Good to GreatChapter 6

A Culture of Discipline

Kelsey Combest

Ryan Lacy

Katie Ficken

A Culture of Discipline

• Few start-ups become great companies partly because they respond to growth and success in the wrong way• Greater complexity causes company to trip over success

• Too many new people• New customers• New orders• New products• Lack of planning, accounting, systems, and hiring constraints

create friction

A Culture of Discipline

Bureaucratic cultures arise to compensate for incompetence and lack of discipline, which arise from having the wrong people on the bus in the first place.

If you get the right people on the bus, and the wrong people off, you don’t need a bureaucratic system.

Abbott LaboratoriesResponsibility AccountingFreedom within a framework

A Culture of Discipline

• The main idea: Build a culture full of people who take disciplined action within the three circles, fanatically consistent with the Hedgehog concept– Build a culture around freedom and responsibility– Have self-disciplined people willing to fulfill their

responsibilities– Don’t be a tyrannical disciplinarian– Adhere to the Hedgehog Concept, and create a “stop

doing list”

Reminder

The Hedgehog ConceptThree intersecting circles

What can we be the best at in the world?What drives our economic engine?Where is our passion?

Gives focus and purpose and aligns everyone to a common sight of how things are and will be.

Freedom and Responsibility within a Framework

Good to great companies build a consistent system with clear constraints, but they also give people freedom and responsibility within the framework of that system.Disciplined peopleDisciplined thoughtDisciplined action

Rinsing Your Cottage Cheese

Dave ScottOne more small step added to all the other small steps to

create a consistent program of superdiscipline.Much of the answer to the question of “good to great” lies

in the discipline to do whatever it takes to become best within carefully selected arenas and then to seek continual improvement from there.

Rinsing Your Cottage Cheese

Wells Fargo – Carl ReichardtBank of America

A Culture, Not a Tyrant

Discipline“Whereas good-to-great companies had Level 5 leaders

built an enduring culture of discipline, the unsustained comparisons had Level 4 leaders who personally disciplined the organization through sheer force.”

A Culture, Not a Tyrant

Burroughs – Ray MacDonaldRubbermaid – Stanley GaultChrysler – Lee Iacocca

Disciplined action without disciplined understanding of the three circles cannot produce sustained great results.

Fanatical Adherence to the Hedgehog Concept

Pitney Bowes holds monopoly on U.S. postage machines and falls apart when Government steps in

Fred Allen shifts circles and sticks to them“Anything that does not fit with our Hedgehog Concept,

we will not do. We will not launch unrelated businesses. We will not make unrelated acquisitions. We will not do unrelated joint ventures. If it doesn’t fit, we don’t do it. Period.”

Fanatical Adherence to the Hedgehog Concept

What NOT TO doR.J. Reynolds leaves circles of tobacco industryWent down because of it and lost 2 Billion dollars

What TO doPhillip-Morris invested in similar non-healthy itemsStayed in their circles and succeeded

Fanatical Adherence to the Hedgehog Concept

Nucor SteelKept things simple and created a culture of

equalityPassion for

eliminating class distinctions

Economic denominator of profit per

ton of finished steel

Could become the best in the

world at harnessing culture and

technology to produce low-

cost steel

Having a “Stop Doing” List

It takes discipline to say “No, thank you” to big opportunities if they’re outside of your circles

Kimberly-Clark stopped with the titles in the office Budgeting is not how much to spend in each

activity, but “Which areas should be fully funded, and which should not be funded at all”

Takeaways

A culture of discipline requires people who adhere to a consistent system AND gives people freedom and responsibility within that framework.

A tyrant who disciplines is very dysfunctional, but a culture of discipline is highly functional and leads to sustained results.

To gain the results you want, it takes a strict adherence to your Hedgehog Concept and to be willing to say no to opportunities that fall outside the three circles.

References

Collins, Jim. Good to Great. New York, NY: HarperCollins Publishers, Inc., 2001. p 120-43.

http://hedgehogconcepts.com/index.php?page_title=Apple’s+Great+Hedgehog+Concept

http://citrixblogger.org/2008/04/29/the-hedgehog-concept/