Book Review: Good to Great: Why Some Companies Make the Leap

The Great Leap Forward

Good to Great: Why Some Companies Make the Leap…And Others Don’tBy Jim Collins

HarperCollins Publishers, 2001, $30

What’s the difference between merely good and clearly great?chest-thumping leadership and bleeding-edge technology? Not so, says Collins, whose new book explores why some companies make the leap from mediocre to meteoric success?and why others can’t. Collins, author of the 1994 best-seller Built to Last, identifies 11 companies that have made the transition from good to great, and some of those names might surprise you (Walgreens makes the list; Wal-Mart doesn’t). He also identifies some common factors among good-to-great companies, and these may surprise you too. Top executives at these companies, for instance, are less like General Patton or Julius Caesar and more like soft-spoken Abraham Lincoln. And while technology is important to these enterprises, it isn’t (to quote baseball great Reggie Jackson) the straw that stirs their drinks. Technology can accelerate the good-to-great transition, Collins says, but can’t ignite it.

All of Collins’s conclusions are drawn from a subjective definition of “great”?namely, that only those companies are truly great that can demonstrate 15 years of sustained, above-average stock market results (which is why Circuit City makes the cut but DaimlerChrysler doesn’t). There is no accounting for what these companies actually do, only for what they return to shareholders. A debatable definition, but suspend your disbelief if you must, because Collins’s research nevertheless delivers some keen insights into the makings of some of today’s most successful companies.

-Tom Field

Loyalty! Leadership! Success!

Loyalty Rules!: How Today’s Leaders Build Lasting RelationshipsBy Frederick F. Reichheld

Harvard Business School Press, 2001, $27.50

With Loyalty Rules, Reichheld follows up on his 1996 best-seller, The Loyalty Effect, which pointed out a link between loyalty and bottom-line profits. In 2001, he applies his loyalty theory to the digital economy?and none too soon. Reichheld, a Bain & Co. director emeritus, maintains that when profits are squeezed and stock prices plummet, loyalty is the only source of competitive advantage. And not just customer loyalty but the employee, supplier and investor loyalty on which customer loyalty hinges.

He hypothesizes that while the Internet has accelerated churn among all four groups, six principles of loyalty (which are outlined in the book) can make the new economy profitable for any company. Thankfully, Reichheld doesn’t turn to fly-by-night dotcoms for his loyalty rules. Instead he employs examples from loyalty leaders such as Enterprise Rent-A-Car, Harley-Davidson and USAA. The book is as much no-nonsense advice as it is highbrow theory. A practical Loyalty Acid Test Survey, which should help executives measure and strengthen key relationships, resides in the back of the book and is available for free on Reichheld’s website, www.loyaltyrules.com. One does wonder how the companies profiled are doing today and laments the fact that Loyalty Rules didn’t come out a year (or two) ago.

-Stephanie Overby

CIO Best-Seller List

5. Ruling the Waves: Cycles of Discovery, Chaos, and Wealth from Buccaneers to Bill Gates

by Debora L. Spar

Harcourt Trade Publishers, 2001 4. Who Moved My Cheese?

by Spencer Johnson

The Putnam Publishing Group, 1998 3. The Tipping Point: How Little Things Can Make a Big Difference

by Malcolm Gladwell

Little, Brown & Co., 2000 2. The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics

by William Easterly

MIT Press, 2001 1. Jack: Straight from the Gut

by Jack Welch

Warner Books, 2001

SOURCE: September 2001 data compiled by WordsWorth Books, Cambridge, Mass.