The following quotes are from Jim Collins book. Good to Great which is available for purchase here.
The vast majority of companies never become great, precisely because the vast majority become quite good-and that is their main problem. 1
We expected that good-to-great leaders would begin by setting a new vision and strategy. We found instead that they first got the right people on the bus, the wrong people off the bus, and the right people in the right seats-and then they figured out where to drive it. 13
You must maintain unwavering faith that you can and will prevail in the end. regardless of the difficulties, AND at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be. 13
When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls. When you combine a culture of discipline with an ethic of entrepreneurship, you get he magical alchemy of great performance. 13
Those who launch revolutions, dramatic change programs, and wrenching restructurings will almost certainly fail to make the leap from good to great. No matter how dramatic the end result, the good-to-great transformations 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. Rather, the process resembled relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough, and beyond. 14
As one of my favorite professors once said, “The best students are those who never quite believe their professors.” 16
“I never stopped trying to become qualified for the job.” 20
Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious-but their ambition is first and foremost for the institution, not themselves. 21
In over three quarters of the comparison companies, we found executives who set their successors up for failure or chose weak successors, or both. 26
In contrast to the very I-centric style of the comparison leaders, we were struck by how the good-to-great leader, they’d talk about he company and the contributions of other executives as long as we’d like but would deflect discussion about their own contributions. 27
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. No, they first go the right people on the bus (and the wrong people off the bus) and then figured out where to drive it. 41
If people join the bus primarily because of where it is going, what happens if you get ten miles down the road and you need to change direction? You’ve got a problem. But if people are on the bus because of wo else is on the bus, then it’s much easier to change direction: “Hey, I got on this bus because of who else is on it; if we need to change direction to be successful, fine with me.”
The right people don’t need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great. Third, if you have the wrong people, it doesn’t matter whether you discover the right direction; you still won’t have a great company. Great vision without great people is irrelevant. 42
They hired outstanding people whenever and wherever they found them, often without an y specific job in mind. “That’s how you build the future,” he said. “If I’m not smart enough to see the changes that are coming they will. And they’ll be flexible enough to deal with them.” 42
You get the best people, you build them into the best managers in the industry, and you accept the fact that some of them will be recruited to become CEOs of other companies. 43
“I don’t 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.” 45
Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people. 54
The sign reminded me of out interview with Walter Bruckart, vice president during the good-to-great years. When asked to name the top five factors that lead to the transition from mediocrity to excellence, Bruckart said, “One would be people. Two would be people. Three would be people. Four would be people. And five would be people. A huge part of our transition can be attributed to our discipline in picking the right people.”
“’Alan, I’m really wearing down trying to find the exact right person to fill this position or that position. At what point do I compromise?’ Without hesitation, Alan said, “You don’t compromise. We find another way to get through until we find the right people.’” 55
The moment you feel the need to tightly manage someone, you’ve made a hiring mistake. The best people don’t need to be managed. Guided, taught, led-yes. But not tightly managed. 56
Worse, all the time and energy we spend on that one person siphons energy away from developing and working with the right people. We continue to stumble along until the person leaves on his own (to our great sense of relief) or we finally act (also to our great sense of relief). Meanwhile, our best people wonder, “What took you so long?” 56
Letting the wrong people hang around is unfair to all the right people as they inevitably find themselves compensating for the inadequacies of the wrong people. 56
I spent a lot of time thinking and talking about who sits where on the bus. I called it “putting square pegs in square holes and round pegs in round holes.” …Instead of firing honest and able people who are not performing well, it is important to try to move them once or even two or three times to other positions where they might blossom. 57
But how do you know when you know? Two key questions can help. First, if it were a hiring decision (rather than a “should this person get off the bus?” decision), would you hire the person again? Second, if the person came to tell you that he or she is leaving to pursue an exciting new opportunity, would you feel terribly disappointed or secretly relieved? 58
The RJR versus Philip Morris case illustrates a common patter. The good-to-great companies made a habit of putting their best people on their best opportunities, not their biggest problems. The comparison companies had a penchant for doing just the opposite, failing to grasp the fact that managing your problems can only make you good, whereas building your opportunities is the only way to become great. 59
He was so good at assembling the right people around hi, and putting the right people in the right slots, that he just didn’t need to be there all hours of the day and night. 61
The people we interviewed from the good-to-great companies clearly loved what they did, largely because the loved who they did it with. 62
They didn’t like the answers that it gave, so they closed it. 68
There is nothing wrong with pursuing a vision for greatness. After all, the good-to-great companies also set out to create greatness. But, unlike the comparison companies, the good-to-great companies continually refined the path to greatness with the brutal facts of reality. 71
“This is a culture that is very hostile to complacency,” said one executive. “We have an itch that what we just accomplished, no matter how great, is never going to be good enough to sustain us,” said another. 72
Pitney’s first management meeting of the new year typically consisted of about fifteen minutes discussing the previous year (almost always superb results) and two hours talking about the “scary squiggly things” that might impede future results. 72
The company created a long-standing tradition of forums where people could stand up and tell senior executives what the company was doing wrong, shoving rocks with squiggly things in their faces, and saying, “Look! You’d better attention to this.” 72
Throughout the study, we found comparison companies where the top leader led with such force or instilled such fear that people worried more about he leader-what he would say, what he would think, what he would do-than they worried about external reality and what it could do to the company. 72
The moment a leader allows himself to become he primary reality people worry about, rather than reality being the primary reality, you have a recipe for mediocrity, or worse. This is one of the key reasons why less charismatic leaders often produce better long-term results than their more charismatic counterparts.
Indeed, for those of you with a strong, charismatic personality, it is worthwhile to consider the idea that charisma can be as much a liability as an asset. Your strength of personality can sow the seeds of problems, when people filter the brutal facts form you. You can overcome the liabilities of having charisma, but it does require conscious attention. 73
“I…had no need for cheering dreams,” he wrote. “Facts are better than dreams.”73
When you conduct autopsies without blame, you go a long way toward creating a climate where the truth is heard. If you have the right people on the bus, you should almost never need to assign blame but need only to search for understanding and learning. 78
Indeed, we found no evidence that the good-to-great companies had more or better information that the comparison companies. None. Both sets of companies had virtually identical access to good information. The key, lies not in better information, but in turning information into information that cannot be ignored. 79
In confronting the brutal facts, the good-to-great companies left themselves stronger and more resilient, not weaker and more dispirited. There is a sense of exhilaration that comes in facing head-on the hard truths and saying, “We will never give up. We will never capitulate. It might take a long time, but we will find a way to prevail. 81
The good-to-great leaders were able to strip away so much noise and clutter and just focus on the few things that would have the greatest impact. 87
This brings me to one of the most crucial points of this chapter: A Hedgehog Concept is not a goal to be the best, a strategy 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 crucial. 88
You can only discover what ignites your passion and the passions of those around you.
The good-to-great companies did not say, “Okay, folks, let’s get passionate about what we do.” Sensibly, they went the other way entirely: We should only do those things that we get passionate about. 109
For the comparison companies, the exact same world that had become so simple and clear to the good-to-great companies remained complex and shrouded in mist. Why? For two reasons. First, the comparison companies never asked the right questions, the questions prompted by the three circles. Second, they set their goals and strategies more from bravado than from understanding.
Nowhere is this more evident than in the comparison companies’ mindless pursuit of growth: Over two thirds of the comparison companies displayed an obsession with growth without the benefit of a Hedgehog Concept. Statements such as “We’ve been a growth at any price company” and “Betting that size equals success” pepper the materials on the comparison companies. In contrast, not one of the good-to-great companies focused obsessively on growth. Yet they created sustained, profitable growth far greater than the comparison companies that made growth their mantra. 111
Despite its vital importance (or, rather, because of its vital importance), it would be a terrible mistake to thoughtlessly attempt to jump right to a Hedgehog Concept. You can’t just go off-site for two days, pull out a bunch of flip charts, do breakout discussions, and come up with a deep understanding. Well, you can do that, but you probably won’t get it right. It would be like Einstein saying, “ I think it’s time to become a great scientist, so I’m going to go off to the Four Seasons this weekend, pull out the flip charts and unlock the secrets of the universe.” 112
It took about four years on average for the good-to-great companies to clarify their Hedgehog Concepts. 114
Chart p 114
Characteristics of the Council
The council exists as a device to gain understanding about important issues facing the organization.
The Council is assembled and used by the leading executive and usually consists of five to twelve people.
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.
Each Council member retains the respect of every other Council member, without exception.
Council members 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.
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 odds with intelligent decisions. The responsibility for the final decision remain with the leading executive.
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. 115-116
George Rathmann avoided this entrepreneurial death spiral. He understood that the purpose of bureaucracy is to compensate for incompetence and lack of discipline-a problem that largely goes away if you have the right people in the first place. Most companies build their bureaucratic rules to manage the small percentage of wrong people on the bus, which in turn drives away the right people on the bus, which then increases the percentage of wrong people on the bus, which increases the need for more bureaucracy to compensate for incompetence and lack of discipline, which then further drives the right people away, and so forth. 121
You are rigorous at the end of the year, adhering exactly to what you said was going to happen. You don’t get a chance to editorialize. You don ‘t get a chance to adjust and finagle, and decide that you really didn’t intend to do that anyway, and readjust your objectives to make yourself look better. You never focus on what you’ve accomplished relative to exactly what you said you were going to accomplish-no matter how tough the measure. 122
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 of the three circles. Equally important, create a “stop doing list” and systematically unplug anything extraneous. 124
The 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. They hired self-disciplined people who didn’t need to be managed, and then managed the system, not the people. 125
In a sense, much of this book is about creating a culture of discipline. It all starts with disciplined people. The transition begins not by trying to discipline the wrong people into the right behaviors, but by getting self-disciplined people on the bus in the first place. 126
The comparison companies often tried to jump right to disciplined action. But disciplined action without self-disciplined people is impossible to sustain, and disciplined action without disciplined thought is a recipe for disaster. 126
The good-to-great companies at their best followed a simple mantra: “Anything that does not fit with out Hedgehog Concept, we will not do. We will not launch unrelated businesses. We will not make unrelated acquisitions. We will not do unrelated joint ventures. If it doesn’t fit, we don’t do it. Period.” 134
The challenge becomes not opportunity creation, but opportunity selection. 136
It takes discipline to say “No, thank you” to big opportunities. The fact that something is a “once-in-a-lifetime opportunity is irrelevant if it doesn’t fit within the three circles. 136
All 7,000 employees’ names appeared in the annual report, not just officers’ and executives’. 138
IN a good-to-great transformation, budgeting is a discipline to decide which arenas should be fully funded and which should not be funded at all. In other words, the budget process is not about figuring out how much each activity gets, but about determining which activities best support Hedgehog Concept and should be fully strengthened and which should be eliminated entirely. 140
Once they understood their three circles, they rarely hedged their bets. Recall Kroger’s commitment to overturn its entire system to create superstores, while A&P clung to the “safety” of its older stores. 141
The real question is, once you know the right thing, do you have the discipline to do the right thing and, equally important, to stop doing the wrong things? 141
Most men would rather die, than think. Many do.– Bertrand Russell 144
This brings us to the central point of the chapter. When used right, technology becomes an accelerator of momentum, not a creator of it. 152
If you had the opportunity to sit down and read all 2,000+ pages of transcripts from the good-to-great interviews, you’d be struck by the utter absence of talk about “competitive strategy.” Yes, they did talk about strategy, and they did talk about performance, and they did talk about becoming the best, and they even talked about winning. But they never talked in reactionary terms and never defined their strategies principally in response to what others were doing. They talked in terms of what they were trying to create and how they were trying to improve relative to an absolute standard of excellence. 160
“We’re just never satisfied. We can be delighted, but never satisfied.” 160
No, those who turn good into great are motivated by a deep creative urge and an inner compulsion for sheer unadulterated excellence for its own sake. Those who build and perpetuate mediocrity, in contrast, are motivated more by the fear of being left behind. 160
Picture an egg just sitting there. No one pays it much attention until, one day, the egg cracks open and out jumps a chicken! All the major magazines and newspapers jump on the event, writing feature stories-“The Transformation of Egg to Chicken!” “The Remarkable Revolution of the Egg!” “Stunning Turnaround at Egg!”-as if the egg had undergone some overnight metamorphosis, radically altering itself into a chicken.
But what does it look like from the chicken’s point of view? It’s a completely different story. While the world ignored this dormant-looking egg, the chicken was evolving, growing, developing, incubating. From the chicken’s point of view, cracking the egg is simply one more step in a long chain of steps leading up to that moment-a big step, to be sure, but hardly the radical, single-step transformation it looks like to those watching from outside the egg. 168
The good-to-great companies had no name for their transformations. There was no launch event, no tag line, no programmatic feel whatsoever. Some executives said that they weren’t even aware that a major transformation was under way until they were well into it. It was often more obvious to them after the fact that at the time. 169
Clearly, the good-to-great companies did get incredible commitment and alignment-they artfully managed change-but they never really spent much time thinking about it. It was utterly transparent to them. We learned that under the right conditions, the problems of commitment, alignment, motivation, and change just melt away. They largely take care of themselves. 176
When people begin to feel the magic of momentum-when they begin to see tangible results, when they can feel the flywheel beginning to build speed-that’s when the bulk of people line up to throw their shoulders against the wheel and push. 178
Peter Drucker once observed that the drive for mergers and acquisitions comes less form sound reasoning and more from the fact that doing deals is a much more exciting way to spend your day than actual work. 180
Bad BHAGs, it turns out, are set with bravado; good BHAGs are set with understanding. Indeed, when you combine quiet understanding of the three circles with the audacity of a BHAG, you get a powerful, almost magical mix. 202
Indeed, the point of this entire book is not that we should “add” these findings to what we are already doing and make ourselves even more overworked. No, the point is to realize that much of what we’re doing is at best a waste of energy. If we organized the majority of our work time around applying these principles, and pretty much ignored or stopped doing everything else, our lives would be simpler and our results vastly improved. 205
Now for the interesting twist: The coach has an MBA from an elite business school and is a Phi Beta Kappa graduate in economics, having won the prize for the best undergraduate honors thesis at one of he most selective universities in the world. She found, however, that most of what her classmates went on to do-investment banking on Wall Street, starting Internet companies, management, consulting, working for IBM, or whatever-held no meaning for her. She just didn’t care enough about those endeavors to want to make them great. 208
Indeed, the real question is not, “Why greatness?” but “What work makes you feel compelled to try to create greatness?” If you have to ask the question, “Why should we try to make it great? Isn’t success enough?” then you’re probably engaged in the wrong line of work. 209
When all these pieces come together, not only does your work move toward greatness, but so does your life. For, in the end, it is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work. Perhaps, then, you might gain that rare tranquility that comes from knowing that you’ve had a hand in creating something of intrinsic excellence that makes a contribution. Indeed, you might even gain that deepest of all satisfaction: knowing that your short time here on this earth has been well spend, and that it mattered. 210
The single most harmful step you can take in a journey from good to great is to put the wrong people in key positions. 216