What makes a company great? To find the answer, Jim Collins’s 21-person research team (at his management research firm) spent five years reading and coding 6,000 articles, generating more than 2,000 pages of interview transcripts, and creating 384 megabytes of computer data. His research identified 11 companies that met the criteria for transforming from a “good company” to one that had achieved “greatness.” Collins wrote about these companies in his book, Good to Great, which became a massive bestseller, selling over four million copies.
But the companies themselves didn’t always fare as well as the book about them. Circuit City went bankrupt in 2009, Fannie Mae was involved in the home mortgage scandal and was delisted from the New York Stock Exchange in 2010. Wells Fargo had to receive a government bailout in 2008 to keep from shutting down. As economist Steven D. Levitt noted in 2008, the returns on those 11 companies was not so great: a portfolio of the “good to great” companies would have underperformed the S&P 500.
Collins’s book sold well (and continues to do so, 14 years later) in large part because Americans of all stripes have an almost religious belief in the almost unlimited power—for good or ill—of corporations. We like to think that companies know what they’re doing and can largely control their futures (and ours). This is part of what Megan McArdle refers to as “corporation theology“: