Good to Great

1
Good to Great

• Discussion Notes
• Cameron M. Ford
• Organizational Behavior, Fall 2006

2
Level 5 Leadership Hierarchy
Level 5 Executive
Effective Leader
Competent Manager
Contributing Team Member
Highly Capable Employee
3
Level 5 Leadership

• Requires paradoxical blend of
• Strong professional will
• Personal humility
• Motivational Orientation
• Toward achieving collective greatness rather than
  demonstrating personal greatness
• Attributional Style
• Take credit for blame and avoid credit for
  success (directly opposite of typical pattern of
  individual attributional biases)
• Can individuals acquire these characteristics?

4
Getting the Right People on the Bus

• Acquiring human resources preceded developing
  revised strategy
• Having right people, and removing wrong
  people creates strong peer pressure and
  self-motivation
• Broad executive talent base is more flexible and
  enduring than genius with 1000 helpers
• Compensation systems are primarily useful as a
  means of attracting and retaining talent
• Need disciplined approach to HR
• Dont settle
• Break up early
• Focus talent on opportunities, not problems

5
Good to Great Confront the Brutal Facts

• Problematizing can motivate individuals to
  search for new approaches
• Fear must be externalized individuals must feel
  comfortable speaking honestly to each other,
  especially when differences in power exist
• Practices that encourage truth telling
• Leading with questions
• Engaging in dialogue and debate
• Examining failures without casting blame

6
The Stockdale Paradox

• Retaining faith that you will prevail in the end,
  regardless of the difficulties, and
• Confronting the most brutal facts of your current
  reality, whatever they might be
• How can a company enhance its hardiness factor?

7
The Hedgehog Concept

• A simple, crystalline concept that flows from
  deep understanding about the intersection of the
  following three circles
• What can you be the best at?
• What drives your economic engine?
• What are you deeply passionate about?
• Focusing on what you can do better than anyone
  else is the only path to greatness
• Sample companies typically took four years to
  fully articulate their hedgehog concept
• What is your hedgehog concept?

8
Why Hedgehogs Earn Superior Returns

• They identify an enduring attributes that
  consumers value (e.g., convenience, price,
  quality), and focus all efforts and resources on
  becoming the best supplier of that attribute.
• They design a business model with associated
  financial (not process) controls (e.g.,
  profit/employee, profit/brand, etc.) that focuses
  effort and investment on achieving and sustaining
  1 status.
• They populate their business with positive people
  who are passionate about doing their best and
  being the best. This facilitates rigorous and
  creative strategy implementation.

9
Shared Goals and Standards as an Alternative to
Structure and Control

• Culture of Discipline
• Responsibility to deliver ends
• Ethic of Entrepreneurship
• Freedom to create means
• Self discipline vs. imposed discipline
• Consistently exceed expectations
• Adhere to hedgehog concept (discipline to say
  No to opportunities)

10
I.T. IS ONLY A TOOL!

• IT can be a great enabler for executing strategy
• IT may be required to keep up with accepted
  industry practices
• IT is not a strategy (Duh!), and is NEVER a
  source of enduring competitive advantage by itself

11
The Flywheel Effect Positive Feedback Loops and
Creative Inertia

• Companies engage in consistent, coherent steps
  forward consistent with hedgehog concept
• Visible results accumulate
• People jump on bandwagon
• Momentum builds
• Excellence ensues

12
The Doom Loop Shifting Goals and Rules Prevent
Accumulation of Competitive Advantage

• Poor results
• Reactive response
• New direction, rules, programs
• Cynicism, mistrust, confusion
• Good people leave, capabilities and results
  continue to erode

13
With Fear There Can be No Creativity

• Those who built great companies werent motivated
  by fear of what they didnt understand, of
  looking like a chump, watching others hit it big,
  or being hammered by their competition
• Those who turn good to great are motivated by a
  deep creative urge and an inner compulsion for
  sheer unadulterated excellence for its own sake

14
Work as Play Could it be That Simple?

• Games and good-to-great companies share several
  common attributes
• They have clear goals
• They have consistent rules that everyone knows
  and must abide by
• They evoke intrinsic motivation (flow)
• They require and reward skill and performance
• They require years of training before excellence
  can be realized
• They provide a context for improvisation