Good to Great Legendary SD.pptx

Strategy
• Is finding a different way to compete, to create a
different sort of value for the customer which
allows the company to prosper, to achieve
sustainable profitability.
• Strategy is your unique way of competing in the
market.

Strategy
• Strategy is no doubt an important part of
management and it is the main focus of the board
of directors. Maybe that’s the results of Porter’s
influence and the dominance of his “five forces
framework”

Strategy &
Porter’s 5 forces model

Competence
Character
1. Integrity_
2. Intent
4. Results
3. Capabilities
© 2004-2006 CoveyLink
Building Culture Of Trust

Good to Great
The questions are;
How to move my company from good to great?
My company is great, how to lead it to be among the
greatest?
How to start rethinking about the future of my
business?

Collins’ Laboratory Results
• Started with 1,435 good companies
• Found the companies that became great based on certain
criteria over 40 year performance
• Company had to show good stock performance, capped with a
transition point
• After transition, company had to generate stock returns that
exceeded general market at least 3 times over 15 years
independent of industry

Being Good, Ain’t Good
Enough
• Vast majority of good companies remain just that –
good, not great
• 11 “great” companies were identified
• $1 invested in the general market since 1970 would yield
$56 by year 2000
• $1 invested evenly upon the 11 great companies would have
yielded $471 by year 2000
• All 11 companies had decent performance, until a
transition occurred

11 “Great” Companies
• A few of the companies over the past 15 years that have
been identified as great:
• Abbot
• Circuit City
• Fannie Mae
• Gillette
• Kimberly-Clark
• Wells Fargo
• Walgreens
• Philip Morris
• Kroger
• Nucor
• Pitney Bowes

Mr. Leader …Who are you ?
• Organizes people and resources toward the
effective and efficient pursuit of
predetermined objectives.
• Contributes individual capabilities to the
achievement of group objectives and works
effectively with others in group setting.
• Catalyzes commitment to and vigorous
pursuit of a clear and compelling vision,
stimulating higher performance standards.
• Makes productive contribution through
talent, knowledge, skills, and good work
habits.
• Group Ex
•
‫ينظم‬
‫ال‬ ‫للسعي‬ ‫الموظفين‬ ‫او‬ ‫الناس‬
‫فعال‬
‫محدده‬ ‫اهداف‬ ‫تحقيق‬ ‫اجل‬ ‫من‬
‫سلفا‬
•
‫لالشخاص‬ ‫الفرديه‬ ‫القدرات‬ ‫يستغل‬
‫من‬
‫الجماعه‬ ‫اهداف‬ ‫تحقيق‬ ‫اجل‬
•
‫يحفز‬
‫من‬ ‫الحثيث‬ ‫والسعي‬ ‫االلتزام‬
‫خالل‬
‫االداء‬ ‫ويحفز‬ ‫ومقنعه‬ ‫واضحه‬ ‫رؤيه‬
‫العالي‬
•
‫يعمل‬
‫اط‬ ‫في‬ ‫االخرين‬ ‫مع‬ ‫فعال‬ ‫بشكل‬
‫ار‬
‫المجموعه‬

Level 5 Leaders
5
‫واالداره‬ ‫الشخصيه‬ ‫تواضع‬ ‫من‬ ‫مزيج‬ ‫خالل‬ ‫من‬ ‫دائمه‬ ‫عظمه‬ ‫يبني‬
‫المهنيه‬
.
4
‫وي‬ ‫ومقنعه‬ ‫واضحه‬ ‫رؤيه‬ ‫خالل‬ ‫من‬ ‫الحثيث‬ ‫والسعي‬ ‫االلتزام‬ ‫يحفز‬
‫حفز‬
‫العالي‬ ‫االداء‬
3
‫مح‬ ‫اهداف‬ ‫تحقيق‬ ‫اجل‬ ‫من‬ ‫الفعال‬ ‫للسعي‬ ‫الموظفين‬ ‫او‬ ‫الناس‬ ‫ينظم‬
‫دده‬
‫سلفا‬
2
‫الجماعه‬ ‫اهداف‬ ‫تحقيق‬ ‫اجل‬ ‫من‬ ‫لالشخاص‬ ‫الفرديه‬ ‫القدرات‬ ‫يستغل‬
1
‫المجموعه‬ ‫اطار‬ ‫في‬ ‫االخرين‬ ‫مع‬ ‫فعال‬ ‫بشكل‬ ‫يعمل‬

• The highest level in a hierarchy of
leadership capabilities
• Leaders at the other four levels in the
hierarchy can produce high levels of
success but not enough to elevate
organizations from mediocrity to
sustained excellence.
• Good-to-great transformations don’t
happen without Level 5 leadership.
LEVEL 5 LEADERSHIP:

Level 5 is not the only requirement for transforming a good organization into a
great one
Other factors include getting the right people on the bus (and the wrong people
off the bus) and creating a culture of discipline.
LEVEL 5 LEADERSHIP:

• We do not need to move sequentially through each level of
the hierarchy to reach the top.
• But to be a fully-fledged Level 5, we need the capabilities
of all the lower levels, plus the special characteristics of
level 5.
LEVEL 5 LEADERSHIP:

LEVEL 5 LEADERSHIP
• Level 5 leaders are fanatically driven, infected with an incurable need to produce
results.
“ They will sell the mills or fire their brother, if that what it takes to make the
company great”
Ex: George Cain (Abbott)

• G. Cain (18yrs) / had inspiring standards.
• Abbott was suffering from Mediocrity & nepotism.
• Cain made it clear that neither family ties nor length of experience have anything to do with
whether you held a key position in the company.
• If you didn’t have the capacity to become the best executive in the industry in your span of
responsibility, then you will loose your pay check.
• Sorry, I had to fire you . Want another slice of turkey.
LEVEL 5 LEADERSHIP

LEVEL 5 LEADERSHIP
• Level 5 leaders look out the window to apportion credit to factors outside themselves ..
When things go well, and if they can’t find a specific person or event to give credit to, they
credit good luck.
• At the same time, they look in the mirror to apportion responsibility, never blaming bad luck
when things go poorly.
• While the comparison poor leaders, they’d look out the window for something or someone
outside themselves to blame for poor results. But would preen in front of the mirror and
credit themselves when things went well.

The 2 Sides of Level 5 Leadership
Professional Will
• Creates superb results, a clear catalyst in
the transition from good to great.
• Demonstrates an unwavering resolve to
do whatever must be done to produce
the best long-term results, no matter how
difficult.
• Sets the standard of building an enduring
great company; will settle for nothing
less.
• Looks in the mirror, not out the window,
to apportion responsibility for poor
results, never blaming other people,
external factors, or bad luck.
Personal Humility
• Demonstrates a compelling modesty,
shunning public adulation; never boastful.
• Acts with quiet, calm determination;
relies principally on inspired standards,
not inspiring charisma, to motivate.
• Channels ambition into the company, not
the self; sets up successors for even
greater success in the next generation.
• Looks out the window, not in the mirror,
to apportion credit for the success of the
company—to other people, external
factors, and good luck.

The 2 Sides of Level 5 Leadership
Professional Will
‫في‬ ‫واضحا‬ ‫حافزا‬ ‫تمثل‬ ‫رائعه‬ ‫نتاءج‬ ‫يحقق‬
‫عظيم‬ ‫الي‬ ‫جيد‬ ‫من‬ ‫االنتقال‬
‫به‬ ‫القيام‬ ‫يجب‬ ‫ما‬ ‫بكل‬ ‫للقيام‬ ‫متذبذب‬ ‫وغير‬ ‫راسخ‬ ‫عزم‬ ‫عنده‬
‫المدي‬ ‫علي‬ ‫النتائج‬ ‫أفضل‬ ‫لتحقيق‬
‫الصعوبه‬ ‫مدي‬ ‫عن‬ ‫النظر‬ ‫بغض‬ ‫الطويل‬
‫ذلك‬ ‫من‬ ‫بأقل‬ ‫يقبل‬ ‫وال‬ ‫عظيمه‬ ‫شركه‬ ‫لبناء‬ ‫المعايير‬ ‫يضع‬
‫علي‬ ‫اللوم‬ ‫يلقي‬ ‫ال‬ ‫وأبدا‬ ‫النافذه‬ ‫من‬ ‫وليس‬ ‫المراه‬ ‫في‬ ‫ينظر‬
‫الحظ‬ ‫سوء‬ ‫او‬ ‫الخارجيه‬ ‫العوامل‬ ‫او‬ ‫االخرين‬
Personal Humility
‫يكون‬ ‫ال‬ ‫وأبدا‬ ‫التملق‬ ‫عن‬ ‫ويبتعد‬ ‫التواضع‬ ‫من‬ ‫الكثير‬ ‫يظهر‬
‫متبجحا‬
‫وليس‬ ‫االلهام‬ ‫علي‬ ‫التحفيز‬ ‫فى‬ ‫ويعتمد‬ ‫وواضح‬ ‫كثيرا‬ ‫هادىء‬
‫الكاريزما‬
‫لنجاحات‬ ‫له‬ ‫خلفاء‬ ‫يضع‬ ‫ما‬ ‫ودائما‬ ‫لنفسه‬ ‫وليس‬ ‫للشركه‬ ‫طموحه‬
‫أكبر‬.
‫او‬ ‫لالخرين‬ ‫النجاح‬ ‫لينسب‬ ‫المرآه‬ ‫وليس‬ ‫النافذه‬ ‫من‬ ‫ينظر‬
‫الحظ‬ ‫لحسن‬ ‫او‬ ‫خارجيه‬ ‫لعوامل‬

Level 5
Leadership
First Who…
Then What
Confront the
Brutal Facts
Hedgehog
Concept
Culture of
Discipline
Technology
Accelerators
Disciplined People Disciplined Thought Disciplined Action
Buildup
Good to Great

Level 5
Leadership
First Who…
Then What
Confront the
Brutal Facts
Hedgehog
Concept
Culture of
Discipline
Technology
Accelerators
Buildup
Level 5
Leadership
Good to Great

First Who, Then What
• get the right people on the bus, the
right people in the right seats and
the wrong people off the bus, …

• “…if you have the wrong people, it
doesn’t matter whether you discover the
right direction; you still won’t have a
great company.
Great vision without great people is
irrelevant

• The right people don’t need to be tightly
managed or fired up.
“ They are self motivated”

• “…the ‘who’ questions come
before the ‘what’ questions –
before vision, before strategy,
before tactics, before
organizational structure, before
technology.”

• In a good to great transformation,
people are not your most
important asset. The right people
are.
• Great vision without great people
is irrelevant.
• Ex: Maxwell and Fannie Mae.

• When Maxwell became a CEO of Fannie Mae, he
said “ there would only be seats for A players who
were going to put A+ effort, and if you weren’t up
for it, you had better get off the bus, and get off
now.
• 14 out of 26 left the company and replaced by the
best, smartest executives.

• “To be rigorous not ruthless means
consistently applying exacting
standards at all times and at all
levels, especially upper
management. “
Ex: Wells Fargo and Croker bank.

• 1986, Wells Fargo acquired Crocker bank.
• Wells Fargo team concluded that the vast majority of Crocker managers would be
the wrong people on the bus.
• Wells Fargo made it clear to Crocker managers “ look this is not a merger of equals;
it’s an acquisition. We bought your branches , your customers”.
• Wells Fargo terminated most of the crocker managers because the average Crocker
manager was just not the same caliber as the average Wells manager.
• If they weren’t going to make it on the bus in the long term, why let them suffer on
the short term.

• The only way to deliver to the
people who are achieving is to not
burden them with the people who
are not achieving. P.53

• Alan Wurtzel of Circuit City in reply to
the question, “At what point do I
compromise?” Without hesitation said,
“You don’t compromise. We find another
way to get through until we find the right
person.” P. 55

How to be rigorous?
• Practical principles:
• 1. When in doubt don’t hire, keep
looking.
• 2. When you know you need to make a
people change, act.
• 3. Put your best people on your biggest
opportunities, not on your biggest
problems.

1. When in doubt, don’t hire keep looking.
• Packard’s law:
No company can grow revenues consistently faster
than its ability to get enough of the right people to
implement that growth.

2.When you Know you need to make people
change act.
• The moment you feel the need to tightly manage someone, you’ve made a hiring mistake.
The best people don’t need to be managed.
• Waiting too long before acting is equally unfair to the people who need to get off the bus.
For every minute you allow a person to continue holding a seat when you know that person
will not make it in the end, you are stealing a portion of his life time that he could spend
finding a better place where he could flourish.

2.When you Know you need to make people
change act.
• We always say “ he’s doing ok job and it would be a huge hassle to replace
him. So, we avoid the issue.
• So, to save ourselves we wait and wait. Meanwhile, all the best people are
still wondering “ when they are going to do something about this?”.
• Good to great companies showed the following bipolar pattern at the top
management level: “ people either stayed on the bus for a long time or get
off the bus in a hurry.

3. Put your best people on your biggest opportunities not
your biggest problems
• Managing your problems can only make you good whereas , building your
opportunities is the only way to become great.
EX: R.J. Reynolds Vs Philip Morris (Joe cullman)
Reynolds “ if someone in the world wants a camel, let him call us.
Cullman on the reverse moved George Weisman from local market (99%)
to international (1%) at that time. After that Marlboro became the best
selling cigarette in the world.

• What does this principle say to us?
• How does this principle inform your work
with certain ministries?

• How does this principle inform
nominations in the future?
• How might you tell if someone is
the right person on the bus?

Level 5
Leadership
First Who…
Then What
Confront the
Brutal Facts
Hedgehog
Concept
Culture of
Discipline
Technology
Accelerators
Buildup
Confront
the
Brutal Facts
Good to Great

Confront the Brutal Facts
(Yet never lose faith)

A. Facts are better than dreams.
• “You absolutely cannot make a
series of good decisions without
first confronting the brutal facts.”

• Fred Purdue of Pitney Bowes said,
“When you turn over rocks and look at
all the squiggly things underneath, you
can either put the rock down, or you can
say, ‘My job is to turn over rocks and look
at the squiggly things,’ even if what you
see can scare the (stuffens’) out of you.”

• “Yes, leadership is about vision. But
leadership is equally about creating a
climate where the truth is heard and the
brutal facts confronted. There’s a huge
difference between the opportunity to
‘have your say’ and the opportunity to be
heard.”

B. Creating a climate where truth is heard:
• 1. Lead with questions, not answers.
• 2. Engage in dialogue and debate, not
coercion.
• 3. Conduct autopsies, without blame.
• 4. Build “red flag” mechanisms.

1. Lead with questions not answers
• 1973 , Alan wurtzel became CEO after his father, the company name
was Wards (appliance and Hi Fi stores).
• The company was facing bankruptcy.
• Within 10 years,Wurtzel and his team turned the company around and
created the circuit city concept.
• They succeeded to beat the market 22 times from 1982 – 2000.

• How did Wurtzel do that ?
• Wurtzel resisted the urge to walk with “Answers” instead, once he put the right people on
the bus, he began with “questions”.
• They were calling Wurtzel “ the prosecutor”.
• “You know like a bulldog, I wouldn’t let go until I understand” wurtzel said.
• They used questions for only one reason, to gain understanding.

• They didn’t use questions as a form of manipulation “ don’t you agree with me on that?”.
• Or as a way to blame or put down others “why did you mess this up?”.
• Good to great leaders made particularly good use of informal meetings where they would meet with
group of managers & employees … with no script, agenda, or set of action items to discuss.
• Instead they would start with question like “So what’s on your mind?”, “Can you tell me about
that?”
“ Can you help me understand?”

2. Engage in dialogue and debate, not coercion.
• 1965, Nucor(nuclear energy products) , you could hardly find a company more awful than.
• It had no culture to be proud of, it had no consistent direction, it was on the verge of
bankruptcy.
• 1995, Nucor became the 4th biggest steel company in the world.
• Level 5 leaders (Ken Iverson and the best money manager David Ayock.
• All the meeting were flammable, but once they reach a decision …

3.Conduct autopsies, without blame
• 1978, Philip Morris acquired 7-up company but in 1985 he sold it with big loss.
• In his book “I’m a lucky guy”, Joe Cullman dedicates 5 pages to dissecting 7-up disaster.
• He said that they spent thousands of hours to look for the reasons of this collapse. He used to look to
the mirror and tell himself you are the reason of this failure.
• Cullman said to his colleagues “ I will take responsibility for this bad decision, but we will all take
the responsibility for extracting the maximum learning from the price we’ve paid”.

4. Build “red flag” mechanisms
• In his research, collin and his team found that both good companies and good to great companies
had virtually identical access to good information.
• The key lies not in better information, but in turning information into information that can’t be
ignored.
• Upjohn and “Halcion” although all the data and information assure poor results and serious side
effects, where News Week quoted “ dismissing safety concerns about Halcion had become virtual
company profile”.
• Despite of confronting the brutal fact Upjohn said it’s adverse publicity.
• Ex: Bruce Woolpert and Grainetrock company (short pay device)

C. Unwavering faith a mid of brutal
facts.
• P&G late 1960 invaded the paper
based consumer business.
• Scott paper was the leader at that
time.
• Kimberly Clark was a competitor

D. The Stockdale Paradox.

Remember The Stockdale
Paradox
• AND at the same time
confront the most brutal
facts of your current reality,
whatever they might be.
Retain faith that you will
prevail in the end,
regardless of the
difficulties.
•Admiral Jim Stockdale arrested in 1965 to 1973.
•Tap – tap =A Tap-pause-tap tap = B tap tap – pause – tap = f

• What are some of the brutal facts that we must face?
• Using The Stockdale Paradox phrase a statement about
one of these brutal facts?
• What mills might we need to sell?
• Who are the managers that should get off the bus
now?

Level 5
Leadership
First Who…
Then What
Confront the
Brutal Facts
Hedgehog
Concept
Culture of
Discipline
Technology
Accelerators
Buildup
Hedgehog
Concept
Good to Great

The Hedgehog Concept
• “Precisely, the Hedgehog concept
is a simple, crystalline concept that
flows from deep understanding
about the intersection of the three
circles.”

Hedgehog Concept
What you are deeply
passionate about
What you can
be the best in
the world at
What drives
your
economic
engine

• A Hedge Hog concept is not a goal to
be the best, a strategy to be the best,
an intention to be the best, a plan to
be the best. It is an understanding of
what you can be the best at.

• Just because something is your “core business”-just
because you have been doing it for years or
perhaps even decades – does not necessarily mean
that you can be the best in the world at it. And if
you can’t be the best in the world at your core
business, then your core business can’t form the
basis of your Hedgehog concept.

• “The only way to remain great is to
keep applying the fundamental
principles that made you great.”

• “We should only do those things
that we can get passionate about.”

• The essence of the process is to get
the right people engaged in vigorous
dialogue and debate, in fused with the
brutal facts and guided by questions
formed by the three circles.

• “Know ‘one big thing’ and stick to
it.”

• Which is more important: the goal
to be the best at something, or
realistic understanding of what you
can (and cannot) be the best at?

• What is your
hedgehog?

• What are we deeply passionate about? (love to do)
• What can we become the best in the world at?
(genetic or God-given talent)
• What drives our economic engine?
• How are we going to finance what we are going to do?
• How can we create cash flow.

A Culture of Discipline
“The purpose of bureaucracy is to compensate for
incompetence and lack of discipline.

• “Most companies build their bureaucratic rules to manage the small
percentage of wrong people on the bus, which in turn drives away the
right people on the bus, which then increases the percentage of wrong
people on the bus, which increases the need for more bureaucracy to
compensate for incompetence and lack of discipline, which then further
drives the right people away, and so forth.” P. 121
• “Avoid bureaucracy and hierarchy and instead create a culture of
discipline.” P. 121

“Set your objectives for the year, you record them
in concrete. You can change your plans through the
year, but you never change what you measure
yourself against.” P.122

“You focus on what you’ve accomplished relative
to exactly what you said you were going to
accomplish – no matter how tough the measure.”
P.122

“The point is to first get self-disciplined people who
engage in very rigorous thinking, who then take
disciplined action within the framework of a
consistent system designed around the Hedgehog
Concept.” P. 126

“They displayed a remarkable discipline to unplug all
sorts of extraneous junk.” P.139

Should we have a “stop” doing list?
What should be on the list?

If class distinctions are deeply divisive, then why
do organizations persist in creating an executive
class that separates itself from those who do the
real work? If you ran the whole show, what would
you remove to reduce class distinctions?

THE FLYWHEEL AND THE
DOOM LOOP
The Biblical Truth: Parable of the Mustard Seed
(Matt. 13:31) Parable of the Leaven (Matt. 13:33) -
Matt. 17:20 (faith as mustard seed) – Jesus
beginning with the disciples.

DOOM LOOP
“Step by step, action by action, decision by decision,
turn by turn of the flywheel – that adds up to
sustained and spectacular results.” p.165

DOOM LOOP
“There will be build up and break through.” P.165

DOOM LOOP
“Tremendous power exists in the fact of continued
improvement and the delivery of results. Point to
tangible accomplishments … people see and feel the
buildup of momentum, they will line up with
enthusiasm.” P.174

Building Vision
• Do we know what is core
and what is not?
• What is our vision?
• Do we have a good
BHAG?
• What should be some of
our base camps?

Good to Great Legendary SD.pptx

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