Introduction
In the book Good to great: Why some companies make the leap… and others don’t, the author Jim Collins critically analyses the factors that help establishments make the transition from average business institutions to profitability giants. Collins analysed the total stock returns of business enterprises listed in the Fortune 500 for a period of 30 years. The aim of the study was to pick out those companies that were able to make constant respectable profits for at least fifteen years of the three decades. A total of eleven companies made the cut. These eleven companies were then compared with eleven establishments in the same field that performed unimpressively over the same period of time. Collins and his team studied the financial records and strategy plans of the two sets of companies and came up with theories to explain the disparity. The team concludes, through the various chapters in the book, that desirable performance in any company depends entirely on discipline.
Main body
Under discipline Collins singles out the people, the thought and the action as the most important elements of a company where discipline needs to be properly enforced if success is to be attained. In the aspect of discipline of the people, Collins is able to point out the fact that the companies which performed well generally had managerial systems that encouraged the humility and dedication of the senior members of staff. Such individuals are quick to give credit where it was due and humbly owned up to their mistakes. At the same time, these managers are focused and confidently pursued approaches that that they felt could impact positively on the company. Still under the concept of discipline of the people, Collins makes note of the need for companies to employ persons with the appropriate skill. Collins emphasizes the need to have individuals whose skill and knowledge complements each other as opposed to having one super-skilled individual and a whole panel of aides who just sit and wait for commands. The author concludes that while the latter system could yield momentary periods of desirable profitability, the system is not sustainable once the person at the top of the pyramid leaves.
In the concept of sustaining discipline of thought, Collins establishes that competent companies have mechanisms in place for dealing with unpleasant challenges. These successful companies were able to see past biases developed through previous similar challenges as well as sideline vested interests to come up with tailor-made plans to deal with the issues at hand. Even with undesirable measures that such companies make, they ensure that they are working towards institutional stability as opposed to making immediate profits. Collins categorically underscores the need for companies to develop avenues for discussion that encourage the participation of all the team members. Also under the discipline of thought concept, Collins encourages companies to find out the one thing that they do best and develop it to its full potential. In elaborating this point, the author uses the analogy of the contrast between the defense systems of the fox and the hedgehog. The former usually runs away from impending harm while the latter just curls up and stays still. Collins believes that successful companies are like the hedgehog which has discovered that its strength lies in its spikes and develops a method to ensure that at a time of danger, the greatest number of spikes possible is used in its protection.
When it comes to the concept of the discipline of action, Collins suggests that the most successful of companies have devised ways of cultivating a culture of discipline. This includes ensuring that all the members of staff are given the freedom to work independent of strict supervision. Collins however links this concept to the recruitment aspect which he claims either gives a company dependable members of staff who can work with minimal supervision or an irresponsible workforce that does not show initiative. The successful companies allow their employees to use their creative abilities to ensure the general growth of the institution. Still on the aspect of discipline of action, Collins emphasizes the need for companies to embrace technology in their operations. He finds it obnoxious for companies to constantly regard technology as burden based on its rapid evolution. He insists that technology is a dependent variable and if properly used can help an institution move from underperforming to becoming the envy of their rivals.
Personal view of the book
The book, according to me, is enlightening and very inspiring. It is written in a flawless, easy to understand format that even persons who are not professionals in the managerial field can appreciate. The numerous examples and analogies further contribute to the books simplicity by helping illustrate very complex issues in a very simple manner. The general discipline theory which the book emphasizes can also be put to test in a typical institutional situation and is not just a fancy finding that can only impress academicians. The literature flows well with the profession of managerial accounting in the sense that it mainly offers suggestions on how managerial skills can be well applied in any institution to help it achieve its financial goals. The various concepts raised by the author are aimed at helping individuals in senior administrative positions identify and interpret information as well as communicate properly with their junior associates on aspects pertaining to the attainment of the company’s goals.
However, even with all these great features, a number of doubts can be raised as to the mechanism used by Collins and his team to come up with the theory. The study was only based on the sustainability of profits by companies over a period of 15 years and I personally would argue that this is not a solid ground to found a theory that is expected to affect various departments of an institution. As much as the cumulative stock returns could be used to provide a decent comparative point for the successful integration of the different company departments in raising profitable enterprises, it still would have been advisable for Collins and his team to use other indicators in the study.
Conclusion
In general Collins’ book is a very instrumental guide for organizational growth especially because it is based on general managerial skills improvement. This publication will make for a very important read to all people who are interested in helping their companies grow from strength to strength. It is however worth noting that not all the prescribed methods for company enhancement can apply across the board but they come in handy to present some good insights into how some enterprises got to be what they are today.
References
Good to Great – Why Some Companies Make the Leap and Others Don’t, by Jim Collins, 2001. ISBN-10: 0066620996.