In his international blockbuster Built to Last, which rode the business bestseller lists for five years, Jim Collins and his coauthor, Jerry Porras, revealed the success secrets of companies that were outstanding at their founding and then sustained greatness.

In his new book, Collins has chosen to research an entirely new line of inquiry. Is transformation really possible? Are there mediocre companies that have turned themselves around and achieved sustained excellence after a decade of more of ordinary performance? And what is it about these companies that can explain their success?

For nearly five years, Collins and his research team undertook a massive study of every company that has made the Fortune 500 since the advent of that listing in 1965—over 1400 companies in all. The result of that research was astounding—only 11 companies had successfully turned a mediocre enterprise into a true long term champion. The surprising secrets of how they did it—and how any company can—are brilliantly unlocked in this visionary new work.

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Gift books get down to business

Good for you! While everyone else is running around the mall searching for the perfect gift, you are taking an easier route - choosing informative and timely books to please everyone on your list. Here are six books to supply any business curmudgeon with an "I'm glad I opened this" holiday smile.

Good to Great: Why Some Companies Make the Leap . . . and Others Don't by Jim Collins is a thought-provoking challenge to American business. The author of the best-selling Built to Last, Collins now explores the most difficult test any company faces - how to take a "good" business, with average profits and satisfied stock holders, and make that company "great." Based on a study of 11 companies who made the leap and sustained greatness for more than 15 years, Good to Great is THE gift for a manager or boss who wrestles with strategy issues and wants to know how to make a change.

Another sure pick is The Chastening: Inside the Crisis that Rocked the Global Financial System and Humbled the IMF by Paul Blustein. Technically, this is a public policy book that unabashedly spills the beans on how and why the Asian financial crisis caught the International Monetary Fund with its pants down.

Compelling and immediately spell-binding, The Chastening reveals inherent weaknesses in the global financial system. A perfect gift for policy wonks and market analysts as well as anyone in international trade.

Pick up The Natural Laws of Business by Richard Koch for anyone on your list who loves to think about theoretical issues in business. Does your boss pour over The Economist each month? Have a friend who delights in reading The Harvard Business Review? This intriguing book by the author of The 80/20 Principle applies scientific insight in physics, natural sciences and economics toward business success. Its result? A thought-provoking book that exercises the brain and limbers the innovation muscle.

I know, not everyone on your holiday list thinks the future looks bright for American business. For the pragmatist in every company (and you'll usually find them behind the door marked "Finance") buy The Agenda: What Every Business Must Do to Dominate the Next Decade by Michael Hammer. It's a thought-provoking, get-real-about-your-business kind of book with a "tough times are coming" approach to the next 10 years. "It's time for business to get serious again," says Hammer. Recent weeks prove he's right.

Just for fun, grab Dictionary of the Future by Faith Popcorn and Adam Hanft for that funky someone on your shopping list. This intriguing "dictionary" is full of terms that trend guru Faith Popcorn believes will have an impact on business in the near future. The book is divided into subjects like biology and technology, demographics and new behaviors, with words and meanings listed in each subject. Do you know what a Circle of Poison is? Or where your Content Room is? Get with it! A totally fascinating sourcebook for anyone with futurist tendencies, its main drawback is that once you start browsing the pages, you won't want to stop.

Tried and true, books on how to make a portfolio achieve better results are always popular. The 100 Best Stocks to Own in America, Seventh Edition by Gene Walden is one of those good presents to unwrap. This updated edition features easy to understand analysis of 100 time-tested stocks with a simple and clear economic presentation of each. Walden annually selects stocks with earnings and stock growth potential, consistency and a good dividend yield. His advice will guide first-time investors as well as portfolio-savvy traders in the search for a strong portfolio return.

Sharon Secor is a business writer based in Minneapolis.

Chapter One

That's what makes death so hard - unsatisfied curiosity.

-Beryl Markham West with the Night

Good is the enemy of great.

And that is one of the key reasons why we have so little that becomes great.

We don't have great schools, principally because we have good schools. We don't have great government, principally because we have good government. Few people attain great lives, in large part because it is just so easy to settle for a good life. The vast majority of companies never become great, precisely because the vast majority become quite good - and that is their main problem.

This point became piercingly clear to me in 1996, when I was having dinner with a group of thought leaders gathered for a discussion about organizational performance. Bill Meehan, the managing director of the San Francisco office of McKinsey & Company, leaned over and casually confided, "You know, Jim, we love Built to Last around here. You and your coauthor did a very fine job on the research and writing. Unfortunately, it's useless."

Curious, I asked him to explain.

"The companies you wrote about were, for the most part, always great," he said. "They never had to turn themselves from good companies into great companies. They had parents like David Packard and George Merck, who shaped the character of greatness from early on. But what about the vast majority of companies that wake up partway through life and realize that they're good, but not great?" companies, for the most part, have always been great. And the vast I now realize that Meehan was exaggerating for effect with his "useless" comment, but his essential observation was correct - that truly great majority of good companies remain just that - good, but not great. Indeed, Meehan's comment proved to be an invaluable gift, as it planted the seed of a question that became the basis of this entire book - namely, Can a good company become a great company and, if so, how? Or is the disease of "just being good" incurable?

Five years after that fateful dinner we can now say, without question, that good to great does happen, and we've learned much about the underlying variables that make it happen. Inspired by Bill Meehan's challenge, my research team and I embarked on a five-year research effort, a journey to explore the inner workings of good to great.

In essence, we identified companies that made the leap from good results to great results and sustained those results for at least fifteen years. We compared these companies to a carefully selected control group of comparison companies that failed to make the leap, or if they did, failed to sustain it. We then compared the good-to-great companies to the comparison companies to discover the essential and distinguishing factors at work.

The good-to-great examples that made the final cut into the study attained extraordinary results, averaging cumulative stock returns 6.9 times the general market in the fifteen years following their transition points. To put that in perspective, General Electric (considered by many to be the best-led company in America at the end of the twentieth century) outperformed the market by 2.8 times over the fifteen years 1985 to 2000. Furthermore, if you invested $1 in a mutual fund of the good-to-great companies in 1965, holding each company at the general market rate until the date of transition, and simultaneously invested $1 in a general market stock fund, your $1 in the good-to-great fund taken out on January 1, 2000, would have multiplied 471 times, compared to a 56 fold increase in the market.

These are remarkable numbers, made all the more remarkable when you consider the fact that they came from companies that had previously been so utterly unremarkable. Consider just one case, Walgreens. For over forty years, Walgreens had bumped along as a very average company, more or less tracking the general market. Then in 1975, seemingly out of nowhere - bang! Walgreens began to climb...and climb...and climb...and climb...and it just kept climbing. From December 31, 1975, to January 1, 2000, $1 invested in Walgreens beat $1 invested in technology superstar Intel by nearly two times, General Electric by nearly five times, Coca-Cola by nearly eight times, and the general stock market (including the NASDAQ stock run-up at the end of 1999) by over fifteen times.

How on earth did a company with such a long history of being nothing special transform itself into an enterprise that outperformed some of the best-led organizations in the world? And why was Walgreens able to make the leap when other companies in the same industry with the same opportunities and similar resources, such as Eckerd, did not make the leap? This single case captures the essence of our quest.

This book is not about Walgreens per se, or any of the specific companies we studied. It is about the question - Can a good company become a great company and, if so, how? - and our search for timeless, universal answers that can be applied by any organization.

"Our five-year quest yielded many insights, a number of them surprising and quite contrary to conventional wisdom, but one giant conclusion stands above the others: We believe that almost any organization can substantially improve its stature and performance, perhaps even become great, if it conscientiously applies the framework of ideas we've uncovered."

This book is dedicated to teaching what we've learned. The remainder of this introductory chapter tells the story of our journey, outlines our research method, and previews the key findings. In chapter 2, we launch headlong into the findings themselves, beginning with one of the most provocative of the whole study: Level 5 leadership. Undaunted Curiosity People often ask, "What motivates you to undertake these huge research projects?" It's a good question. The answer is, "Curiosity."...

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Excerpted from Good to Great by Jim Collins Copyright © 2001 by Harper Collins
Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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