Lauren Sterna Craig Crowell Collin Gillaspie Jennifer Eccles Scott Addison Clint Chapman

VS.  Drugstore.com launched and online pharmacy and mailed prescriptions to customers causing Walgreens stock to drop 40%  Walgreens coined the phrase “crawl, walk, then run” referring to entering the internet market slowly and picking up momentum along the way.  Drugstore.com did the opposite and went from run, walk, then crawl. Walgreens carefully planned their internet strategy and won the head to head with drugstore.com.

T ECHNOLOGY AND THE H EDGEHOG C ONCEPT  Technological sophistication is present in every good to great company, but Hedgehogs pioneer the application of carefully selected technology, not the technology itself.  pioneered the application of bar code scanners, it helped them keep up with inventory by linking backroom storage with frontline purchases.  pioneered laser welding on relatively inexpensive items that are used repeatedly (razor blades).

T ECHNOLOGY AND THE H EDGEHOG C ONCEPT  Good companies (Foxes) apply new technologies only after they have been pioneered by better companies.  Other companies (Wal-mart) decided to follow Kroger’s successful example by implementing the bar code system to keep track of inventory.

T ECHNOLOGY A CCELERATORS IN THE G OOD - TO -G REAT C OMPANIES  Abbott- computer technology to increase economic denominator of profit per employee.  Circuit City- sophisticated point-of-sale and inventory- tracking technologies.  Fannie Mae- sophisticated algorithms and computer analysis to more accurately assess mortgage risk.  Gillette- sophisticated manufacturing technology.  Kimberly-Clark- application of manufacturing-process technology to support their passionate pursuit of product superiority  Kroger- first to experiment with scanners, which it linked to the entire cash-flow cycle.

T ECHNOLOGY A CCELERATORS IN THE G OOD - TO -G REAT C OMPANIES  Nucor- application of the most advanced mini-mill steel manufacturing technology.  Philip Morris- packing and manufacturing technology.  Pitney Bowes- advanced technology in the mailroom.  Walgreens- application of satellite communications and computer network technology.  Wells Fargo- application of technologies that would increase economic denominator.

TECHNOLOGY AS AN ACCELERATOR, NOT A CREATOR OF MOMENTUM  Does the technology fit directly with your Hedgehog Concept?  Yes → Become a pioneer in the application of that technology  No → Then ask, do you need this technology at all?  Technology must create a clear Hedgehog Concept and stay within the three circles in order to make a great company.

TECHNOLOGY AS AN ACCELORATOR, NOT A CREATOR OF MOMENTUM  Unsustained pioneering in the application of technology  Chrysler (computer-aided design) Made excellent use of advanced computer-aided and other design technologies, but failed to link those technologies to a consistent Hedgehog Concept  Fannie-Mae  CEO, Jim Johnson and lead technology audit consultant, Bill Kelvie, took Fannie Mae from a 2 (nearly Stone Age technology) to a 3.8 (almost cutting edge)  Technology was a key part of what Fannie Mae leaders called “the second wind” of the transformation and acted as an accelerating factor

T HE T ECHNOLOGY T RAP  Albert Einstein named “Person of the 20 th Century” by Time Magazine  Known for his advances in science and technology  20 th century will be remembered for civil rights, democracy, and mostly technology

T HE T ECHNOLOGY T RAP  When good to great leaders were asked the top 5 factors in transition- technology was not one in 80% of cases  Mediocrity results from management failure not technology failure  Technology is not the primary cause of greatness or decline  Technology cannot turn a good firm into a great one or prevent disaster

N UCOR AND B ETHLEHEM S TEEL  Nucor was known as one of the most aggressive pioneers when it came to the application of mini-mill steel manufacturing  Became a cornerstone case at business schools  “The primary factors were the consistency of the company and our ability to project its philosophers throughout the whole organization, enabled by our lack of layers and bureaucracy.”  Bethlehem Steel tried the same type of technology, but it did not work as well.  Technology was the accelerator of Bethlehem’s demise.

T ECHNOLOGY AND THE FEAR OF BEING LEFT BEHIND  Good to great companies were not motivated by fear. They were driven by the fear of what they didn’t understand.  Good to great companies are motivated by a creative urge and an inner compulsion for excellence  No amount of technology can make you a level 5 leader or company

T ECHNOLOGY AND THE FEAR OF BEING LEFT BEHIND  In the late 1990’s during the technology bubble many companies were worried about how their company would adapt to the new technology  Great companies responded quietly and calmly. Others were fearful and frantic

 Coke teams up with Chromocell Corp. to develop innovative sweetener technology.  Cutting Carbon Emissions  Creating Sustainable Packaging (85 percent of our volume delivered in recyclable bottles) ADVANCES IN PRODUCTS

 Coke Free-style (touchscreen dispensers)  Climate Friendly Refrigeration with Greenpeace ADVANCES IN DISTRIBUTION

 The Coca-Cola Company announced that it has agreed to test fuel cells powered by environmentally friendly biogas to power its Odwalla juice packaging plant in Dinuba, Calif.  Panama’s 100 Percent Green Water Treatment Plant  First LED-Certified Coca-Cola Bottling Facility Opens In Baton Rouge ADVANCES WITHIN

SUMMARY  Technology and the Hedgehog Concept  Hedgehogs pioneer the application of carefully selected technology  Technology as an Accelerator  Does technology fit directly with your Hedgehog Concept?  Technology Trap  Technology and the fear of being left behind