Good to great ppt (vww)

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Good to Great by Jim Collins Houston Baptist University April 26 th , 2008 Stephen Githinji Vincent Wedelich Luke Pils

Transcript of Good to great ppt (vww)

Good to Greatby Jim Collins

Houston Baptist University

April 26th, 2008

Stephen Githinji

Vincent Wedelich

Luke Pils

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

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.

Good To Great CompaniesCompany 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

Good to Great

Confront theBrutal Facts

HedgehogConcept

DISCIPLINED THOUGHT

BUILD UP

Level 5Leadership

First Who…Then What

DISCIPLINED PEOPLE

BREAKTHROUGH …

Culture ofDiscipline

TechnologyAccelerator

DISCIPLINED ACTION

Level 5Leadership

First Who…Then What

DISCIPLINED PEOPLE

Level 5 Leadership

HIGHLY CAPABLE INDIVIDUALMakes productive contributions through

talent, knowledge, skills, and good work habits.

CONTRIBUTING TEAM MEMBERContributes individual capabilities to the achievement of group objectives, and works effectively with others.

COMPETENT MANAGEROrganizes people and resources toward the

effective and efficient pursuit of set objectives.

EFFECTIVE LEADERCatalyzes commitment to and

pursuit of a clear vision, stimulatinghigher performance standards.

LEVEL 5 EXECUTIVEBuilds enduring

greatness throughpersonal humility

and professional will.

LEVEL 1

LEVEL 2

LEVEL 3

LEVEL 4

Making sure the right decisions happen—no matter how difficult or painful—for the long-term greatness of the institutionand the accomplishment of its mission.

Level 5 LeadershipLevel 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.

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.

First Who…Then 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.

Confront theBrutal Facts

HedgehogConcept

DISCIPLINED THOUGHT

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.

Good to Great

Confront theBrutal Facts

HedgehogConcept

DISCIPLINED THOUGHT

BUILD UP

Level 5Leadership

First Who…Then What

DISCIPLINED PEOPLE

BREAKTHROUGH …

Culture ofDiscipline

TechnologyAccelerators

DISCIPLINED ACTION

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)

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

AUTOPSIES ANDANALYSIS GUIDED

BY THETHREE CIRCLES

DIALOGUE ANDDEBATE, GUIDED BY

THREE CIRCLES THE THREE

CIRCLES

THE COUNCIL

Getting The Hedgehog Concept An Iterative Process

EXECUTIVE DECISIONSGUIDED BY THE THREE CIRCLES

ASK QUESTIONSGUIDED BY THETHREE CIRCLES

Good to Great

Confront theBrutal Facts

HedgehogConcept

DISCIPLINED THOUGHT

BUILD UP

Level 5Leadership

First Who…Then What

DISCIPLINED PEOPLE

BREAKTHROUGH …

Culture ofDiscipline

TechnologyAccelerators

DISCIPLINED ACTION

HEIARCHICALORGANIZATIONS

GREATORGANIZATIONS

BUREAUCRATICORGANIZATIONS

START-UPORGANIZATIONS

HIGH

CULTURE OF

DISCIPLINE

LOW

ETHIC OF

ENTREPRENEURSHIP

HIGHLOW

The Good to Great Matrix of Creative Discipline

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. Don’t 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.

Rinsing Your Cottage Cheese

DISCIPLINED THOUGHT

BUILD UP

DISCIPLINED PEOPLE

BREAKTHROUGH …

DISCIPLINED ACTION

Nucor’s 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.

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).

Good to Great

Confront theBrutal Facts

HedgehogConcept

DISCIPLINED THOUGHT

BUILD UP

Level 5Leadership

First Who…Then What

DISCIPLINED PEOPLE

BREAKTHROUGH …

Culture ofDiscipline

TechnologyAccelerators

DISCIPLINED ACTION