1. Good to Great
WHY SOME COMPANIES MAKE THE LEAP…
AND OTHERS DON’T

2. 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

3. Good to Great

4. “Good is the enemy of great.”
-JIM COLLINS

5. “Can a good company become
Great?”

6. Any organization can become
Yes
great if it consistently applies the
concepts and ideas that will be
presented in this presentation.

7. Before we begin, what is
considered a Great company
Great companies have
returns that are at least
3 times the general market
3
2
1
General
Market

8. What are some of the
good companies out
there?

10. All of these companies
only broke the general
market by 2.5 times

11. What are the great
companies?

13. 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 1975-1990
Pitney Bowes 7.16 times the market 1973-1988
Philip 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 1974-1989
Kimberly-Clark 3.42 times the market 1972-1987

14. Comparison Companies
Comparisons companies are those
companies that had the same
opportunities, similar resources and in the
same industry as the good-to-great
companies, but never made the leap from
good to great.

15. Great companies vs.
Comparison Companies
Good-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

16. Unsustained comparisons
Unsustained comparisons are those companies
that have made the leap from good-to-
great, but failed to sustain the progress.
Unsustained Comparisons
Burroughs
Chrysler
Harris
Hasbro
Rubbermaid
Teledyne

17. How did this Great companies
transition from Good to Great?
What did these companies do
that made them great?
Great Results
Good Results What’s
inside the
Black Box?

18. So What’s in the Black Box?
What’s
inside the
Black Box?

19. Buildup
THIS

20. Simplified version of Mr. Collins
framework
Disciplined People
Level 5 Leadership First Who….Then What
Disciplined Thought
Confront The Brutal Facts Hedgehog Concept
Disciplined Action
Culture of Discipline Technology Accelerators

21. Level 5 Leadership
The first aspect in Collin’s framework
needed for a company to breakthrough
from good to great is leadership.

22. Level 5 Leadership
But this isn’t any ordinary leadership, It’s Level
5 Leadership.
So what is Level 5 Leadership?

23. Level 5 Leadership
Level 5: Builds enduring greatness

24. What are the traits of a Level 5
Leader?

25. Level 5 Leaders set their company
up for success after they leave, by
finding a successor that will
succeed.

26. Level 5 leaders are very modest.

27. Level 5 leaders are fanatically
driven to produce results.

28. Almost all Level 5 Leaders came
from within the company.

29. Level 5 leaders always take the
blame, and always give away the
credit to their subordinates.
Gives Credit
Level 5
Leader

30. Level 5 Leadership Formula
HUMILITY
+
WILLPOWER
=
LEVEL 5

31. We just went over WHO Level 5
Leaders are. The rest of the
process 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

32. First Who…Then What
The second aspect in Collin’s framework
needed for a company to breakthrough
from good to great is having the right
people, in the right location.

33. First Who…Then What
Collins uses a bus People
Good
analogy to describe
Bad People
what he and the team found.

34. First Who…Then What
Collins states that it is important to
begin with “who”, instead of “what

35. First Who…Then What
If 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.

36. First Who…Then What
If the people are on the bus because of
who else is on the bus, then it’s much
easier to change direction.”

37. First Who…Then What
The problem of motivation and
management goes away when you
have the right people on the bus.

38. First Who…Then What
“great vision without great people is irrelevant”

39. Now that the Level 5 Leaders have the disciplined
people, they now need the discipline thought

40. Confront the Brutal Facts
The third aspect in Collin’s framework
needed for a company to breakthrough
from good to great is to confronted the
brutal facts of reality.

41. Confront the Brutal Facts
The Good to great companies would lead
with questions, not answers.

42. Confront the Brutal Facts
They would engage in dialogue and debate,
not coercion.

43. Confront the Brutal Facts
The Good to great companies would
conduct autopsies, without blame.

44. Stockdale Paradox
“Retain faith that you will
prevail in the end, regardless of
the difficulties, and at the same
time confront the most brutal
facts of your current reality,
whatever they might be.”

45. Confront the Brutal Facts
Now that the Good to Great companies know
the brutal facts, they need to conceptualize
their ideas .

46. Hedgehog Concept
The fourth aspect in Collin’s framework
needed for a company to breakthrough
from good to great is to understand what
you can be the best at.

47. Hedgehog Concept
The 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.

48. But how did the Good to Great companies
come up with these great, simple, ideas?

49. HEDGEHOG
CONCEPT
What you are
deeply Passionate
About
These 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

50. Hedgehog Concept
Collins states that it took an average of four
years for the good-to-great companies to
clarify their hedgehog concept.

51. All aspects of The Council are guided with
the three circles (hedgehog concept) in mind
Ask
Questions
A useful mechanism that Collins creates to
help Autopsies the process along is called “The
move Dialogue
THE
and
Analysis
Council”.
COUNCIL
and
Debate
Executive
Decisions

52. Now that the Good to Great companies have
disciplined people and discipline
thought, it’s time for action

53. Culture of Discipline
The 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

54. Culture of Discipline
The Good to Great companies build a culture
around the idea of freedom and
responsibility, within a framework.

55. Culture of Discipline
Fill the culture with self-disciplined people
who are willing to go extreme lengths to
fulfill their responsibilities.

56. Culture of Discipline
Adhere with great consistency to the
hedgehog concept, exercising an almost
religious focus on the intersection of the
three circles.

57. 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.

58. Technology Accelerators
The sixth aspect in Collin’s framework
needed for a company to breakthrough
from good to great is to use only those
technologies that apply to the
companies hedgehog concept.

59. Technology Accelerators
The executives of the good-to-great
companies knew that without the clear
understanding of how new technology fits
into a company’s hedgehog concept,
technology became only a means of
accelerating that companies own self
demise.

60. Now that everything for a company to
breakthrough from good to great is in place,
the only thing to do is to wait, while
fanatically applying the great, simple ideas
from the hedgehog concept.

61. The last Concept in the framework is the
flywheel. This takes all of the concepts put
together, and provides the breakthrough.
Buildup
Disciplined People Disciplined Thought Disciplined Action

62. Flywheel
Following all of the six concepts within the
framework will begin to push the wheels
momentum.

63. Flywheel
Over time, the Wheel will begin to develop
more and more momentum

64. Flywheel
Until finally, the wheel will gather enough
momentum, that a breakthrough will occur,
and the company will finally transition from
good to great.

65. Steps
Forward, Consistent with
Hedgehog Concept
Over time, as the wheel began to spin, the
Thisemployees 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

66. From Good to Great to Built to Last
When Mr. Collins wrote this book Good to
Great, he asked himself “What should be
the role of Built to Last in doing this study?

67. Mr. Collins came up with these two
connections between his two books.

68. 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 in
Established 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.

70. Mr. Collins. is very renowned in the world
of business. Mr. Collins specializes in the
subjects of Company growth and
sustainability.Analysis when he wrote
At the time
his book, Good to Great, Mr. Collins was a
professor at Stanford University’s
Graduate school of Business.

71. Good to Great is excellent. The principles in
the book are not only bound to the world of
business. In fact, the book almost has less
with building a great business than it does
with how to build a great community,
institution, nation, school, team or army.

72. The analyst recommends that this book be
bought, read multiple times and kept forever.

73. It’s that good

74. http://www.jimcollins.com/

75. http://www.mciisgallagher.com/

76. James E. Gallagher
MCIIS class of 2012
Date Produced: January 10, 2010
Classification: Unclassified
Phone: 240-432-3489
Email: jgalla79@mercyhurst.edu
Website: mciisgallagher.com/