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Stop Reading Business Books And Start Reading Darwin

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Stop Reading Business Books And Start Reading Darwin

Remember Good to Great? Published in 2001 by Jim Collins, the book is pretty much required reading in the business world. It offers terrific examples of how 11 companies outsmarted, outran, and outdid the competition to sustain remarkable market success during a 15-year period.

What it doesn’t offer is the secret to success for your company, or any other for that matter.

Fifteen years of sustained growth is hard to manage, yet these 11 companies did it by seemingly following eerily similar strategies: find a humble leader who will put the company before his own needs; gather a stellar crew of great people and then figure out what they can do; know the “one big thing” your company can be the very best at and stick to it (the Hedgehog Principle); build a culture of discipline; and so on.

No question, these are smart business strategies. And, absolutely, these companies achieved greatness — for a moment in time. But where are they now?

Circuit City is bankrupt. Fannie Mae was taken over by the government after helping to cause a near-collapse of the global economy. Pitney Bowes has declined steadily over the last decade. Wells Fargo (along with many of its peers, to be fair) is facing lawsuits and a new regulatory era brought on by disgraceful lending practices. As a group, the Good to Great Class of 2001 generally underperformed against the S&P 500 in the years after the book was published.

I’m afraid that the subjects of Jim Collins’ other famous book, Built to Last, have not, well, lasted either. Many of the 18 companies featured in that book have stumbled somewhere along the way, including Motorola, Ford, and Disney.

These are just a few examples of business books that seem to offer the path to success. So why are they so often wrong? In a word: hindsight. Stories of success make so much sense and seem so linear once a company has already succeeded that we tend to conveniently forget the parts of the company’s story that looked like red flags at the time.  In hindsight, you can take any random collection of successful companies and identify some common characteristics. That doesn’t mean those common characteristics are the secret to greatness.

The real challenge is to pick 11 companies and, based on a set of non-financial characteristics, predict their future success. Now that would be a valuable book!

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