Good to Greatby Jim CollinsChapter 9: From Good to Great to Built to Last Presented by Team 6 Andrei Gololobov, Laura McMannis, Svetlana Grimes
From Good to Great to Built to Last • Built to Last examined: * 18 enduring great companies (Johnson & Johnson) * Differences between good and great companies • It didn’t answer the question of how to change a good company into a great one • When writing “From Good to Great” pretended as if “Built to Last” didn’t exist
How did the two studies relate? i. Built to Last leaders followed the good-to-great framework ii. Good to Great is a prequel to Built to Last EstablishedGood to Sustained Built to Enduring Company or + Great Great + Last Great Start-upConcepts Results Concepts Company iii. To make the shift to greatness, apply central concept from Guilt to Last: Core values + purpose beyond making money + preserve the core/stimulate progress iv. Ideas in one enrich and inform ideas in the other
Good to Great in the early stages of Built to Last • Enduring great companies went through buildup to breakthrough, following good-to-great framework - Wal-Mart - Hewlett-Packard - Johnson & Johnson
First who…then what Packard’s Law – No company can grow revenues consistently faster than its ability to get enough of the right people to implement that growth and still become a great company. Personal humility Is important * Warren Buffett’s house bought for $31500.00 in 1957
Core ideology: The extra dimension of enduring greatness • Core Ideology • “The HP Way”: technical contribution, respect for individual, responsibility to the communities, non-central status of profit - Merck’s non-profit contribution to cure parasites • There are no specific core values for becoming an enduring great company
Core values • How do you preserve the core and yet adapt to a changing world? Embrace key concept of preserving the core/stimulating progress. Johnson & Johnson Change Preserve Initiating Good Management Practices, Medicine Packaging Corporate Social Responsibility
Clock Building, Not Time Telling • Endure and adapt across multiple generation • Genius of AND • Equally embrace extreme ideas and extreme viewpoints • Core Ideology • Give your organization a sustainable purpose • Preserve the Core/Stimulate Progress • Keep your core values fixed while at the same time stimulating change from above
Level 5 Leadership • Clock Building… • Sustainable without a Level 5 Leader • Genius And • Humility and Ambition • Core Ideology • Ambition but also a sense of greater purpose • Preserve the Core… • Stimulating progress toward tangible results, no matter the cost
First Who…Then What • Clock Building… • Create a managerial culture that consistently values getting the right people on the bus • Genius And • Right people in, Wrong people out • Core Ideology • Selecting like minded individuals • Preserve the Core… • Promotion from within
Confronting the Brutal Facts • Clock Building… • Permanent climate where the truth is heard • Genius And • Confront the facts and maintain self-confidence • Core Ideology • Clarifies an organizations values • Preserve the Core… • Once you see the Brutal Facts, you will know what to do
Hedgehog Concept • Clock Building… • The Council Circle (Guidance by the three circles) • Genius And • Deep understanding, incredible simplicity • Core Ideology • Which values you are passionate about • Preserve the Core… • Keep your BHAG directly within the three circles
Culture of Discipline • Clock Building… • Operate through sheer personality but make it a permanent trait for future leaders to come • Genius And • Freedom and Responsibility • Core Ideology • Eject those who don’t share the organization’s values • Preserve the Core… • Discipline and then empower
Technology Accelerators • Clock Building… • Technology Accelerators • Genius And • Develop new technologies and shun fads • Core Ideology • Technology is compliant with core values • Preserve the Core… • Flywheel can accelerated by carefully chosen technoligies
Flywheel, Not Doom Loop • Clock Building… • A sustained flywheel does not depend on charismatic leaders • Genius And • Incremental Innovation and Radical Innovation • Core Ideology • Core values are never consistent in a Doom Loop • Preserve the Core… • Consistency and momentum of a flywheel is the perfect environment for introducing core values
Johnson & Johnson • Clock Building… • Maintain a consistent set of values with corporate social responsibility in mind. • Create a managerial culture guided by a traditional credo • Genius And • J&J constantly strives to reduce the cost of its products, while at the same time believing in the opportunity to make a sound profit.
Johnson & Johnson • Core Ideology • To provide scientifically sound, high quality products and services to help heal, cure disease and improve the quality of life. • Preserve the Core… • J&J constantly pushes for new innovations in pharmaceuticals, cosmetics, and professional medical equipment without compromising on its original set of fixed values
A Good BHAG • Must be clear, compelling, and easily understood • Must serve as a rallying point for all the people in an organization • Must capture people’s sense of imagination and fascination
Boeing • What are you deeply passionate about • Manufacturing aircraft • What drives your economic engine • Experience with building large aircraft and jet engines • What can you be best in the world at • Commercial jet manufacturing. Design an aircraft that can carry more passengers at faster speeds • Result: Boeing 707, and a continuous line of successful commercial jets
A Good BHAG • For a company to have staying power, it must remain within the three circles • All concepts within the three circles must be constantly applies and reapplied • Any attempt to leave the three circles can make a great company run the risk of loosing its status
Why Greatness? • Two Potential Answers • No harder to build something great than to build something good. • Less suffering • Search for meaningful work • Provides basis for a great life • Remember, Greatness doesn’t matter on SIZE!!!!
Merging the two answers Create Ultimate Greatness • Utilize the Hedgehog Concept • Creates a spinning flywheel • Adds more energy into the pool • Passion leads to greatness • Striving for greatness leads to Level 5 Leadership
Takeaways • Enduring great companies preserve their core values and purpose while constantly adapting to local as well as global changes. • A good BHAG, above all, must have staying power, which can be achieved if the organization adheres to the three circles of the hedgehog concept. • It’s not harder to become great than it is to become good. Do something that you love and are passionate and strive for greatness.