Good to Great, or Just Good?

My response to Good to Great, or Just Good?:

The article states that there are two fatal errors in GTG and that they are data mining and mistake association for causation. Data mining is the process of collecting patterns, formulating explanations and treating the underlying causes. The problem with data mining is that it relies on the specific time period and circumstance as per the article states. The article continues on to state that Collins identified an association between great firms and five characteristics and then deemed them those five characteristics to be the driving force behind the greatness, ignoring the firm’s position in time and other factors. He did not show ‘how’ the characteristics made the firms great. The article seeks to prove Collins’ invalid by measuring the performance of the 11 companies for the 10 years after the study and also by comparing stock return performances to the S&P 500 during different periods in time. Of course, this article is assuming the leadership and the commonalities have stayed the same though out these periods in time. When measuring results of a firm from 1964 through 2005 there will be an incredible amount of disparity from leadership changes and process accountability. I had a hard time buying into Niendorf and Beck’s opinions, especially when they’re comparing the five characteristics with the results of a company. As the article points, these 11 companies are ranked average at best when compared to the S&P 500, but these companies during the study period rose to be a top 500 company. They got there for reasons such as the five characteristics that Collins points out. Once that time period is over, many things change including leadership and systems, so accountability afterwards wouldn’t make any sense. I would think that common sense tells us, after reading the five characteristics, that yes they are commonalities that you would find in excelling companies. Is that not what Collins is saying? Not to mention that the book was voted in as one of the best business model books of all time.

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