good to great

A Book Discussion

I am developing this as a possible presentation at the MIT Sloan Alumni Club of Boston. While it is not complete it is comprehensive enough to demonstrate my presentation style.

Lindsey Anderson

Selection Process

1,435 CompaniesSelected from the Fortune 500

1965 1970 1975 1980 1985 1990 1995

126 CompaniesSelected into full CRSP data

pattern analysis

19 CompaniesSelected into industry analysis

11 CompaniesGood toGreat

1

2

3

4

Good to Great Companies

Company T Year+15 Beat the MarketAbbot 1974-1989 3.98Curcuit City 1982-1997 18.5Fannie Mae 1984-1999 7.56Gillette 1980-1995 7.39Kimberly-Clark 1972-1987 3.42Kroger 1973-1988 4.17Nucor 1975-1990 5.16Phillip Morris 1964-1979 7.06Pitney Bowes 1973-1988 7.16Walgreens 1975-1990 7.34Wells Fargo 1983-1998 3.99

Direct Comparisons

Good to Great Direct ComparisonsAbbot Upjoin

Curcuit City SiloFannie Mae Great Western

Gillette Warner-LambertKimberly-Clark Scott Paper

Kroger A&PNucor Bethleham Steel

Phillip Morris R.J. ReynoldsPitney Bowes Addressograph

Walgreens EckardWells Fargo Bank of America

Unsustained Comparisons

BurroughsChryslerHarrisHasbroRubbermaidTeledyne

Focus of Research

What'sinside the

Black Box?Good Results

Great Results!

Overview

Level 5 Leader

Level 5 Leadership

Level 5 Executive

Effective Leader

Competent Manager

Level 5

Level 3

Level 4

Level 2

Level 1

Organizes people and resources toward the effectiveand efficient pursuit of predetermined objectives.

Contributing Team Member

Highly Capable IndividualMakes productive contributions through talent,knowledge, skills, and good work habits.

Contributes individual capabilities to the achievements of groupobjectives and works effectively with others in a group setting.

Catalyzes commitment to and pursuit of a clear and compellingvision, stimulating higher performance standards.

Builds enduing greatness through a paradoxicalblend of personal humility and professional will.

Level 5Leadership

Humility + Will

Level 5Leadership

Level 5 Leaders

Set up successors for success In over 75% of Unsustained Comparison

Companies executives set up their successors for failure or picked a weak successor

Insiders: 10 out of 11 Good to Great CEOs came from within the company, 3 from family inheritance High profile, shake-things-up outsiders

negatively correlated with Good to Great

Level 5Leadership

Is Level 5 Learnable?

2 Kinds of people: those who have the seed and those who don’t

Seed may develop under the right circumstances—self reflection, conscious personal development, a mentor, a great teacher, loving parents, level 5 boss, personal crisis

Level 5Leadership

Why aren’t there more level 5 leaders? There are plenty of

Level 5 leaders, but Board of Directors have a tendency to select dazzling, celebrity leaders rather than Level 5

Level 5Leadership

Symbiotic Relationship

Level 5 traits enable you to implement the other findings, while practicing the other traits helps you become a Level 5 leader

We’ve talked about what Level 5 leaders are, the rest of the talk will be on what they do

Level 5Leadership

First Who…Then What

Who or What’s on First


Advantages of a Strong Executive Team

Continuity and Longevity Agility Through debate and passion come

up with the best vision of the company—many heads better than one Debate then Unify


The Right People

People aren’t your most important asset, the right people are

Self motivated—don’t need to be tightly managed or fired up

Will do the right things and deliver the best results regardless of the incentive system Negative correlation: Good to Great

executives got slightly less compensation than their mediocre counterparts First Who…

Then What

Rigor

Tremendous rigor needed in people decisions to take a company from good to great

Greater weight on character attributes than on a specific educational background, practical skills, work experience


Rigorous, not Ruthless

Best people don’t need to worry about their jobs and can concentrate on their work 6 out of 11 Good to Great had no

layoffs and 4 just had 1 Comparison companies used layoffs 5

times more frequently than Good to Great companies

Lead a Great LifeFirst Who…Then What

How to be Rigorous

When in doubt, don’t hire—keep looking

Act when you know you need to make a change Unfair to everyone to let the wrong

people hang around Off the Bus or move to another seat?


Focus on Opportunities

Put your best people on your biggest opportunities, not your biggest problems

Managing your problems can only make you good, building your opportunities can make you great

When you decide to sell off your problems don’t sell of your best people


Confront the Brutal Facts

Don‘t De-Motivate

Expending energy on motivating people is largely a waste of time

The key is not to de-motivate people Nothing more demoralizing than

ignoring the brutal facts of reality

Confront theBrutal Facts

Don‘t De-Motivate

“There is no worse mistake in Public Leadership than to hold out false hopes soon to be swept way” Winston S. Churchill


Creating a culture where the truth can be heard Lead with Questions not Answers

Understanding and not manipulation or put downs Engage in dialog and debate—not coercion

Search for the best answers Conduct Autopsies without Blame

“I will take responsibility for this bad decision. But we will all take responsibility for extracting the maximum learning from the tuition we’ve paid” Joe Cullman, Phillip Morris

Build a red flag mechanisms that turn information into information that can’t be ignored


Level 5 Leadership

The strength of a leader’s personality doesn’t deter people from bringing him or her the brutal facts

Leadership isn’t just vision, it’s getting people to confront the brutal facts and act on the implications


Stockdale Paradox

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

Confront the most brutal facts of your current reality, whatever they may be

AND at the same time

Hardiness

By hitting the realities of their situation head-on Good-to-Great emerged from adversity even stronger


Hedgehog Concept

UnconsciousNatural Selection Relativity

Hedgehog Concept

Simply a complex world into a single organizing idea Essence of profound insight is simplicity E=MC2

Good to Great took a simple concept and implemented it with fanatical consistency

The Three Circles

What are you deeplyPassionate About

Whatyou canbe the Bestin the Worldat

Whatdrives yourEconomic

Engine

HedgehogConcept

Being the Best Not a goal to be the best Not a strategy to be the best Not an intention to be the best Not a plan to be the best Understanding of what you can be the best at Just because you have been doing something for years

your core business does not necessaryily mean you can be the best at it

Curse of competency “Just because your good at it--just because we’re making money and generating growth--doesn’t necessaryly mean we can be the best at it

Doing only what your good at will only make you good; focusing only what you can do better than any other oranization is the only path to greatness

A Culture of Discipline

TechnologyAccelerators

Culture ofDiscipline

HedgehogConcept



Level 5Leadership

Disciplined People Disciplined Thought Disciplined Action

Matrix of Creative Discipline

HeirarchicalOrganization

GreatOrganization

BureaucraticOrganization

Start-upOrganization

High

High

Low

Low Ethic ofEntrepreneurship



DisappointingResults

Reaction, withoutUnderstanding

New Direction,Program, Leader,

Event, Fad, orAcquisition

No Buildup; NoAccumulatedMomentem

good to great

Education