Managers Aptitude Training MAT Managers Aptitude Training From Good to Great

Good is the Enemy of Great Inside the Black Box What’s Inside The Black Box Good Results

Good is the Enemy of Great Some Clues Executive Compensation as a key driver in Corporate performance G-t-G’s no evidence that they spent more time on long-range strategic planning than the comparison companies G-t-G’s focused equally on what no to do an what to stop doing Technology can accelerate a transformation, but technology cannot cause a transformation

Good is the Enemy of Great Some Clues Mergers play no role igniting transformation; two big mediocrities joined together never make one great company G-t-G’s paid scant time to managing change, motivating people, creating alignment. Under the right conditions, the problems of commitment, alignment, motivation, and change largely melt away They produced a truly revolutionary leap in results, but not by a revolutionary process Greatness, it turns out, is largely a matter of conscious choice

Good is the Enemy of Great BREAKTHROUGH! BUILDUP… LEVEL 5 LEADERSHIP FIRST WHO… THEN WHAT CONFRONT THE BRUTAL FACTS HEDGEHOG CONCEPT CULTURE OF DISCIPLINE TECHNOLOGY ACCELERATORS DISCIPLINED PEOPLE DISCIPLINED THOUGHT DISCIPLINED ACTION FLYWHEEL

Good is the Enemy of Great Core Values are Key Profitability The Purpose Good to Great Concepts Sustained Results Built to Last Enduring Company Key Dynamic of Preserve the Core / Stimulate Progress

Level 5 Leadership Level 5 Level 4 Level 3 Level 2 Level 1 Level 5 Executive Builds enduring greatness through a paradoxical blend of personal humility and professional will Executive Leader Catalyses commitment to and vigorous pursuit of a clear and compelling vision, stimulating higher performance standards Competent Manager Organizes people and resources toward the effective and efficient pursuit of predetermined objectives. Contributing Team Member Contributes individual capabilities to the achievement of group objectives and works effectively with others in a group setting. Highly Capable Individual Makes productive contributions through talent, knowledge, skills, and good work habits. Level 4 Level 3 Level 2 Level 1

Level 5 Leadership Professional Will Personal Humility Creates superb results, a clear catalyst in the transition from g->g Demonstrates an unwavering resolve to do whatever must be done to produce the best long term results, no matter how difficult Sets standard of building an enduring great company; will settle for nothing less Looks in the mirror, not out the window, to apportion responsibility for poor results, never blaming other people, external factors, or bad luck Personal Humility Demonstrates a compelling modesty, shunning public adulation: never boastful Acts with quiet, calm determination; relies principally on inspired standards, not inspiring charisma, to motivate Channels ambition into the company, not the self; sets up successors for even greater success in the next generation Looks out the window, not in the mirror, to apportion credit for the success of the company – to other people, external factors, and good luck.

First who… then what FLYWHEEL BREAKTHROUGH! BUILDUP… LEVEL 5 LEADERSHIP FIRST WHO… THEN WHAT CONFRONT THE BRUTAL FACTS HEDGEHOG CONCEPT CULTURE OF DISCIPLINE TECHNOLOGY ACCELERATORS DISCIPLINED PEOPLE DISCIPLINED THOUGHT DISCIPLINED ACTION FLYWHEEL

First Who… Then What “Who” rather than “What” People joint the bus primarily because of where it is going No question of how to motivate people Great vision without great people is irrelevant “Weak generals, strong lieutenants” Placeholders, rather than highly capable executives We need eyeball-to-eyeball ferociously debating in search of the best answers You get the best people, you build them into the best managers in the industry, and you accept the fact that some of them will be recruited to become the drivers of other companies. I don’t know where we should take this company, but I do know that if I start with the right people, ask them the right questions, and engage them in vigorous debate, we will find a way to make this company great.

Great-to-Great Companies First Who… Then What Level 5 + Management Team Great-to-Great Companies First Who Get the right people on the bus. Build a superior executive team Then What Once you have the right people In place, figure out the best path to greatness

Non Sustained Profitability Companies First Who… Then What A “Genius with A Thousand Helpers” Non Sustained Profitability Companies First What Set a vision for where to drive the bus. Develop a road map for driving the bus. Then Who Enlist a crew of highly capable “helpers” to make the vision happen

First Who… Then What Rigorous, not ruthless Yes, compensation and incentives are important, but for very different reasons in g->g companies. The purpose of a compensation system should not be to get the right behaviors from the wrong people, but to get the right people on the bus in the first place, and to keep them there Reject the old adage that people are your most important asset. In a g->g transformation, people are not your most important asset. The “right” people are. Rigorous, not ruthless

Arguing and debate is key, First Who… Then What Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people When in doubt, don’t hire – keep looking When you know you need to make a people change, act Put your best people on your biggest opportunities, not your biggest problems Arguing and debate is key, But unifying fully behind a decision, regardless of parochial interests is success

Confront the brutal facts (yet never lose faith) BREAKTHROUGH! BUILDUP… LEVEL 5 LEADERSHIP FIRST WHO… THEN WHAT CONFRONT THE BRUTAL FACTS HEDGEHOG CONCEPT CULTURE OF DISCIPLINE TECHNOLOGY ACCELERATORS DISCIPLINED PEOPLE DISCIPLINED THOUGHT DISCIPLINED ACTION FLYWHEEL

Confront the brutal facts (yet never lose faith) “There is no worse mistake in public leadership than to hold out false hopes soon to be swept away.” Winston S. Churchill, The Hinge of Fate

Confront the brutal facts (yet never lose faith) There is nothing wrong with pursuing a vision for greatness. After all the g->g companies also set out to create greatness. But, unlike the comparison companies, the g->g companies continually refined the path to greatness with the brutal facts of reality. Leadership is about vision. Leadership is equally about creating a climate where the truth is heard Lead with Questions, not Answers Engage in dialogue and debate, not Coercion Conduct autopsies without blame Build red flag mechanisms We will never give up. We will never capitulate. It might take a long time, but we will find a way to prevail.

The Hedgehog concept (simplicity within the three circles) BREAKTHROUGH! BUILDUP… BUILDUP… LEVEL 5 LEADERSHIP FIRST WHO… THEN WHAT CONFRONT THE BRUTAL FACTS HEDGEHOG CONCEPT CULTURE OF DISCIPLINE TECHNOLOGY ACCELERATORS DISCIPLINED PEOPLE DISCIPLINED THOUGHT DISCIPLINED ACTION FLYWHEEL

The Hedgehog concept (simplicity within the three circles) What you are deeply passionate about What you can be the best in the world at What drives your economic engine

The Hedgehog concept (simplicity within the three circles) What you are deeply passionate about The key is to understand what your organization can be the best in the world at, and equally important what it cannot be the best at – not what it “wants” to be the best at. The Hedgehog Concept is not a goal, strategy, or intention; it is an understanding.

The Hedgehog concept (simplicity within the three circles) If you cannot be the best in the world at your core business, then your core business cannot form the basis of your Hedgehog Concept. The “best in the world” understanding is a much more severe standard than a core competence. You might have a competence but not necessarily have the capacity to be truly the best in the world at that competence. Conversely, there may be activities at which you could become the best in the world, but at which you have no current competence. What you can be the best in the world at

The Hedgehog concept (simplicity within the three circles) What drives your economic engine To get insight the drivers of your economic engine, search for the one denominator that has the single greatest impact. G->G companies set their goals and strategies based on understanding; comparison companies set their goals and strategies based on bravado.

A Culture of Discipline BREAKTHROUGH! BUILDUP… BUILDUP… LEVEL 5 LEADERSHIP FIRST WHO… THEN WHAT CONFRONT THE BRUTAL FACTS HEDGEHOG CONCEPT CULTURE OF DISCIPLINE TECHNOLOGY ACCELERATORS DISCIPLINED PEOPLE DISCIPLINED THOUGHT DISCIPLINED ACTION FLYWHEEL

A Culture of Discipline Freedom is only part of the story and half of the truth…That is why I recommend that the Statue of Liberty on the East Coast be supplanted by a Statue of Responsibility on the West Coast. -Victor E. Frankl, Man’s Search for Meaning

A culture of discipline Build a culture full of people who take disciplined action within the three Circles, fanatically consistent with the Hedgehog Concept Build a culture around the idea of freedom and responsibility, within a framework Fill that culture with self-disciplined people who are willing to go extreme lengths to fulfill their responsibilities. They will “rinse their cottage cheese.” Don’t confuse a culture of discipline With a tyrannical disciplinarian Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection of the three circles. Equally important, create a “stop doing list” and systematically unplug anything extraneous.

Technology Accelerators BREAKTHROUGH! BUILDUP… BUILDUP… LEVEL 5 LEADERSHIP FIRST WHO… THEN WHAT CONFRONT THE BRUTAL FACTS HEDGEHOG CONCEPT CULTURE OF DISCIPLINE TECHNOLOGY ACCELERATORS DISCIPLINED PEOPLE DISCIPLINED THOUGHT DISCIPLINED ACTION FLYWHEEL

Technology Accelerators Key Points: Think Different Avoid technology fads and bandwagons, yet they become pioneers In the application of carefully selected technologies The key question about any technology is, Does it fit directly with your Hedgehog Concept? Yes: become a pioneer No: settle for parity or ignore it entirely Technology as an accelerator not a creator of it Give leading-edge technologies to direct comparisons for free, and the comparisons still would have failed to produce anywhere near the same results How a company reacts to technological change is a good indicator of its inner drive for greatness versus mediocrity.

The flywheel and the doom loop BREAKTHROUGH! BUILDUP… BUILDUP… LEVEL 5 LEADERSHIP FIRST WHO… THEN WHAT CONFRONT THE BRUTAL FACTS HEDGEHOG CONCEPT CULTURE OF DISCIPLINE TECHNOLOGY ACCELERATORS DISCIPLINED PEOPLE DISCIPLINED THOUGHT DISCIPLINED ACTION FLYWHEEL