"I wish there was one kind of fatal blow that we could all pick out," said Stephen Baker, vice president of industry analysis at market researching firm, The NPD Group Inc. "Every time there was a crossroad ... in hindsight they almost always did the wrong thing."
In one of the most famous business books of all times, Jim Collins singled out Circuit City as one of the best managed companies in the world, distilling lessons on how to run a succesful company from its story. Yeah, Best Buy depantsed them, but why would a "Good to Great" management team allow that to happen?
"These business books are mostly backward-looking: what have companies done that has made them successful? The future is always hard to predict, and understanding the past is valuable; on the other hand, the implicit message of these business books is that the principles that these companies use not only have made them good in the past, but position them for continued success.
To the extent that this doesn’t actually turn out to be true, it calls into question the basic premise of these books, doesn’t it?"
The main thesis I remember from Good to Great was that in each of its cases, the turnaround from good to great had come from a change in leadership at the top. The new leaders (the book claimed) had all fit a certain profile and shared a similar leadership style. I liked the book quite a bit because the character of these leaders that Collins was describing seemed admirable.
It isn't obvious whether the demise of Circuit City refutes the thesis. Perhaps the leader Collins wrote about retired and was replaced with someone who didn't share the same values? In that case GtG would actually predict a decline. Alternatively, if the company failed under the same leader that Collins wrote about, that would refute GtG pretty well. One can also imagine scenarios between these two poles where it might not be so clear.
By the way, your point reminds me of a similar one people made about In Search of Excellence (the GtG of its day), the "excellent" companies of which didn't seem so excellent a few years later.
Yeah, I guess I'm not saying this refutes the book so much as I'm asking whether the principles in the book (like "the hedgehog concept") illustrate what went wrong with Circuit City.
You could level similar critiques against other GtG companies, like Abbott Labs or, hello? Fannie Mae.
The companies were all picked based on stock price performance - which should tell you something about the books ability to make predictions.
Not to take anything away from Good to Great as a book, but past performance does not indicate future returns is pretty much the only constant about the stock market.
"I wish there was one kind of fatal blow that we could all pick out," said Stephen Baker, vice president of industry analysis at market researching firm, The NPD Group Inc. "Every time there was a crossroad ... in hindsight they almost always did the wrong thing."
In one of the most famous business books of all times, Jim Collins singled out Circuit City as one of the best managed companies in the world, distilling lessons on how to run a succesful company from its story. Yeah, Best Buy depantsed them, but why would a "Good to Great" management team allow that to happen?