The document summarizes key concepts from Chapters 4-6 of Jim Collins' book Good to Great. It discusses the importance of confronting brutal facts, developing a Hedgehog Concept of focusing on one thing you can be the best in the world at, and cultivating a culture of discipline. Some main points include: 1) To become great, leaders must confront the brutal facts of reality and create a climate where the truth can be heard, even if it is scary. They must also retain faith that they can prevail despite difficulties. 2) Developing a Hedgehog Concept takes time and involves understanding what you can be best at, what drives your economic engine, and what you are passionate about. It

1. GOODTOGREATGOODTOGREAT
Chapters 4-6Chapters 4-6
By Jim CollinsBy Jim Collins

2. Review “Level 5 Leader”

3. Review “Level 5 Leader”
Interview with Jim Collins:
YouTube Clip

4. Level 5
Leadership
First Who…
Then What
Confront the
Brutal Facts
Hedgehog
Concept
Culture of
Discipline
Technology
Accelerators
Disciplined PeopleDisciplined People Disciplined ThoughtDisciplined Thought Disciplined ActionDisciplined Action
Buildup
Breakthrough
Confront the
Brutal Facts
Chapter 4: Confront the Brutal Facts

5. Confront the Brutal Facts
Must create a culture
wherein people have a
tremendous opportunity
to be heard and,
ultimately, for the truth
to be heard.
Setting off on the path
to greatness requires
confronting the brutal
facts of current reality.

6. Chap.4: Confront the Brutal FactsChap.4: Confront the Brutal Facts
(Yet never lose faith)
 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” (p. 72).

7. Confront the Brutal FactsConfront the Brutal Facts
(Yet never lose faith)(Yet never lose faith)
 “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” (p.74).

8. Confront the Brutal FactsConfront the Brutal Facts
(Yet never lose faith)(Yet never lose faith)
 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.

9. The Stockdale Paradox
 Jim StockdaleJim Stockdale stoically
accepted the brutal facts
of reality while
maintaining an
unwavering faith in the
endgame—that he would
prevail despite the brutal
facts.
 Who didn’t make it out?
The optimists.
 Those who think it will all
be a quick fix and
everyone will be out by
Christmas are the ones
that lose heart and fail.
3

10. Remember The StockdaleRemember The Stockdale
ParadoxParadox
 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.

11. Martin Luther King, Jr.Martin Luther King, Jr.
 Discuss
Do you believe King displayed the
Stockdale paradox mentality
during the Civil Rights
Movement?
Why or why not?

12. Confront the Brutal Facts
(Yet never lose faith)
 “There is a sense of
exhilaration that
comes in facing head-
on the hard truths and
saying, ‘We will never
give up. We will never
capitulate. It might
take a long time, but
we will find a way to
prevail.’” P.81

13. Confront the Brutal FactsConfront the Brutal Facts
(Yet never lose faith)(Yet never lose faith)
 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?
 What restaurants might we need to close?
 What “corporate raiders” need to be fought off?

14. Level 5
Leadership
First Who…
Then What
Confront the
Brutal Facts
Hedgehog
Concept
Culture of
Discipline
Technology
Accelerators
Disciplined PeopleDisciplined People Disciplined ThoughtDisciplined Thought Disciplined ActionDisciplined Action
Buildup
Breakthrough
Hedgehog
Concept
Chapter 5: The Hedgehog Concept

15. Chap. 5: The Hedgehog ConceptChap. 5: The Hedgehog Concept
 “The fox knows many things,
but the hedgehog knows one
big thing.”
 Foxes pursue many ends at the
same time and see the world in
all its complexity. They are
scattered or diffused, moving
on many levels.
 Hedgehogs simplify a complex
world into a single organizing
idea, a basic principle or
concept that unifies and guides
everything.
 For a hedgehog, anything that
does not somehow relate to the
hedgehog idea holds no
relevance.

16. The Hedgehog ConceptThe Hedgehog Concept
 “Precisely, the
Hedgehog concept is
a simple, crystalline
concept that flows
from deep
understanding about
the intersection of the
three circles.” P.95

17. The Hedgehog ConceptThe Hedgehog Concept
 You can be passionate about all you want, but if
you can’t be the best at it or if it doesn’t make
economic sense, then you might have a lot of fun,
but you won’t get great results.
 If we can’t be the best at it, then why are we
doing it at all?
 A Hedgehog 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.

18. What are your three circles?What are your three circles?
 What can you be the
best in the world at?
 What drives your
economic engine?
 What are you deeply
passionate about?

19. Hedgehog Concept
Getting the Hedgehog Concept takes an
average of four years.
The right people
Engaged in vigorous
dialogue and debate
Infused with the
brutal facts
Guided by questions
formed by the three
circles
It is an iterative process by The Council:

20. Hedgehog Concept
The
Council
All Guided by
the Three Circles
Ask Questions
Dialogue &
Debate
Autopsies
& Analysis
Executive
Decisions
An Iterative
Process

21. The Hedgehog ConceptThe Hedgehog Concept
 At what you can be best in the world. This
standard goes far beyond core competence — just
because you possess a core competence doesn’t
necessarily mean you are the best in the world at
that competence. Conversely, what you can be
best in the world at might not even be something
in which you are currently engaged. The
Hedgehog Concept is not a goal or strategy to be
the best at something; it is an understanding of
what you can be the best at and, almost equally
important, what you cannot be the best at.

22. The Hedgehog ConceptThe Hedgehog Concept
 What drives your economic engine? To get
insight into the drivers of your economic engine,
search for the one denominator (profit per x, for
example, or cash flow per x) that has the single
greatest impact. If you could pick one and only one
ratio to systematically increase over time to make a
greater impact, what would that ratio be? This
denominator can be subtle, sometimes even
unobvious. The key is to use the denominator to
gain understanding and insight into your economic
model.

23. The Hedgehog ConceptThe Hedgehog Concept
 What you are deeply passionate about. Good-to-
great companies did not pick a course of action,
then encourage their people to become passionate
about their direction. Rather, those companies
decided to do only those things that they could get
passionate about. They recognized that passion
cannot be manufactured, nor can it be the end
result of a motivation effort. You can only discover
what ignites your passion and the passions of
those around you.

24. The Hedgehog ConceptThe Hedgehog Concept
 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. P.114

25. The Hedgehog ConceptThe Hedgehog Concept
 “Kno w ‘o ne big thing ’ and stick to
it.” P. 119

26. The Hedgehog Concept
 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?

27. The Hedgehog Concept
 Can each sub-
unit and each
person have a
hedgehog
concept?

28. The Hedgehog Concept
 How is the
Hedgehog
Concept
applicable in a
church?
a hospital?
retail?

29. Level 5
Leadership
First Who…
Then What
Confront the
Brutal Facts
Hedgehog
Concept
Culture of
Discipline
Technology
Accelerators
Disciplined PeopleDisciplined People Disciplined ThoughtDisciplined Thought Disciplined ActionDisciplined Action
Buildup
Breakthrough
Culture of
Discipline
Chapter 6: Culture of Discipline

30. Culture of Discipline
People who “rinse their
cottage cheese”
Not about a tyrant who
disciplines
Getting disciplined people
who engage in disciplined
thought and who then take
disciplined action,
fanatically consistent with
three circles

31. Culture of Discipline
Requires people who
adhere to a consistent
system.
Gives people freedom
and responsibility
within framework of
that system.
Involves a duality.

32. FREEDOM (AND RESPONSIBILITY)FREEDOM (AND RESPONSIBILITY)
WITHIN A FRAMEWORKWITHIN A FRAMEWORK
 Disciplined People:
 Not trying to discipline the wrong people into
the right behaviors, but getting self-
disciplined people on the bus in the first place
 Disciplined Thought:
 You need to confront the brutal facts of
reality, while retaining resolute faith that you
can and will create a path to greatness
 Disciplined Action:
 Primary subject of this chapter
 The comparison companies often tried to skip
this jump right to disciplined plan

33. Culture of Discipline
Budgeting is to decide which arenas fit
Hedgehog Concept and should be fully funded
and which should not be funded at all.
“Stop doing” lists are
more important than “to
do” lists.
“Anything that does not
fit with our Hedgehog
Concept, we will not do.”
Includes willingness to shun opportunities
that fall outside the three circles.

34. A Culture of DisciplineA Culture of Discipline
“Avoid bureaucracy and hierarchy and
instead create a culture of discipline. When
you put these two complementary forces
together—a culture of discipline with an
ethic of entrepreneurship—you get a
magical alchemy of superior performance
and sustained results” (p.121-122).

35. A Culture of DisciplineA Culture of Discipline
The Good-to-Great Matrix of Creative Discipline
High
Culture of
Discipline
Low
Low Ethic of High
Entrepreneurship
HierarchicalHierarchical
OrganizationOrganization
GreatGreat
OrganizationOrganization
BureaucraticBureaucratic
OrganizationOrganization
Start-upStart-up
OrganizationOrganization

36. A Culture of DisciplineA Culture of Discipline
“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).

37. A Culture of DisciplineA Culture of Discipline
“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).

38. A Culture of DisciplineA Culture of Discipline
“They displayed a remarkable
discipline to unplug all sorts of
extraneous junk” (p.139).

39. A Culture of DisciplineA Culture of Discipline
Do you have a “stop” doing list?
What should be on the list?