Good is the Enemy of Great

This opening chapter introduces the central question of the book: Why do some companies make the leap from good to great while others never do? Jim Collins and his research team embarked on a five-year journey to find answers, studying 1,435 companies to identify those that truly made the transformation.

The Central Question

The book begins with a provocative insight: good is the enemy of great. We don’t have great schools principally because we have good schools. We don’t have great government because we have good government. Few people attain great lives because it’s so easy to settle for a good life.

“Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great.” — Jim Collins

This applies directly to companies. The vast majority of companies never become great precisely because they become quite good—and that’s their main problem. Settling for “good enough” creates complacency that prevents the pursuit of greatness.

The Research Project

Collins assembled a team of 21 researchers who worked for five years, studying companies that made the leap from good to great. The research was rigorous and data-driven, designed to identify what actually distinguished great companies from merely good ones.

Research Methodology

• Starting pool: 1,435 companies from the Fortune 500 (1965-1995)
• Selection criteria: 15 years of cumulative stock returns at or below the general market, followed by 15 years at least 3x the market
• Final selection: 11 good-to-great companies
• Comparison companies: Carefully selected companies that failed to make the leap

The Good-to-Great Companies

After extensive screening, 11 companies emerged that met the stringent criteria. These companies achieved extraordinary results—cumulative stock returns that beat the general market by at least three times over fifteen years.

The 11 Good-to-Great Companies

Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and Wells Fargo.

These companies averaged cumulative stock returns 6.9 times the general market over the fifteen years following their transition points.

Comparison Companies

To understand what made the good-to-great companies special, the research team selected comparison companies—similar firms in the same industries that failed to make the leap. This “matched pair” analysis helped isolate the factors that truly mattered.

Example Comparison Pairs

Good-to-Great:

• Walgreens
• Wells Fargo
• Kimberly-Clark

Comparison:

• Eckerd
• Bank of America
• Scott Paper

What They Found (Preview)

The research uncovered several surprising findings that defied conventional wisdom:

Counter-Intuitive Findings

• Celebrity leaders who ride in from the outside are negatively correlated with going from good to great
• There’s no link between executive compensation and the shift from good to great
• Strategy alone did not separate the good-to-great companies from their comparisons
• Technology is not the primary driver of transformation
• There was no single defining action, grand program, or miracle moment

Key Takeaways

• Good is the enemy of great—settling for “good enough” prevents the pursuit of excellence
• The research studied 1,435 companies over 5 years, identifying 11 that truly made the leap
• Good-to-great companies beat the market by an average of 6.9x over 15 years
• Comparison companies helped isolate the specific factors that enabled the transformation
• Many conventional beliefs about corporate success proved to be myths