Good to Great Why some companies make the Leap and Others Don’t An Empirical Study by Jim Collins

January 2004 Clearwater, Fl.

Good to GreatWhy some companies make the Leap and Others

Don’t

An Empirical Study by Jim Collins


Key Concepts

Level 5 LeadershipFirst Who, Then WhatConfront the Brutal FactsHedgehog PrincipleCulture of DisciplineTechnology AcceleratorsThe Flywheel and Doom loop


Level 5 Leadership

This is the leader who exhibits the paradoxical qualities of personal humility and professional will.

Leadership that is ambitious, but the ambitions are for the company, not themselves.

Set up successors for greater success in the next generation.


Level 5 Leadership

Compelling modesty and self-effacing.

Fanatically driven to produce sustained results

They are more a plow horse that show horse.

The window and the mirror phenomenon.


First Who…Then what…

First get the right people on the bus and the wrong people off the bus, and then decide where to go.

People are not your most important asset, the right people are.

In great companies, the throttle on growth was not technology, or markets, competition or products, it was the ability to get and keep enough of the right people.


First Who…Then What

Be rigorous not ruthlessWhen in doubt, don’t hire keep lookingWhen you know you need to make a people

change, act.Put your best people on your biggest

opportunities, not your biggest problems.

Debate vigorously to find the best answers, then unify behind the decision regardless of the parochial interests.


Confront the Brutal Facts

(yet NEVER loose faith) Consider the Stockdale Paradox: you must

maintain unwavering faith that you will prevail in the end AND AT THE SAME TIME have enough discipline to confront the brutal facts of the situation, what ever they might be.

Create endless opportunity for Truth to be heard

Lead with questions not answers Engage in dialogue and debate, not coercion Conduct autopsies without blame



(yet NEVER loose faith)Build red flag mechanisms that turn

information into information that cannot be ignored.

Leadership is not charisma or just vision, it begins with getting people to confront the brutal facts, and to act on the implications.



(yet NEVER loose faith)

Do not worry about motivating people, spend time figuring out how not to de-motivate people.

Ignoring the brutal facts is a key way to de-motivate people.


The Hedgehog Principle

You must have deep understanding of:What are you absolutely passionate about?What do you understand that you CAN be

the best in the world at?What drives your economic engine?

Use the Counsel (page 115-116) to get understand your Hedgehog.


The Hedgehog Principle

Goals as strategies are based on the hedgehog concept for the business.

It took four years on average for the companies in the study to “Get” their hedgehog concept.

There is no need to be in a great industry to produce great results.


A Culture of Discipline

You want self-disciplined people, not discipline.

Self-discipline people produce disciplined thought, which leads to disciplined action in an egoless manner.

This culture produces fanatical adherence to the hedgehog concept.



With disciplined action you do not need controls.

There is a required duality Adherence to consistent system or framework Yet give freedom and responsibility with in that

framework.

The key is to combine a culture of discipline with the ethic of entrepreneurship.



This is not a tyrannical leader disciplining people; it is a culture of people who are fanatically disciplined with the framework of the organization, yet who are able to think and act within that framework.

The more an organization stays within its three circles with rigor, the more it has opportunities for growth.



The purpose of budgeting is not to decide how much each activity gets, but do decide on which arenas best fit with the hedgehog concept and should be FULLY FUNDED and which should not be funded at all

The stop doing list is infinitely more valuable and important than the to-do list.


Technology Acceleration

Think differently about technology and technology change.

Pioneers in the CAREFUL application of SELECTED technologies.



Key questions about technology is “does the technology fit directly with your hedgehog concept?” If the answer is yes, then be a pioneer in that application. If not settle for parity or ignore the technology.

Technology is an accelerator of momentum, not a creator of it.



Give the same technology to another company and the results would be mediocre at best because the company did not understand how the technology fit into its hedgehog concept.

Great companies respond to technology with thoughtful creativeness driven by a compulsion to turn unrealized potential into results.



Crawl, walk, run during times of technology change.

The technologies are not the thing that transforms the company, but allows the company to be more efficient.


The Flywheel and the Doom Loop

“Keep on swimming, keep on swimming, keep on swimming, swimming, swimming…..” (Dori in Finding Nemo).

The flywheel builds momentum slowly at first, and eventually becomes self generating.

The flywheel concept is the process of relentlessly pushing in one direction, turn after turn, while the wheel gains momentum until the point of breakthrough and beyond.



The doom loop is the opposite of that.

No time was spent on creating alignment, motivating the troops, or managing change. Under the right conditions, those things take care of themselves.



Alignment follows FROM results and moments, not the other way.

The flywheel is the key to managing the pressures of Wall Street.


Built to Last by Jim Collins


Concepts from Built to Last

Clock Building, not time tellingBuild an organization that can last

through several generations of multiple leaders and product cycles.



The Genius of AND…Embrace both extremes of an idea…

rather that A or B, figure out how to do A and B, i.e., purpose AND profit, freedom AND responsibility, etc.



Core Ideology Instill core values (essential and

enduring tenets) and core purpose (the reason for existence.)

These are the most important principles in guiding decision making and inspiring people.



Preserve the core AND stimulate progress Keep the core ideology while stimulating

change and growth in everything else. Change practices and strategies, while

holding firm on purpose and values Achieve Big Harry Audacious Goals (BHAGs)

that are consistent with Core Ideology.


Exercise based on the Good to Great Principles


Bankrupt Body Balance for

PerformanceLet’s make Body Balance for Performance go out of business

What could you do to put Body Balance for Performance, Inc, and your center out of business quickly?



We just laid out all of the things that could be done to put us all out of business.

Look at that list and see what you are doing that is on the list.

Write those things down so that you have your Stop Doing List



What are the activities and behaviors that are exactly opposite of the bankrupting behaviors?


The Flywheel

What activities need to be put on the stop doing list?

What activities need to be put on the to do list?

Now don’t do and do those thing ONLY.


Body Balance for Performance’s

Hedgehog Concept


What are we Passionate About?

Helping people, whether franchisee or client, improve their condition in life

Revolutionizing Golf Learning


What do we understand that we can be the best in

the world at?We can be the best golf health and fitness franchising business in the world

The implication then is that you all understand that you can be the best golf and fitness delivery professional in the world.


What Drives our Economic Engine?

Body Balance for Performance, Inc.’s economic engine is net profit per franchise.

What drives the economic engine for your center?


Be Great!

Good to Great Why some companies make the Leap and Others Don’t An Empirical Study by Jim Collins

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