Transcript BOOK REVIEW GOOD-TO

BOOK REVIEW
GOOD-TO-GREAT
PRESENTED BY:
Norhasliza Ibrahim
Sitynoryasmin Ahmad Khairuddin
Azlida
INTRODUCTION
Author:
James C. Collins
Language:
English
Publisher:
William Collins
Publication date: October 16, 2001
Media type: Hardcover
Pages:
320
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
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.
James C. Collins
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 Don’t 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
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.
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 that make a leap from
in same industry , same
good to great but failed to
opportunities and similar
maintain the success
resources at the time of
transition but make no move
from good to great
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
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
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
• 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.
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.
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.
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
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.
•
•
•
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 it’s
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.
CHAPTER 3: FIRST WHO…THEN
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
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, don’t 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.
CHAPTER 4
CONFRONT THE BRUTAL FACT
(YET NEVER LOSE FAITH)
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 Kroger’s decision to thrown all its
resources into the task of converting its entire
system to the superstore concept, they were
remarkably on target.
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.
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.
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.
CHAPTER 5
THE HEDGEHONG CONCEPT
(SIMPLICITY WITHIN THE THREE
CIRCLES)
A simple crystalline concept that lows from deep
understands about the intersection of the
following circles.
• At what you can be best in the world
This standard goes far beyond core
competence.
It is because you possess a core competence
doesn’t 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.
• 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.
• 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.
• Critical point is the “hedgehog concepts is not
a goal to be the best, it’s 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.
Getting the hedgehog concepts (an interactive
process)
Ask Question,
Guided by the three circles
THE
Autopsies and analysis
Guided by the three circles COUNCIL
Dialogue and debate,
Guided by the three circles
Executive Decisions
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.
6.
7.
8.
9.
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.
The council is a standing body, not an ad
hoc committee assembled for a specific
project.
The Council meets periodically, as much as
once a week or as infrequently as once per
quarter.
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.
10.
11.
The Council is an informal body, not listed
on any formal organization chart or in any
formal documents.
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.
CHAPTER 6
A CULTURE OF DISCIPLINE
The Good to Great Matrix of Creative Discipline
High
Hierarchical
Organization
Great
Organization
Culture of
Discipline
Bureaucratic
Organization
Start-up
Organization
Low
Low
Ethic of
Entrepreneurship
High
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”
•
Don’t 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.
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.
• Don’t 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 company’s 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.
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.
The Flywheel Effect
The Doom Loop
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.
 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 momentumturn by turn of the flywheel-they tried to skip buildup and
jump immediately to breakthrough. Then, with
disappointing result, they’d 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.
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 didn’t 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.

•
•
•
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.
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.
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.
