Good to Great

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Good to Great
KS Bank June 14, 2006
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Overview
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Overview

• 11 great companies
• First 15 years Good results
• Next 15 years 6.9 times avg. market return
• 11 comparison companies
• First 15 years Good results
• Next 15 years Good results
• Same industry
• Same opportunities
• Same resources
• Different results

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Overview

• Great Comparison
• Abbott Upjohn
• Circuit City Silo
• Fannie Mae Great Western
• Gillette Warner-Lambert
• Kimberly-Clark Scott Paper
• Kroger AP
• Nucor Bethlehem Steel
• Philip Morris R.J. Reynolds
• Pitney Bowes Addressograph
• Walgreens Eckerd
• Wells Fargo Bank of America

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Overview

• Stage 1 Disciplined People
• Level 5 Leadership
• First Who, Then What
• Stage 2 Disciplined Thought
• Facts Faith
• The Hedgehog Concept
• Stage 3 Disciplined Action
• Culture of Discipline
• Technology Accelerators
• The Flywheel Doom Loop
• Stage 4 Building Greatness to Last
• Clock Building, not Time Telling
• Preserve the Core, Stimulate Progress

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Overview

• Superior Performance
• Distinctive Impact
• Lasting Endurance

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Good is the Enemy of Great

• The vast majority of companies
• never become great, precisely because the
• vast majority become quite good,
• and that is their main problem.
• Jim Collins
• Good to Great

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Stage 1 Disciplined PeopleLevel 5 Leadership

• Level 1 Highly Capable Individual
• Level 2 Contributing Team Member
• Level 3 Competent Manager
• Level 4 Effective Leader
• Level 5 Level 5 Executive
• Extreme personal humility
• Intense personal will

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Stage 1 Disciplined PeopleLevel 5 Leadership

• Level 5 Leaders
• Window Shared credit for success with others
• Mirror Took personal responsibility for failure
• Comparison CEOs
• Window Blamed others, bad luck, etc.
• Mirror Took credit for all company success

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Stage 1 Disciplined People First Who, Then What

• Get the right people on the bus
• Get the wrong people off the bus
• Get the right people in the right seats
• People before purpose

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Stage 1 Disciplined People First Who, Then What

• Rule 1 When in doubt, dont hire keep
  looking
• Rule 2 When you know you need to make a people
  change, act right away!
• Rule 3 Put your best people on your biggest
  opportunities, NOT your biggest problems

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Stage 2 Disciplined ThoughtFacts Faith

• The Stockdale Paradox
• Confront the brutal facts
• Lead with questions, not answers
• Engage in dialogue and debate, not coercion
• Conduct autopsies, without blame
• Build red flag mechanisms
• Maintain faith that you will prevail

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Stage 2 Disciplined ThoughtThe Hedgehog Concept
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Stage 2 Disciplined ThoughtThe Hedgehog Concept
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Stage 3 Disciplined ActionA Culture of
Discipline

• Freedom AND Responsibility
• Rigorous standards
• Responsibility for results
• Freedom to be creative
• Accountability at all levels
• Saying no
• Disciplinarian leader vs. Disciplined culture

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Stage 3 Disciplined ActionTechnology
Accelerators

• Great Companies
• Proactive (Goals)
• Acceleration
• Comparison Companies
• Reactive (Fear)
• Initiation
• Examples
• Golf
• Running

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The FlywheelThe Positive Power of Momentum

• Consistent direction
• Focused
• Proactive
• Evolution
• Incremental change
• Cumulative effort
• Long-term focus
• Acquisition as accelerator of momentum
• No change programs
• Leading by example
• Creating small wins
• Synergy

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The Doom LoopThe Negative Power of Momentum

• Inconsistent direction
• Diversified
• Too many plates spinning
• Pulled in too many different directions
• Reactive
• Revolution
• Searching for a magical moment
• Desire immediate breakthrough
• Unwilling to invest in buildup
• Short-term focus
• Acquisition as creator of momentum
• Failed change programs

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Built to LastClock Building, not Time Telling

• Enduring
• Multiple leaders
• Multiple product/service life cycles

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Built to LastThe Genius of AND

• Humility AND Will
• Facts AND Faith
• Freedom AND Responsibility

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Built to LastCore Ideology (Values Purpose)

• Reason for being
• Beyond just making money
• Inspiring standard
• Why do we exist?
• Know them
• Live them
• Preserve them

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Built to LastPreserve the Core, Stimulate
Progress

• Core
• Values
• Purpose
• Change (Disney)
• Practices
• Strategies
• Goals

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Why Greatness?

• Its no harder than being mediocre
• Less suffering
• Less work
• People desire meaningful work

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What Now?

• Personal application
• Social sector application
• Professional application

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David Rendall [phone] www.drendall.com w
ww.daverendall.typepad.com dave_at_drendall.com