Good to Great: Chapter 7  Summary & Analysis

Collins relates the story of drugstore.com, an early internet pharmacy that gained a high market valuation as soon as it went public in 1999, despite having little concrete evidence that it would provide returns to its investors. Because its technology was so new and exciting, the conventional wisdom of the time held that the company was destined for success. Pressure mounted on Walgreens to dive into internet business with the same speed, but Walgreens instead proceeded slowly and methodically, introducing web features deliberately over time. While Walgreens’s stock steadily climbed, drugstore.com lost most of its initial market value.

The contrast between Walgreens and drugstore.com illustrates the core idea of this chapter: good-to-great companies show that technology is only an asset when it is applied methodically in service of the company’s Hedgehog Concept. Collins points out that this principle applies not just to the internet, but to any new technology; such innovations are never valuable just for their own sake. Walgreens, for example, showed similarly wise adoptions of other new technologies in the past. Good-to-great companies are technologically sophisticated, but in unique and careful ways that tie closely to their Hedgehog Concepts.

Collins lists the ways that each good-to-great company embraced new technology methodically, from Kroger’s early adoption of bar code scanners to Gillette’s devotion to excellence in manufacturing razors. In each case, technology accelerates the company’s momentum but, crucially, does not create that momentum in the first place. The good-to-great companies began their transformations by developing sound Hedgehog Concepts to create momentum, and only then did they use technology to support those efforts.

Good-to-great companies often became pioneers in the use of technology, when that technology tied closely to their Hedgehog Concepts. In contrast, comparison companies did not usually become pioneers in technology. Those who did were unsustained comparisons, which shows, as Collins writes, that “technology alone cannot create sustained great results.” Collins notes that this data-based conclusion is at odds with media coverage of technology and business, which often suggests that technology-driven change is more important than anything else.

Additionally, most of the good-to-great executives the researchers interviewed did not emphasize technology as a key to their success, even though it was usually important in their companies’ transformations. Instead, they emphasized factors like company culture and consistency of purpose. Again, technology supported their positive changes but did not cause them. Collins also points out that technology (or its absence) was never single-handedly responsible for the failure of a comparison company. Instead, it was short-sighted reliance on technology as a replacement for strategy that often accelerated these failures.

Collins notes that some members of his research team were against including a chapter on technology, because it seemed like a subset of the idea of disciplined action already covered in other chapters. However, the team ultimately decided to include the chapter because of the way technology use illuminates the good-to-great companies’ devotion to achieving excellence for its own sake. In contrast, the comparison companies were more worried about avoiding being left behind; their use of technology was motivated by fear rather than creativity. Over and over, Collins and his team noted how good-to-great companies respond to change slowly, carefully, and with attention to their Hedgehog Concepts, while comparison companies acted frantically and fearfully.