July 30, 2008

News & Opinion: Freakonomics' Levitt Questioning Good To Great

By: 800-CEO-READ @ 6:48 PM – Filed under: Management & Workplace Culture

Steven Levitt on his Freakonomics blog takes a shot at Good To Great and the recent performance of GTG standouts Fannie Mae, Circuit City, and Wells Fargo. A purchase of either Fannie Mae or Circuit City at the time of the book's publication would have netted you an 80% loss in your investment today. Not so good.

This bring ups the whole question of the author Jim Collins' suggested methodology and whether it's one business leaders should be following. There are plenty of great comments on Levitt's post to go read on this. The same criticisms are leveled against Collins' prior book Built To Last and the classic In Search of Excellence by Tom Peters and Bob Waterman. Nassim Nicholas Taleb's Fooled By Randomness and Phil Rosenwig's The Halo Effect are both cited for their critical views of predictable methodologies.

This has always been my belief: all of these books are directional correct. The principles they describe for success are all worth pursuing. We get a little stuck on the empirical side of the debate. It is true that these authors hang their hats on the research to give their findings legitimacy, but we can't completely dismiss everything they have to say every time a highlighted firm falters.