Carlos Brito: The Stockdale Paradox via The Brooklyn Investor
After watching a video of Carlos Brito pounding the table on the book, Good to Great: Why Some Companies Make the Leap…And Others Don’t by Jim Simons, I had to reread it. I read it years ago when it came out and thought itwas a great book, but rereading it now, I enjoyed it even more. That’s because I’ve spent more time since then reading about businesses, annual reports, and watching companies succeed and fail over the years. So I have many more reference points to relate all of this stuff to.
It is fun to read about Wells Fargo and how together they are, and it’s nice to see that they have maintained their “greatness”. Unfortunately, Circuit City Stores Inc (OTCMKTS:CCTYQ) and Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) no longer exist, but most of the others have been doing well since then. Collins did say that if these ‘great’ companies change, or don’t continue their great ways, they will quickly fall back to mediocrity or worse.
By the way, here are the great companies in the book:
Vanguard’s move into PE may change the landscape forever
Private equity has been growing in popularity in recent years as more and more big-name funds and institutional investors dive in. Now even indexing giant Vanguard is out to take a piece of the PE pie. During a panel at the Morningstar Investment Conference this year, Fran Kinniry of Vanguard, John Rekenthaler of Morningstar and Read More
An interesting point is the contrast between this book and the The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success Jim Collins even points out Teledyne Technologies Incorporated (NYSE:TDY) and Henry Singleton as an example of a “genius with a thousand helpers”; a company that did well under a genius and then stumbled when the genius departed.
See full article by The Brooklyn Investor
Video is embedded below, more on the book below the video
Built to Last: Successful Habits of Visionary Companies, the defining management study of the nineties, showed how great companies triumph over time and how long-term sustained performance can be engineered into the DNA of an enterprise from the verybeginning.
But what about the company that is not born with great DNA? How can good companies, mediocre companies, even bad companies achieve enduring greatness?
For years, this question preyed on the mind of Jim Collins. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? And if so, what are the universal distinguishing characteristics that cause a company to go from good to great?
Using tough benchmarks, Collins and his research team identified a set of elite companies that made the leap to great results and sustained those results for at least fifteen years. How great? After the leap, the good-to-great companies generated cumulative stock returns that beat the general stock market by an average of seven times in fifteen years, better than twice the results delivered by a composite index of the world’s greatest companies, including Coca-Cola, Intel, General Electric, and Merck.
Good to Great: Why Some Companies Make the Leap…And Others Don’t The Comparisons:
The research team contrasted the good-to-great companies with a carefully selected set of comparison companies that failed to make the leap from good to great. What was different? Why did one set of companies become truly great performers while the other set remained only good?
Over five years, the team analyzed the histories of all twenty-eight companies in the study. After sifting through mountains of data and thousands of pages of interviews, Collins and his crew discovered the key determinants of greatness — why some companies make the leap and others don’t.
Good to Great: Why Some Companies Make the Leap…And Others Don’t The Findings:
The findings of theGood to Great: Why Some Companies Make the Leap…And Others Don’t study will surprise many readers and shed light on virtually every area of management strategy and practice. The findings include:
- Level 5 Leaders: The research team was shocked to discover the type of leadership required to achieve greatness.
- The Hedgehog Concept: (Simplicity within the Three Circles): To go from good to great requires transcending the curse of competence.
- A Culture of Discipline: When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great results. Technology Accelerators: Good-to-great companies think differently about the role of technology.
- The Flywheel and the Doom Loop: Those who launch radical change programs and wrenching restructurings will almost certainly fail to make the leap.
“Some of the key concepts discerned in the study,” comments Jim Collins, “fly in the face of our modern business culture and will, quite frankly, upset some people.”
Perhaps, but who can afford to ignore these findings?