Good to Great outlines Jim Collins' framework for how good companies can make the leap to becoming great. The framework involves 6 aspects: 1) Level 5 Leadership, 2) First Who, Then What, 3) Confronting Brutal Facts, 4) Developing a Hedgehog Concept, 5) Building a Culture of Discipline, and 6) Using Technology Accelerators. Over time, consistently applying this framework causes the "flywheel effect" that builds momentum until a breakthrough occurs, transitioning the company from good to great.

1. Good to Great
WHY SOME COMPANIES MAKE THE LEAP…
AND OTHERS DON’T
FARZIN FARDISS, PARS SAMAN BOARD MEMBER,
FARDISS@PARSSAMAN.COM

2. Agenda
→ What are considered good and great companies
→ What’s inside the black box?
→ Level 5 Leadership
→ First Who….Then What
→ Confront the Brutal Facts
→ Hedgehog Concept
→ A Culture of Discipline
→ Technology Accelerators
→ Flywheel

3. Good to Great

4. “Good is the enemy of great.”
-JIM COLLINS

5. “Can a good company become
Great?”

6. Yes
Any organization can become
great if it consistently applies the
concepts and ideas that will be
presented in this presentation.

7. Before we begin, what is
considered a Great company
General
Market
Great companies have
returns that are at least
3 times the general market
1
2
3

8. What are some of the
good companies out
there?

10. All of these companies
only broke the general
market by 2.5 times

11. What are the great
companies?

13. Good to Great Cases
Company
Results from Transition point to 15
years beyond transition point
T‐year to T‐year
+15
Circuit City 18.5 times the market 1982‐1997
Fannie May 7.56 times the market 1984‐1999
Gillette 7.39 times the market 1980‐1995
Walgreens 7.34 times the market 1975‐1990
Pitney Bowes 7.16 times the market 1973‐1988
Philip Morris 7.06 times the market 1964‐1979
Nucor 5.16 times the market 1975‐1990
Kroger 4.17 times the market 1973‐1988
Wells Fargo 3.99 times the market 1983‐1998
Abbot 3.98 times the market 1974‐1989
Kimberly‐Clark 3.42 times the market 1972‐1987

14. Comparison Companies
Comparisons companies are those
companies that had the same
opportunities, similar resources and in the
same industry as the good-to-great
companies, but never made the leap from
good to great.

15. Great companies vs.
Comparison Companies
Good‐to Great Companies Direct Comparisons
Abbot Upjohn
Circuit City Silo
Fannie May Great Western
Gillette Warner‐Lambert
Kimberly‐Clark Scott Paper
Kroger A&P
Nucor Bethlehem Steel
Philip Morris R.J. Reynolds
Pitney Bowes Addressograph
Walgreens Eckerd
Wells Fargo Bank of America

16. Unsustained comparisons
Unsustained comparisons are those companies
that have made the leap from good-to-great,
but failed to sustain the progress.
Unsustained Comparisons
Burroughs
Chrysler
Harris
Hasbro
Rubbermaid
Teledyne

17. How did this Great companies
transition from Good to Great?
What did these companies do
that made them great?
Good Results
Great Results
What’s
inside the
Black Box?

18. So What’s in the Black Box?
What’s
inside the
Black Box?

19. Buildup
THIS

20. Simplified version of Mr. Collins
framework
Disciplined ActionDisciplined Action
Culture of Discipline Technology Accelerators
Disciplined ThoughtDisciplined Thought
Confront The Brutal Facts Hedgehog Concept
Disciplined PeopleDisciplined People
Level 5 Leadership First Who….Then What

22. But this isn’t any ordinary leadership, It’s Level
5 Leadership.
Level 5 Leadership
So what is Level 5 Leadership?

23. Level 5 Leadership
Level 5: Builds enduring greatness

24. What are the traits of a Level 5
Leader?

25. Level 5 Leaders set their company
up for success after they leave, by
finding a successor that will
succeed.

26. Level 5 leaders are very modest.

27. Level 5 leaders are fanatically
driven to produce results.

28. Almost all Level 5 Leaders came
from within the company.

29. Level 5 leaders always take the
blame, and always give away the
credit to their subordinates.
Level 5
Leader
Gives Credit

30. Level 5 Leadership Formula
HUMILITY
WILLPOWER
+
LEVEL 5
=

31. We just went over WHO Level 5
Leaders are. The rest of the
process of transitioning from good
to great shows what they DO.
Level 5
Leadership
Disciplined ActionDisciplined People
Confront the
Brutal Facts
Hedgehog
Concept
Culture of
Discipline
Technology
Accelerators
Disciplined Thought
First
Who…Then
What
Buildup

32. First Who…Then What
The second aspect in Collin’s framework
needed for a company to breakthrough
from good to great is having the right
people, in the right location.

33. First Who…Then What
Collins uses a bus analogy to describe
what he and the team found.
Bad PeopleGood People

34. Collins states that it is important to
begin with “who”, instead of “what
First Who…Then What

35. If the people jump on the bus because of
where it is going, and ten miles down
the road you change direction, then
there will be a problem.
First Who…Then What

36. If the people are on the bus because of
who else is on the bus, then it’s much
easier to change direction.”
First Who…Then What

37. The problem of motivation and
management goes away when you
have the right people on the bus.
First Who…Then What

38. “great vision without great people is irrelevant”
First Who…Then What

39. Now that the Level 5 Leaders have the disciplined
people, they now need the discipline thought

40. Confront the Brutal Facts
The third aspect in Collin’s framework
needed for a company to breakthrough
from good to great is to confronted the
brutal facts of reality.

41. Confront the Brutal Facts
The Good to great companies would lead
with questions, not answers.

42. Confront the Brutal Facts
They would engage in dialogue and debate,
not coercion.

43. Confront the Brutal Facts
The Good to great companies would
conduct autopsies, without blame.

44. Stockdale Paradox
“Retain faith that you will
prevail in the end, regardless of
the difficulties, and at the same
time confront the most brutal
facts of your current reality,
whatever they might be.”

45. Confront the Brutal Facts
Now that the Good to Great companies know
the brutal facts, they need to conceptualize
their ideas .

46. Hedgehog Concept
The fourth aspect in Collin’s framework
needed for a company to breakthrough
from good to great is to understand what
you can be the best at.

47. Hedgehog Concept
The good-to-great companies transitioned
from good to great because they took a
great, simple idea that had piercing insight,
and consistently used that idea for all of
their decision making.

48. But how did the Good to Great companies
come up with these great, simple, ideas?

49. What you are
deeply Passionate
About
What you can be
the best in the
world at
What drives your
economic engine
HEDGEHOG
CONCEPT
These great, simple, ideas came from
the answers of three questions.

50. Hedgehog Concept
Collins states that it took an average of four
years for the good-to-great companies to
clarify their hedgehog concept.

51. THE
COUNCIL
THE
COUNCIL
Ask
Questions
Ask
Questions
Dialogue
and
Debate
Dialogue
and
Debate
Executive
Decisions
Executive
Decisions
Autopsies
and
Analysis
Autopsies
and
Analysis
A useful mechanism that Collins creates to
help move the process along is called “The
Council”.
All aspects of The Council are guided with
the three circles (hedgehog concept) in mind

52. Now that the Good to Great companies have
disciplined people and discipline thought,
it’s time for action

53. Culture of Discipline
The fifth aspect in Collin’s framework needed
for a company to breakthrough from good
to great is to have disciplined action
within the three circles, fanatically
consistent with the hedgehog concept

54. Culture of Discipline
The Good to Great companies build a culture
around the idea of freedom and
responsibility, within a framework.

55. Culture of Discipline
Fill the culture with self-disciplined people
who are willing to go extreme lengths to
fulfill their responsibilities.

56. Culture of Discipline
Adhere with great consistency to the
hedgehog concept, exercising an almost
religious focus on the intersection of the
three circles.

57. Now that the Good to Great companies have
all the components needed to transition
from good to great, the last item was how
to approach and integrate new
technological advances into their hedgehog
concept.

58. Technology Accelerators
The sixth aspect in Collin’s framework
needed for a company to breakthrough
from good to great is to use only those
technologies that apply to the
companies hedgehog concept.

59. The executives of the good-to-great
companies knew that without the clear
understanding of how new technology fits
into a company’s hedgehog concept,
technology became only a means of
accelerating that companies own self
demise.
Technology Accelerators

60. Now that everything for a company to
breakthrough from good to great is in place,
the only thing to do is to wait, while
fanatically applying the great, simple ideas
from the hedgehog concept.

61. The last Concept in the framework is the
flywheel. This takes all of the concepts put
together, and provides the breakthrough.
Disciplined ActionDisciplined People Disciplined Thought
Buildup

62. Following all of the six concepts within the
framework will begin to push the wheels
momentum.
Flywheel

63. Over time, the Wheel will begin to develop
more and more momentum
Flywheel

64. Until finally, the wheel will gather enough
momentum, that a breakthrough will occur,
and the company will finally transition from
good to great.
Flywheel

65. Steps Forward,
Consistent with
Hedgehog Concept
Steps Forward,
Consistent with
Hedgehog Concept
Accumulation of Visible
Results
Accumulation of Visible
Results
People Line Up,
Energized by Results
People Line Up,
Energized by Results
Flywheel Builds
Momentum
Flywheel Builds
Momentum
Over time, as the wheel began to spin, the
employees within those good-to-great
companies became more enthusiastic, and
more motivated then before
This only made their resolve stronger and the
wheel spin even faster.
Collins came to call this the “flywheel effect”

66. From Good to Great to Built to Last
When Mr. Collins wrote this book Good to
Great, he asked himself “What should be
the role of Built to Last in doing this study?

67. Mr. Collins came up with these two
connections between his two books.

68. Established Company
or Start-up
Established Company
or Start-up
Good to Great
Concepts
Good to Great
Concepts
Sustained Great
Results
Sustained Great
Results
Built to Last ConceptsBuilt to Last Concepts
Enduring Great
Companies
Enduring Great
Companies
The difference is that they used the
framework at an early stage in their
company, trying to get it off the ground, as
opposed to the CEOs in Good to Great, who
used the frame work in companies that were
already established and grown.
The leaders in Built to Last used the same
Good-to-Great framework to breakthrough.

70. Mr. Collins. is very renowned in the world
of business. Mr. Collins specializes in the
subjects of Company growth and
sustainability. At the time when he wrote
his book, Good to Great, Mr. Collins was a
professor at Stanford University’s
Graduate school of Business.

71. http://www.jimcollins.com/