Good To Great By Jim Collins Chapter 7: Technology Accelerators Team 1

Crawl, Walk, then Run Companies should respond to new technologies by first crawling, then walking, and finally running Crawl – Experiment with the new technology and determine if it fits into the Hedgehog Concept Walk – Find unique ways to utilize and implement the new technology within the Hedgehog Concept Run – Fully implement the new technology and become an expert in that field

Walgreens vs. drugstore.com During the dotcom era, drugstore.com posed a threat to Walgreens In light of new internet technology, Walgreens began by experimenting with a Web site (crawl) Walgreens then found ways it could tie the Internet to its inventory-and-distribution model as well as its convenience concept (walk) Walgreens then launched its Internet site and pioneered a computer network system (run) What about drugstore.com? Massive losses and layoffs

“A company will only become a great company if it figures out how to apply technology to a coherent concept that reflects understanding of the three circles.” (p. 147)

Technology and the Hedgehog Concept Great companies adapt and endure through technology changes Good-to-great companies think differently about technology Technology is used as a tool to accelerate momentum after breaking through Good-to-great companies are pioneers in the application of their selected technologies

Examples Abbott – pioneered the application of computer technology to increase profit per employee Circuit City – pioneered the application of point-of-sale and inventory-tracking technologies Fannie Mae – pioneered the application of algorithms and computer analysis Gillette – pioneered the application of manufacturing technology Kimberly-Clark – pioneered application of manufacturing-process technology Kroger – pioneered the application of bar code scanners

Examples Nucor – pioneered the application of mini-mill steel manufacturing technology Philip Morris – pioneered the application of packaging and manufacturing technology Pitney Bowes – pioneered the application of technology in the mailroom Walgreens – pioneered the application of satellite communications and computer networks technology Wells Fargo – pioneered the application of technology that would increase profit per employee

Technology as a Momentum Accelerator, not Creator Technology becomes important only after a company discover its Hedgehog Concept and after it reaches a breakthrough “The pioneering application of technology usually came late in the transition and never at the start.” (p. 152)

Ask These Questions Does the technology fit directly with the Hedgehog Concept? If yes, then become pioneers in the application of the technology If no, ask, do we need the technology at all? If yes, then all you need is parity (you don’t need the best) If no, then the technology is irrelevant (you don’t need the technology at all)

Technology as a Momentum Accelerator It is important to note that good-to-great companies remain disciplined within the frame of their Hedgehog Concept when they pioneer the application of technology Once they understand the relevant technologies, they become fanatical and creative

What Technology Cannot Do… Make a company great Create sustained results Examples: Chrysler and computer-aided design Harris and printing electronics Rubbermaid and manufacturing “Technology without a clear Hedgehog Concept, and without the disclipine to stay within the three circles, cannot make a company great.” (p. 153)

Technology and Culture Time Magazine picked Albert Einstein as “Person of the 20th Century” Time also picked Jeff Bezos of Amazon.com as “Person of the Year” for 1999 This shows our cultural obsession with technology and its implications

Technology in the Study “We were quite surprised to find that fully 80 percent of the good-to-great executives we interviewed didn’t even mention technology as one of the top five factors in the transition.” (p. 155) Take for example Nucor: Technology was part of their equation, but a secondary part

The Technology Trap “Technology is important – you can’t remain a laggard and hope to be great. But technology by itself is never a primary cause of either greatness or decline.” (p. 157) Examples: Remington Rand and UNIVAC De Havilland and the Comet Westinghouse and the AC electrical system

Strategy Good-to-great companies have strategies that focus on creativity, improvement, and excellence Wayne Sanders of Kimberly-Clark: “We’re just never satisfied. We can be delighted, but never satisfied.” (p. 160) The comparison companies have strategies that are reactionary – they form their strategy in response to what their competition is doing

“Those that stay true to these fundamentals and maintain their balance, even in times of great change and disruption, will accumulate the momentum that creates breakthrough momentum.” (p. 161)

Takeaways Good-to-great companies think differently about technology Good-to-great companies only use a technology if it fits within their Hedgehog Concept and then become a pioneer in the application of that technology Technology is only an accelerator of momentum, not a creator of momentum