Title: Anna Rendon Ashley Hoptay
1Good To GreatChapter 3 First WhoThen What
There are going to be times when we cant wait
for somebody. Now, youre either on the bus or
off the bus. - Ken Kesey
- Anna Rendon Ashley Hoptay
- Olivia Erwin Paige Stone
- Brandon Laviage Chase Mueller
- Tanner Gilreath
2Transforming From Good to Great
- The executives who ignited the transformations
from good to great did not first figure out where
to drive the bus and then get people to take it
there. - What did they do then?
- They FIRST got the right people on the bus and
the wrong people off of the bus, and THEN they
figured out where to drive it.
3What They Said
- Look, I dont really know where we should take
this bus. But I know this much If we get the
right people on the bus, the right people in the
right seats, and the wrong people off the bus,
then well figure out how to take it someplace
great.
4Three Simple Truths
- Begin with the Who rather than the What.
Helps you adapt to a changing world. - If you have the right people on the bus, the
problem of how to motivate and manage people
largely goes away. The right people are
self-motivated to produce the best results. - Going in the right direction with the wrong
people will never produce a great company. Great
vision without great people is irrelevant.
5Excerpts From Obamas Inaugural Address
- This is the journey we continue today. We remain
the most prosperous, powerful nation on Earth.
Our workers are no less productive than when this
crisis began. Our minds are no less inventive,
our goods and services no less needed than they
were last week or last month or last year. Our
capacity remains undiminished. But our time of
standing pat, of protecting narrow interests and
putting off unpleasant decisions -- that time has
surely passed. Starting today, we must pick
ourselves up, dust ourselves off, and begin again
the work of remaking America. - For everywhere we look, there is work to be done.
The state of the economy calls for action, bold
and swift, and we will act -- not only to create
new jobs, but to lay a new foundation for growth.
- Where the answer is yes, we intend to move
forward. Where the answer is no, programs will
end. And those of us who manage the public's
dollars will be held to account -- to spend
wisely, reform bad habits, and do our business in
the light of day -- because only then can we
restore the vital trust between a people and
their government. - Know that America is a friend of each nation and
every man, woman and child who seeks a future of
peace and dignity, and that we are ready to lead
once more
6What Does this Show?
- Obamas Inaugural Speech shows he is a level five
leader in many ways - He doesnt focus on himself he focuses on
everyone. - In this situation, he knows that in order to turn
America around, he has to get everyone on the bus
before he drives it in the right direction. - Another example
- Picking the right cabinet. One of the first
things Obama did was make his new Cabinet sign a
new code of ethics his way of making sure he
has the right people on the bus - But he allowed someone on the bus who was a
lobbyist in the area he is working? - William Lynn Deputy Defense Secretary
7Wells Fargo
- CEO Dick Cooley foresaw that the banking industry
would eventually undergo change. - Instead of focusing on change, he focused on
finding the right people. - Focused on injecting an endless stream of
talent directly into the veins of the company. - Hired outstanding people whenever and wherever
they found them, often without any specific job
in mind.
8Wells Fargo
- Thats how you build the future, Cooley said.
If Im not smart enough to see the changes that
are coming, they will. And theyll be flexible
enough to deal with them.
9Wells Fargos Success
- By getting the right people on the bus, Wells
Fargo outperformed the market by over three
times. - This occurred at a time when its sector of the
banking industry fell 59 behind the general
stock market
10Bank of America
- Bank of America took a different approach Weak
generals, strong lieutenants - If you pick strong generals for key positions,
their competitors will leave. But if you pick
weak generals placeholders, rather than highly
capable executives then the strong lieutenants
are more likely to stick around.
11BOA Management Climate
- Weak generals would wait for direction from
above. - Sam Armacost, who inherited the weak generals
model, said, I came away quite distressed from
my first couple of management meetings. Not only
couldnt I get conflict, I couldnt even get
comment. They were all waiting to see which way
the wind blew.
12Bank of Americas Success
- Lost 1 billion
- Ended up recruiting a gang of strong generals to
turn the bank around.
13Wells Fargo VS BOA
- In 1998, the cumulative value of 1 invested
- Wells Fargo 74.47
- General Market 19.86
- Bank of America 15.60
14Good to Great Distinctions
- Get the right people on the bus and the wrong
people off the bus before you figure out where to
drive it. - The degree of sheer rigor needed in people
decisions in order to take a company from good to
great.
15David Maxwell
- CEO of Fannie Mae during its darkest days
- Held off on developing a strategy until he got
the right people in place, while the company was
losing 1 million every single business day with
56 billion of loans underwater. - Focused on getting the right people on the Fannie
Mae management team.
16Maxwells A Team
- Maxwell made it absolutely clear that there would
only be seats for A players who were going to put
forth A effort, and if you werent up for it,
you better get off the bus, and get off now! - Example think of our teams we want only A
players who will put forth an A effort. The
alternative is getting fired. - 14 of the 26 executives left the company
17Wells Fargo and Fannie Mae Lessons
- Who questions come before what questions
before vision, before strategy, before tactics,
before organizational structure and before
technology. - Exemplified a Level 5 style
- I dont know where we should take this company,
but I do know that if I start with the right
people, ask them the right questions, and engage
them in vigorous debate, we will find a way to
make this company great.
18Genius With a Thousand Helpers?
- In this model, the company is a platform for the
talents of an extraordinary individual. - In these cases, the towering genius, the primary
driving force in the companys success, is a
GREAT asset.. AS LONG AS THE GENIUS STICKS
AROUND! - Companys who take this approach are usually
successful UNTIL the genius of the company
leaves. - Ex. Steve Jobs
19Level 5 Management Team
A Genius With A Thousand Helpers
(Comparison Companies)
(Good To Great Companies)
Level 5 Leader
Level 4 Leader
First What
First Who
Set a vision for where to drive the bus. Develop
a road map for driving the bus.
Get the right people on the bus. Build a superior
executive team.
Then What
Then Who
Enlist a crew of highly capable helpers to make
the vision happen.
Once you have the right people in place, figure
out the path to greatness.
20Good to Not So Great Companies- classic scenarios
- Eckerd Corporation, led by Jack Eckerd expanded
the Eckerd Empire with over 1000 stores across
the southeastern U.S. In the late 1970s,
Eckerds revenues equaled Walgreens. But when
Jack Eckerd left to pursue his passion for
politics, Eckerd Corp. took a toll for the worse
as the company began a long decline and
eventually taken over by J.C. Penny. - Henry Singleton, owner of Teldyne had proclaimed
a small enterprise to number 293 in the Fortune
500 list in only 6 YEARS! The company dominated
the marketplace from exotic metals to insurance.
Once Singleton stepped away, soon the company
crumbled. - Each of these cases failed utterly at the task of
building a great company.
21Its Who You Pay, Not How You Pay Them
- Top Executives, Managers and Employees
- Compensation
- Stock Options
- Huge Incentives (Jets, Vacations, company cars,
etc) - Examples Big 3 Auto Makers, Lehman Brothers,
Merrill Lynch - Do these things really increase performance and
create great results? - NO!
22Data Inputs
- Collected weeks of data from proxy statements
- Preformed 112 separate analyses looking at
patterns and correlations - Qualifications Cash vs. Stock, LT vs. ST
Incentives, Salary vs. Bonus, etc.. - Outcome No significant patterns related to
executive compensation, and no systematic
differences on compensation packages
23Main Point
- Good to Great
- Received slightly less total cash compensation 10
years after the transition than others in
mediocre companies - Not that these people will work for free
- But do better work with less incentives because
they want what's best for the company - The right people will do the right things and
deliver the best results they are capable of
regardless of the incentive system
24Nucor Example
- Built on the idea that you can teach farmers to
make steel but you cant teach a farmer work
ethic, to people who dont have it in the first
place - Plants Crawfordsville, Indiana Norfolk,
Nebraska Plymouth, Utah - They generated as high as 50 turnover in the
first year, followed by very low turnover as the
right people settled in
25Nucor Environment
- Workers
- Teams of 20 to 40 people
- Team Bonus mechanism with over 50 tied directly
to the productivity of the team - Highest paid steel workers in the world
- Arrived to work 30 minutes early and ready to go
when the shift bell rang - The system did not aim to turn lazy people into
hard workers, but to create an environment where
hardworking people to thrive and lazy ones to fail
26Rigorous, Not Ruthless
- Good to great companies are not ruthless cultures
they are rigorous - Ruthless Hacking and Cutting or Wantonly firing
people without any thoughtful consideration - Rigorous Consistently applying exacting
standards at all times and all levels - The best people need not to worry about their
positions and can concentrate fully on their work
27Wells Fargo Example
- Acquired Crocker Bank in 1986
- Consolidation
- Removed 1600 managers and top executives
- However some Crocker managers took positions in
Wells Fargo because they were better qualified
then the ones originally in that spot - The only way to deliver to the people who are
achieving is not to burden them with the people
who are not achieving.
28Wells Example Cont
- Ruthless
- To let the workers stay employed and waste
precious time when other job opportunities might
arise - Rigorous
- To deal with it up front and let people move on
with their lives
29How to Be Rigorous
- 3 Practical disciplines for being rigorous rather
than ruthless - When in doubt, dont hirekeep looking.
- When you know you need to make a people change,
act. - Put your best people on your biggest
opportunities, not your biggest problems.
30When in doubt, dont hirekeep looking
- For growth, companies should not focus on
- The markets
- Technology
- Competition
- Instead, they should concentrate on finding and
keeping enough of the right people.
31Packards 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.
32Circuit City- Always Looking for Great People
- Focused one getting the right people from top to
bottom. - Alan Wurtzels (CEO) goal was to build the best,
most professional management team in the
industry. - Delivery drivers wore uniforms, were clean
shaving, and had to be professional.
33Practical Discipline 2
- When you know you need to make a people change,
act. - The best people dont need to be managed, but
instead guided and taught
34What Happens With The Wrong People
- When you let the wrong people stay around, the
right people always need to be compensating for
the inadequacies of the wrong people - They are constantly on your mind and are a
constant drain on your energy
35Why Do People Wait
- Mainly cause it can be an inconvenience to get
rid of them, they constantly come up with excuses
on why they should wait - But meanwhile it constantly affects the right
people
36Churn?
- Turnover within a period of time
- The good-to-great did not churn more, they just
churned better, meaning that people either stayed
for a long period of time or they left quickly
37A Selections
- The good-to-great companies didnt have the
theory of try a lot of people and see who
works. They took their time and would find the
perfect person for the position - When Colman Mockler became CEO of Gillette, he
spent 55 of his time in his first 2 years
changing or moving 38 of the top 50 people of his
management team
38When Is It Time?
- 2 key questions can help
- 1.) If you are trying to place someone somewhere,
ask your self, Would you hire them again? - 2.) If the person came to you and told you that
he/she was leaving would, Would you feel
disappointed or relieved?
39Practical Discipline 3
- Put your best people on your biggest
opportunities, not your biggest problems. - There is an important corollary to this
discipline When you decide to sell off your
problems, dont sell off you best people. This is
one of those little secrets of change. If you
create a place where the best people always have
a seat on the bus, theyre more likely to support
changes in direction. - One of the crucial elements in taking a company
from good to great is somewhat paradoxical. You
need executives, on the one hand, who argue and
debate sometimes violently in pursuit of the
best answers, yet, on the other hand, who unify
fully behind a decision, regardless of parochial
interests. - The good to great companies made a habit of
putting their best people on their best
opportunities, not their biggest problems.
40First Who, Great Companies, and A Great Life
- Good to great management teams consist of people
who debate together vigorously in search of the
best answers, yet who unify behind decisions,
regardless of parochial interests. - The old adage People are your most important
asset is wrong. People are not your most
important asset. The right people are. - The right person has more to do with character
traits and innate capabilities than with specific
knowledge, background, or skills.
41Conclusion Main Points
- Find the right people for the job
- Focus on who is running the company, not what is
running it - Find level 5 leaders
- Tie compensation into performance
- 3 Disciplines
- When in doubt, dont hire..keep looking
- When you know you need to make a people change
- Put your best people on your biggest
opportunities, not your biggest problems