The best way for a new enterprise to achieve significant, sustainable success is to begin with the proper DNA: those tried-and-true traits common to high-achieving companies. But what about those companies that were not successful from the outset, those perpetually mediocre organizations? Is there any hope for them to move from good to great? According to bestselling author Jim Collins, it is possible. Collins elucidates key elements that fueled various companies’ sudden ascendancy.

Good to Great sprang from a critique of the author’s earlier bestseller, Built to Last, an investigation of the habits common to high-achieving companies. At a meeting in San Francisco, a management executive for a successful firm told the author that Built to Last was a terrific book, but, unfortunately, it was useless because all the companies discussed were successful from the get-go. This raised the question of whether companies that get off to a halting, mediocre start are doomed to persist in mediocrity. Is it a disease without a cure? Or is it possible for a mediocre company to suddenly become a great company with prolonged, far-above-market returns?

This line of inquiry led to a five-year research project. The methodology for this study involved a thorough analysis (interviews, articles, and all available statistics) of 14 companies. All of the companies selected began as mediocre enterprises, but then, at some critical transition point, began (and then continued) to experience growth at least three times greater than the general market for 15 years or more. For a sense of scale, Coca-Cola, General Electric, Disney, and Wal-Mart were “only” 2.5 times above market averages. The 14 companies represented a wide variety of industries. Among the companies that met the above criteria were Circuit City (18.5 times the market), Gillette (7.39 times the market), Kimberly-Clark (3.42 times the market), and Walgreens (7.34 times the market).

To increase the rigor of the study, 14 additional “competitor companies” were factored into the analysis. Each company that had gone from good to great after a critical transition period was paired with a company in the same industry that had had similar resources and opportunities, yet stayed mediocre. It was important to compare companies within industries and to compare the mediocre companies to the good-to-greats. Otherwise, it would be like looking for commonalities between Olympic gold medalists from different sports: there would be common elements, but it would be far less illuminating than investigating the differences between good athletes and the best in a particular sport.

For each of these companies, the good-to-great period took place in the final quarter of the twentieth century. People might object that the recent technological and economic developments would render older data irrelevant. But when has the economy ever not been changing? Electricity, the phone, the car profoundly shaped economic life and activity. Even if the rate of change is faster than ever before, these findings point to universals, timeless truths that apply to people regardless of time or place. Consider the relationship between engineering and the laws of physics: even if approaches to engineering change drastically in appearance and sophistication, designs will still be subject to the same laws of physics. This book is less a lecture on engineering and more a lesson in physics—rules that have been hiding in plain sight.

The leadership profile for top performing companies may surprise you. Most people think of the headstrong, even pugnacious, personalities that “get things done” as those who will likely lead successful companies. But these qualities do not take companies from good to great.

There are vital qualities to executive leadership, like possessing personal competence, being a good team player, a capable manager, and demonstrating leadership. But the most critical component, and the glue that holds the aforementioned pieces together, is a mix of personal humility and professional will. Together, they comprise what can be called Level 5 Leadership.

Have you ever heard of Darwin Smith? If you’re like most people—even most management gurus—you probably have not. When he became CEO of the paper company Kimberly-Clark in 1971, there were serious doubts about his qualifications. He was shy, awkward, and self-effacing, and preferred the company of plumbers and mechanics to financial wizards at galas and board meetings. He grew up an Indiana farm boy, and eventually earned admission into Harvard Law after working full-time during the day and taking college courses at night.

For the  20 years prior to Smith’s tenure, the company had performed well below the market averages. In the decades that followed Smith’s appointment, however, the company only grew. Within 20 years, company stocks were four times greater than the general market, putting it far ahead of competitors.  

Smith demonstrated a personal humility, but also a tough resolve to see things through. His face-like-flint determination was directed toward the good of the company rather than self-gratification.

One of the most damaging trends in businesses is to bring in celebrity personalities to turn companies around. What you want is someone who looks through a window to recognize how others have contributed to success, and into a mirror when there are mistakes and setbacks. Celebrity executives tend to do the opposite: they put the mirror up when they hear praise, and then look through a window for people to blame when projects implode.

The workhorse does better than the show pony in turning a business from good to great. The track record for celebrity executives with big personalities (and even bigger egos) is actually pretty abysmal. None of this is based on preconceived ideology. It is based on empirical data: all of the good-to-great companies had someone with humility and will during a critical transition process. By contrast, almost all of the good-not-great competitors lacked these qualities in their executives.

Companies that go from good to great have a culture of discipline. This is not a top-down system that micromanages its employees’ actions through a nit-picking bureaucracy. Bureaucracies emerge when people are incapable of doing good work without supervision--or doing good work at all. This reveals a more basic problem of having the wrong people. Kick these people out, bring the right people aboard, and you will not need bureaucracy.

The primary motivation for workers in good-to-great companies is not a fear of a tyrant boss or bureaucratic repercussions. When workers are self-motivated, they are capable of working within a system, exercising both freedom and responsibility. Neurologist and Holocaust survivor Viktor Frankl rightly observed that freedom doesn’t mean much without responsibility. He thought that the United States’ Statue of Liberty should be replaced with a Statue of Responsibility. The companies that moved from good to great all had frameworks where employees had both.

Good-to-great companies have disciplined workers that can muster disciplined thought leading to disciplined action. No tyrant or bureaucracy is necessary where such a culture exists.

Part of the culture of discipline means not simply jumping at every opportunity. If an opportunity seems once-in-a-lifetime, it is important to remember that there will be plenty of other once-in-a-lifetime opportunities. Even on a daily basis, it is easy to accrue items for a growing to-do list. It’s important to determine what needs doing, but deciding what is unnecessary is even more vital. Restricting efforts to those that activities at the intersection of passion, high profit per unit, and best-in-sector ability requires disciplined thinking and action on the part of employers and employees.

In interview transcripts and articles about the good-to-great companies, words like determined, dogged, persistent, tenacious, detail-oriented, attentive, conscientious, systematic, and meticulous abounded. These same words were glaringly absent in interviews and articles regarding comparison companies.

One of the surprising findings in the study of good-to-great companies is that very few of them considered technology an important factor in company transformation. In over 80 interviews with upper management of the companies, only 1 in 5 mentioned technology as a top-five contributor to success. Even Nucor, a company lauded for its innovative use of technology, never mentioned technology itself as a key asset. It might be able to speed up progress, but it will never generate it.

There is a pervasive belief that keeping up with the latest tech developments is essential for a company’s survival, let alone success. The evidence collected and processed over the five-year study of good-to-great companies simply does not support that assumption. Technological change is never the main cause for a company’s downfall or its ongoing success.

What sets the good-to-great companies apart is not necessarily how they use technology but how they think about technology. The companies that rise to greatness figure out the best application for certain technologies that align with what they’re after. To be more specific, these companies use technology that creatively harnesses the intersection of passion, what they do best in the world, and the single factor that most effectively drives profit; and then creatively applies technology to make the most of it.

The Stockdale Paradox states that you must never lose faith that you will prevail over the difficulties—whatever they may be— but you also must never shy away from the most brutal facts of your current situation.

When Procter & Gamble entered the paper-based product competition in the 1960s, Scott Paper voluntarily relegated themselves to second place instead of vying to become the industry’s leader, even though they had been on top for years. Kimberly-Clark, another company in the industry, decided that P&G’s competition was not an impediment to success but would be the making of it. The competition would sharpen them instead of destroying them. Both the management at Kimberly-Clark and Scott Paper faced the tough facts: Procter & Gamble was far bigger and had tremendous resources and great minds on its side. But where Scott concluded that the obstacles were insurmountable, Kimberly-Clark held to the belief that it would prevail regardless of the obstacles.

This expectation to prevail coupled with courage to face facts is not just relevant in business but any kind of organization. Former Prime Minister of England, Winston Churchill, is a towering exemplar of this dual-mentality.

Winston Churchill once wrote, “There is no worse mistake in public leadership than to hold out false hopes soon to be swept away.” He didn’t shy away from the brute facts. To avoid his strident personality becoming an impediment to the flow of information, Churchill created the Statistical Office, where facts would be delivered in their most raw, pointed form. Even in England’s darkest hours, when France and Poland had surrendered to the Nazis, the United States was still insisting on its glorious isolation, and most Britons themselves had abandoned hope of beating the Nazis, Churchill insisted on hearing it straight, but he also remained completely confident that England would “rid the earth of [Hitler’s] shadow.” And they did.

Good-to-great companies squarely face harsh realities, but end up making more apt decisions because they’re based on reality. Charisma can be an asset, but it can also dissuade people from volunteering honest feedback. The companies that succeed also don’t waste time trying to “motivate” the troops. If a company has taken the time to bring on the right people and kick out the wrong people, they will already have motivated workers. Instead of motivating, make sure you don’t do anything that would de-motivate or demoralize the team. Nothing destroys momentum like empty promises that don’t take tough facts into account.