrew Cross
    http://andrewcross.ca

    […] a blog post, “Rethinking Good To Great“, Mike Hyatt said this in September 2008: The problem with “Good To Great” is that the […]

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