good to great ppt (vww)

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  1. 1. Good to Great by Jim Collins Houston Baptist University April 26th , 2008 Stephen Githinji Vincent Wedelich Luke Pils
  2. 2. History Behind the Book Good is the enemy of great. (Collins Page 1) Schools, government, lives are all good. Bill Meehan from McKinsey Consulting Built To Last Useless Assembled research team of 21 people. Find companies that showed good to great pattern Looked for companies that showed the following financial patterns: 15 year stock return at or below market rate of competition Transition point could be seen Returns three times market rate maintained for 15 years
  3. 3. Companies Researched Contrasted the good-to-great companies to a carefully selected set of comparison companies (Collins 7). They selected two sets of comparison companies (Collins 8). The first set direct comparisons- companies: In the same industry with the same opportunities and similar resources at the time of transition, but that showed no leap from good to great. The second consisted of unsustained comparisons- companies Made a short term shift from good to great but failed to maintain the trajectory- to address the question of sustainability. In all, they had a total study set of twenty-eight companies: eleven good to great companies, eleven direct comparisons, and six unsustained comparisons.
  4. 4. Good To Great Companies Company Results From Transition Point to 15 Years Dates Abbott 3.98 times the market 1974-1989 Circuit City 18.50 times the market 1982-1997 Fannie Mae 7.56 times the market 1984-1999 Gillette 7.39 times the market 1980-1995 Kimberley-Clark 3.42 times the market 1972-1987 Kroger 4.17 times the market 1973-1988 Nucor 5.16 times the market 1975-1990 Philip Morris 7.06 times the market 1964-1979 Pitney Bowes 7.16 times the market 1973-1988 Walgreens 7.34 times the market 1975-1990 Wells Fargo 3.99 times the market 1983-1998
  5. 5. Good to Great Confront the Brutal Facts Hedgehog Concept DISCIPLINED THOUGHT BUILD UP Level 5 Leadership First Who Then What DISCIPLINED PEOPLE BREAKTHROUGH Culture of Discipline Technology Accelerator DISCIPLINED ACTION
  6. 6. Level 5 Leadership First Who Then What DISCIPLINED PEOPLE
  7. 7. Level 5 Leadership HIGHLY CAPABLE INDIVIDUAL Makes productive contributions through talent, knowledge, skills, and good work habits. CONTRIBUTING TEAM MEMBER Contributes individual capabilities to the achievement of group objectives, and works effectively with others. COMPETENT MANAGER Organizes people and resources toward the effective and efficient pursuit of set objectives. EFFECTIVE LEADER Catalyzes commitment to and pursuit of a clear vision, stimulating higher performance standards. LEVEL 5 EXECUTIVE Builds enduring greatness through personal humility and professional will. LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 Making sure the right decisions happenno matter how difficult or painfulfor the long-term greatness of the institution and the accomplishment of its mission.
  8. 8. Level 5 Leadership Level 5 Leadership Key Points Every good to great company had Level 5 leadership during the pivotal transition years (Collins 39). Level 5 leaders embody A paradoxical mix of personal humility and professional will. They are ambitious for the company, not themselves. They Set up their successors for even greater success in the next generation. They display a compelling modesty, are self-effacing, and understated.
  9. 9. Level 5 Leadership They are fanatically driven with: incurable need to produce sustained results. A resolve to do whatever it takes to make the company great, no matter how big or hard the decisions. Level 5 leaders: display a workmanlike diligence- more plow horse than show horse. attribute success to factors other than themselves. When things go poorly, however, they look in the mirror and blame themselves, taking full responsibility. One of the most damaging trends in recent history is the tendency (especially by boards of directors) to select dazzling, celebrity leaders and to de-select potential Level 5 leaders.
  10. 10. First WhoThen What Getting the right people on the bus and into the right seats. Building pockets of greatness with limited resources. Using early-assessment to select self-motivated self-disciplined talent.
  11. 11. Confront the Brutal Facts Hedgehog Concept DISCIPLINED THOUGHT
  12. 12. Confront the Brutal Facts The Stockdale Paradox: Retain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be.
  13. 13. Good to Great Confront the Brutal Facts Hedgehog Concept DISCIPLINED THOUGHT BUILD UP Level 5 Leadership First Who Then What DISCIPLINED PEOPLE BREAKTHROUGH Culture of Discipline Technology Accelerators DISCIPLINED ACTION
  14. 14. Good To Great Companies Hedgehogs: The Good to Great Businesses tended to be hedgehogs. Very clear understanding of what they wanted to do; one idea. Walgreens (convenient locations, pioneered the drive through pharmacy, clustered their stores) Foxes: The Comparison Companies tended to be Foxes. Scattered, diffused, and inconsistent. Eckerd (home video)
  15. 15. Three Circles of the Hedgehog Concept What you CAN BE THE BEST IN THE WORLD AT What you are deeply PASSIONATE ABOUT What drives your ECONOMIC ENGINE
  16. 16. AUTOPSIES AND ANALYSIS GUIDED BY THE THREE CIRCLES DIALOGUE AND DEBATE, GUIDED BY THREE CIRCLES THE THREE CIRCLES THE COUNCIL Getting The Hedgehog Concept An Iterative Process EXECUTIVE DECISIONS GUIDED BY THE THREE CIRCLES ASK QUESTIONS GUIDED BY THE THREE CIRCLES
  17. 17. Good to Great Confront the Brutal Facts Hedgehog Concept DISCIPLINED THOUGHT BUILD UP Level 5 Leadership First Who Then What DISCIPLINED PEOPLE BREAKTHROUGH Culture of Discipline Technology Accelerators DISCIPLINED ACTION
  18. 18. HEIARCHICAL ORGANIZATIONS GREAT ORGANIZATIONS BUREAUCRATIC ORGANIZATIONS START-UP ORGANIZATIONS HIGH CULTURE OF DISCIPLINE LOW ETHIC OF ENTREPRENEURSHIP HIGHLOW The Good to Great Matrix of Creative Discipline
  19. 19. Creating a Climate of Creative Discipline 1. Build a culture around the idea of freedom and responsibility. 2. Fill that culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities. 3. Dont confuse a culture of discipline with a tyrannical disciplinarian. 4. Adhere with great consistency to the hedgehog concept, stay within the three circles, create a to stop doing list, and unplug anything extraneous.
  20. 20. Rinsing Your Cottage Cheese DISCIPLINED THOUGHT BUILD UP DISCIPLINED PEOPLE BREAKTHROUGH DISCIPLINED ACTION
  21. 21. Nucors Three Circles PASSION for eliminating class distinctions and creating an egalitarian meritocracy that aligns management, labor, and financial interests. Could become the Best in the world at Harnessing culture And technology to produce Low-cost steel. Economic Denominator Of profit per ton of Finished steel.
  22. 22. Start A Stop Doing List 1. Do have a to do list. a. We build this lists, bigger and bigger b. They rarely become reality. 2. Do have a to stop doing list. a. Display remarkable discipline b. Unplug extraneous junk. There is two ways to get rich: Augment your means (increase your income). Decrease your wants (budget yourself).
  23. 23. Good to Great Confront the Brutal Facts Hedgehog Concept DISCIPLINED THOUGHT BUILD UP Level 5 Leadership First Who Then What DISCIPLINED PEOPLE BREAKTHROUGH Culture of Discipline Technology Accelerators DISCIPLINED ACTION