Good to great ppt (vww)

Good to Great
by Jim Collins
Houston Baptist University
April 26th
, 2008
Stephen Githinji
Vincent Wedelich
Luke Pils

History Behind the Book
 “Good is the enemy of great.” (Collins Page 1)
 Schools, government, lives are all good.
 Bill Meehan from McKinsey Consulting – Built To Last – Useless
 Assembled research team of 21 people.
 Find companies that showed good to great pattern
 Looked for companies that showed the following financial patterns:
 15 year stock return at or below market rate of competition
 Transition point could be seen
 Returns three times market rate maintained for 15 years

Companies Researched
 Contrasted the good-to-great companies to a carefully selected set of
comparison companies (Collins 7).
 They selected two sets of comparison companies (Collins 8).
 The first set direct comparisons- companies:
 In the same industry
 with the same opportunities and similar resources at the time of
transition,
 but that showed no leap from good to great.
 The second consisted of unsustained comparisons- companies
 Made a short term shift from good to great but failed to maintain the
trajectory- to address the question of sustainability.
 In all, they had a total study set of twenty-eight companies: eleven good to
great companies, eleven direct comparisons, and six unsustained
comparisons.

Good To Great Companies
Company Results From Transition
Point to 15 Years Dates
Abbott 3.98 times the market 1974-1989
Circuit City 18.50 times the market 1982-1997
Fannie Mae 7.56 times the market 1984-1999
Gillette 7.39 times the market 1980-1995
Kimberley-Clark 3.42 times the market 1972-1987
Kroger 4.17 times the market 1973-1988
Nucor 5.16 times the market 1975-1990
Philip Morris 7.06 times the market 1964-1979
Pitney Bowes 7.16 times the market 1973-1988
Walgreens 7.34 times the market 1975-1990
Wells Fargo 3.99 times the market 1983-1998

Good to Great
Confront the
Brutal Facts
Hedgehog
Concept
DISCIPLINED THOUGHT
BUILD UP
Level 5
Leadership
First Who…
Then What
DISCIPLINED PEOPLE
BREAKTHROUGH …
Culture of
Discipline
Technology
Accelerator
DISCIPLINED ACTION

Level 5
Leadership
First Who…
Then What
DISCIPLINED PEOPLE

Level 5 Leadership
HIGHLY CAPABLE INDIVIDUAL
Makes productive contributions through
talent, knowledge, skills, and good work habits.
CONTRIBUTING TEAM MEMBER
Contributes individual capabilities to the achievement
of group objectives, and works effectively with others.
COMPETENT MANAGER
Organizes people and resources toward the
effective and efficient pursuit of set objectives.
EFFECTIVE LEADER
Catalyzes commitment to and
pursuit of a clear vision, stimulating
higher performance standards.
LEVEL 5
EXECUTIVE
Builds enduring
greatness through
personal humility
and professional will.
LEVEL 1
LEVEL 2
LEVEL 3
LEVEL 4
Making sure the right decisions
happen—no matter how difficult
or painful—for the long-term
greatness of the institution
and the accomplishment
of its mission.

Level 5 Leadership
Level 5 Leadership Key Points
 Every good to great company had Level 5 leadership during the pivotal
transition years (Collins 39).
 Level 5 leaders embody
 A paradoxical mix of personal humility and professional will.
 They are ambitious for the company, not themselves.
 They Set up their successors for even greater success in the next generation.
 They display a compelling modesty, are self-effacing, and understated.

Level 5 Leadership
 They are fanatically driven with:
 incurable need to produce sustained results.
 A resolve to do whatever it takes to make the company great, no matter
how big or hard the decisions.
 Level 5 leaders:
 display a workmanlike diligence- more plow horse than show horse.
 attribute success to factors other than themselves.
 When things go poorly, however, they look in the mirror and blame
themselves, taking full responsibility.
 One of the most damaging trends in recent history is the tendency (especially
by boards of directors) to select dazzling, celebrity leaders and to de-select
potential Level 5 leaders.

First Who…Then What
 Getting the right people on the bus and into the
right seats.
 Building pockets of greatness with limited
resources.
 Using early-assessment to select self-motivated
self-disciplined talent.

Confront the
Brutal Facts
Hedgehog
Concept
DISCIPLINED THOUGHT

Confront the Brutal Facts
The Stockdale Paradox:
Retain unwavering faith that you can and
will prevail in the end, regardless of the
difficulties, and at the same time have the
discipline to confront the most brutal
facts of your current reality, whatever
they might be.

Good to Great
Confront the
Brutal Facts
Hedgehog
Concept
DISCIPLINED THOUGHT
BUILD UP
Level 5
Leadership
First Who…
Then What
DISCIPLINED PEOPLE
BREAKTHROUGH …
Culture of
Discipline
Technology
Accelerators
DISCIPLINED ACTION

Good To Great Companies
Hedgehogs:
The Good to Great Businesses tended to be
hedgehogs. Very clear understanding of what they
wanted to do; one idea.
Walgreens (convenient locations, pioneered the
drive through pharmacy, clustered their stores)
Foxes:
The Comparison Companies tended to be Foxes.
Scattered, diffused, and inconsistent.
Eckerd (home video)

Three Circles of the Hedgehog Concept
What you CAN
BE THE BEST IN
THE WORLD AT
What you are deeply
PASSIONATE ABOUT
What drives your
ECONOMIC
ENGINE

AUTOPSIES AND
ANALYSIS GUIDED
BY THE
THREE CIRCLES
DIALOGUE AND
DEBATE, GUIDED BY
THREE CIRCLES
THE THREE
CIRCLES
THE COUNCIL
Getting The Hedgehog Concept An Iterative Process
EXECUTIVE DECISIONS
GUIDED BY THE
THREE CIRCLES
ASK QUESTIONS
GUIDED BY THE
THREE CIRCLES

HEIARCHICAL
ORGANIZATIONS
GREAT
ORGANIZATIONS
BUREAUCRATIC
ORGANIZATIONS
START-UP
ORGANIZATIONS
HIGH
CULTURE OF
DISCIPLINE
LOW
ETHIC OF
ENTREPRENEURSHIP
HIGHLOW
The Good to Great Matrix of Creative Discipline

Creating a Climate of Creative Discipline
1. Build a culture around the idea of freedom and
responsibility.
2. Fill that culture with self-disciplined people who
are willing to go to extreme lengths to fulfill their
responsibilities.
3. Don’t confuse a culture of discipline with a
tyrannical disciplinarian.
4. Adhere with great consistency to the hedgehog
concept, stay within the three circles, create a to
stop doing list, and unplug anything extraneous.

Rinsing Your Cottage Cheese
DISCIPLINED THOUGHT
BUILD UP
DISCIPLINED PEOPLE
BREAKTHROUGH …
DISCIPLINED ACTION

Nucor’s Three Circles
PASSION for eliminating
class distinctions and
creating an egalitarian
meritocracy that aligns
management, labor, and
financial interests.
Could become the
Best in the world at
Harnessing culture
And technology to
produce
Low-cost steel.
Economic Denominator
Of profit per ton of
Finished steel.

Start A “Stop Doing” List
1. Do have a “to do” list.
a. We build this lists, bigger and bigger
b. They rarely become reality.
2. Do have a “to stop doing” list.
a. Display remarkable discipline
b. Unplug extraneous junk.
There is two ways to get rich:
• Augment your means (increase your income).
• Decrease your wants (budget yourself).

Good to great ppt (vww)

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