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Published: October 1, 2001

 
 

Climbing to Greatness with Jim Collins

“The most effective leaders of companies in transition are the quiet, unassuming people whose inner wiring is such that the worst circumstances bring out their best,” Mr. Collins says. “They’re unflappable; they’re ready to die if they have to. But you can trust that, when bad things are happening, they will become clearheaded and focused.” According to Good to Great, if you want to lead a business that transcends its past mediocrity, you must be that type of person yourself. Otherwise, you had better find someone with the stoic resolve of the elder Jimmy Collins to run the business in your place.

Yet if you tried to say that Jim Collins deliberately invoked the spirit of his grandfather in this book, you’d get a fierce argument back, at least from his research associates. They had to fight to include the test-pilot-style leadership (Level 5 Leadership) among the book’s precepts because the data required it, defying Mr. Collins’s distaste for any conclusions about leadership at all. Moreover, the research was deliberately designed to nullify any of Mr. Collins’s personal bias. Harvard Business School professor Morten Hansen, who consulted with Mr. Collins on the design of a credible research approach for Good to Great, offers this assessment: “It’s very rare that people conduct a study aimed at managers following the best methods of academic research. This work has the potential to set a new standard for what we believe about management — and to establish principles for building long-term, not short-term, greatness.”

That hard-edged, results-oriented research methodology, which is spelled out in a remarkably complete and accessible appendix in Good to Great, started with an analysis of stock market returns, but it led to asking a series of questions about virtue. How do we invest our time? Whom should we associate with? When should we tell the truth? How should we behave? The Good to Great research suggests there are correct answers to these questions, and that the right kinds of virtue will lead to sustained financial performance. But the right answers represent a significant change, in heart and mind, from the prevailing way in which most people in business currently work and live.

Seven Key Factors
Most business books start by asserting that some new precept or technique will lead to success. They then look for examples to prove it. Mr. Collins started from the opposite direction: He studied only companies whose cumulative stock returns over time showed that they had reliably gone from 15 years or more of nondescript performance to 15 years or more of performance that outpaced the general market by a factor of three or more, and where the leap was not due to the general industry trend. Of the 1,435 companies that appeared on the Fortune 500 list from 1965 to 1995, Mr. Collins found only 11 that met the criterion.

Some companies, like Coca-Cola Company and PepsiCo Inc., were not included because their industry had boomed along with them; others, like all the potential high-tech candidates, hadn’t been around long enough to exhibit the necessary pattern of 15 years flat, then 15 years of accelerated growth. The companies that did qualify had to begin their breakthrough results no later than 1984 in order to produce the full 15 years of explosive performance. They are: Abbott Laboratories, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Pitney Bowes, Walgreens, and Wells Fargo. The 11th, Philip Morris, is one of the most reviled companies in the world, and yet it is the only company that met the criteria for both Built to Last and Good to Great.

 
 
 
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Resources

  1. Jim Collins, Good to Great: Why Some Companies Make the Leap ... and Others Don’t (HarperBusiness, 2001)
  2. James C. Collins and Jerry I. Porras, Built to Last: Successful Habits of Visionary Companies (HarperBusiness, 1994)
  3. Jim Collins, “Level 5 Leadership: The Triumph of Humility and Fierce Resolve,” Harvard Business Review, January 2001; Click here
  4. Jim Collins’s Web site: Click here