Good to Great


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Good to Great

  1. 1. A Book Discussion I am developing this as a possible presentation at the MIT Sloan Alumni Club of Boston. While it is not complete it is comprehensive enough to demonstrate my presentation style. Lindsey Anderson
  2. 2. Selection Process 1,435 Companies Selected from the Fortune 500 1965 1970 1975 1980 1985 1990 1995 126 Companies Selected into full CRSP data pattern analysis 19 Companies Selected into industry analysis 11 Companies Good to Great 1 2 3 4
  3. 3. Good to Great Companies Company T Year+15 Beat the Market Abbot 1974-1989 3.98 Curcuit City 1982-1997 18.5 Fannie Mae 1984-1999 7.56 Gillette 1980-1995 7.39 Kimberly-Clark 1972-1987 3.42 Kroger 1973-1988 4.17 Nucor 1975-1990 5.16 Phillip Morris 1964-1979 7.06 Pitney Bowes 1973-1988 7.16 Walgreens 1975-1990 7.34 Wells Fargo 1983-1998 3.99
  4. 4. Direct Comparisons Good to Great Direct Comparisons Abbot Upjoin Curcuit City Silo Fannie Mae Great Western Gillette Warner-Lambert Kimberly-Clark Scott Paper Kroger A&P Nucor Bethleham Steel Phillip Morris R.J. Reynolds Pitney Bowes Addressograph Walgreens Eckard Wells Fargo Bank of America
  5. 5. Unsustained Comparisons Burroughs Chrysler Harris Hasbro Rubbermaid Teledyne
  6. 6. Focus of Research What's inside the Black Box? Good Results Great Results!
  7. 7. Overview
  8. 8. Level 5 Leader
  9. 9. Level 5 Leadership Level 5 Executive Effective Leader Competent Manager Level 5 Level 3 Level 4 Level 2 Level 1 Organizes people and resources toward the effective and efficient pursuit of predetermined objectives. Contributing Team Member Highly Capable Individual Makes productive contributions through talent, knowledge, skills, and good work habits. Contributes individual capabilities to the achievements of group objectives and works effectively with others in a group setting. Catalyzes commitment to and pursuit of a clear and compelling vision, stimulating higher performance standards. Builds enduing greatness through a paradoxical blend of personal humility and professional will. Level 5 Leadership
  10. 10. Humility + Will Level 5 Leadership
  11. 11. Level 5 Leaders  Set up successors for success  In over 75% of Unsustained Comparison Companies executives set up their successors for failure or picked a weak successor  Insiders: 10 out of 11 Good to Great CEOs came from within the company, 3 from family inheritance  High profile, shake-things-up outsiders negatively correlated with Good to Great Level 5 Leadership
  12. 12. Is Level 5 Learnable?  2 Kinds of people: those who have the seed and those who don’t  Seed may develop under the right circumstances—self reflection, conscious personal development, a mentor, a great teacher, loving parents, level 5 boss, personal crisis Level 5 Leadership
  13. 13. Why aren’t there more level 5 leaders?  There are plenty of Level 5 leaders, but Board of Directors have a tendency to select dazzling, celebrity leaders rather than Level 5 Level 5 Leadership
  14. 14. Symbiotic Relationship  Level 5 traits enable you to implement the other findings, while practicing the other traits helps you become a Level 5 leader  We’ve talked about what Level 5 leaders are, the rest of the talk will be on what they do Level 5 Leadership
  15. 15. First Who…Then What
  16. 16. Who or What’s on First First Who… Then What
  17. 17. Advantages of a Strong Executive Team  Continuity and Longevity  Agility  Through debate and passion come up with the best vision of the company—many heads better than one  Debate then Unify First Who… Then What
  18. 18. The Right People  People aren’t your most important asset, the right people are  Self motivated—don’t need to be tightly managed or fired up  Will do the right things and deliver the best results regardless of the incentive system  Negative correlation: Good to Great executives got slightly less compensation than their mediocre counterparts First Who… Then What
  19. 19. Rigor  Tremendous rigor needed in people decisions to take a company from good to great  Greater weight on character attributes than on a specific educational background, practical skills, work experience First Who… Then What
  20. 20. Rigorous, not Ruthless  Best people don’t need to worry about their jobs and can concentrate on their work  6 out of 11 Good to Great had no layoffs and 4 just had 1  Comparison companies used layoffs 5 times more frequently than Good to Great companies  Lead a Great Life First Who… Then What
  21. 21. How to be Rigorous  When in doubt, don’t hire—keep looking  Act when you know you need to make a change  Unfair to everyone to let the wrong people hang around  Off the Bus or move to another seat? First Who… Then What
  22. 22. Focus on Opportunities  Put your best people on your biggest opportunities, not your biggest problems  Managing your problems can only make you good, building your opportunities can make you great  When you decide to sell off your problems don’t sell of your best people First Who… Then What
  23. 23. Confront the Brutal Facts
  24. 24. Don‘t De-Motivate  Expending energy on motivating people is largely a waste of time  The key is not to de-motivate people  Nothing more demoralizing than ignoring the brutal facts of reality Confront the Brutal Facts
  25. 25. Don‘t De-Motivate “There is no worse mistake in Public Leadership than to hold out false hopes soon to be swept way” Winston S. Churchill Confront the Brutal Facts
  26. 26. Creating a culture where the truth can be heard  Lead with Questions not Answers  Understanding and not manipulation or put downs  Engage in dialog and debate—not coercion  Search for the best answers  Conduct Autopsies without Blame  “I will take responsibility for this bad decision. But we will all take responsibility for extracting the maximum learning from the tuition we’ve paid” Joe Cullman, Phillip Morris  Build a red flag mechanisms that turn information into information that can’t be ignored Confront the Brutal Facts
  27. 27. Level 5 Leadership  The strength of a leader’s personality doesn’t deter people from bringing him or her the brutal facts  Leadership isn’t just vision, it’s getting people to confront the brutal facts and act on the implications Confront the Brutal Facts
  28. 28. Stockdale Paradox Retain faith that you will prevail in the end, regardless of the difficulty Confront the most brutal facts of your current reality, whatever they may be AND at the same time
  29. 29. Hardiness  By hitting the realities of their situation head-on Good-to-Great emerged from adversity even stronger Confront the Brutal Facts
  30. 30. Hedgehog Concept
  31. 31. UnconsciousNatural Selection Relativity Hedgehog Concept  Simply a complex world into a single organizing idea  Essence of profound insight is simplicity E=MC2  Good to Great took a simple concept and implemented it with fanatical consistency
  32. 32. The Three Circles What are you deeply Passionate About What you can be the Best in the World at What drives your Economic Engine Hedgehog Concept
  33. 33. Being the Best  Not a goal to be the best  Not a strategy to be the best  Not an intention to be the best  Not a plan to be the best  Understanding of what you can be the best at  Just because you have been doing something for years your core business does not necessaryily mean you can be the best at it  Curse of competency “Just because your good at it--just because we’re making
  34. 34. A Culture of Discipline Technology Accelerators Culture of Discipline Hedgehog Concept Confront the Brutal Facts First Who… Then What Level 5 Leadership Disciplined People Disciplined Thought Disciplined Action
  35. 35. Matrix of Creative Discipline Heirarchical Organization Great Organization Bureaucratic Organization Start-up Organization High High Low Low Ethic of Entrepreneurship Culture of Discipline Culture of Discipline
  36. 36. Disappointing Results Reaction, without Understanding New Direction, Program, Leader, Event, Fad, or Acquisition No Buildup; No Accumulated Momentem