11. Flywheel and Doom Loop
• Good-to-great transformations dramatic and revolutionary on
outside
• Organic, cumulative processes on inside
• No single defining action
• No grand program
• No one lucky break or miracle moment
12. Flywheel and Doom Loop
• Sustainable transformations follow predictable pattern of build-
up and breakthrough
• Pushing giant heavy flywheel
• Average organizations follow “doom loop” pattern
• Try to skip build-up
• Jump immediately to breakthrough
13. Flywheel and Doom Loop
• Disappointing results
• Lurch back and forth
• Fail to maintain consistent direction
14.
15. Level 5 Executive Leadership
• Personal Humility
• Professional Will
• Workmanlike diligence – plow horse not show horse
• Ambitious for company not themselves
16. “First Who, Then What”
• Get right people on bus
• Wrong people off the bus
• Get right people in right seats
• Then decide where to drive
17. “First Who, Then What “
• Getting right people on team
• Before vision, strategy and tactics
• Put best people on biggest opportunities
• Not biggest problems
24. Hedgehog Concept
• Set goals and strategies based on understanding
• Iterative process
• Hedgehog companies simple - know one big thing and stick to it
25. Stockdale Paradox
Retain faith that you
will prevail in the end,
regardless of the
difficulties
Confront most brutal
facts of current reality,
whatever they may be
At the same time
26. Confront Brutal Facts (But Never Lose
Faith in Potential for Greatness)
• Impossible to make good decisions without honest
confrontation of brutal facts
• Create culture where truth heard
• Lead with questions
• Engage in dialogue not coercion
27. Confront Brutal Facts (But Never Lose
Faith in Potential for Greatness)
• Conduct autopsies without blame
• Charisma liability - strong personality deters people from
presenting brutal facts
• Don’t waste time trying to “motivate people”
• Right people self-motivated
• Can be de-motivated
28. Culture of Discipline
• Three forms
1. Disciplined people – don’t need hierarchy
2. Disciplined thought – don’t need bureaucracy
3. Disciplined action – don’t need excessive controls
• Combining with ethics of entrepreneurship results in great
performance
30. Culture of Discipline
• Culture of disciplined people take disciplined action within
three circles of Hedgehog Concept
• Disciplined people engage in disciplined thought and take
disciplined action
• Fanatical adherence to Hedgehog Concept
• Willingness to shun opportunities outside three circles
31. Culture of Discipline
• Budgeting not to decide how much each activity gets
• Decide areas best fit Hedgehog Concept
• “Stop doing” lists important than “to do” lists
32.
33. Technology Accelerators
• Avoid technology fads
• Pioneers in applying carefully selected technologies
• Use technology as accelerator of momentum
• Not creator
36. Best of The Best
• Clock Building not Time Telling
• Great idea or charismatic visionary leader - “time telling”
• Prosper far beyond presence of any single leader and through
multiple product life cycles - “clock building”
37. Best of The Best
• Two myths:
1. Great idea
2. Great and charismatic leader
38. Company Itself Ultimate Creation
• Not company as vehicle for products
• Products as vehicle for company
• Never, never, never give up company
• Kill, revise or evolve idea
39. Company Itself Ultimate Creation
• Transition
• From
• Designing products
• To
• Designing organization-creating environment - conducive to
creation of great products
• Critical shift in thinking
46. Profitability
• Necessary condition for existence
• Means not end
• Oxygen, food, water and blood
• Not life, but without them, there is no life
47. Profitability
• “If we provide real satisfaction to the real customers-we will be
profitable.”
• Not go after cheap end
• No opportunity for technical contribution
49. Words or Deeds?
• Ideology pervasive
• Transcend any individual leader
• Indoctrinate employees
• Nurture and select senior management
• Consistent alignment with core ideology
50. Visionary Companies
• Few core values (3 to 6)
• Capture what authentically believed
• No rational or external justification
• Articulate both core values and purpose in core ideology
51. Preserve Core/Stimulate Progress
• “Scared cow” - basic philosophy of doing business
• Visionary company preserve and protect core ideology
• Open for change and evolution
52. Visionary Company
• Core ideology work hand in hand with relentless drive for
progress
• Deep, inner, compulsive drive
• Not satisfied with status quo
• Drive for progress internal
53. Visionary Company
• Self-confidence combined with self-criticism
• Self-criticism - self-induced change and improvement
• No ultimate finish line - never “we’ve arrived”
54. Big Hairy Audacious Goal (BHAG)
• Committed to huge, daunting challenge
• Big mountain to climb
• Moon mission in 1960s
55. Big Hairy Audacious Goal (BHAG)
• Engages people
• Reaches out
• Tangible, energizing, highly focused
• Little or no explanation
56. “Hubris Factor”
• Overbearing pride, confidence or arrogance
• Highly visionary companies self-confidence bordering on hubris
• “Taunting the gods”