Good To Great

A Brief Summary
Prepared By
Satyam Srivastava
PGP32243
Section E

Good To Great : Brief Summary

A study by Jim Collins and his team into what it takes for a
Good Company to become Great.
They studied 11 companies which outperformed their industry
over a span of 15 years. Their success was measured by the
stock performance, which normally grew more than 3 times.
The 11 companies are :

Gillette
Philip Morris
Walgreens
Wells Fargo
Kimberly- Clark
Abbott
Circuit City
Fannie Mae
Kroger
Nucor
Pitney Brows

Good is the enemy of Great

Complacency is the roadblock to Excellence. Thats why we have so little that

becomes Great.
Many companies dont feel the need to try hard to become Great from Good.
The companies studied had the urge to strive for greatness. They had some form
of catalyst factors that kept them going.
The book talks about Timeless Physics of Good to Great. It delineates how a
Good organisation could be turned into a Great one that produces sustained
great results, using whatever definition of results best applies to it.

Level 5 Leadership
An organisation is steered by the leader. All Good to
Great companies had level 5 Leaders.
These leaders are characterised by two traits :
Professional Will
Personal Humility
Personal Will Demonstrate unwavering resolve to
produce the best results, irrespective of difficulty level.
Personal Humility Demonstrate compelling modesty.
They are never boastful and shy away from public
adulation.
Celebrity CEOs are negatively correlated with making
good company great.
Success is not personal, but defined by something that
will outlast their time.
They take the blame for any failure on themselves and
give credit to others for success of the company.
They always set up their successors for even greater
success in the next generation.

First Who.. Then What

Human resource is very critical. The executives first got the Right People on the bus (and wrong people
off the bus) and then figured where to Drive it. People are not the most important asset. The right
people are.
Why..?? :
If you begin with Who rather than What, you can easily adapt to a changing world.
If you have the right people on the bus, the problem of how to motivate and manage people
largely goes away.
If you have the wrong people, it doesnt matter whether you discover the right direction; you still
wont have a great company.
Compensation does not correlate with Good to Great Process. Its who you pay, not how you pay them.
The purpose of compensation should not be to get the right behaviours from the wrong people, but to
get the right people on the bus in the first place, and to keep them there.
The Good to Great companies have rigorous cultures, but not ruthless cultures.
Some practical disciplines for how to be rigorous.
When in doubt, dont hire keep looking
When you know you need to make a people change, act
Put your best people on your biggest opportunities, not your biggest problems
The teams consist of people who debate vigorously in search of the best answers, yet who unify behind
decisions, regardless of parochial interests.

Confront the Brutal Facts

Facts are better than dreams.
All the Good to Great companies began the process of finding a path to greatness by confronting the
brutal facts of their current reality.
Right decisions become self evident when honest and diligent effort is made to determine the ground
reality.
Its crucial to create a culture wherein people have a tremendous opportunity to be heard and
ultimately for the truth to be heard.
How ???
Lead with questions, not answers.
Engage in dialogue and debate, not coercion.
Conduct autopsies, without blame.
Build red flag mechanisms that turn information into information that cannot be ignored.
Stockdale Paradox : Retain absolute faith that you can and 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.
Leadership does not begin with vision. It begins with getting people to confront the brutal facts and to
act on the implications.

The Hedgehog Concept

It states that companies should look for one big important
drive or goal instead of going for everything.
It could be found through the concept of three circles. At
the intersection of these circles lies the winning target.
The key is to understand what your organisation can be the
Best in the world at, and equally important what it Cannot
be the Best at.
Core competence doesnt really reflects what is Best.
The Hedgehog Concept is not a goal, strategy, or intention;
it is an understanding.
One useful device is the creation of a council of 5-12
members to discuss and gain insights into the organisation.
It should meet regularly and the members should have
freedom to speak their minds.
The council exists to assist the Chief Executive, not to
reach the consensus. It is an informal body.

A Culture of Discipline
Great companies have both entrepreneurial spirit and sense of
discipline.
Sustained great results depend upon building a culture full of
self disciplined people who take disciplined action, fanatically
consistent with the 3 circles.
On the one hand people adhere to a consistent system and on
the other, they get freedom and responsibility within the
framework of that system.
A culture of discipline is not just about action. It is about
getting disciplined people who engage I disciplined thought
and who then take disciplined action.
A simple Mantra is : Anything that does not fit with the
Hedgehog concept will not be done.
The fact that something is a once in a lifetime opportunity
is irrelevant if it does not fit within the three circles.
Stop Doing list is more important than To Do list.

Technological Accelerators
Technology is not a differentiator in itself but rather something that
enhances great companies.
The Good-to-Great companies used it to increase leverage, in a conscious,
directed way rather than rushed to embrace it for the sake of its newness.
The key question about any technology is Does it fit with the Hedgehog
concept?
It is an accelerator of momentum, not creator of it.
Great companies react respond to a technological change with
thoughtfulness and creativity, driven by a compulsion to turn unrealized
potential into results whereas mediocre companies react, motivated by the
fear of being left behind.
Technology by itself is never a primary root cause of either greatness or
decline.

The Flywheel and the Doom Loop

Flywheel represents positive cycle. It is a heavy wheel
that takes a lot of energy to set in motion- a constant
and steady work rather than a quick acceleration.
Under right circumstances, the problem of commitment,
alignment, motivation and change largely take care of
themselves.

Doom loop represents negative cycle. It happens

when companies try skip buildup and jump
immediately to breakthrough.
Then with disappointing results they lurch back
and forth, failing to make a consistent direction.