W h y s o m e c o m p a n I e s m a k e t h e
each month (calculated instep) from t - 15 tot by the ratio of the cumulative stock return number calculated at precisely
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| each month (calculated instep) from t - 15 tot by the ratio of the cumulative stock return number calculated at precisely the transition date. 4. Use these shifted returns to calculate the average ratio of cumulative stock returns to the market across all eleven good-to-great companies at each month t - 15 tot. In other words, calculate the average of the calculation instep at t - 15 across all eleven companies, then t - 15 plus 1 month for all eleven companies, plus 2 months, and so forth, for all 360 months. This creates the combined, cumulative returns relative to the market curve for the good-to-great companies. 5. For each direct comparison company, repeat steps 1-3 above, using the same dates for the direct comparison company as for its counterpart good-to-great company. 6. For the direct comparison companies as a set, repeat step 4 above. 7. This chart shows the good-to-great companies versus the direct comparison companies, cumulative returns ratio to the market, t - 15 tot, with t as a common reference point where the ratio to the market is set to 1.0. The chart on page 4 was created using the following methodology 1. For each good-to-great company, invest $1 on December 31, 1964 (the date of the first transition in our study. 2. For each good-to-great company, calculate cumulative stock returns at the market rate of return through the transition-date month, then switch over to using returns from the good-to-great company. For any missing CRSP data (usually because the company was not yet publicly traded, merged, or was acquired, use the market rate of return in lieu of company returns. Notes 263 3. For each month from December 3 1,1964, through December 3 1,1999, add the cumulative returns across all eleven companies and divide by 11. This gives the cumulative return of $1 invested in the entire set. 4. For the general market, invest $1 on December 31, 1964, and carry through December 3 1,1999. 5. For each direct comparison company repeat steps 1-3, holding the company at the market rate until the date of transition for the corresponding good-to-great company. Notes RJR held at market rate from May 3 1, 1989, to December 3 1, 1999, as the company emerged from its LBO indifferent pieces (RJR and Nabisco. 6. This chart shows the market versus the comparison companies versus the good-to-great companies, the value of $1 invested from December 3 1, 1964, to year 2000. C HAP TE Rb. David Truman (New York Simon Schuster, 564. 2. Robert based on research and a manuscript by William W. Wicks, Shared Values A History of Kimberly-Clark (Connecticut Greenwich Publishing Group, 101. 3. "Darwin Smith May Have Done Too Good a Job" Business Week, August 1, 1988, 57; "Rae Takes On the Paper Industry's Tough Lone Wolf" Globe and Mail, July 20, 1991; "Former CEO of KC Dies" Dallas Morning News, December 27, 1995, 4. Research Interview E, page 26. 5. Research Interview E, page 26. 6. "Darwin Smith May Have Done Too Good a Job" Business Week, August 1, 1988, 57. 7. "Darwin Smith May Have Done Too Good a Job" Business Week, August 1, 1988, 57; "Kimberly-Clark Bets, Wins on Innovation" Wall Street November 22, 1991, A "Darwin E. Smith, 69, Executive Who Remade a Paper Company" New York Times, December 28, 1995, B Robert based on research and a manuscript by William W. Wicks, Shared Values A History of Kimberly-Clark (Connecticut Greenwich Publishing Group, 101. 8. Robert based on research and a manuscript by William W. Wicks, Shared Values A History of Kimberly-Clark (Connecticut Greenwich Publishing Group, 1 12. 9. International Directory of Company Histories, vol. 3 Chicago St. James Press, 40; "Kimberly-Clark-Aiming for the Consumer" Financial World, April 1, 1970, 15. 10. Robert based on research and a manuscript by William W. Wicks, Shared Values A History of Kimberly-Clark (Connecticut Notes Publishing Group, 106, 112; "Darwin E. Smith, 69, Executive Who Remade a Paper Company" New York Times, December 28, 1995, B "Former CEO of KC Dies" Dallas Morning News, December 27, 1995, Research Interview E, page 6; "Paper Tiger How Kim- berly-Clark Wraps Its Bottom Line in Disposable Huggies," Wall Street Journal, 23, 1987, The Battle of the Bottoms" Forbes, March 24, 12. "The Battle of the Bottoms" Forbes, March 24, 13. Robert based on research and a manuscript by William W. Wicks, Shared Values A History of Kimberly-Clark (Connecticut Greenwich Publishing Group, 10. 14. Shelby Foote, The Civil War A Narrative Red River to Appomattox (New York Random House, 1040; James M. Battle Cry of Freedom The Civil War Era (New York Ballantine Books, 854. 15. Gordon McKibben, Cutting Edge Gillette's Journey to Global Leadership (Boston Harvard Business School Press, 14. 16. Company "Chronology" Gillette corporate typescript, 1995; Gordon McKibben, Cutting Edge Gillette's Journey to Global Leadership Boston Harvard Business School Press, 198, 199; Rita Campbell, Resisting Hostile Takeovers The Case of Gillette (Connecticut Praeger Publishers, 153. 17. Gordon McKibben, Cutting Edge Gillette's Journey to Global Leadership (Boston Harvard Business School Press, 159. 18. Rita Ricardo-Campbell, Resisting Hostile Takeovers The Case of Gillette Connecticut Praeger Publishers, 1997). 19. Author conversation with Gillette CEO, summer 2000. "We invested almost $1.5 billion in Sensor and We believed that these projects would have been scrapped had the takeover happened" 20. Gordon McKibben, Cutting Edge Gillette's to Global Leadership (Boston Harvard Business School Press, 158. Calculations run using CRSP data. 2 Gordon McKibben, Cutting Edge Gillette's Journey to Global Leadership (Boston Harvard Business School Press, 254. 22. "Maxwell Relinquishes Rights to $5.5 Million Final Retirement Payment" PR Newswire, January 21, 1992; "$5.5 Million Declined Official" Washington Post, January 22, 1992, 23. "Iacocca's Last Stand" Fortune, April 20, 1992, 63. 24. "Sincere Tyranny" Forbes, January 28, 1985, 54. 25. "Managing Leaders of Corporate Change" Fortune, December 14, 1992, 104. 26. "Chairman Quits Post" New York Times, November 17, 1992, D "Rubbermaid's Sad Succession Tale" New York Times, July 5, 1987, C 1. 27. "Is Rubbermaid Reacting Too Late" New York Times, December 22, 1996, Al. Notes 265 28. Research Interview D, page 17. 29. Chris Jones and Duane "Media Hype Analysis' (unpublished, Good to Great research project, summers 1998, 1999. 30. "Did CEO Save Scott Paper-or Just Pretty It Up The Shredder" Business January 1996. 31. "Did CEO Save Scott Paper-or Just Pretty It Up The Shredder" Business January 15, 1996; "Chain Saw to the Rescue" Forbes, August 26, 1996; "After the Fall" Across the Board, April 1996, 28-33; "Only the Paranoid Survive" Worth Online, October 1996; Albert J. with Bob Andelman, Mean Business How Save Bad Companies and Make Good Companies Great (New York Fireside, 20. 32. Albert J. with Bob Andelman, Mean Business How I Save Bad Companies and Make Good Companies Great (New York Fireside, 132. 33. The cases where a charismatic CEO eventually became a liability for the company were Great Western, Warner-Lambert, Scott Paper, Bethlehem Steel, R. J. Reynolds, Addressograph-Multigraph, Eckerd, Bank of America, Burroughs, Chrysler, Rubbermaid, and Teledyne. 34. "President Wall Street July 28, 1982, 1; "Iacocca Hands Over the Keys to Chrysler" Investor's Business Daily, January 4, 35. "Iacocca Hands Over the Keys to Chrysler" Investor's Business Daily, January 4, 1993, 1. 36. "How Chrysler Filled Detroit's Biggest Shoes" Wall Street September. "Why Certain Stocks" Wall Street April 13, 1995, Al "Chrysler's New Plan Sell Cars" Fortune, June 26, 1995, 19. 38. "Will Success Spoil Chrysler" Fortune, January 10, 1994; "Company of the Year Chrysler Has the Hot Cars. More Important, It Has a Smart, Disciplined Management Team" Forbes, January 13, 82; Benz Will Acquire Chrysler in $36 Billion Deal That Will Reshape Industry" New York Times, May 7, 1998, A. 39. Research Interview A, page 3; Research Interview G, page 35; A Drugmaker's Return to Health" Business Week, April 26, 1976, 38; Herman Kogan, The Long White Line The Story Laboratories (New York Random House, 249. 40. The International Directory of Company Histories, 707; "The Medicine Men of Kalamazoo" Fortune, July 1959, 106. 41. Leigh Wilbanks, " CEO Analysis Unit" (unpublished, Good to Great research summer 1998. 42. University of Chicago Center for Research in Securities Prices data, all dividends reinvested and adjusted for stock splits. 43. Research Interview pages 9-1 0. 44. Herman Kogan and Rick Kogan, to the Nation (Deerfield, Walgreens Company, 236; Research Interview page 3. 266 Notes 45. Research Interview G, page 10. 46. University of Chicago Center for Research in Securities Prices data, all dividends reinvested and adjusted for stock splits. 47. Research Interview G, page 16. 48. Research Interview H, page 12. 49. Research Interview pages 10. 50. Joseph F. I'm a Lucky Guy (Joseph F. 1. 51. "Searching for Profits at Bethlehem" New York Times, December 25, 1983, 52. "Steel Man Ken Iverson," Inc, April 1, 53. Jeffrey L. Rodengen, The Legend of the Nucor Corporation (Fort derdale, Fla Write Stuff Enterprises, 7 1. 54. Joseph F. I'm a Lucky Guy (Joseph F. d, 1998). 55. Gordon Cutting Edge Gillette's Journey to Global Boston Harvard Business School Press, 78-79. Download 3.69 Mb. Share with your friends:
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