Good to Great by Jim Collins Chapter 9

Good to Great by Jim Collins Chapter 9: From Good to Great to Built to Last Presented by Team 6 Andrei Gololobov, Laura Mc. Mannis, Svetlana Grimes

From Good to Great to Built to Last examined: * 18 enduring great companies (Johnson & Johnson) * Differences between good and great companies o It didn’t answer the question of how to change a good company into a great one o 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 Established Company or Start-up Good to + Great Concepts Sustained Great Results + Built to Enduring Last Concepts Great 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, noncentral 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

A Good BHAG

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 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.