Good to GreatWHY SOME COMPANIES MAKE THE LEAP…AND OTHERS DON’T
Agenda→ What are considered good and great companies→ What’s inside the black box?→ Level 5 Leadership→ First Who….Then What→ Confront the Brutal Facts→ Hedgehog Concept→ A Culture of Discipline→ Technology Accelerators→ Flywheel→ Link Chart→ Analysis→ Contact Information
Good to Great
“Good is the enemy of great.” -JIM COLLINS
“Can a good company becomeGreat?”
Any organization can become Yesgreat if it consistently applies the concepts and ideas that will be presented in this presentation.
Before we begin, what isconsidered a Great company Great companies have returns that are at least 3 times the general market 3 2 1 General Market
What are some of thegood companies out there?
All of these companiesonly broke the general market by 2.5 times
What are the great companies?
Good to Great Cases Results from Transition point to 15 T-year to T-year Company years beyond transition point +15 Circuit City 18.5 times the market 1982-1997 Fannie May 7.56 times the market 1984-1999 Gillette 7.39 times the market 1980-1995 Walgreens 7.34 times the market 1975-1990Pitney Bowes 7.16 times the market 1973-1988Philip Morris 7.06 times the market 1964-1979 Nucor 5.16 times the market 1975-1990 Kroger 4.17 times the market 1973-1988 Wells Fargo 3.99 times the market 1983-1998 Abbot 3.98 times the market 1974-1989Kimberly-Clark 3.42 times the market 1972-1987
Comparison CompaniesComparisons companies are thosecompanies that had the sameopportunities, similar resources and in thesame industry as the good-to-greatcompanies, but never made the leap fromgood to great.
Great companies vs. Comparison CompaniesGood-to Great Companies Direct Comparisons Abbot Upjohn Circuit City Silo Fannie May Great Western Gillette Warner-Lambert Kimberly-Clark Scott Paper Kroger A&P Nucor Bethlehem Steel Philip Morris R.J. Reynolds Pitney Bowes Addressograph Walgreens Eckerd Wells Fargo Bank of America
Unsustained comparisonsUnsustained comparisons are those companiesthat have made the leap from good-to-great, but failed to sustain the progress. Unsustained Comparisons Burroughs Chrysler Harris Hasbro Rubbermaid Teledyne
How did this Great companiestransition from Good to Great?What did these companies do that made them great? Great Results Good Results What’s inside the Black Box?
So What’s in the Black Box? What’s inside the Black Box?
Simplified version of Mr. Collins framework Disciplined People Level 5 Leadership First Who….Then What Disciplined ThoughtConfront The Brutal Facts Hedgehog Concept Disciplined Action Culture of Discipline Technology Accelerators
Level 5 LeadershipThe first aspect in Collin’s frameworkneeded for a company to breakthroughfrom good to great is leadership.
Level 5 LeadershipBut this isn’t any ordinary leadership, It’s Level5 Leadership. So what is Level 5 Leadership?
Level 5 Leaders set their companyup for success after they leave, by finding a successor that will succeed.
Level 5 leaders are very modest.
Level 5 leaders are fanatically driven to produce results.
Almost all Level 5 Leaders came from within the company.
Level 5 leaders always take theblame, and always give away the credit to their subordinates. Gives Credit Level 5 Leader
Level 5 Leadership Formula HUMILITY + WILLPOWER = LEVEL 5
We just went over WHO Level 5 Leaders are. The rest of theprocess of transitioning from good to great shows what they DO. Buildup Level 5 First Confront the Hedgehog Culture of Technology Leadership Who…Then Brutal Facts Concept Discipline Accelerators What Disciplined People Disciplined Thought Disciplined Action
First Who…Then WhatThe second aspect in Collin’s frameworkneeded for a company to breakthroughfrom good to great is having the rightpeople, in the right location.
First Who…Then WhatCollins uses a bus People Good analogy to describe Bad Peoplewhat he and the team found.
First Who…Then WhatCollins states that it is important tobegin with “who”, instead of “what
First Who…Then WhatIf the people jump on the bus because of where it is going, and ten miles down the road you change direction, then there will be a problem.
First Who…Then WhatIf the people are on the bus because ofwho else is on the bus, then it’s much easier to change direction.”
First Who…Then What The problem of motivation andmanagement goes away when youhave the right people on the bus.
First Who…Then What“great vision without great people is irrelevant”
Now that the Level 5 Leaders have the disciplined people, they now need the discipline thought
Confront the Brutal FactsThe third aspect in Collin’s frameworkneeded for a company to breakthroughfrom good to great is to confronted thebrutal facts of reality.
Confront the Brutal FactsThe Good to great companies would lead with questions, not answers.
Confront the Brutal FactsThey would engage in dialogue and debate, not coercion.
Confront the Brutal FactsThe Good to great companies would conduct autopsies, without blame.
Stockdale Paradox “Retain faith that you willprevail in the end, regardless ofthe difficulties, and at the same time confront the most brutal facts of your current reality, whatever they might be.”
Confront the Brutal FactsNow that the Good to Great companies know the brutal facts, they need to conceptualize their ideas .
Hedgehog Concept The fourth aspect in Collin’s framework needed for a company to breakthroughfrom good to great is to understand what you can be the best at.
Hedgehog ConceptThe good-to-great companies transitioned from good to great because they took a great, simple idea that had piercing insight, and consistently used that idea for all of their decision making.
But how did the Good to Great companies come up with these great, simple, ideas?
HEDGEHOG CONCEPT What you are deeply Passionate AboutThese great, simple, ideas came from the answers of three questions. What you can be What drives your the best in the economic engine world at
Hedgehog ConceptCollins states that it took an average of four years for the good-to-great companies to clarify their hedgehog concept.
All aspects of The Council are guided withthe three circles (hedgehog concept) in mind Ask QuestionsA useful mechanism that Collins creates tohelp Autopsies the process along is called “The move Dialogue THE and Analysis Council”. COUNCIL and Debate Executive Decisions
Now that the Good to Great companies have disciplined people and discipline thought, it’s time for action
Culture of DisciplineThe fifth aspect in Collin’s framework needed for a company to breakthrough from good to great is to have disciplined action within the three circles, fanatically consistent with the hedgehog concept
Culture of DisciplineThe Good to Great companies build a culture around the idea of freedom and responsibility, within a framework.
Culture of DisciplineFill the culture with self-disciplined people who are willing to go extreme lengths to fulfill their responsibilities.
Culture of Discipline Adhere with great consistency to thehedgehog concept, exercising an almostreligious focus on the intersection of the three circles.
Now that the Good to Great companies have all the components needed to transition from good to great, the last item was how to approach and integrate new technological advances into their hedgehog concept.
Technology AcceleratorsThe sixth aspect in Collin’s framework needed for a company to breakthroughfrom good to great is to use only those technologies that apply to the companies hedgehog concept.
Technology Accelerators The executives of the good-to-great companies knew that without the clearunderstanding of how new technology fits into a company’s hedgehog concept, technology became only a means of accelerating that companies own self demise.
Now that everything for a company tobreakthrough from good to great is in place, the only thing to do is to wait, whilefanatically applying the great, simple ideas from the hedgehog concept.
The last Concept in the framework is theflywheel. This takes all of the concepts put together, and provides the breakthrough. Buildup Disciplined People Disciplined Thought Disciplined Action
FlywheelFollowing all of the six concepts within the framework will begin to push the wheels momentum.
FlywheelOver time, the Wheel will begin to develop more and more momentum
FlywheelUntil finally, the wheel will gather enoughmomentum, that a breakthrough will occur,and the company will finally transition from good to great.
Steps Forward, Consistent with Hedgehog Concept Over time, as the wheel began to spin, theThisemployees withinresolvegood-to-great the only made their those stronger and Collins came to call this the “flywheel effect” companies became more enthusiastic, Visible wheel spin even faster. Flywheel Builds Accumulation of and Momentum motivated then before more Results People Line Up, Energized by Results
From Good to Great to Built to LastWhen Mr. Collins wrote this book Good to Great, he asked himself “What should bethe role of Built to Last in doing this study?
Mr. Collins came up with these twoconnections between his two books.
The difference is that they used the framework at an early stage in their company, trying to get it off used the same The leaders in Built to Last the ground, as opposed to the CEOs inEstablished Company Good to Great Results Good to Great, who Sustained Great Good-to-Great framework to breakthrough. or Start-up Concepts Built to Last Concepts Enduring Great Companies used the frame work in companies that were already established and grown.
Mr. Collins. is very renowned in the worldof business. Mr. Collins specializes in the subjects of Company growth andsustainability.Analysis when he wrote At the timehis book, Good to Great, Mr. Collins was a professor at Stanford University’s Graduate school of Business.
Good to Great is excellent. The principles inthe book are not only bound to the world of business. In fact, the book almost has lesswith building a great business than it does with how to build a great community, institution, nation, school, team or army.
The analyst recommends that this book bebought, read multiple times and kept forever.
It’s that good
James E. Gallagher MCIIS class of 2012Date Produced: January 10, 2010 Classification: Unclassified Phone: 240-432-3489Email: email@example.com Website: mciisgallagher.com/