By

• Manish Sachdev (Roll No - 42)• Nilesh Ayare (Roll No - 3)• Amit Jambhavdekar (Roll No - 18)• Suraj Sahu (Roll No - 43)

Book Review

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History of Author

James C. "Jim" Collins, III (born 1958, Boulder, Colorado) is an American business consultant, author, and lecturer on the subject of company sustainability and growth.

Jim Collins frequently contributes to Harvard Business Review, Business Week, Fortune and other magazines, journals, etc.

He is also the author of several books: How the Mighty Fall: And Why Some Companies Never Give In, Built to Last: Successful Habits of Visionary Companies, and Good to Great.

o Good is the enemy of greato Level 5 leadershipo First Who..Then Whato Confront the Brutal Facts (Yet never lose

faith)o The Hedgehog Concepts (Simplicity within

the three circles)o A culture of Disciplineo Technology acceleratorso The Flywheel and the Doom Loop

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Index

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Good is the Enemy of Great

It is easier to do the basics for something good than to really work for something great.

This concept of being content with par keeps so much in our world from being great.

Most companies focus too much on what to do and ignore what not to do or what they should stop doing.

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Phase I – The Search:

Fifteen-year cumulative stock returns at or below the general stock market, punctuated by a transition point, then cumulative returns at least three times the market over the next fifteen years.

Company should demonstrate the good-to-great pattern independent of its industry; if the whole industry showed the same pattern, we dropped the company

Collins’ Research Process

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Phase II – Compared to what?

What do Good-to-Great companies share in common that distinguished them from the comparison companies.

Direct Comparison – With the companies in the same industry as the good-to-great companies with the same opportunities and similar resources at the time of transition, but showed no leap from good to great

Unsustained Comparison – With companies that made a short term shift from good to great but failed to maintain the trajectory.

Collins’ Research Process

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Phase III – Inside the Black Box

Larger-than-life, celebrity leaders who ride in from the outside are negatively correlated with taking a company from good to great.

No systematic pattern linking specific forms of executive compensation to the price.

The good-to-great companies did not focus principally on what to do to become great; they focused equally on what not to do and what to stop doing.

Technology and technology-driven change has virtually nothing to do with igniting a transformation from good to great.

Mergers and acquisitions play virtually no role in igniting a transformation from good to great; two big mediocrities joined together never make one great company.

Collins’ Research Process

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Phase III – Inside the Black Box (Contd …)

The good-to-great companies paid scant attention to managing change, motivating people, or creating alignment.

The good-to-great companies had no name, tag line, launch event, or program to signify their transformations

The good-to-great companies were not, by and large, in great industries, and some were in terrible industries

Collins’ Research Process

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Phase IV– Chaos to Concept

An iterative process of looping back and forth, developing ideas and testing them against the data, revising the ideas, building a framework, seeing it break under the weight of evidence, and rebuilding it yet again. That process was repeated over and over, until everything hung together in a coherent framework of concepts.

See patterns and extract order from the mess-to &r-chaos to concept.

Collins’ Research Process

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

11 Good to Great Companies

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Level 5 Executiv

e

Effective Leader

Competent Manager

Contributing Team Member

Highly Capable Individual

Level 5 Leadership

o Leaders who employ a paradoxical mix of personal humility and professional will

o They are ambitious, to be sure, but ambitious first and foremost for the company and not for themselves.

o Set up their successors for even greater success for the next generation

o Compelling modesty, self-effacing, understatedo Fanatically driven to produce sustainable resultso More plow horse than show horseo Attribute success to factors than themselves.o When things go poorly, they take full responsibility for

poor decisionso Many people have the potential to evolve into Level 5

o Leaders who employ a paradoxical mix of personal humility and professional will

o They are ambitious, to be sure, but ambitious first and foremost for the company and not for themselves.

o Set up their successors for even greater success for the next generation

o Compelling modesty, self-effacing, understatedo Fanatically driven to produce sustainable resultso More plow horse than show horseo Attribute success to factors than themselves.o When things go poorly, they take full responsibility for

poor decisionso Many people have the potential to evolve into Level 5

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Level 5 Leadership

The good-to-great Leaders began the transformation by first getting the right people on the bus (and the wrong people off the bus) and then figured out where to drive it

The good-to-great Leaders began the transformation by first getting the right people on the bus (and the wrong people off the bus) and then figured out where to drive it

The idea here is not just getting the right people on the team. The key point is that “Who” questions come before “what” decisions

The idea here is not just getting the right people on the team. The key point is that “Who” questions come before “what” decisions

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First Who … Then What

The comparison companies frequently followed the “genius with a thousand helpers". This model fails when the genius departs

Three practical disciplines for being rigorous in people decisions:

When in doubt, don’t hire- Keep Looking. When you know you need to make a people

decision, Act.

Three practical disciplines for being rigorous in people decisions:

When in doubt, don’t hire- Keep Looking. When you know you need to make a people

decision, Act. Put your best people on your best opportunities,

not biggest problems.

Put your best people on your best opportunities, not biggest problems.

The good-to-great leaders were rigorous, not ruthless in people decisions. They did not rely on layoffs and restructuring as primary strategy for improving performance. The Comparison companies used layoffs to a much greater extent.

The good-to-great leaders were rigorous, not ruthless in people decisions. They did not rely on layoffs and restructuring as primary strategy for improving performance. The Comparison companies used layoffs to a much greater extent.

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First Who … Then What (contd..)

Good-to-great management teams consist of people who debate vigorously to find best answers, yet who unify behind decisions.

Good-to-great management teams consist of people who debate vigorously to find best answers, yet who unify behind decisions.

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First Who … Then What (contd..)

The old adage “People are your most important asset” is wrong. People are not you most important asset. The right people are.

All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality.

All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality.

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Confront the Brutal Facts

When you start with an honest and diligent effort to determine the truth of your situation, the right decisions often become self-evident.

It is impossible to make good decisions without infusing the entire process with an honest confrontation of the brutal facts.

Lead with questions, not answers Engage in dialogue and debate, not

coercion Conduct autopsies, without blame Build red flag mechanisms where

information cannot be ignored

Lead with questions, not answers Engage in dialogue and debate, not

coercion Conduct autopsies, without blame Build red flag mechanisms where

information cannot be ignored

Creating a climate where the truth is heard involves Four basic practices:Creating a climate where the truth is heard involves Four basic practices:

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Confront the Brutal Facts (contd..)

A primary task in taking a company from good to great is to create a culture wherein people have a tremendous opportunity to be heard and, ultimately, for the truth to be heard.

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.

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.

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Confront the Brutal Facts (contd..)A Key psychology for leading from good to great is the Stockdale Paradox:

Hedgehogs simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything.

Hedgehogs see what is essential, and ignore the rest.

Hedgehogs simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything.

Hedgehogs see what is essential, and ignore the rest.

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Hedgehog Concept

• Just because you doing a business for years & years doesn’t mean you are best in it in world. And if you are not the best in the world, it can’t form the basis of Hedgehog Concept.

• Satisfaction should not stop the research.• You think your company should be in great industry ? NO.• A company or a Passion ?• Difference between Growth & Speed

• Just because you doing a business for years & years doesn’t mean you are best in it in world. And if you are not the best in the world, it can’t form the basis of Hedgehog Concept.

• Satisfaction should not stop the research.• You think your company should be in great industry ? NO.• A company or a Passion ?• Difference between Growth & Speed

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Hedgehog Concept

The Hedgehog Concept is a deep understanding of three intersecting circles translated into a simple, crystalline concept:

The Hedgehog Concept is a deep understanding of three intersecting circles translated into a simple, crystalline concept:

1. What you are deeply passionate about

2. What you can be best in the world at

3. What drives your economic engine

1. What you are deeply passionate about

2. What you can be best in the world at

3. What drives your economic engine

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Hedgehog Concept

People who “rinse their cottage cheese” Not about a tyrant who disciplines

People who “rinse their cottage cheese” Not about a tyrant who disciplines

Getting disciplined people who engage in disciplined thought and who then take disciplined action, fanatically consistent with three circles

Getting disciplined people who engage in disciplined thought and who then take disciplined action, fanatically consistent with three circles

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Culture of Discipline

Requires people who adhere to a consistent system.

Gives people freedom and responsibility within framework of that system.

Requires people who adhere to a consistent system.

Gives people freedom and responsibility within framework of that system.

Involves a duality. Involves a duality.

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Culture of Discipline

Good-to-greats Organizations think differently about technology and technological change than mediocre ones.

Good-to-greats avoid technology fads and bandwagons. Yet they often become pioneers in the application of carefully selected technologies.

Good-to-greats Organizations think differently about technology and technological change than mediocre ones.

Good-to-greats avoid technology fads and bandwagons. Yet they often become pioneers in the application of carefully selected technologies.

Technology Accelerators

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Does the technology fit directly with your Hedgehog Concept?

Good-to-greats used technology as an accelerator of momentum, not a creator of it.

Does the technology fit directly with your Hedgehog Concept?

Good-to-greats used technology as an accelerator of momentum, not a creator of it.

Technology Accelerators

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Great companies respond with thoughtfulness and creativity, driven by compulsion to turn unrealized potential into results.

Great companies respond with thoughtfulness and creativity, driven by compulsion to turn unrealized potential into results.

Technology Accelerators

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Technology by itself is never a root cause of either greatness or decline.

“Crawl, walk, run” can be a

very effective approach, even during times of rapid and radical technological change.

Technology by itself is never a root cause of either greatness or decline.

“Crawl, walk, run” can be a

very effective approach, even during times of rapid and radical technological change.

Technology Accelerators

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Level 5Leadership

First Who…Then What

Confront theBrutal Facts

HedgehogConcept

Culture ofDiscipline

TechnologyAccelerations

Disciplined People Disciplined Thought Disciplined Action

Buildup…Breakthrough !

Flywheel

Good to Great

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Good-to-great transformations never happened in one fell swoop.

There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment.

Instead they followed a predictable pattern of buildup and breakthrough.

Good-to-great transformations never happened in one fell swoop.

There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment.

Instead they followed a predictable pattern of buildup and breakthrough.

The Flywheel

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Like pushing on a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but . . .

With persistent pushing . . . In a consistent direction . . . Over a long period of time . . . The flywheel builds momentum . . Eventually hitting a point of breakthrough.

Like pushing on a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but . . .

With persistent pushing . . . In a consistent direction . . . Over a long period of time . . . The flywheel builds momentum . . Eventually hitting a point of breakthrough.

The Flywheel

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In good-to-great companies problems of commitment, alignment, motivation, and change largely take care of themselves.

Alignment follows from results and momentum, not the other way around.

In good-to-great companies problems of commitment, alignment, motivation, and change largely take care of themselves.

Alignment follows from results and momentum, not the other way around.

The Flywheel

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Comparison companies followed a different pattern, the doom loop. Rather than accumulating momentum- turn by turn of the flywheel. They tried to skip buildup and jump immediately to breakthrough. Then, with disappointing results, they fail to maintain consistent results.

Comparison companies followed a different pattern, the doom loop. Rather than accumulating momentum- turn by turn of the flywheel. They tried to skip buildup and jump immediately to breakthrough. Then, with disappointing results, they fail to maintain consistent results.

The Doom Loop

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Comparison companies frequently tried to create a breakthrough with large, misguided acquisitions.

The great company in contrast, principally used large acquisitions after breakthrough, to accelerate momentum in an already fast spinning flywheel.

Comparison companies frequently tried to create a breakthrough with large, misguided acquisitions.

The great company in contrast, principally used large acquisitions after breakthrough, to accelerate momentum in an already fast spinning flywheel.

The Doom Loop

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Thank You !