James C. "Jim" Collins, An American Business Consultant, Author, and Lecturer on the subject of company sustainability and growth. Jim Collins frequently contributes to Harvard Business Review, Business Week, Fortune and other magazines, journals, etc. He is also the author of several books. Member of Good To Great research teamJyoti, IIBM Patna Members of the God To Great research team
Good is the Enemy of Great" is the first sentence of Jim Collins business best seller, Good to Great. Good is the enemy of great. And that is one of the reasons that we have so little that becomes great. The vast majority of companies never become great, because they become quite good – that’s the problem. “Great remained great” “Good remained good”The main question of this entire book is – “Can a good company become a great company & if so how?”Jyoti, IIBM Patna
They identified companies that made the leap from good to great & then compare these companies to a carefully selected control group of comparison companies that fail to make the leap or if they did , they failed to sustain it.
Then they compared the good to great companies to the comparison companies to discover the essential & distinguishing factors at work. Example- Invested(1$) General market Good to Great 56 times 471 timesCriteria for selection of good to great companies- 15 years cumulative stock returns at or below the general stock market. Punctuated by a transition point. Then cumulative returns at least 3 times the market over the next 15 years.
For perspective , a mutual fund of the following “marquis set” ofcompanies beat the market by only 2.5 times over the years 1985-2000:3M , Boeing, Coca Cola , GE, Hewlett- Packard, Intel , Johnson &Johnson, Merck, Motorola, Pepsi, P & G, Wal-Mart & Walt Disney.Then 11 companies made it from all fortune 500 between 1965&1995. These good to great companies are- Abbott, Circuit city, Fannie Mae, Gillette, Kimberly Clark, Kroger,Nucor, Philip Morris, Piney Bower, Walgreens , Wells Fargo.Jyoti, IIBM Patna
Company Result from T Years transition point to To T + 15 Years 15 years beyond transition pointAbbott 3.98 times the market 1974-1989Circuit City 18.50 1982-1997Fannie Mae 7.56 1984-1999Gillette 7.39 1980-1995Kimberly Clark 3.42 1972-1987Kroger 4.17 1973-1988Nucor 5.16 1975-1990Philip Morris 7.06 1964-1979Pitney Bower 7.16 1973-1988Walgreens 7.34 1975-1990Wells Fargo 3.99 1983-1998
Example –Walgreens In Dec. 31 1975 – Jan. 1,2000, 1% invested in Walgreensbeat $ 1 invested in Intel by 2 times General Electric 5 times Coca Cola 8 times General stock market 15 timesFannie Mae also beat companies like GE & Coca Cola.Jyoti, IIBM Patna