BOOK REVIEW GOOD-TO-GREAT

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BOOK REVIEWGOOD-TO-GREAT

• PRESENTED BY
• Norhasliza Ibrahim
• Sitynoryasmin Ahmad Khairuddin
• Azlida

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INTRODUCTION

• Author James C. Collins
• Language English
• Publisher William Collins
• Publication date October 16, 2001
• Media type Hardcover
• Pages 320

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• Chapter 9 chapters include
• 1. Good is the enemy of great
• 2. Level 5 leadership
• 3. First Who..Then What
• 4. Confront the Brutal Facts (Yet never lose
  faith)
• 5. The Hedgehog Concepts (Simplicity within the
  three circles)
• 6. A culture of Discipline
• 7. Technology accelerators
• 8. The Flywheel and the Doom Loop
• 9. From Good to great to built to last

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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.

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James C. Collins
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• Books
• 1994 Built to Last by James C. Collins and
  Jerry I. Porras (Paperback, Hardcover, CD)
• 1995 Beyond Entrepreneurship Turning Your
  Business into an Enduring Great Company by
  James C. Collins and William C. Lazier
  (Paperback Hardcover)
• 2001 Good to Great Why Some Companies Make
  the Leap And Others Dont by James C. Collins
  (Paperback, Hardcover, CD).
• 2005 Good to Great and the Social Sectors by
  James C. Collins (Paperback)
• 2009 How the Mighty Fall And Why Some
  Companies Never Give In by James C. Collins

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CHAPTER 1 GOOD IS THE ENEMY OF GREAT

• Emphasis on how the good company can be
  transform to the great company
• This research is a journey on getting the inner
  working of good to great
• Concept research
• identifying the company that has make leap from
  goods to great
• Comparison GTG companies with the comparison
  companies.
• performance of the companies were measured based
  on their cumulative return stocks
• There is no warranty that the huge company
  could leap to great company. The Walgreens has
  beat 1 invest in Intel by 2 Times, General
  Electric by 5 and Coca Cola by 8 times.
• The successful of Walgreens bring the curiosity
  on why Eckerd with the similar resources and
  opportunity were not being able to make a leap.

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The research has four phases Phases
1 Establishing team - The teams consist of four
to six people teams have to identify the
company with good to great pattern in at least 15
years. Phases 2 Identify factors that good to
great company share in common then distinguished
them against the comparison companies.
Direct Comparison Company Unstained Comparison Company
Direct Comparison Company in same industry , same opportunities and similar resources at the time of transition but make no move from good to great that make a leap from good to great but failed to maintain the success
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• Phase 3
• Inside The black Box
• Collected publish material / interview
• Coded according to strategy, technology and
  leadership
• Analyzed and be debated to further drawing the
• potential conclusion of the involving company
• and the teams are welcome to raise their
• voices on any comment

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• Phase 4
• Chaos to Concept
• Simulate the outcomes by testing against data in
  order to build framework, break it and rebuild it
  against.
• The simulation shows good to good has change 100
  of while comparison company make changed
  estimated 30 .
• Level 5 Leadership
• occurs during the transition from good to great
  and most of them are sticking on the Stockdale
  Paradox, and believe the businesses not
  definitely good in their core business.
• discipline culture in each company.
• Enduring Great Companies
• Good To Great Concept Sustained Great Result
  Built To last Concept Enduring Great Companies

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Findings

• Based on the study, the research team found that
• Larger than life Most of the inner celebrity
  shows the positive correlation with taking good
  to good. Its proved whereby 10 out of 11 good to
  great s leader are from inside
• There is no linking between executive
  compensation and the process of going good to
  great
• Both good to great and comparison companies has
  their range of strategic planning
• Most of the good to great company focus on what
  they should stop instead of what they should do
• Technology were not cause the transformation in
  the good to great company

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• Mergers and acquisition has no impact on the
  movement of good to great company
• The good to great company has very few attained
  in managing change, motivation and creating
  alignment
• There also unaware of official launch event for
  the transformation
• It is not necessary the good to great company
  shall be at large and in great industry , since
  they are company in the terrible industry has
  move from good to greats.

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LESSON LEARNT

• The author has taken the good move on this
  research, it tremendously give us the
  information and facts that we never expect
• The company that success on the transformation
  has the level 5 leadership. The transition
  process may create the leaders level 5.
  Nowadays, the organization should take serious
  action on the talent management practices since
  it were proven the leadership is came from the
  inner organization. The huge investment to launch
  the transformation never worth for the value,
  this is because it has never happened in one
  slope. Small company in terrible industry also
  has a chances to success in their transformation.

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CHAPTER 2 LEVEL LEADERSHIP

• This chapter will distinguished traits of good
  to great leader or Level 5 leaders.
• Kimberly Clark Case Study
• Darwin E smith, decision with switching the
  business from coated paper company to paper
  based products.
• He believed the competition and the good economy
  will make the succeed
• The level 5 leaders usually will to cuts against
  controversy as long as their ambition is achieve.

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• Gillette Company Case Study
• CEO of Gillette, Colman Mockler -threat when
  Revlon lead by Ronald Perelman
• implement the hostile taking over with the
  purchase of 44 of their stock and
• their stock also bought by Coniston Partners as
  much of 5.9.
• not to take for granted on the acquisition - many
  people investing Mockler and team invest on
  technology and they finally developed new product
  called Sensor and Mach 3, and it was success and
  totally drown the demand for the existing
  product
• accept the offered by Ronald Perelman and wish it
  worth.
• Forbes magazine that really gave negative
  impression to the Gillette team, Mockler was died
  with heart attack

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• Ambition for the Company
• David Maxwell, the CEO for Fannie Mae make lost
  1 Million each
• day before he decided to transform to Wall
  Street firm. With the transformation his business
  earns 4 Million each day. Day after, he has to
  retire, and get the benefit of his retirement
  package, with the gracious heart, Maxwell is
  willing to contribute the money to low housing
  income.
• Henry v111 with Biggest Dog Syndromes
• Comparison companies, while for example Scott
  Paper a leaders at Kimberly Klarks earn the
  165,000 per day and to maintain his earn, the
  business has to cut down on the workforce and
  Research and development expenses.

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• Level 5b leader see windows as a way to
  segregate credited factors when things goes
  well and were not blaming bad luck when
  something goes wrong.
• There researcher categorized two hypotheses where
  as those leaders in the level 5 leaders and other
  categories which do not have level 5 leaders.
  This categories need to has greater ambition of
  building something larger and more lasting
  than themselves.
• Level 5 leaders are naturally born with
  capability and its believed they might have
  significance experience in their life.
• Steps to becoming leaders level 5
• Level 5 leaders are the key component for
  business to move from good to great company.
  Satisfying and powerful idea may enhance the best
  transition from good to greats. Symbiotic
  relationship between level 5 and remaining
  findings would help each level to develop level 5
  leaders.
• Lesson Learnt
• The transformation requires the brave decision,
  because sometimes it requires abnormal decisions,
  such cases of Abbot Laboratory to remove all
  nepotism. Level 5 leaders always put the
  organization as the number one priority and
  always think about the grow of the company. Level
  5 leaders is developed at the time of transition
  and the most important the organization has to be
  open in get the powerful ideas that would
  enhance the transformation and developing level 5
  leaders.

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CHAPTER 3 FIRST WHOTHEN WHAT

• This chapter is about to get right people on the
  business before you
• figure out where to drive It
• First who, then what
• It is not necessary to set new directions,
  strategy and to get new people to ensure the
  successful of the transformation. Good to great
  companies always understand on whom leaders
  should join the organization
• Well Fargo Case Study
• Dick Cooley began his talented management team
  prepare the wrenching change.
• efficient when the business is outperform 3
  times against general stock market while others
  bank fell behind.
• Contrast to Bank of America, where they followed
  weak generals, strong lieutenants. Weak generals
  are the employee where as wait for the direction
  from above. After losing I billions, Bank of
  America realized strong general to turn the
  bank around. Strong general is approach of
  recruiting the talented people from the
  competitor, mostly from Well Fergo

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• Henry Singleton Case study
• The small enterprise has evolved to the
  corporation and success by has more than 100
  acquisition, but once Singleton moved out, and
  the business were merged with Allegheny, it was
  failed to be great.
• This study also reveals there is no linking
  between executive compensation and the process
  from good to great. They believed, right people
  will do everything with their power. Compensation
  is more to get right people in business at place
  and keep them.
• Good To Great Company always seems for rigorous,
  they usually consistency with exact standard at
  all levels especially at upper management. There
  are three steps on how the companies can be
  rigorous
• Practice Discipline, when it doubt, dont hire
  and keep looking
• When you know there is need to make people
  change, do it.
• Put the best people on the biggest opportunity
  not the problems.
• Lesson Learnt
• Good to Great Company usually take advantage on
  the level 5 leaders, to get
• maintain them, the right people shall be at right
  places and it appears the crucial
• the Human resources in recruiting and retains the
  best resources.

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CHAPTER 4

• CONFRONT THE BRUTAL FACT
• (YET NEVER LOSE FAITH)

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• Facts are better than dreams
• Good to great companies did not have a perfect
  track record.
• But on the whole, they made many more good
  decisions than the comparison companies.
• Even more important on the really big choices
  such as Krogers decision to thrown all its
  resources into the task of converting its entire
  system to the superstore concept, they were
  remarkably on target.

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• Let the Truth be Heard
• To accomplish this, 4 basic practices must
• engaged
• 1. Lead with question, not answer
• Leading from good to great does not mean coming
  up with the answer and motivating everyone to
  follow your messianic vision. It means having the
  humility to grasp the fact that you do not yet
  understand enough to have the answers and then to
  ask the questions that will lead to the best
  possible insights.

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• 2. Engage in dialogue and debate, not coercion
• All good to great companies have a penchant for
  intense debates, discussions and healthy
  conflict. Dialogue is not used as sham process to
  let people have their say so they can buy into
  a predetermined decision rather it is used to
  engage people in the search for the best answers.
• 3. Conduct autopsies, without blame
• Good to great leaders must take an honest look
  at decisions his or her company makes, rather
  than simply assigning blame for the outcomes pf
  those decisions. These autopsies go a long way
  toward establishing understanding and learning,
  creating a climate where the truth is heard.

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• 4. Build red flag mechanisms that turn
  information into information that cannot be
  ignored
• Good to great companies have no better access to
  information than any other company. They simply
  give their people and customers ample
  opportunities to provide unfiltered information
  and insight that can act as early warning for
  potentially deeper problems.

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CHAPTER 5

• THE HEDGEHONG CONCEPT
• (SIMPLICITY WITHIN THE THREE CIRCLES)

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• A simple crystalline concept that lows from deep
• understands about the intersection of the
• following circles.

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• At what you can be best in the world
• This standard goes far beyond core competence.
• It is because you possess a core competence
  doesnt necessarily mean you are the best in the
  world at that competence.
• Conversely, what you can be best in the world at
  might not even be something in which you are
  currently engaged.
• The Hedgehog concept is not a goal or strategy
  to be the bet at something, it is an
  understanding of what you can be the best at and
  almost equally important on what you cannot be
  the best at.

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• What drives your economic engine
• To get insight into the drivers of your economic
  engine, search for the one dominator (profit per
  x, for example or cash flow per x) that has the
  single greatest impact, if you could pick one and
  only one ratio to systematically increase over
  time to make a greater impact on what that ratio
  be. This denominator can be subtle and sometimes
  even unobvious. The key is to use the denominator
  to gain understanding and insight into your
  economic model.

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• What you are deeply passionate about
• Good to great companies did not pick a course of
  action and then encourage their people to become
  passionate about their direction. Rather, those
  companies decide to do only those things that
  they could get passionate about. They recognized
  that passion cannot be manufactured nor can it be
  the end result of a motivation effort. You can
  only discover what ignites your passions of those
  around you.

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• Critical point is the hedgehog concepts is not a
  goal to be the best, its a strategy to be the
  best, an intention to be the best, a plan to be
  the best.
• It is an understanding of what you can be the
  best at.
• The distinction is absolutely critical.
• Collins points out how companies that stray
  outside their core competency pay for it dearly.
• In contrast, when a great company can no longer
  do a certain thing better than someone else,
  despite the fact that it had been doing it for a
  long time, it dropped that line at work and it
  never looked back.

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Getting the hedgehog concepts (an interactive
process)
Ask Question, Guided by the three circles
Dialogue and debate,
THE
Autopsies and analysis
Guided by the three circles
COUNCIL
Guided by the three circles
Executive Decisions
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• Characteristics of the Council
• 1. The Council exists as a device to gain
  understanding about important issues facing the
  organization.
• 2. The Council is assembled and used by the
  leading executive and usually consists of five to
  twelve people.
• 3. Each council member has the ability to argue
  and debate in search of understanding, not from
  the egoistic need to win a point or protect a
  parochial interest.
• 4. Each council member retains the respect of
  every other council member without exception.
• 5. Council member come from a range of
  perspectives but each member has deep knowledge
  about some aspect of the organization and/or the
  environment in which it operates.

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• 6. The Council includes key members of the
  management team but is not limited to members of
  the management team, nor is every executive
  automatically a member.
• 7. The council is a standing body, not an ad hoc
  committee assembled for a specific project.
• 8. The Council meets periodically, as much as
  once a week or as infrequently as once per
  quarter.
• 9. The Council does not seek consensus,
  recognizing that consensus decisions are often at
  adds with intelligent decisions. The
  responsibility for the final decision remains
  with the leading executive.

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• 10. The Council is an informal body, not listed
  on any formal organization chart or in any
  formal documents.
• 11. The Council can have a range of possible
  names, usually quite innocuous. In the good to
  great companies, they had benign names like
  Long-Range Profit Improvement Committee,
  Corporate Products Committee, Strategic Thinking
  Group and Executive Council.

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CHAPTER 6

• A CULTURE OF DISCIPLINE

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The Good to Great Matrix of Creative Discipline
Hierarchical Organization
Great Organization
High
Culture of
Start-up Organization
Bureaucratic Organization
Discipline
Low
Low
High
Ethic of
Entrepreneurship
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• This means following
• Build a culture around the idea of freedom and
  responsibility, within a framework.
• Fill that culture with self-disciplined people
  who are willing to go to extreme lengths to
  fulfill their responsibilities. They will rinse
  their cottage cheese
• Dont confuse a culture of discipline with a
  tyrannical disciplinarian.
• Adhere with great consistency to the Hedgehog
  Concept, exercising an almost religious focus on
  the intersection if the three circles.

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• To create a culture of discipline, you must
• ? Build a culture around the idea of freedom and
  responsibility, within a framework.
• Good-to-great companies built a consistent
  system with clear constraints, but they also gave
  people freedom and responsibility within the
  framework of that system.
• Fill your culture with self-disciplined people
  who are willing to go to extreme lengths to
  fulfill their responsibilities.
• People in good-to-great companies tend to be
  almost fanatical in the pursuit of greatness,
  they possess the discipline to do whatever it
  takes to become the best within carefully
  selected arenas and then seek continual
  improvement from there.

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• Dont confuse a culture of discipline with a
  tyrannical disciplinarian.
• Many companies that could not sustain their
  success had leaders who personally disciplined
  the organization through sheer force. Good to
  Great companies had Level 5 leaders who built an
  enduring culture of discipline, powered by
  self-disciplined people who acted in the
  companys best interests without strict dictums
  from leadership.
• Adhere with great consistency to the Hedgehog
  Concept, exercising an almost religious focus on
  the intersection of the three circles.
• The good-to-great companies at their best
  followed a simple mantra Anything that does
  not fit with our Hedgehog Concept, we will not
  do. They did not launch unrelated businesses or
  joint ventures in an effort to diversify.

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CHAPTER 7 Technology Accelerators

• Good to Great organizations think differently,
  about technology and technological change than
  mediocre ones.
• Good to great organizations also avoid
  technology fads and bandwagons and they become
  pioneers in the application of carefully selected
  technology.
• The good to great companies used technology as
  an accelerator of momentum, not a creator of it.
• None of the good to great companies began their
  transformations with pioneering technology.
• so, they are become pioneers in the application
  of technology once they grasped how it fit with
  their three circles and after they hit
  breakthrough.
• we discuss how a company reacts to technological
  change is good indicator of its inner drive for
  greatness versus mediocrity.
• So, great companies respond with thoughtfulness
  and creativity, driven by a compulsion to turn
  unrealized potential into results, mediocre
  companies react and lunch about motivated by fear
  of being left behind.

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• The Flywheel Effect
• The Doom Loop

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CHAPTER 8 The Flywheel and the Doom Loop

• Good to great transformation often look like
  dramatic, revolutionary events to observing from
  the outside, but they feel like organic,
  cumulative processes to people on the inside. The
  confusion of end outcomes (dramatic result) with
  process ( organic and cumulative) skews our
  perception of what really works over the long
  haul.
• No matter how dramatic the end result, the
  good-to-great transformation 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.

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• Sustainable transformations follow a predictable
  pattern of buildup and 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 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 result,
  theyd lurch back and forth, failing to maintain
  a consistent direction.
• The comparison companies frequently tried to
  create a breakthrough with large, misguided
  actuations. The good-to-great companies, in
  contrast, principally used large acquisitions
  after breakthrough, to accelerate momentum in an
  already fast-spinning flywheel.

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CHAPTER 9 From Good to Great to Built to Last

• From this chapter, the good to great research
  project, they discuss about the ideas in build to
  last while doing the good to great research.
  Actually, built to last, based on six year
  research project conducted at Stanford Business
  School in the early 1990s. for example, this
  group research examined companies like Procter
  Gamble (founded in 1937)
• So they found early in the research, then they
  made a very important decision. They decided to
  conduct the research for Good to Great as if
  built to last didnt exist. This was the only way
  to clearly see the key factors in transforming a
  good company into a great one with minimal bias
  from previous work.

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• Concept in Good To Great
• Level 5 leadership
• Relationship to Concept in Built to Last
• Clock Building, Not Time Telling Level 5 leaders
  build a company that can tick along without them,
  rather than feeding their egos by becoming
  indispensable. 
• Genius of AND Personal humility AND professional
  will.
• Core Ideology Level 5 leaders are ambitious for
  the company and what it stands for they have a
  sense of purpose beyond their own success.
• Preserve the Core/Stimulate Progress Level 5
  leaders are relentless in stimulating progress
  toward tangible result and achievement, even if
  it means firing their brothers.

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LESSON LEARN

• The company use both Good to Great and Built to
  Last to understand why they great, so, they can
  keep doing the right thing. For example, if you
  feel you right or failure, so better is to be
  successful without being resolutely clear about
  why are successful.( Robert Burgelmen)- Prof.
  from Stanford Business School.
• To create and find the value from Good to Great
  and will commit to applying what we learn to
  whatever we do for our company, social sector
  work and your own life.
• The Good to Great performance pattern must be
  a company shift, not an industry event. In other
  word. The company must demonstrate the pattern
  not only relative to the market, but also
  relative to its industry.

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• At the transition point, the company must have
  been established, ongoing company, not a startup.
• This was defined as having operations for at
  least twenty five year prior to the transition
  point.
• Additionally, it had to have been publicly
  traded with stock return data available at least
  ten years prior to the transition point.