These leaps into greatness did not occur through revolution. Contrary to popular opinion, these firms did not get in an expensive new CEO to turn things around. (This, in fact, is the mark of a mediocre company.) And although the remarkable results of great companies sometimes make it look like their success happened quickly, the 'leap' only happened after years of effort, what Collins calls 'pushing against the flywheel'.

The American drugstore chain Walgreens is an old company which for four decades followed the general market in its performance. Then, in 1975, the company left the 'average' and began its remarkable success. From 1975 to 2000 it outperformed the stock market by 15 times, the much-lauded General Electric by five times and the famed Coca-Cola company by eight times.

What accounts for the sudden and sustained rise out of mediocrity? Jim Collins began a five-year research effort to find out. Of the list of 11 great companies he came up with, whose inclusion was based on superior performance for at least 15 years, Collins says, "a dowdier group would be hard to find". It included Fannie Mae (a mortgage finance house), Gillette (razors), Kimberly-Clark (nappies/diapers, paper towels), Kroger (discount supermarkets), Philip Morris (cigarettes, chocolate, coffee) and Pitney Bowes (back office equipment).

What themes did Collins draw from the research?

A certain kind of leadership

Collins was not really interested in leadership when he began the study. He wanted to get away from the 'great leader' complex of many businesses where it is thought that bringing in a dynamic leader will transform everything. He did in fact discover that leadership is extremely important, but the type of leader that makes for greatness was the surprise. Great-company leaders are an unusual blend of ambition and humility, "more like Lincoln and Socrates than Patton or Caesar".

Such leaders do not seem outwardly ambitious, because they channel their drive and determination into securing the long-term success of their company. They are reluctant to talk about themselves, instead pointing to other people who have made a contribution. These leaders also share a passion for the products their firm create, however commonplace. For instance, the Gillette people, mainly because it excited them, sunk $200 million into developing the Mach 3 razor, a great success. They are in it for the future greatness of the company.

The right people

Conventional wisdom has it that if you want to start and build a great company, you develop the concept to perfection and then hire the best people you can find. Collins and his team, though, found that when the executives of good-to-great firms began their corporate transformations, they worked seemingly in reverse: ".they first get the right people on the bus (and the wrong people off the bus) and then figured out where to drive it."

The benefits of this approach: if you have the right people from the beginning, they will be able to adapt to any changes in direction or strategy. You will not have to motivate them because they share the desire to achieve greatness, and therefore are already motivated. Interestingly, the great companies pay no more than the merely good; remuneration is not a big factor in motivating people when they have something larger than money to aim for. The best companies know, as Collins puts it, that "Great vision without great people is irrelevant."

A reason for being

Great companies have a single idea or a focus which guides everything they do. Such concepts may take many years to refine, but once in place can generate enormous success because they are so differentiated. Walgreens has as its self-defining concept the best, most conveniently located drugstores, with high profit per customer visit. WellsFargo didn't try to beat Citicorp or Bank of America to be the biggest global American bank. Instead, it focused on being a very profitable bank with a focus on the western United States.

Collins has a 3-circle model to test for greatness. The book is worth getting for this chapter alone, as you can apply it to your life as much to the organization where you work. What is it exactly that you stand for? Can you sum it up in a few words? If not, your current efforts are likely to be scattered and lacking energy, just like the 'merely good' companies.

Technology

Technology was rarely mentioned as a major factor for success by executives in the great companies. It was never a case of 'this technology will make the company', more like 'we could use this to take us further with what we are doing'. Other companies chose technology for technology's sake, but the exceptional companies only invested in cutting edge ways of doing things when it matched up with their larger vision. Collins' assessment is that "technology by itself is never a primary cause of either greatness or decline." The wise use of technology, however, is part of great-company culture.

Final word

Good To Great was researched at the height of the 'new economy' mania. Collins says of these years: "We entered a remarkable moment in history when the whole idea of trying to build a great company seemed quaint and outdated." Having a 'culture of discipline', one of the key characteristics of great companies that he identifies, did indeed seem old-fashioned. It turned out that these firms had become great not through being 'in the right industry at the right time', but had identified their unique strengths and worked relentlessly to capitalise on them.