Good to Great, Or just Good?

The error in Phil Collin's great analysis was the fact that he did not find timeless, universal answers, but an average business performance analysis. The result tat cam from his study were not sustainable aspects that those certain companies have achieved. The analysis only shows the 11 companies that had the principles in common at the time of his study. The test results that came from the study of GTG, concluded that there is no empirical evidence that the GTG concepts lead to sustained great results.

One of the flaws that the system Collins set up was the study of data mining. The problem that occurs is that the data collected during data mining depend completely on the specific time period and data set gathered. In other words, things change over time. The fact that a company does well in a certain period, does not mean that they product those same numbers typically across the board. Another thought about data mining is that the data received is based on a random period of time. Random patterns that only show up in specific time periods. The only way data mining can be accurately analyzed is if we use it over a period of time, and analyze the trends of the data changing. People can then see a typical pattern of each individual company.

Another problem with the GTG analysis is the association and causation comparison. Collins associated the great firms with the five characteristics. So, in a way, he was saying that the only way for a company to be great is to have these characteristics, and these characteristics only. But this is generally not the correct way to analyze the company.

The right way to do things sounds like the fundamental scientific method. The ability to set up a theory, a hypothesis, and then sampling, testing, and drawing conclusions regarding the validity of the theory. This is the proper way to analyze a situation, idea, event, etc. The argument is that Collins did not provide any evidence of using this model.

The results that came out after the comparison of the GTG and the S&P 500 was that there was no significant difference between the returns of the GTG firms, and the S&P 500 firms. They found little evidence of the "Greatness" described in GTG. No evidence was found that the GTG firms were associated with greatness in the time period following that used by Collins to select the firms. All in all, the GTG study was shut down as a accurate way to measure great firms.