Labor Law Guy

Good to Great, Then Gone or Gobbled Up

Posted in Random Musings by laborlawguy on January 27, 2009

An associate introduced me to a book entitled Good to Great by Jim Collins, who is widely regarded as a management guru. His book examines the traits and disciplines that separate the great enterprises from the merely good ones.

(If you want a good explanation of what propels the great companies, Jim provides a downloadable good-to-great diagnostic tool, which pretty much summarizes his book in the process.)

Beginning on page 101 of Good to Great, Collins lists several companies that went from good to great by focusing on what they truly could be best in the world at.

The second listed great company, following Abbott Laboratories, is Circuit City.  CC is now bankrupt and liquidating, so I e-mailed Collins to see if he could tell me where they blew it, but it’s been a few days and I’ve heard nothing back. Understandable since the man is no doubt busy with more important matters (see below). At any rate, Collins pegged CC as going from good to great because it became the best at “implementing the ‘4-S’ model (service, selection, savings, satisfaction) applied to big-ticket consumer sales.”

Mind you, I’m in no position to speak for Collins, but if I were answering my own e-mail to him, I’d say, “Best Buy” happened. The latter retailer seemed to ace out CC on savings, for sure, and probably on selection as well.

Now, coming in third (the list is actually alphabetical, so the ordering is ironic as much as anything) is Fannie Mae, which got taken over by Uncle Sam in September along with its sibling Freddie Mac. Fannie and Freddie are both hemorrhaging red ink after years of insuring “affordable housing.” (Don’t get me started on that topic.)

Collins says that Fannie Mae went from good to great by realizing it could become “the best capital markets player in anything that pertains to mortgages.”

Yeah, but it couldn’t survive a real estate bubble, which it created in the first place, of course.

Anyway, I promised to update you on what Collins is doing these days. Turns out, well before the current economic panic, he and a partner began researching how companies survive in hard times.

Too late for Circuit City and Fannie Mae, I guess, but I look forward to his conclusions, which he hinted at in this Fortune magazine interview.

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