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Good to great book summary
Good to Great outlines Jim Collins' framework for how good companies can make the leap to becoming great. The framework involves 6 aspects: 1) Level 5 Leadership, 2) First Who, Then What, 3) Confronting Brutal Facts, 4) Developing a Hedgehog Concept, 5) Building a Culture of Discipline, and 6) Using Technology Accelerators. Over time, consistently applying this framework causes the "flywheel effect" that builds momentum until a breakthrough occurs, transitioning the company from good to great.
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Good to great book summary
- 1. Good to Great WHYSOME COMPANIES MAKE THE LEAP… AND OTHERS DON’T FARZIN FARDISS, PARS SAMAN BOARD MEMBER, [email protected]
- 2. Agenda → What areconsidered 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
- 3.
- 4. “Good is theenemy of great.” -JIM COLLINS
- 5. “Can a goodcompany become Great?”
- 6. Yes Any organization canbecome 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 General Market Great companies have returns that are at least 3 times the general market 1 2 3
- 8. What are someof the good companies out there?
- 10. All of thesecompanies only broke the general market by 2.5 times
- 11. What are thegreat companies?
- 13. 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 market1982‐1997 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 companiesare 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. ComparisonCompanies 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 comparisonsare 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 thisGreat 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?
- 18. So What’s inthe Black Box? What’s inside the Black Box?
- 19.
- 20. Simplified version ofMr. Collins framework Disciplined ActionDisciplined Action Culture of Discipline Technology Accelerators Disciplined ThoughtDisciplined Thought Confront The Brutal Facts Hedgehog Concept Disciplined PeopleDisciplined People Level 5 Leadership First Who….Then What
- 22. But this isn’tany ordinary leadership, It’s Level 5 Leadership. Level 5 Leadership So what is Level 5 Leadership?
- 23. Level 5 Leadership Level5: Builds enduring greatness
- 24. What are thetraits of a Level 5 Leader?
- 25. Level 5 Leadersset their company up for success after they leave, by finding a successor that will succeed.
- 26. Level 5 leadersare very modest.
- 27. Level 5 leadersare fanatically driven to produce results.
- 28. Almost all Level5 Leaders came from within the company.
- 29. Level 5 leadersalways take the blame, and always give away the credit to their subordinates. Level 5 Leader Gives Credit
- 30. Level 5 LeadershipFormula HUMILITY WILLPOWER + LEVEL 5 =
- 31. We just wentover 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 People Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined Thought First Who…Then What Buildup
- 32. First Who…Then What Thesecond 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 Collinsuses a bus analogy to describe what he and the team found. Bad PeopleGood People
- 34. Collins states thatit is important to begin with “who”, instead of “what First Who…Then What
- 35. If the peoplejump 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
- 36. If the peopleare on the bus because of who else is on the bus, then it’s much easier to change direction.” First Who…Then What
- 37. The problem ofmotivation and management goes away when you have the right people on the bus. First Who…Then What
- 38. “great vision withoutgreat people is irrelevant” First Who…Then What
- 39. Now that theLevel 5 Leaders have the disciplined people, they now need the discipline thought
- 40. Confront the BrutalFacts 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 BrutalFacts The Good to great companies would lead with questions, not answers.
- 42. Confront the BrutalFacts They would engage in dialogue and debate, not coercion.
- 43. Confront the BrutalFacts The Good to great companies would conduct autopsies, without blame.
- 44. Stockdale Paradox “Retain faiththat 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 BrutalFacts Now that the Good to Great companies know the brutal facts, they need to conceptualize their ideas .
- 46. Hedgehog Concept The fourthaspect 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-greatcompanies 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 didthe Good to Great companies come up with these great, simple, ideas?
- 49. What you are deeplyPassionate 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.
- 50. Hedgehog Concept Collins statesthat it took an average of four years for the good-to-great companies to clarify their hedgehog concept.
- 51. THE COUNCIL THE COUNCIL Ask Questions Ask Questions Dialogue and Debate Dialogue and Debate Executive Decisions Executive Decisions Autopsies and Analysis Autopsies and Analysis A useful mechanismthat 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
- 52. Now that theGood to Great companies have disciplined people and discipline thought, it’s time for action
- 53. Culture of Discipline Thefifth 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 TheGood to Great companies build a culture around the idea of freedom and responsibility, within a framework.
- 55. Culture of Discipline Fillthe culture with self-disciplined people who are willing to go extreme lengths to fulfill their responsibilities.
- 56. Culture of Discipline Adherewith great consistency to the hedgehog concept, exercising an almost religious focus on the intersection of the three circles.
- 57. Now that theGood 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 sixthaspect 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. The executives ofthe 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
- 60. Now that everythingfor 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 Conceptin the framework is the flywheel. This takes all of the concepts put together, and provides the breakthrough. Disciplined ActionDisciplined People Disciplined Thought Buildup
- 62. Following all ofthe six concepts within the framework will begin to push the wheels momentum. Flywheel
- 63. Over time, theWheel will begin to develop more and more momentum Flywheel
- 64. Until finally, thewheel will gather enough momentum, that a breakthrough will occur, and the company will finally transition from good to great. Flywheel
- 65. Steps Forward, Consistent with HedgehogConcept Steps Forward, Consistent with Hedgehog Concept Accumulation of Visible Results Accumulation of Visible Results People Line Up, Energized by Results People Line Up, Energized by Results Flywheel Builds Momentum 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”
- 66. From Good toGreat 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 cameup with these two connections between his two books.
- 68. Established Company or Start-up EstablishedCompany or Start-up Good to Great Concepts Good to Great Concepts Sustained Great Results Sustained Great Results Built to Last ConceptsBuilt to Last Concepts Enduring Great Companies 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.
- 70. Mr. Collins. isvery 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.
- 71.