Leadership Excellence Good to Great Damon Burton University of Idaho

Good to Great Premise 1.5 Year Study – Fortune 500 companies 2.Team Leader Jim Collins, Former Dean Stanford Business College 3.Identified companies who went from “good” to “great” and maintained gains for at least 15 years 4.Compared “great” companies to comparison companies that started at a similar level but didn’t make the leap, or if they did, failed to maintain it.

Good to Great Premise Great Companies were defined as having stock returns 3 times greater than the market average “great” companies actually showed returns 6.9 times the market average comparison companies made little progress during the 1985 to 2000 study period. 4.The 10 best corporations in the world only beat market averages by 2.8 times the market average.

Greatest Company Walgreens 1.$1 invested in Walgreens beat Intel 2:1, General Electric 5:1, Coca Cola 8:1 and the general stock market 15:1. 2.How did they go from a solid but average company to a GREAT one? 3.Comparison companies that failed to make the leap allowed Collins’ team to identify differences that led to greatness.

7 Characteristics of Great Companies 1.Level 5 Leadership, 2.First Who... Then What, 3.Confront the Brutal Facts, 4.The Hedgehog Concept, 5.A Culture of Discipline, 6.Technology Accelerators, 7.The Flywheel and the Doom Loop

Level 5 Leaders  Level 5 leaders are self-effacing, quiet, reserved even shy,  Level 5’s are a blend of personal humility and professional will.  They are more like Lincoln and Socrates than Patton and Caesar.  Level 5’s share many characteristics with “servant leaders.”

First Who... Then What  Before Level 5 leaders create a new vision, they get the “right people on the bus,” “the wrong people off the bus,” and the “right people in the right seats.”  Once the right people are on board, then they figure out where to go.  The “right” people are the key to great companies.  These people are given autonomy to determine how best to do their jobs.

Confront the Brutal Facts but Never Lose Faith  Based on the story of prisoner-of-war James Stockdale, great companies confront an interesting paradox.  You must maintain unwavering faith that you can and will ultimately be successful.  At the same time, you must have the discipline to confront the brutal facts of your current reality.  If you don’t accept “how bad it really is,” you can’t develop a plan to make things better.

The Hedgehog Concept  Just because something is your core business and just because you’re been doing it for a long time, it does not mean you can be really good at it—even the best.  You must be really good at something if that core product is going to make your company “GREAT!”  The hedgehog has a simple, but highly effective, success strategy.

The 3 Intersecting Circles  Circle 1 – What are you deeply passionate about?  Circle 2 – What can you be really good at, even the best?  Circle 3 – What drives your on-going success as an organization?  The Intersection of those 3 circles represents your “Hedgehog Principle.”  Your “hedgehog principle” must be based on facts NOT emotion, history or wishful thinking.

A Culture of Discipline  When you have disciplined thought, you don’t need hierarchy.  When you have disciplined thought, you don’t need bureaucracy.  When you have disciplined action, you don’t need excessive controls or rules.  When you combine a culture of discipline with an ethic of positive change, great organizations are formed.

Technology Accelerators  Great organizations think differently about technology.  They never use technology as the primary means for creating change.  Instead, they are pioneers in the application of “carefully selected technologies.”  Technology is a great tool, BUT never the “magic bullet” that creates success.

The Flywheel and the Doom Loop  Dramatic change programs seldom create the leap from good to great.  Great never occurs based on a single move or choice, a grand program, an epic innovation, a lucky break, or a magic moment.  The process resembles relentlessly pushing a giant heavy flywheel, turn upon turn, building momentum slowly until a point of breakthrough success.  The “doom loop” is expecting dramatic change with a major idea, event or program.