Good to Great Chapter 6 A Culture of Discipline Kelsey Combest Ryan Lacy Katie Ficken

A Culture of Discipline Few start-ups become great companies partly because they respond to growth and success in the wrong way Greater complexity causes company to trip over success Too many new people New customers New orders New products Lack of planning, accounting, systems, and hiring constraints create friction

A Culture of Discipline Bureaucratic cultures arise to compensate for incompetence and lack of discipline, which arise from having the wrong people on the bus in the first place. If you get the right people on the bus, and the wrong people off, you don’t need a bureaucratic system. Abbott Laboratories Responsibility Accounting Freedom within a framework

A Culture of Discipline The main idea: Build a culture full of people who take disciplined action within the three circles, fanatically consistent with the Hedgehog concept Build a culture around freedom and responsibility Have self-disciplined people willing to fulfill their responsibilities Don’t be a tyrannical disciplinarian Adhere to the Hedgehog Concept, and create a “stop doing list”

Reminder The Hedgehog Concept Three intersecting circles What can we be the best at in the world? What drives our economic engine? Where is our passion? Gives focus and purpose and aligns everyone to a common sight of how things are and will be.

Freedom and Responsibility within a Framework Good to great companies build a consistent system with clear constraints, but they also give people freedom and responsibility within the framework of that system. Disciplined people Disciplined thought Disciplined action

Rinsing Your Cottage Cheese Dave Scott One more small step added to all the other small steps to create a consistent program of superdiscipline. Much of the answer to the question of “good to great” lies in the discipline to do whatever it takes to become best within carefully selected arenas and then to seek continual improvement from there.

Rinsing Your Cottage Cheese Wells Fargo – Carl Reichardt Bank of America

A Culture, Not a Tyrant Discipline “Whereas good-to-great companies had Level 5 leaders built an enduring culture of discipline, the unsustained comparisons had Level 4 leaders who personally disciplined the organization through sheer force.”

A Culture, Not a Tyrant Burroughs – Ray MacDonald Rubbermaid – Stanley Gault Chrysler – Lee Iacocca Disciplined action without disciplined understanding of the three circles cannot produce sustained great results.

Fanatical Adherence to the Hedgehog Concept Pitney Bowes holds monopoly on U.S. postage machines and falls apart when Government steps in Fred Allen shifts circles and sticks to them “Anything that does not fit with our Hedgehog Concept, we will not do. We will not launch unrelated businesses. We will not make unrelated acquisitions. We will not do unrelated joint ventures. If it doesn’t fit, we don’t do it. Period.”

Fanatical Adherence to the Hedgehog Concept What NOT TO do R.J. Reynolds leaves circles of tobacco industry Went down because of it and lost 2 Billion dollars What TO do Phillip-Morris invested in similar non-healthy items Stayed in their circles and succeeded

Fanatical Adherence to the Hedgehog Concept Nucor Steel Kept things simple and created a culture of equality Passion for eliminating class distinctions Economic denominator of profit per ton of finished steel Could become the best in the world at harnessing culture and technology to produce low-cost steel

Having a “Stop Doing” List It takes discipline to say “No, thank you” to big opportunities if they’re outside of your circles Kimberly-Clark stopped with the titles in the office Budgeting is not how much to spend in each activity, but “Which areas should be fully funded, and which should not be funded at all”

Takeaways A culture of discipline requires people who adhere to a consistent system AND gives people freedom and responsibility within that framework. A tyrant who disciplines is very dysfunctional, but a culture of discipline is highly functional and leads to sustained results. To gain the results you want, it takes a strict adherence to your Hedgehog Concept and to be willing to say no to opportunities that fall outside the three circles.

References Collins, Jim. Good to Great. New York, NY: HarperCollins Publishers, Inc., 2001. p 120-43. http://hedgehogconcepts.com/index.php?page_title=Apple’s+Great+Hedgehog+Concept http://citrixblogger.org/2008/04/29/the-hedgehog-concept/