Going from Good to Great: Leadership and the People Who Made up Great Organizations
What makes a company great? There are many good companies, but few are truly great, according to Jim Collins, author of the best-seller “Good to Great: Why Some Companies Make the Leap and Others Don’t.”
The book addresses the question, “Can a good company become a great company and if so, how?” The difference between good and great companies is that the great ones attain extraordinary results.
Collins, a faculty member of the Stanford Graduate School of Business at the time of his research, compared the 30-year performance of more than 1,400 companies. Comparing similar companies over a long period of time ruled out confounding variables such as the particular tenure of a CEO, changes in the economy and the introduction of new technologies.
From the group, Collins selected 11 companies that he observed had transformed from good to great companies. The study — which took nearly 10 years of effort — involved analyzing more than 6,000 articles, reviewing 2,000 pages of interview transcripts and studying countless bits of data.
Companies were qualified as good or great based on stock results. Great companies were those that had a cumulative stock return of at least three times the general market during a 15-year time span, while good companies beat the market by 1.25 times during the same period.
As an example, if someone back in 1965 had invested $10,000 in a mutual fund from one of the 11 great companies, by 2001 his or her return would have grown to more than $4.5 million, compared to the nearly $550,000 in returns from an investment in one of the good companies.
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