A Review of GOOD _ TO _ GREAT By Jim Collins Presented by Arnold Goldman President of The Alternative Board of South Broward

Good To Great “Good is the enemy of Great” Disciplined People –Level 5 Leadership –First Who then What Disciplined Thought –Confront the Brutal Facts –The Hedgehog Concept Disciplined Action –A Culture of Discipline –Technology Accelerators, THE FLYWHEEL

Greatness is Not a Business Idea Video

CHOICE OF COMPANIES Sample companies selected on the basis of sustained 15 year returns of at least three times the market. Focus of the book was on “traits” these companies had in common

COMPANIES IN THE STUDY Good–to-Great CompaniesDirect Comparison Companies Abbott LabsUpjohn Circuit CitySilo Fannie MaeGreat Western GilletteWarner- Lambert Kimberly-ClarkScott Paper KrogerA&P NucorBethlehem Steel Philip MorrisR.J.Reynolds Pitney BowesAddressograph WallgreensEckerd Wells FargoBank of America

Good is the Enemy of Great Good is the Enemy of Great (1:07)

They focused equally on what NOT to do and what to STOP doing Chapter 1 (Disciplined People) GOOD IS THE ENEMY OF GREAT!

You do not have to be big to be great –(:23)

DISIPLINED PEOPLE Level 5 Leadership

Video Where did the level 5 finding come from? Autopsies without blame (1:56)

LEVEL 5 LEADERSHIP Compared to high profile leaders with big personalities, good to great leaders are self –effacing, quiet, reserved, even shy Level 5 leaders are a paradoxical blend of personal humility and professional will They are more like Lincoln and Socrates rather than Patton or Caesar

LEVEL 5 LEARDER TRAITS… Ambition first and foremost for the company Concern for the company’s success rather than personal riches and renown They are fanatically driven and infected with an incurable need to produce results

LEVEL 5 LEARDER TRAITS They will fire a brother, closed a manufacturing plant, if that what it takes for the company to be successful They look in the mirror to apportion responsibility for poor results Looks out the window to apportion credit for the success of the company

DISIPLINED PEOPLE The two most significant attributes of Great Companies: Leadership »People

First Who … The What First Who Concept The Right People are Self Motivated

Chapter 3 Disciplined People FIRST WHO….THEN WHAT Leaders who ignited the transformation from good too great did not figure where to drive the bus (the company) and then find the people to take it there Level 5 leaders know that if they get the right people on the bus, in the right seats on the bus, and the wrong people off the bus, they will figure out how to take it someplace great.

3 Simple Truths: If you begin with “who” rather than “what” you can more easily adapt to a changing world If you have the right people on your bus the problem of how to motivate and manage people largely go away If you have the wrong people on the bus you will never become a great company

COMPENSATION The purpose of a compensation system should not to get the right behaviors from the wrong people, but to get the right people on the bus in the first place.

RIGOROUS, NOT RUTHLESS RUTHLESS MEANS HACKING AND CUTTING, ESPECIALLY IN DIFFICULT TIMES, OR WONTONLY FIRING PEOPLE WITHOUT THOUGHTFUL CONSIDERATION RIGOROUS MEANS CONSISTANTLY APPLYIONHG EXATINFG STANDARDS AT ALL TIMES AND ON ALL LEVELS, ESPECIALLY IN UPPER MANAGEMENT

HOW TO BE RIGOROUS 3 DISIPLINES Practical Discipline #1 –When in doubt don’t hire Practical Discipline #2 –When you know you have to make a people change… act! Practical Discipline #3 –Put your best people on your biggest opportunity, NOT your biggest problem

HOW TO FIND THE RIGHT PEOPLE FOR YOUR BUS? You hire for aptitude and fire for attitude How will a new hire act What motivates an employees

BEHAVIORAL ASSESSMENTS and COMMUNICATION DISC WILL TELL YOU HOW SOMEONE WILL ACT IN YOUR ORGANIZATION PIAV (Personal Interests Attitudes & Values ) will tell you what motivates an employee

First Who … The What First Who Concept The Right People are Self Motivated

CONFRONT THE BRUTAL FACTS Video Paranoid Neurotics The way you confront the brutal facts can mean the difference between good and great (2:07)

The Stockdale Paradox Retain faith that you will prevail in the end regardless of the difficulties –AND at the same time… Confront the most brutal facts of your current reality, whatever they might be

The Stockdale Paradox (2:35)

Chapter 3 Chapter 4 Disciplined Thought 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

Create a Climate Where Truth is Heard 4 Practices 1Lead with questions, not answers 2Engage in dialogue and debate, not coercion 3Conduct autopsies, without blame 4Build a “red flag” mechanism

How Do We Motivate Our Employees? If you have the right people on your bus they will be self motivated One of the primary ways to de- motivate people is to ignore the brutal facts of reality

Chapter 5 Disciplined Thought THE HEDGEHOG CONCEPT ( Simplicity within the Tree Circles) What is the Hedgehog Concept (1:56) How to find your company’s 3 circles (3:35)

Chapter 4 Disciplined Thought THE HEDGEHOG CONCEPT ( Simplicity within the Tree Circles) What is the Hedgehog Concept (1:56) How to find your company’s 3 circles (3:35)

3 Circle / 3 Questions 1.What failed and we should stop doing 2.What is working and we should continue or consider to continue 3.What is there that might meet the 3 circles test and we should seriously consider doing

Are you a Hedgehog or a Fox? Level 5 leaders who built good – great companies were, to one degree or another, Hedgehogs Those who led the comparison companies tended to be Foxes

Hedgehog Concept The Hedgehog Concept is NOT a goal, strategy, or intention… IT IS AN UNDERSTANDING

How Long Does It Take To Develop A Hedgehog? It took 4 years on average for Good- to-Great companies to develop a Hedgehog Concept

Understanding the Three Circles Understand what your company 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

Understanding the Three Circles Understanding what you are passionate about

Understanding the Three Circles Recognize what your economic engine is Audio: The 3 circles and the resource engine (:40)

Understanding 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 Good –to-Great companies set their goals and strategies based on understanding

The Council The council consists of a group of dedicated people who participate in dialogue and debate guided by the three circles THE ALTERNATIVE BOARD

10 Characteristics of the Council 1.The council exists as a device to gain understanding about important issues facing the organization 2.The Council usually consists of 5 to 12 people ( 4 -8) 3.Each Council member has the ability to argue and debate in search of understanding 4.Each Council member retains respect of every other Council member, without exception 5.Council members come from a range of perspectives

10 Characteristics of the Council 6.The Council is a standing body, not an ad hoc committee assembled for a specific project 7.The Council consistently meets on a periodical basis; once a week; month or quarterly 8.The council does not seek consensus, recognizing that consensus decisions are often at odds with intelligent decisions. The final decision is that of the CEO 9.The Council is an “informal” body, not listed in any org chart or formal documentation 10The council is made up of key executives, but is not limited to management only

Chapter 6 Disciplined Action A Culture of Discipline Amgen’s culture of Discipline (2:19) How do you do stop doing

Chapter 6 Disciplined Action A Culture of Discipline Build a culture full of people who take disciplined action within the three circles, fanatically consistent with the Hedgehog Concept

A Culture of Discipline 1.)Build a culture around the idea of freedom and responsibility, within a framework 2.)Fill that culture with self disciplined people who are willing to go to extreme lengths to fulfill their responsibilities

A Culture of Discipline 3.)Don’t confuse a culture of discipline with a tyrannical disciplinarian 4.)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

A Culture of Discipline Good-to-Great companies built a consistent system with clear constraints, but the also gave people freedom and responsibility within the framework of that system. They hired self disciplined people who didn’t need to be managed, and then managed the system, not the people.

It Takes Discipline To Say No The Good-to-Great companies at their best followed a simple mantra: –“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!”

Chapter 7 Disciplined Action Technology Accelerators Good-to-Great companies use technology as an accelerator of momentum, not a creator of it. Crawl; Walk; Run can be a very effective approach, even during times of rapid and radical technological change

The Flywheel The Flywheel Concept Harnessing the Flywheel (.40)

The Flywheel Good-to-Great comes about by a cumulative process – step by step; action by action; decision by decision; turn by turn of the Flywheel

Chapter 8 The Flywheel Good-to-great transformations never happen in one fell swoop There was no single defining action; no grand program; no one killer innovation; no solitary lucky break; no wrenching revolution

The Doom Loop Rather than accumulating momentum comparison companies tried to skip buildup and jump right into breakthrough. –With disappointing results they’d lurch back and forth failing to maintain a consistent direction.

4 Core Ideas For Keeping a Flywheel Accelerating 1.)Clock Building; Not Time Telling - Build an organization that can endure and adapt through multiple generations and product cycle

4 Core Ideas For Keeping a Flywheel Accelerating 2.)Genius of AND –Personal humility AND professional will –Embrace both extremes on a number of dimensions at the same time

4 Core Ideas For Keeping a Flywheel Accelerating 3.)Core Ideology –Instill core values and purpose as principles to guide decisions and inspire people throughout the organization over a long period of time

4 Core Ideas For Keeping a Flywheel Accelerating 4.)Preserve the Core / Stimulate Progress –Change practices and strategies while holding core values and purpose fixed

Preserve the Core / Stimulate Progress Preserve the Core / Stimulate Progress (1:57)

Preserve the Core / Stimulate Progress As time passes and new ideas are discussed Good-to-Great companies always preserve their core values while stimulating progress

BHAG Big Hairy Audacious Goal

BHAG How do you tell if you have a good BHAGG