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Good to Greatby Jim CollinsSome Highlights
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The Sample of Good to Great Companies

• Start with 1,435 good companies. Examine their
  performance over 40 years. Then find the 11
  companies that went from mediocre and became
  great .
• The 11 good-to-great companies that Collins found
  averaged returns 6.9 times greater than the
  marketsmore than twice the performance rate of
  General Electric under the legendary Jack Welch.
• The surprising good-to-great list included
  many unheralded companies
• One such surprise, the Kroger Co.a grocery
  chainbumped along as a totally average performer
  for 80 years and then somehow broke free of its
  mediocrity to beat the stock market by 4.16 times
  over the next 15 years. And it didn't stop there.
  From 1973 to 1998, Kroger outperformed the market
  by 10 times.

• Circuit City - 18.50x market
• Fannie Mae - 7.56x market
• Gillette - 7.39x market
• Walgreens - 7.34x market
• Philip Morris - 7.06x market
• Pitney Bowes - 7.16x market

• Kroger - 4.17x market
• Nucor Corp - 5.16x market
• Wells Fargo - 3.99x market
• Abbott Laboratories - 3.98x market
• Kimberly-Clark Corp - 3.42x market

15 years of cumulative stock returns at or
below market, then a transition point followed by
cumulative stock returns at least 3 times higher
than the market over the next 15 years
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Good vs Great

• Good is the ENEMY of great
• If one is good there is very little need to
  change If it isnt broken, dont fix it
• To become great requires a new vision
• It requires different leadership

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Discipline - It starts with people

• To go from Good to Great requires
• Disciplined People
• Disciplined Thought
• Disciplined Actions
• First who, then what.
• One needs disciplined people, who apply
  disciplined thought and take disciplined action.
• How does one get the right people?
• Are the good people on the bus?
• Are the wrong people off the bus? And
• For those on the bus are they sitting in the
  correct seats?

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But, you need a great leader a Level 5

• The level 5 leader in all the good to great
  companies were all cut form the same cloth
• It is all about the type of leader
• One who does not lead by inspired talk but by
  inspired thought (discipline)
• Its about humility
• Constantly asking the question Do I measure
  up?
• Its not about me, its about the company, the
  goal.

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The window or the mirror?

• All these leaders, when asked how they succeeded
  answered We were lucky
• But the real answer is probably more about the
  window or the mirror
• Its not just about the leader its about the
  team/the people
• These successful leaders point out the window at
  the things/people who led to the success, and to
  luck, when things go well
• When things go bad, they look in the mirror
  asking themselves how they have failed and what
  they need to do to fix it.

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Confronting the brutal facts

• Its about disciplined thought to confront the
  brutal facts
• The Stockdale Paradox
• One requires the unwavering faith that one can
  prevail despite the constraints.
• This needs to be balanced with the discipline to
  face the brutal facts about ones situation.
• Those who do not make it through trying
  circumstances are the optimists. They die of
  broken hearts when things do not work out as
  planned.

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The Hedgehog Concept

• Are you engaged in work that fits your own three
  circles
• What you are passionate about, what you are
  genetically encoded for?
• What can you be the best in the world at (and
  what can you not)?
• What can you get paid for?

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Bringing it all together

• To go from Good to Great requires disciplined
  people, with disciplined thought, to take
  disciplined action to stop doing that which does
  not fit the three circles.
• Once the point of intersection is determined, one
  needs to action a Stop Doing List!
• The fundamental distinguishing dynamic of
  enduring great companies is that they preserve a
  cherished core ideology while simultaneously
  stimulating progress and change in everything
  that is not part of the core ideology.
• Put another way, the most enduring and successful
  corporations distinguish their timeless core
  values and enduring core purpose (which should
  never change) from their operating practices and
  business strategies (which should be changing
  constantly in response to a changing world).