Labor Law Guy

‘Good to Great’ Author Answers My Question

Posted in Random Musings by laborlawguy on May 22, 2009

Jim Collins, author of Good to Great, was the subject of an earlier post of mine entitled “Good to Great, Then Gone or Gobble Up.” In that ditty, I queried how Circuit City, which Collins claimed had gone from being a good to being a great company, could go under just a few years after having been proclaimed “great.” At the same time, I also e-mailed Collins to get his take.

Turns out that the author of Good to Great has been busy, but he didn’t neglect my letter. I got a response yesterday to my question about what happened to Circuit City, and here’s what Mr. Collins wrote:

Thank you for your email.  I apologize for my long delay in reply; I’ve been buried working on two books, feeling like a snake that swallowed two watermelons at the same time.   In response to your question: Circ uit City engineered its transition from good to great under Alan Wurtzel and his team principally during the 1970s and 1980s, then fell in a later generation; we focused our research for Good to Great primarily on the Wurtzel era, when CC made its leap.  Perhaps it might be helpful to underscore that the principles we uncovered in prior research do not depend upon the current strength or struggles (or even the later demise) of the specific companies we studied.  Think of it this way: If we studied healthy people in contrast to unhealthy people, and we derived health-enhancing principles–such as sound sleep, balanced diet, and moderate exercise–would it undermine these principles if later some of our previously healthy subjects started sleeping badly, eating poorly, and not exercising?  Sleep, diet and exercise would still hold as principles of health.    That said, the question of how once-great companies can self-destruct ignited my curiosity.  Not all companies that attain greatness manage to sustain that greatness for two, three or more decades.  Some do, but others lose their greatness in later generations of leadership.  Some companies fall a long way and come back as great, and others disappear or become irrelevant. The question is: why do some great companies fall, and others not?  And also, why do some come back, and others not?    I have recently published a small book on this topic entitled How the Mighty Fall.

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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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