good to great
TRANSCRIPT
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
Great CompaniesCompany Name
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Year 5 Year 10 Year 15 Year 20
“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