2. Overview of Components: The Build Up: Disciplined People Level 5 Leadership First Who Then What Disciplined Thought Confront the Brutal Facts The Breakthrough: Hedgehog Concept Disciplined Action Culture of Discipline Technology Accelerators

3. The Flywheel  The flywheel expresses the transition that good-to-great companies experience after choosing a direction based on their hedgehog concept and enacting it with disciplined people who exercised disciplined thoughts.  It captures the overall feel of what it was like inside the companies as they went from good to great.  A representation of work building on top of itself to create momentum for success. The Doom Loop  The doom loop captures the methods of the comparable companies that did not transition to greatness.

4.  Push with great effort to turn the flywheel, building upon earlier work to compound invested effort to create unstoppable momentum, and thus a sustainable great company once it takes off. The breakthrough is seen in the companies stock prices and represents all the combined efforts  It is not one single great push, it is all of the pushes and ideas added together in an overall accumulation of effort applied in a consistent direction to get the flywheel spinning. This idea contradicts what the media portrays

6. What's important ? -To know the process is long and built up. -There is no one transition point. -The breakthrough appears dramatic and revolutionary on the outside but it is more like an organic development process from the inside.

7.  Many interlocking pieces that build one upon another  Evolves over time, the transition is gradual  Companies require thousands of pushes on the flywheel big and small  Each push is a step in the direction to becoming great  They accumulate one on top of another  Takes years to build up momentum

8.  A push in the flywheel Buying North American bottling operations into Coca-Cola's ownership Coca-Cola CEO Muhtar Kent and a group of senior executives from Coca-Cola and CCE will oversee efforts to join CCE's bottling plants with Coca-Cola's fountain and juice businesses into a new entity called Coca-Cola Refreshments.

9.  What did they call what they where doing?  Did they have a name for it?  The answer: “They didn’t call it anything.” No launch event, no tag line, no programmatic feel  The transformation from within  Buildup followed by Breakthrough

10.  Following the buildup-breakthrough flywheel model is not just a luxury of circumstance.  Good to great companies followed this model no mater how bad the short term circumstances.  This also applies to managing the short- term pressures of Wall Street.

11.  Applies to managing the short-term pressures of Wall Street.  David Maxwell- from the end of 1984 to 2000, $1 invested in Fannie Mae multiplied 64 times, beating the general market  Blue Plans-Abbott would tell wall street analysts to expect a 15% growth in the company but would set an internal rate of 25 to 30%.

12.  Upjohn investing for the long-term “buy into our future”.  Upjohn continually threw money after projects like Rogaine baldness cure, becoming a consistent disappointment.

13.  Power through continued improvement and tangible accomplishments Image: The Flywheel Effect. Photograph. Good to Great. New York: Harper Business, 2001. 175.

14.  Not a question of alignment as a key challenge “Under the right conditions, the problems of commitment, alignment, motivation and change just melt away.”  The idea is to help people understand the new strategy and vision through a series of successes. People will stand behind your company

15.  By putting a successful flywheel into action and accumulating momentum, the goals of the company are obvious and people more easily agree to help keep the flywheel moving.  The bottom line: The “right people” want their company to succeed. With a successful flywheel (momentum pushing it continuously in the right direction) the company will, through the support of everyone involved, become great.  Coca-Cola Example

16.  Good to Great: After the development of the Hedgehog Concept/After the flywheel had built significant momentum  Accelerator vs. Creator  Comparison: Tried to jump right to breakthrough by increasing growth, diversifying troubles, or making CEO’s look good through acquisitions or mergers  Companies are able to buy growth but NOT greatness  2 big mediocrities joined together NEVER make one great company

17.  International Acquisitions:  Joint Ventures:  Joining New Markets:

18.  If your company changes direction, ask yourself, “Can I still be the best at what I’m doing and am I passionate about it.”  Don’t let the flywheel come to a grinding halt, sometimes it’s not to late to retrace your steps. It’s ok to go back to what was working if at all possible.

19.  Comparison Companies- Used new innovation and new programs to speed the momentum of the flywheel to “motivate the troops.”  New programs failed to sustain results.  They attempted to skip the difficult build up stage and tried to jump right into breakthrough.  They would push the flywheel in one direction then stop it and change its course, numerous times to achieve their desired results.  After years of lurching back and forth the companies failed to sustain their momentum and fell instead into what is called the “doom loop”.

21.  Problem: Each new program and innovation halted the momentum of its predecessor. This forced the flywheel into a different course instead of allowing it to build momentum and bring the company closer to a breakthrough.  Example: Coke changing it’s formula to reenergize its Coca Cola on April 23, 1985. Then having to revert back to the old formula on July 11, 1985, where it reintroduced the old formula as Coca-Cola Classic.  Some version of the doom loop is found in every comparison company.  Though some comparisons vary from company to company they have shown some highly common patterns such as the following: Misguided use of acquisitions The selection of leaders that undid the work of previous generations.

22.  Roberto C. Goizueta became the chairman of the BOD and CEO of the Coca Cola Company in the early 1980s.  Good: Organized numerous U.S. bottling organizations into a new public company (Coca Cola Enterprises Inc.)/Led the introduction of the first extension of the Coca Cola trademark (Diet Coke).  Bad: In 1985 Goizueta changed the coke formula called “New Coke,” in a move called “the biggest marketing blunder ever” by critics.

23.  Each piece of the system reinforces the other parts of the system to form an integrated whole that is much more powerful than the sum of the parts  It is only through consistency over time… that you get maximum results

24.  Established by Claud Adkin Hatcher  Hit hard by barriers to entry Lawsuit from Coca-Cola Government ban of sweetener cyclamate  Attempts at dramatic changes  Inconsistencies in a tough industry

25.  Good to Great transformations never happen in one fell swoop.  Sustainable transformation follows a predictable pattern of buildup and breakthrough  Comparison companies followed the doom loop  Acquisitions to accelerate momentum  Beware of rushing breakthrough by changing the direction of your flywheel causing you to fall into a doom loop

26.  "Coca-Cola – Heritage - The Chronicle of Coca-Cola - A Global Business." Coca-Cola: The Coca-Cola Company. Web. 26 Mar. 2010..  Collins, Jim, Chapter 8, The Flywheel and The Doom Loop, Good to Great. New York: Harper Business 2001. Print.  “The Hedgehog Concept”- “Good is the Enemy of Great,”, Web. 27. Mar. 2010. http://thehedgehogconcept.com/http://thehedgehogconcept.com/  Coke Lore – “The Real Story of New Coke,” Web. 27. Mar. 2010. http://www.thecoca-colacompany.com/heritage/cokelore_newcoke.html