good to great book summary

Good to GreatWHY SOME COMPANIES MAKE THE LEAP…AND OTHERS DON’T

FARZIN FARDISS, PARS SAMAN BOARD MEMBER, [email protected]

Agenda→ What are considered good and great companies

→ What’s inside the black box?

→ Level 5 Leadership

→ First Who….Then What

→ Confront the Brutal Facts

→ Hedgehog Concept

→ A Culture of Discipline

→ Technology Accelerators

→ Flywheel

Good to Great

“Good is the enemy of great.”-JIM COLLINS

“Can a good company become Great?”

YesAny organization can become

great if it consistently applies the concepts and ideas that will be presented in this presentation.

Before we begin, what is considered a Great company

General Market

Great companies have returns that are at least

3 times the general market

1

2

3

What are some of the good companies out

there?

All of these companies only broke the general market by 2.5 times

What are the great companies?

Good to Great Cases

Company Results from Transition point to 15 years beyond transition point

T‐year to T‐year +15

Circuit City 18.5 times the market 1982‐1997

Fannie May 7.56 times the market 1984‐1999

Gillette 7.39 times the market 1980‐1995

Walgreens 7.34 times the market 1975‐1990

Pitney Bowes 7.16 times the market 1973‐1988

Philip Morris 7.06 times the market 1964‐1979

Nucor 5.16 times the market 1975‐1990

Kroger 4.17 times the market 1973‐1988

Wells Fargo 3.99 times the market 1983‐1998

Abbot 3.98 times the market 1974‐1989

Kimberly‐Clark 3.42 times the market 1972‐1987

Comparison Companies

Comparisons companies are those companies that had the same opportunities, similar resources and in the same industry as the good-to-great companies, but never made the leap from good to great.

Great companies vs. Comparison Companies

Good‐to Great Companies Direct Comparisons

Abbot UpjohnCircuit City SiloFannie May Great Western

Gillette Warner‐LambertKimberly‐Clark Scott Paper

Kroger A&PNucor Bethlehem Steel

Philip Morris R.J. ReynoldsPitney Bowes Addressograph

Walgreens EckerdWells Fargo Bank of America

Unsustained comparisons

Unsustained comparisons are those companies that have made the leap from good-to-great, but failed to sustain the progress.

Unsustained ComparisonsBurroughsChryslerHarrisHasbro

RubbermaidTeledyne

How did this Great companies transition from Good to Great?

What did these companies do that made them great?

Good Results

Great Results

What’s inside the Black Box?

So What’s in the Black Box?

What’s inside the Black Box?

Buildup

THIS

Simplified version of Mr. Collins framework

Disciplined Action Disciplined Action

Culture of Discipline Technology Accelerators

Disciplined Thought Disciplined Thought Confront The Brutal Facts Hedgehog Concept

Disciplined People Disciplined People

Level 5 Leadership First Who….Then What

But this isn’t any ordinary leadership, It’s Level 5 Leadership.

Level 5 Leadership

So what is Level 5 Leadership?

Level 5 Leadership

Level 5: Builds enduring greatness

What are the traits of a Level 5 Leader?

Level 5 Leaders set their company up for success after they leave, by

finding a successor that will succeed.

Level 5 leaders are very modest.

Level 5 leaders are fanatically driven to produce results.

Almost all Level 5 Leaders came from within the company.

Level 5 leaders always take the blame, and always give away the

credit to their subordinates.

Level 5 Leader

Gives Credit

Level 5 Leadership Formula

HUMILITY

WILLPOWER+

LEVEL 5=

We just went over WHO Level 5 Leaders are. The rest of the

process of transitioning from good to great shows what they DO.

Level 5 Leadership

Disciplined ActionDisciplined People

Confront the Brutal Facts

Hedgehog Concept

Culture of Discipline

Technology Accelerators

Disciplined Thought

First Who…Then

What

Buildup

First Who…Then WhatThe second aspect in Collin’s framework needed for a company to breakthrough from good to great is having the right people, in the right location.

First Who…Then What

Collins uses a bus analogy to describe what he and the team found.

Bad PeopleGood People

Collins states that it is important to begin with “who”, instead of “what


If the people jump on the bus because of where it is going, and ten miles down the road you change direction, then

there will be a problem.


If the people are on the bus because of who else is on the bus, then it’s much

easier to change direction.”


The problem of motivation and management goes away when you have the right people on the bus.


“great vision without great people is irrelevant”


Now that the Level 5 Leaders have the disciplined people, they now need the discipline thought

Confront the Brutal FactsThe third aspect in Collin’s framework needed for a company to breakthrough from good to great is to confronted the brutal facts of reality.


The Good to great companies would lead with questions, not answers.


They would engage in dialogue and debate, not coercion.


The Good to great companies would conduct autopsies, without blame.

Stockdale Paradox

“Retain faith that you will prevail in the end, regardless of the difficulties, and at the same time confront the most brutal facts of your current reality,

whatever they might be.”

Confront the Brutal FactsNow that the Good to Great companies know

the brutal facts, they need to conceptualize their ideas .

Hedgehog ConceptThe fourth aspect in Collin’s framework needed for a company to breakthrough

from good to great is to understand what you can be the best at.

Hedgehog Concept

The good-to-great companies transitioned from good to great because they took a

great, simple idea that had piercing insight, and consistently used that idea for all of

their decision making.

But how did the Good to Great companies come up with these great, simple, ideas?

What you are deeply Passionate

About

What you can be the best in the

world at

What drives your economic engine

HEDGEHOG CONCEPT

These great, simple, ideas came from the answers of three questions.

Hedgehog Concept

Collins states that it took an average of four years for the good-to-great companies to

clarify their hedgehog concept.

THE COUNCIL

THE COUNCIL

Ask Questions

Ask Questions

Dialogue and

Debate

Dialogue and

Debate

Executive DecisionsExecutive Decisions

Autopsies and

Analysis

Autopsies and

Analysis

A useful mechanism that Collins creates to help move the process along is called “The

Council”.

All aspects of The Council are guided with the three circles (hedgehog concept) in mind

Now that the Good to Great companies have disciplined people and discipline thought,

it’s time for action


The fifth aspect in Collin’s framework needed for a company to breakthrough from good

to great is to have disciplined action within the three circles, fanatically

consistent with the hedgehog concept


The Good to Great companies build a culture around the idea of freedom and

responsibility, within a framework.


Fill the culture with self-disciplined people who are willing to go extreme lengths to

fulfill their responsibilities.


Adhere with great consistency to the hedgehog concept, exercising an almost religious focus on the intersection of the

three circles.

Now that the Good to Great companies have all the components needed to transition

from good to great, the last item was how to approach and integrate new

technological advances into their hedgehog concept.


The sixth aspect in Collin’s framework needed for a company to breakthrough from good to great is to use only those

technologies that apply to the companies hedgehog concept.

The executives of the good-to-great companies knew that without the clear

understanding of how new technology fits into a company’s hedgehog concept, technology became only a means of accelerating that companies own self

demise.


Now that everything for a company to breakthrough from good to great is in place,

the only thing to do is to wait, while fanatically applying the great, simple ideas

from the hedgehog concept.

The last Concept in the framework is the flywheel. This takes all of the concepts put together, and provides the breakthrough.

Disciplined ActionDisciplined People Disciplined Thought

Buildup

Following all of the six concepts within the framework will begin to push the wheels

momentum.

Flywheel

Over time, the Wheel will begin to develop more and more momentum

Flywheel

Until finally, the wheel will gather enough momentum, that a breakthrough will occur, and the company will finally transition from

good to great.

Flywheel

Steps Forward, Consistent with

Hedgehog Concept

Steps Forward, Consistent with

Hedgehog Concept

Accumulation of Visible Results

Accumulation of Visible Results

People Line Up, Energized by Results

People Line Up, Energized by Results

Flywheel Builds Momentum

Flywheel Builds Momentum

Over time, as the wheel began to spin, the employees within those good-to-great

companies became more enthusiastic, and more motivated then before

This only made their resolve stronger and the wheel spin even faster. Collins came to call this the “flywheel effect”

From Good to Great to Built to LastWhen Mr. Collins wrote this book Good to

Great, he asked himself “What should be the role of Built to Last in doing this study?

Mr. Collins came up with these two connections between his two books.

Established Company or Start-up

Established Company or Start-up

Good to Great Concepts

Good to Great Concepts

Sustained Great Results

Sustained Great Results Built to Last ConceptsBuilt to Last Concepts Enduring Great

CompaniesEnduring Great

Companies

The difference is that they used the framework at an early stage in their

company, trying to get it off the ground, as opposed to the CEOs in Good to Great, who used the frame work in companies that were

already established and grown.

The leaders in Built to Last used the same Good-to-Great framework to breakthrough.

Mr. Collins. is very renowned in the world of business. Mr. Collins specializes in the

subjects of Company growth and sustainability. At the time when he wrote his book, Good to Great, Mr. Collins was a

professor at Stanford University’s Graduate school of Business.

http://www.jimcollins.com/