• When we don’t know what works, we create myths to describe what might work
  • Much of business theory is little more than myth
  • “Good to Great” has been a best seller, but it is not helpful for good management
  • To grow business today requires abandoning management myths and aligning with changing market needs

Good to Great by Jim Collins has been a phenomenal business best seller.  Almost 10 years old, it has sold millions of copies.  It continues to be featured on end caps in book stores.  That it has sold so well, and continues selling, is a testament to a much better book by the legendary newsperson Bill Moyers with Joseph Campbell, “The Power of Myth.” (Original PBS 2001 TV show available on DVD, or get the new release this month.)

When we don’t understand something we develop theories as to how it might work.  These theories are based upon what we know, our assumptions, and our biases.  They could be right, or they might not.  Only testing determines the answer.  However, sometimes the theory is so powerfully connected to our beliefs that we don’t want to test it – don’t feel the need to test it.  And if the theory hangs around long enough, people forget it wasn’t tested.  What easily happens is that “logical” theories (based upon assumptions and beliefs) that don’t explain reality become myth.  And the myth becomes very comforting.  Over time, the myth becomes part of the assumption set – unchallenged, and actually used as a basis for building new theories.

For example, the founder of modern medicine – Galen – didn’t understand the circulatory system.  So he thought blood was oxygenated by invisible pores.  As time passed it became impossible to challenge, or even test, this theory.  Eventually, blood letting was developed as a medical practice because people thought the blood stored in the affected area had gone bad.  It was several hundred years before Harvey, through careful testing, proved there were no invisible pores – and instead blood circulated throughout the body.  Millions had perished from blood letting because of a myth.  Bad theory allowed to go unchallenged and untested. It just sounded so good, so acceptable, that people followed it.  Dangerous practice.

Thomas Thurston now gives us great insight to the popular myth developed by Jim Collins in Good to Great.  Published by Growth Science International (http// “Good to Great: Good, But Not Great” Mr. Thurston puts Mr. Collins thesis to the test.  Is it a usable framework for predicting performance, and do followers actually achieve superior performance?  In other words, does the advice in Good to Great work?

Mr. Thurston’s conclusions, quoted below, are quite clear, and mirror those of academics and lay people who have studied the storied Mr. Collins’ work:

  • Even with the copious guidelines set forth by Collins, sorting CEOs into each category proved a highly subjective process.  The classification scheme was ambiguous
  • Level 5 leadership was difficult to categorize with reliability and consistency
  • Our sample [100 well known firms] did not reveal any statistically significant difference in the performance of firms led by Level 5 and Not-Level 5 leaders.  Performance in each category was approximately the same.
  • Level 5 leadership classifications were, in practice, highly subjective and not predictive of superior firm performance.
  • In other words, our results concluded that one can not predict whether a firm will perform good, great or bad based on its having a Level 5 Leader.

We like myth.  It helps us explain what we previously could not explain.  Like early Greek gods helped people explain the complex world around them.  But, when we build our behaviors on myth it becomes extremely dangerous.  We depend upon things that don’t work, and it can have serious repercussions.  Mr. Collins glorified Circuit City and Fannie Mae in his book – yet now one is gone and the other in disrepute.  Meanwhile his list of “great” companies have been proven to perform no better than average since his publication.

In Good to Great Mr. Collins offers a theory for business success that is very appealing.  Be focused on your strengths.  Get everybody on the bus to doing the same thing.  Make sure you know your core, and protect it like a hedgehog protects its home.  And make sure all leaders follow a Christ-like approach of humbleness, and leader servitude.  It sounds very appealing – in an Horatio Alger sort of way.  Work hard, be humble and good things will happen.  We want to believe.

But it just doesn’t produce superior performance.  There are no theories that have identified “great” leaders.  Success has come from all kinds of personalities.  And, despite our love for being “passionate” and “focused” on doing something really “great” there is no correlation between long-term success and the ability to understand your core and focus the organization upon it.  Thousands of businesses have been focused on their core, yet failed.

What we need is a new theory of management.  As the Assistant Managing Editor of the Wall Street Journal, Alan Murray, wrote in “The End of Management,” industrial era management theories about optimization and increased production do not help companies deal with an information era competitiveness fraught with rapid change and keen demands for flexibility.

Increased flexibility and success can be assured.  If companies make some critical changes

  1. Plan for the future, not from the past.  Do more scenario planning and less “core” planning
  2. Obsess about competition – and listen less to customers
  3. Be disruptive.  Don’t focus on optimization and continuous improvement
  4. Embrace White Space to develop new solutions linked to changing market needs

This does work.  Every time.

update links on Thomas Thurston 5/2014: