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Good to Great. Team 6 Will Kerlick Bryan Fetterman Reece Macdonald Molly Murdock John Fletcher. Chapter 1: Good is the Enemy of Great.

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good to great

Good to Great

Team 6

Will Kerlick

Bryan Fetterman

Reece Macdonald

Molly Murdock

John Fletcher

chapter 1 good is the enemy of great
Chapter 1: Good is the Enemy of Great
  • After writing the book “Built to Last,” it was brought to Collins’s attention that the book didn’t tell companies how to become great, so he decided to do some research.
  • Phase 1: The Search
    • Searched for companies at or below market returns for 15 years, then after a transition went to three times the average return over the next 15 years.
      • Had to be demonstrated independent of the industry the company was in
    • You can find greatness in the most unlikely of situations
chapter 1 continued
Chapter 1 (continued)
  • Phase 2: Compared to What?
    • First set of comparison companies consisted of “direct comparisons”-companies that were in the same industry with the same opportunities and similar resources at the time of transition, but showed no leap from good to great.
    • Second set consisted of “unsustained comparisons”- companies that made a short-term shift but failed to maintain trajectory.
chapter 1 continued1
Chapter 1 (continued)
  • Phase 3: Inside the Black Box
    • Celebrity leaders usually failed
    • Compensation was not a driver neither was strategy
    • Good-to-great companies focused on what not to do
    • Technology, mergers, and acquisitions were irrelevant
    • No program was used to launch transformation
  • Phase 4: Chaos to concept
    • The study was an iterative process of looping back and forth, developing ideas and testing them against the data, revising the ideas, building a framework, seeing it break under the weight of evidence, and rebuilding it again.
chapter 2 level 5 leadership
Chapter 2: Level 5 Leadership
  • Every good to great company had Level 5 leadership during the pivotal transition years
  • “Level 5” refers to a five-level hierarchy of executive capabilities, with Level 5 at the top
  • Level 5 leaders embody a paradoxical mix of personal humility and professional will
  • They are ambitious, to be sure, but ambitious first and foremost for the company, not themselves
chapter 2 continued
Chapter 2 (continued)
  • Level 5 leaders display a compelling modesty, are self-effacing and understated. In contrast, two thirds of the comparison companies had leaders with personal egos that contributed to the demise or continued mediocrity of the company.
  • Level 5 leaders are driven to produce sustained results
  • They are resolved to do whatever it takes to make the company great.
  • Window and the mirror
chapter 2 continued1
Chapter 2 (continued)
  • Celebrity leaders are negatively correlated with going from good to great.
  • Level 5 leaders attribute success to luck, colleagues, predecessors, or successors, but never attribute it to themselves.
  • Level 5 leaders set up their successors for even greater success in the next generation
  • Level 5 leadership exists all around, you just have to know what to look for because some people have the potential to evolve into a level 5 leader.
chapter 3 first who then what
Chapter 3: First Who…Then What
  • First figure out who to get on the bus and who to get off the bus, then you can figure out where to drive it
    • This concept could solve the 4 hurdles dilemma discussed in Blue Ocean Strategy. Mainly the cognitive hurdle of convincing employees of the need for a strategic shift could be resolved
  • The question of who occurs before vision, before strategy, before organization structure, and before tactics.
  • The model of “genius with a thousand helpers” fails when the genius departs
  • Good-to-great leaders are rigorous, not ruthless
chapter 3 continued
Chapter 3 (continued)
  • There are three practical disciplines for being rigorous
    • 1. When in doubt, don’t hire-keep looking
    • 2. When you know you need to make a people change, act.
      • First be sure you don’t just have them in the wrong seat.
    • 3. Put your best people on your best opportunities, not your biggest problems.
  • Management tames should consist of people who debate vigorously in search o the best answers, yet unify behind decisions, regardless of parochial interests.
chapter 3 continued1
Chapter 3 (continued)
  • There is no systematic pattern linking executive compensation to the good to great shift.
    • Compensation is not used in motivation, but in getting the right people on the bus in the first place and keeping them.
  • The RIGHT people are your most important asset.
  • Whether someone is the “right person” has more to do with character traits and innate capabilities than with specific knowledge, background, or skills.
    • This idea is also expressed in Strategy: A View from the Top, saying that emphasis is being placed on attracting, rewarding, and retaining talent based more on character traits.
chapter 4 confront the brutal facts
Chapter 4:Confront the Brutal Facts
  • The process of good to great begins with confronting the brutal facts of the current reality.
    • Blue Ocean Strategy captures these realities using the strategy canvas.
  • The right decisions often become self-evident if you start with an effort to determine the truth of your situation.
  • A culture must be created where people have a tremendous opportunity to be heard and for the truth to be heard.
  • The leadership personality can deter people from the brutal facts.
chapter 4 continued
Chapter 4 (continued)
  • Creating a truthful climate involves the following
    • Lead with questions, not answers
    • Engage in dialogue and debate, not coercion
    • Conduct autopsies, without blame
    • Build red flag mechanisms that turn information into information that cannot be ignored
  • Good-to-great companies faced just as much adversity as the comparison companies, but responded differently.
chapter 4 continued1
Chapter 4 (continued)
  • Vision is not where leadership begins. It begins with getting people to confront the brutal facts and to act on the implications.
  • If you have the right people, they will be self-motivated. The key is not to de-motivate them.
  • Stockdale paradox: Retain absolute faith that you can and will prevail in the end, regardless of the difficulties, and at the same time confront the most brutal facts of your current reality.
chapter 5 the hedgehog concept
Chapter 5: The Hedgehog Concept
  • To go from good to great requires a deep understanding of three intersecting circles translated into a simple, crystalline concept (hedgehog concept)
    • The eliminate-reduce-raise-create grid in Blue Ocean strategy helps companies to focus on their concept, as does the strategy canvas.
  • The hedgehog concept is not a goal, strategy, or intention; it is an understanding.
  • Good-to-great companies set their goals and strategies based on understanding not based on bravado.
  • Getting the hedgehog concept is an iterative process, and the council can be a useful device for finding it.
chapter 5 continued
Chapter 5 (continued)
  • The key is to understand what your company can be the best in the world at, and what it cannot be best at.
  • If you cannot be the vest in the world at your core business, then your core business cannot form the basis of your hedgehog concept.
  • Having a competence is not the same as having the capacity to be the best in the world.
  • To get insight into the drivers of your economic engine, search for one denominator that has the single greatest impact.
chapter 5 continued1
Chapter 5 (continued)
  • Good-to-great companies are like hedgehogs; they find “one big thing” and stick to it.
  • Strategy did not separate the good-to great companies from the comparison companies.
  • The industry of the company does not have to be great for the company to produce superior economic returns.
    • Strategy: A View from the Top argues that the attractiveness of an industry are an important determinant of profit potential.
chapter 6 a culture of discipline
Chapter 6: A Culture of Discipline
  • You need a culture full of self-disciplined people who take disciplined action, fanatically consistent with the three circles.
    • If you get the right people on the bus, and the wrong people off, you don’t need bureaucracy.
    • In Strategy: A View from the Top, it says that building a company culture can differentiate a company from its competitors.
  • A culture of discipline required people who adhere to a consistent system, yet it give people freedom and responsibility within a framework of that system.
  • It is about getting disciplined people who engage in disciplined thought and who then take disciplined action.
chapter 6 continued
Chapter 6 (continued)
  • Good-to-great companies are filled with people who display extreme diligence and a stunning intensity. (they rinse their cottage cheese)
  • CEOs who personally discipline through sheer force of personality usually fail to produce sustained results.
  • Must have fanatical adherence to the Hedgehog concept and the willingness to shun opportunities that fall outside the three circles.
    • The more it is willing to do this, the more it will have opportunities for growth.
chapter 6 continued1
Chapter 6 (continued)
  • A great company will have many once in a lifetime opportunities, so ignore the ones that don’t adhere to the three circles.
  • The purpose of budgeting in a good-to-great company is not to decide how much each activity gets, but to decide which arenas best fit with the 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.
chapter 7 technology accelerators
Chapter 7: Technology Accelerators
  • Good-to great companies avoid technology fads and bandwagons.
  • They become pioneers in the application of the selected technology.
  • If the technology fits directly with the hedgehog concept, then the company needs to become a pioneer in its application. If not, then the company needs to ignore it.
  • None of the good-to-great companies began their transformation with pioneering technology. They used it as an accelerator, not a creator.
chapter 7 continued
Chapter 7 (continued)
  • How a company reacts to technological change is a good indicator of its inner drive for greatness versus mediocrity.
  • Great companies are driven by a compulsion to turn unrealized potential into results.
    • Mediocre companies react and lurch about, motivated by a fear of being left behind.
  • An effective approach to technology would be pause, think, crawl, walk, run
chapter 8 the flywheel and the doom loop
Chapter 8: The Flywheel and the Doom Loop
  • From the inside, good-to-great transformations are organic, cumulative processes.
    • The good-to-great transformations never happened in one fell swoop
    • There was no single defining action, no grand program, no one killer innovation or miracle moment
  • The transformation was like pushing a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but with consistent pushing in the same direction, the flywheel builds momentum, eventually hitting the point of breakthrough.
chapter 8 continued
Chapter 8 (continued)
  • With the doom loop, comparison companies attempted to skip buildup and jump immediately to breakthrough.
    • Then they would lurch back and forth, failing to maintain a consistent direction.
  • Comparison companies tried to create breakthrough with large, misguided acquisitions.
    • Good-to-great companies used large acquisitions AFTER breakthrough to accelerate momentum in an already fast spinning flywheel
chapter 8 continued1
Chapter 8 (continued)
  • Good-to-great companies spent essentially no energy trying to create alignment or motivate its people.
    • Under the right conditions, the problems of commitment, alignment, and motivation largely take care of themselves.
  • The short-term pressure of Wall Street were not inconsistent with this model. The flywheel effect is not in conflict with these pressures, but it is a key to manage them.
the flywheel
The Flywheel

BREAKTHROUGH

BUILD UP

Level 5 First Who Confront the HedgeHogCulture of Technology

Leadership Then What Brutal Facts ConceptDiscipline Accelerations

Disciplined People

Disciplined Thought

Disciplined Action

FLYWHEEL

chapter 9 from good to great to built to last
Chapter 9: From Good to Great to Built to Last
  • Good-to-great companies have a deeply held set of core values and core purpose beyond profit and cash flow.
  • The business strategies and operating practices of good-to-great companies endlessly adapt, but core values and purpose are preserved
  • The core values, purpose, and principles guide decisions and inspire people throughout the organization over a long period of time.
chapter 9 continued
Chapter 9 (continued)
  • Bad BHAGs (Big Hairy Audacious Goals) are set with bravado, good BHAGs are set with understanding.
  • Build a company that can endure and adapt through many generations.
  • You should strive for greatness because it is no more difficult to build something great than it is to trudge along in mediocrity.
    • If you are passionate about what you are doing, then why not make it great?
conclusion
Conclusion
  • The combination of these frameworks and concepts captures the process of going from good to great.
  • When all of these pieces come together, not only does your work move toward greatness, but so does your life. For, in the end it is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work.