good to great

Good to Great Framework

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

Good to Great FrameworkDisciplined People

Level 5 Leadership

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

Disciplined People

• Leaders & Workers– All good-to-great companies had a “Level 5”

leader at the time of their transition

Level 5 Leadership

• Concern for the success of an institution is more important than individual riches or prominence (successors)

• Leaders are still ambitious but it is directed towards their organizations and not themselves!

• Blend Humility & Will– Both modest & determined; humble & fearless

Level 5 Training

Be Modest!

– Lose the idea of being a larger-than-life hero– No pedestal

Modest Leaders

Unwavering Resolve

Determination to do whatever needs to be done

Window & Mirror

Cultivating L-5 Leadership

• Exists all around us…we just don’t know what to look for

• Start by practicing the other 4 leadership levels

• Self reflection, conscious personal development, mentors, a Level-5 Boss

Good to Great FrameworkDisciplined People

First Who…Then What

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

First WHO…Then What

GET THE RIGHT PEOPLE ON THE BUS!

First Who…Then What• If people join the bus

because of where it’s going what happens when it needs to change directions?

• Great vision without great people is pointless

• Hire outstanding people when you find them, even without a specific job in mind

• Get the best people, build the best managers, and accept their recruitment

David Maxwell (Fannie Mae)

“I don’t know where we should take this company, but I do know that if I start with the right people, ask them the right questions, and engage them in vigorous debate, we will find a way to make this company great.”

First Who Then What

• Focusing on “what” before “who” = L-4 Leadership

• 1 Genius with 1,000 workers Does not work!

• It’s not how you compensate your executives, it’s about which executives you have to compensate in the first place

• Compensation therefore is only important in the sense that it help attract and retain the “right” people, and should not be used to get the “right” behaviors from the wrong people

• People are NOT the most important asset;The “right” people are

Be Rigorous not Ruthless• Apply challenging

standards at all times and at all levels (especially upper management)

• If people are not going to work on the bus they shouldn’t be kept– acquisitions

• The way to reward people who do achieve is by not burdening them with the people who are not achieving

• If they’re not going to make it on the bus, don’t let them suffer (ruthless); deal with it right up front and let people move on (rigor)

How to Be Rigorous

1. When in doubt, don’t hire but keep looking

– Disciplined hiring practices

2. When you know you need to make a personnel change, act

3. Use your best for big opportunities, not problems

The “RIGHT” Person

• More about character traits and innate capabilities than their specific knowledge, background, or skills

Good to Great FrameworkDisciplined Thought

Confront the Brutal Facts

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

Good to Great Companies

Confront the Brutal Facts

There is no worse mistake in public leadership than to hold out false hopes soon to be swept away.

-Winston S. Churchill

Distinctive Decision Making Process

• Great Companies did not stumble upon good decisions - Disciplined thought process

• Entire process infused with the brutal facts of reality

Truth Seeking

When you start with an honest and diligent effort to determine the truth of a situation the “right” decision often becomes self-evident.

Create a climate of truth

1. Lead with questions, not answers.

Socratic- Why?

Argyris and Schon- double-loop learning

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2. Engage in dialogue and debate, not coercion

Encourage raging, passionate discussion aimed at finding the best answer.. NOT just letting people “have their say” in a predetermined decision.

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3. Conduct Autopsies, without blame

Dive into the situation, find out what went wrong, take responsibility, learn from the mistakes, and move on.

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Build “red flag” mechanisms

Real time information that can not be ignored.

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The Stockdale Paradox

Retain faith that you will prevail in the end, regardless of the difficulties.

Confront the most brutal

facts of your current reality whatever they

might be.

AND

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“Never confuse faith that you will prevail with the discipline to confront the brutal facts of your current reality.”

Admiral Stockdale

Good to Great FrameworkDisciplined Thought

The Hedgehog Concept

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

The Hedgehog & The Fox

• Isaiah Berlin – “The Fox is cunning and good at many different things. The Hedgehog is a simple dowdy creature that knows one big thing.”

The Three Intersecting Circles

Key Points• Understand what your

organization can be or is the best at

• If you cannot be the best at your core business, then your core business cannot be the center of your Hedgehog Concept

• You may be competent in one area but not the best in the world at it-the converse may also be true

• To understand what drives your economic engine, search for the one denominator that has the single greatest impact

The Council

Key Points• A process to help understand important issues

concerning the organization• The Council is put together by the leading executive and

usually consists of 5 to 12 people• Encourages debate & respect for all members and their

points of view• Members come from all parts of the organization• Each member has an in depth knowledge of some

aspect of the organization and/or the environment it operates in

• The Council is a standing body-not an ad hoc committee assembled for a particular project or task

• Meets periodically

“A Hedgehog Concept is not a goal to be the best, a strategy to be the best,

an intention to be the best, a plan to be the best. It is an understanding of what you can be the best at. The distinction

is absolutely crucial”

Jim Collins, Good to Great

Good to Great FrameworkDisciplined Action

Culture of Discipline

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

Culture of Discipline

• Focus on your Hedgehog• Build a System of Freedom and

Responsibility within a Framework• Manage the System, Not the People• Practice Extreme Commitment

Culture of Discipline

• Focus on your Hedgehog– Have the discipline to say “NO”– Do not lurch after growth, grow consistently

within your hedgehog– Willingness to jettison competencies/business

if you cannot be the best– Make excellent use of “stop doing” lists

Culture of Discipline

• Build a System of Freedom and Responsibility within a Framework– People do not have jobs, they have

responsibilities and grasp the distinction– Cultural duality, the “genius of the and”

• E.g. freedom and responsibility, discipline and entrepreneurship, rigor and creativity, focused hedgehog and adaptable.

Culture of Discipline

• Manage the System, Not the People– Recruit self-motivated and self-disciplined

people– Provide an environment that does not de-

motivate– Avoid bureaucracy and unnecessary rules

Culture of Discipline

• Practice Extreme Commitment– Willingness to go to extremes to fulfill

commitments and deliver results– Equally disciplined in good-times as in bad

Good to Great FrameworkDisciplined Action

The Flywheel

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

The Flywheel

• Build cumulative momentum • Be relentlessly consistent over time • Create alignment by results, not hoopla • Avoid the doom loop

The Flywheel

• Build cumulative momentum – greatness a cumulative process, step-by-step,

day-by-day, week-by-week– not accomplished by any single action,

innovation, acquisition, technology, or “white horse”

The Flywheel

• Be relentlessly consistent over time– exhibit consistency of purpose, values,

hedgehog, high standards, people, etc.– interlocking pieces, consistently applied,

reinforce one another– flexibility and adaptability within the context of

coherent hedgehog

The Flywheel

• Create alignment by results, not hoopla– undersell and over-deliver– do not “sell” the future– people jump on board as momentum builds

The Flywheel

• Avoid the doom loop– do not succumb to silver bullet solutions– do not lurch– pioneer technology only if it advances our

hedgehog

Good to Great FrameworkBuilding Greatness to Last

Preserve the Core

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

Preserve the Core

• Articulate a Core Philosophy/Values• Change and Improve Everything Except

Core Values• Create a Passionate Culture that

Preserves Core and Stimulates Progress• Achieve BHAGs, Big Hairy Audacious

Goals

Preserve the Core

• Articulate a core philosophy/values– Core values are inviolate, regardless how the

world or people change– Held even if they become competitive

disadvantage– Reflect an enduring passion or mission

beyond making money

Preserve the Core

• Change and Improve Everything Except Core Values– Clear on difference between core values and

practices, norms, strategies and tactics– Stimulate change, improvement, innovation

and renewal surrounding core– Core should be limited to no more than six

values

Preserve the Core

• Create a passionate culture that preserves core and stimulates progress – Culture consistently reinforces core – Promote leaders who live core– Core values evidenced everywhere– Productively “neurotic,” obsessive focus on

shortcomings

Preserve the Core

• Achieve BHAGs, big hairy audacious goals – Rarely fall short of extreme standards of

performance– Multi-year BHAGs with intermediate

objectives– Set with understanding not bravado and in

alignment with hedgehog

Preserve the Core

• Achieve BHAGs, big hairy audacious goals – Rarely fall short of extreme standards of

performance– Multi-year BHAGs with intermediate

objectives– Set with understanding not bravado and in

alignment with hedgehog

Good to Great FrameworkBuilding Greatness to Last

Clock Building, Not Time Keeping

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping

Clock Building, Not Time Keeping

• System independence, great beyond a single leader or idea

• Create catalytic mechanisms • Manage for the quarter century

Clock Building, Not Time Keeping

• System independence, great beyond a single leader or idea – build a team of strong individuals– build a culture of discipline– hold leaders accountable for success of

successors

Clock Building, Not Time Keeping

• Create catalytic mechanisms – “red flag” mechanisms in place– mechanisms to force continuous improvement– mechanisms cannot easily be subverted– a “council” plays a key role in decision-making

Clock Building, Not Time Keeping

• Manage for the quarter century – build for long-term greatness, ignore short-

term pressure– leaders measure success by successors

performance as much as their own

Good to Great Framework

In Conclusion…

Good to Great• Disciplined People

– Level 5 Leadership– First Who…Then What

• Disciplined Thought– Confront the Brutal Facts– The Hedgehog Concept

• Disciplined Action– Culture of Discipline– The Flywheel

• Building Greatness to Last– Preserve the Core/Stimulate Progress– Clock Building, Not Time Keeping