Good to Great

Jim Collins
Good is the Enemy of Great
• We tend to focus on what to do only; however, it’s
equally important to focus on what not to do.
• Greatness comes from deliberate and consistent
choices. It doesn’t happen overnight or due to a few
events, and most fail to understand this.
• People are not our assets; however, right people are.
• When we have disciplined people, we don’t need
hierarchy.
• The best students are those who never quite believe
their professors.
Level 5 Leadership
• We can accomplish anything in our lives
if we don’t mind who gets the credit.
• Level 5 leaders channel their ego and
ambition into the greater good of the
company.
• When good things happen, give credit to
luck and other factors. When bad things
happen, blame yourself. THIS IS LEVEL 5
LEADERSHIP.
• Level 5 leaders set up their successors
for even more success, and it’s the
opposite in the case of other leaders.
First Who….. Then What
• Level 5 leaders hire the right people, fire the bad people, and then they decide where
to go.
• If people join the bus primarily because of where it is going, what happens if you get
ten miles down the road and you need to change direction? You've got a problem.
But if people are on the bus because of who else is on the bus, then it's much easier
to change direction: "Hey, I got on this bus because of who else is on it; if we need to
change direction to be more successful, fine with me."
• Wells Fargo hired good people without even deciding the job first. They were simply
preparing for the unknown future of the banking industry.
• Right people have a moral code so high that regardless of the compensation they
receive they work to make the company great
• Be rigorous at the top level, and they become the same, and the same cycle
continues up to the bottom level.
• The moment you feel the need to tightly manage someone, you've made a hiring
mistake
• When in doubt, don’t hire – keep looking.
• Members of the good to great team remain friends for life.
• Put your best people on your biggest opportunities, not your biggest problem.
Confront the Brutal Facts
• Facts are better than dreams.
• Obtaining employee’s feedback is good since they know the ground reality.
• When we have the right people in the right seat, we don’t need to motivate them. Take out false hope, and you
will keep the right people motivated.
• Create a culture of opportunity to be heard the people reflect the hard truth
• How to create an environment where truths are shared and heard
• Lead with questions, not answers.
• Engage in dialogue and debate, not coercion.
• Conduct autopsies, without blame.
• Build “red flag” mechanisms
• Sometimes meeting without any agenda is a way to ease the team to come up with questions and ideas.
• Stockdale paradox – have faith that you will prevail; however, at the same time face the brutal facts.
• What sets us apart – not the presence or absence of difficulty – but the way we deal with them.
• Motivating people is a waste of time, rather try not to demotivate them since the right people need no
motivation.
The Hedgehog
Concept
• Hedgehog takes the complex world and simplifies it,
sees what’s essential, and ignores the rest.
• Consistently applying a simple idea for a significant
amount of time can bring astonishing results.
• Single economic denominator – it is common in all
good-to-great companies i.e., profit per customer,
cash flow per x, etc.
• Passion can’t be created externally; we can only ignite
it ourselves (cue might be out there).
• When we apply the hedgehog concept, the problem is
not how to grow – nonetheless, it’s about how not to
grow too fast.
• It took 4 years to find the hedgehog concept to good
to great companies.
A Culture of Discipline
• Bureaucracy is not needed if we have the right people in the right place.
• You can change your plans throughout the year, but you can never change
the objectives.
• Manage the system, not the people.
• Leaders must walk the walk when it comes to discipline.
• Don’t do anything that doesn’t fall under three circles.
• The challenge is not opportunity creation but opportunity selection.
• When you spend money to educate staff about cost-cutting – does it even
make sense?
• Nucor – in the recession, workers’ pay was cut by 25%, officers by 60%,
and executives by 75%. Name of all staff appeared on the annual report.
• Nucor had no Trade Union – even management had to save the Union guys
from the staff.
• For good to great companies – budgeting is an exercise to determine how
much should be funded for essential activities and what should not be
funded at all.
Technology Accelerators
• Most men would rather die than think. Many do.
• Instead of reacting like a chicken, pause and reflect, think, and
use the brain.
• It’s not about technology – it’s about choosing an application of
the technology that aligns with the hedgehog concept of the
company.
• Technology is an accelerator not a creator of momentum.
• Nucor’s CEO didn’t consider technology as one of the top five
factors for the transformation that had happened in the company.
• Technology can’t make a company great, nor it can prevent
disaster.
• Mediocre companies react to the fear of being left out while
great companies are composed, and they act to turn untapped
potential into an opportunity.
• Crawl ---- walk ----- run.
 The Flywheel and the
Doom Loop
• No single great action can make a good-to-great company. It is their
continuous and daily action that brings the result.
• Build momentum, and day by day you will produce the desired result.
• Follow the momentum-creating activity no matter how dire the situation
is.
• Under promise and overdeliver.
• Instead of motivation and hoopla – try to create some result and show that
change can transform things i.e., turn the flywheel and people will join the
momentum.
• Good – to – Great companies tend not to proclaim things at the public
outset – remain silent and achieve the result and it will speak up.
• The good-to-great companies show unfathomable consistency while doing
their business.
• Don’t spend energy on motivation or change adoption. If people
understand it, they will move with it, if not they will stay away.
• If results start flowing, the commitment of the people will start coming
our way.
From Good to Great to
Built to Last
• To be a Build to Last company – discover
something that is beyond money and combine
this with the dynamic of preserving the core
idea.
• Materialistic thought doesn’t get over the great
leaders.
• The great companies have core values – it
doesn’t matter what the core values are – they
simply have them.
• Let the staff decide their own goals rather than
pushing them down. It will be such that they
will start working on them rigorously.
THANK YOU