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A Great Book with a Flaw,
This review is from: Built to Last: Successful Habits of Visionary Companies (Harper Business Essentials) (Paperback)
This book reminds me of the hero in the classic Greek tragedy. The hero is always magnificent, but has a tragic flaw. This is a magnificent book with a tragic flaw.
Porras and Collins set out to write a book about visionary companies, and they did just that. They chose the companies they would study based on specific, detailed criteria.
They wanted to study companies that had been premier institutions in their industries and widely admired while they made an imprint on the world around them. They wanted their companies to have multiple generations of chief executives and to have gone through multiple product or service lifecycles. And they wanted the companies to have been around for a long time - founded before 1950.
They compared each of their visionary companies with another company that was not a premier visionary company. Many of the comparison companies were solid performers. They were good companies, but not great companies. That's one of the great things about the book. You can see the distinction between good performance and great performance.
Another thing that makes the book great is the extensive research. The project took six years, and the authors and their research team dug into critical issues and came up with fascinating insights and comparisons.
Read this book and you will learn about the characteristics of great companies that have an impact on the world around them. The discussions will enrich your understanding of what makes a great company. This will be especially valuable to you if you're in the process of building a company that you want to be great.
That's the great part, the hero part. What about the flaws?
The first flaw is that essentially performance for each of these companies is equated with market performance. There are lots of things the authors could have used, such as return on assets, for example. But share price is easy to track over time and is used as a surrogate for greatness. I'm not sure that that's the best criterion.
What you are actually reading about is a selection of excellent, visionary companies that were perceived as good investments by the market. This "perception" issue is not addressed in the book.
The second flaw is more important. While this book tells you marvelous things about companies that are admittedly great and about some of the things that make for greatness in companies, and while it mixes statistical data with telling anecdotes, it falls short in one critical area. The book doesn't tell you anything about how to achieve greatness.
In other words, it describes what greatness might be and it gives you some examples of companies who have achieved it, but the book ultimately left me with the nagging desire that the authors would have given me some "how to." As far as you can tell from reading the book, these companies were always great.
That may not be a problem for you if you're just starting a company. You've got a clean slate to start from. But if you're guiding an already-established company, or a part of it, I think you'll wish for a few examples of companies that became great after performing at some lesser level.
That's the bottom line in my recommendation. If you're looking for a book that describes greatness and where you'll pick up a wealth of ideas and good historical knowledge about great companies, buy this book. If, on the other hand, what you want is a book that describes in some detail how to achieve that greatness, this may not be the book for you.
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Showing 1-4 of 4 posts in this discussion
Initial post: Aug 3, 2009 1:05:45 PM PDT
Michael S. Peterson says:
I just finished reading Mr. Collins follow up book Good to Great: Why Some Companies Make the Leap... and Others Don't. It addresses the "second flaw" beautifully. In fact, it focuses exclusively on analyzing how good companies (established companies) made changes to create great companies.
In reply to an earlier post on Sep 9, 2009 6:44:41 PM PDT
I came here to post what Michael Peterson did. Good to great is simply awesome. I am going to reread it soon.
In reply to an earlier post on Jan 13, 2011 12:09:45 PM PST
Thank you for your response... I just ordered Good to Great
Posted on Sep 30, 2013 9:04:21 AM PDT
B. Taylor says:
1. I think that the performance of share price - especially when viewed across many business cycles as opposed to shorter-term or cyclical gyrations - is a reasonable proxy for what we might call a company's overall "performance". Of course, any measure of this sort - including return on assets - will have limitations that could be criticized.
2. This book should be critiqued within the confines of the ideas that it does address - not criticized that it doesn't address something else. No book can cover everything. This book is primarily descriptive, not prescriptive. For prescriptives, there are other books such as some recommended here.
I think it's a good idea to start with the descriptive (what does a great company look like?) and then look for the prescriptive, rather than the other way around. If someone wanted to tell me how to harvest oranges, the first thing I'd need to know is what an orange tree looks like.
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