good to great: chapter 6
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Good to Great: Chapter 6. By: Jake Alonzo Charly Cone Natalie Bohman Meredithe Marshall Michael Scott Mikey Via Virginie Charlotte Milhaud. A Culture of Discipline. A Culture of Discipline . Few start-ups have great success because: Company responds to rapid growth in wrong way - PowerPoint PPT PresentationTRANSCRIPT
Good to Great: Chapter 6
By: Jake AlonzoCharly ConeNatalie BohmanMeredithe MarshallMichael ScottMikey ViaVirginie Charlotte Milhaud
A Culture of Discipline
A Culture of Discipline
Few start-ups have great success because: Company responds to rapid growth in wrong way Company can “trip” over its own rapid growth. There is inherent lack of resources for new successful
companies because they cannot keep up with This quickly will push the firm to organize a more
hierarchical structure Employees: structured reporting relationships
Discipline for Success
From an Entrepreneurial standpoint: Employees begin to hate the organizational structure Have added job responsibilities with unequal perceived
compensation The process of disciplining involves:
Forming hierarchical relationships and initiating bureaucratic rules to follow to avoid mayhem
This is aimed at managing the “wrong people” Proves to drive away the “right people” on your
corporate “bus”
Main Ideas
Build a culture of disciplined employees who fall into the three circles
Be consistent to hedgehog mind state Go over how a “stop doing list” helps firms get
rid of extraneous factors Freedom and responsibility framework Why executive managers should “rinse their
cottage cheese” The difference between culture of discipline and
tyrannical disciplinarian
Freedom (and Responsibility) in a Framework Concept introduced through the example of the
Air Traffic System: Pilots operate through a very strict system But lot of freedom when it comes to crucial decisions
(whether to land, whether to abort etc.) Regardless of the stricture of the system, Pilots have
ultimate responsibility.
Good to Great companies build a consistent system with clear constraints, but they also give people freedom and responsibilities within the framework of that system.
How to develop freedom and responsibility in a Framework? Need people and managers who believe in the system Operate with great consistency Create a culture of discipline Install disciplined actions
When a company has a strong culture of discipline, then it rarely needs to discipline peopleA culture of discipline is not about punishing people, it is about control
Freedom (and Responsibility) in a Framework
Freedom at Google In the workplace Employees manage their time To emphasize creativity Tour inside Google Headquarters
Responsibility at Google Strong Code of Conduct
Freedom (and Responsibility) in a Framework
« Good-to-Great companies built a consistent system with clear constraints but they also gave people freedom and responsibilities in the framework of that system. They Hired self-disciplined people who didn’t need to be managed and then managed the system, not the people. » Good to Great – J. Collins – P.125
Rinsing Your Cottage Cheese
Analogy comes from an athlete named Dave Scott.
The Answer to the question of “good to great” lies in the discipline to do what ever it takes to become the best.
Rinsing Your Cottage Cheese
Every company wants to be the best, but most companies lack the discipline to figure out what they need to do to become the best. “they lack the discipline to rinse their cottage cheese”
Getting rid of it takes tenacity, not brilliance
Wells Fargo
Froze executive salaries for 2 years Took away executive dining room, replaced it with
a college dorm food service Closed down the executive elevator, sold corporate
jets and removed live plants. He threw back reports that had fancy binders, with
the admonishment: “Would you spend your OWN money this way? What does a binder add to anyways”
Bank of America
Executives at Bank of America didn’t have the discipline to rinse their own cottage cheese. Northeast corner suite, large conference room,
oriental rugs, and floor-to-ceiling windows viewing the Golden Gate to the Bay Bridge.
Bank of America asked “why rinse our cottage cheese when life is so good?”
A Culture, Not a Tyrant
Discipline created by CEO vs. discipline as a culture
Why are Great companies more disciplined? “Whereas the good-to-great companies had level
5 leaders who built an enduring culture of discipline, the unsustained comparisons had Level 4 leaders who personally disciplined the organization through sheer force.” Collins
Level 4 Culture
Ray MacDonald-Burroughs Criticized everyone less smart than him “The MacDonald Vise” Retirement
Stanley Gault- Rubbermaid “Sincere Tyrant” He was their number one control mechanism After his departure..
Lee Iacocca- Chrysler “The Man. The Dictator. Lee.” Distractions (bottling his own wine, house in Italy, new found
fame, Maserati venture, Second book) Departure
What not to do?
The level four executive show us the culture we don’t want to have. Discipline by force and fear Discipline through hierarchy No culture after disciplinarian leaves
Level 5 Culture
Google- Enduring culture Sergey Brin calm, quiet, not a tyrant No hierarchy, keeps creativity Discipline comes from having the right people
on the bus. Google’s office.
Disciplined action, without disciplined understanding of the results can not produced sustained great results.
Pitney Bowes example
Monopoly Government broke it up
Had to give patents to the competition Severely hurt Pitney Bowes, profitability
drastically decreased Level five leader helped the situation
Fred Allen and successor Started increasing marketability again
High end copiers and fax machine market segment
Explanation
Pitney Bowes Became a pioneer in the PMS (pioneer,
migration, and settler) map Through innovation (pioneer) and use of level 5
management entered into blue ocean market Ex. High end copiers and fax machines, internet
capable backroom machines Through all of these favorable variables turned the
eminent decline of the company around 77% behind market in 1973 to 11x the market in 2000
3 Circles
Companies would fail due to not adhering to 3 circles What you can be best in the world at, driver of economic
engine, and what are you deeply passionate about Good to Great company mantra: “Anything that does
not fit with our hedgehog concept, we will not do… no unrelated business or acquisitions and no unrelated ventures”
R.J. Reynolds: Stepped outside their circle
Bought sea-land shipping company and Aminoil oil company.
2 billion dollar loss
Explanation
The more the company stays within its 3 circles the more it will have attractive opportunities for growth
Google Stays within 3 circles very successfully
Everything is tech based, and very closely related I.e. All of its various internet services
Nucor’s 3 Circles
Stop Doing List
Jim Collins notes, “Those who built the good to great companies , however, made as much use of stop doing as to do list”.
In addition, good to great companies focus resources in few areas. Walgreens went from a food service business
to most convenient drugstore.
The purpose of a budget
A budget should not be based on which areas need the funding but which area supports the hedgehog concept.
Summary of Chapter 6
Good to great companies give employees freedom and responsibility
Disciplined is about getting people to buy into system by engaging in thought than action
Do not confuse culture of discipline with a Tyrant Budget only the areas that support the Hedgehog
Concept “Stop doing” list is just as important as “to do” list