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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 become Great?”
YesAny organization can become great if it consistently applies
the concepts and ideas that will be presented in this
presentation.
Before we begin, what is considered a Great company
General Market
Great companies have returns that are at least 3 times the general
market
1
2
3
What are some of the good companies out
there?
All of these companies only broke the general market by 2.5 times
What are the great companies?
Good to Great Cases
Company Results from Transition point to 15 years beyond transition point
T-year to T-year +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
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.
Great companies vs. Comparison Companies
Good-to Great Companies
Direct Comparisons
Abbot UpjohnCircuit City Silo
Fannie May Great WesternGillette Warner-Lambert
Kimberly-Clark Scott PaperKroger A&PNucor Bethlehem Steel
Philip Morris R.J. ReynoldsPitney Bowes Addressograph
Walgreens EckerdWells Fargo Bank of America
Unsustained comparisons
Unsustained comparisons are those companies that have made the leap from good-to-great, but failed to sustain the progress.
Unsustained ComparisonsBurroughsChryslerHarris
HasbroRubbermaid
Teledyne
How did this Great companies transition from Good to Great?
What did these companies do that made them great?
Good Results
Great Results
What’s inside the Black Box?
So What’s in the Black Box?
What’s inside the Black Box?
Breakthroug
hBuildup
THIS
Simplified version of Mr. Collins framework
Level 5 Leadership
The first aspect in Collin’s framework needed for a company to breakthrough from good to great is leadership.
But this isn’t any ordinary leadership, It’s Level 5 Leadership.
Level 5 Leadership
So what is Level 5 Leadership?
Level 5 Leadership
Level 5: Builds enduring greatness
What are the traits of a Level 5 Leader?
Level 5 Leaders set their company up 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 the blame, and always give away the
credit to their subordinates.
Level 5
Leader
Gives Credit
Level 5 Leadership Formula
HUMILITY
WILLPOWER+
LEVEL 5
=
We just went over WHO Level 5 Leaders are. The rest of the
process of transitioning from good to great shows what they DO.
Level 5 Leadership
Disciplined ActionDisciplined ActionDisciplined PeopleDisciplined People
Confront the Brutal Facts
Hedgehog Concept
Culture of Discipline
Technology Accelerators
Disciplined ThoughtDisciplined Thought
First Who…Then What
Breakthrough
Buildup
First Who…Then WhatThe 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.
First Who…Then What
Collins uses a bus analogy to describe what he and the team found.
Bad PeopleGood People
Collins states that it is important to begin with “who”, instead of “what
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.
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.”
First Who…Then What
The problem of motivation and management goes away when you have the right people on the bus.
First Who…Then What
“great vision without great people is irrelevant”
First Who…Then What
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 framework needed for a company to breakthrough from good to great is to confronted the brutal facts of reality.
Confront the Brutal Facts
The Good to great companies would lead with questions, not answers.
Confront the Brutal Facts
They would engage in dialogue and debate, not coercion.
Confront the Brutal Facts
The Good to great companies would conduct autopsies, without blame.
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.”
Confront the Brutal Facts
Now 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
breakthrough from good to great is to understand what you can be the
best at.
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.
But how did the Good to Great companies come up with these
great, simple, ideas?
What you are deeply
Passionate About
What you can be the best in the world at
What drives your economic
engine
HEDGEHOG CONCEPT
These great, simple, ideas came from the answers of three questions.
Hedgehog Concept
Collins states that it took an average of four years for the good-to-great
companies to clarify their hedgehog concept.
THE COUNCIL
Ask Questions
Dialogue and Debate
Executive Decisions
Autopsies and Analysis
A useful mechanism that Collins creates to help move the process along is called
“The Council”.
All aspects of The Council are guided with the three circles (hedgehog concept) in
mind
Now that the Good to Great companies have disciplined people and discipline
thought, it’s time for action
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
Culture of Discipline
The Good to Great companies build a culture around the idea of freedom
and responsibility, within a framework.
Culture of Discipline
Fill 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 the hedgehog concept, exercising an
almost religious 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 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.
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.
Technology Accelerators
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.
The last Concept in the framework is the flywheel. This takes all of the concepts
put together, and provides the breakthrough.
Disciplined ActionDisciplined ActionDisciplined PeopleDisciplined People Disciplined ThoughtDisciplined Thought
Breakthrough
Buildup
Following all of the six concepts within the framework will begin to push the
wheels momentum.
Flywheel
Over time, the Wheel will begin to develop more and more momentum
Flywheel
Until finally, the wheel will gather enough momentum, that a
breakthrough will occur, and the company will finally transition from
good to great.
Flywheel
Steps Forward, Consistent with
Hedgehog Concept
Accumulation of Visible Results
People Line Up, Energized by Results
Flywheel Builds Momentum
Over time, as the wheel began to spin, the employees within those good-to-great
companies became more enthusiastic, and more motivated then before
This only made their resolve stronger and the wheel spin even faster.
Collins came to call this the “flywheel effect”
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?
Mr. Collins came up with these two connections between his two books.
Established Company or Start-
up
Good to Great Concepts
Sustained Great Results
Built to Last Concepts
Enduring Great Companies
The difference is that they used the framework at an early stage in their
company, trying to get it off the ground, as opposed to the CEOs in Good to Great, who
used the frame work in companies that were already established and grown.
The leaders in Built to Last used the same Good-to-Great framework to breakthrough.
Analysis
Mr. Collins. is very renowned in the world of business. Mr. Collins specializes in the
subjects of Company growth and sustainability. At the time when he wrote his book, Good to Great, Mr. Collins was a
professor at Stanford University’s Graduate school of Business.
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.
The analyst recommends that this book be bought, read multiple times and kept
forever.
It’s that good
http://www.jimcollins.com/
http://www.mciisgallagher.com/
James E. GallagherMCIIS class of 2012
Date Produced: January 10, 2010Classification: Unclassified
Phone: 240-432-3489Email: [email protected]
Website: mciisgallagher.com/