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PRESENTED BY: Syed Shahzad Ali BOOK REVIEW GOOD TO GREAT

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INTRODUCTION <ul><li>Author: James Collins </li></ul><ul><li>Chapters: Nine </li></ul><ul><li>Language: English </li></ul><ul><li>Publisher: William Collins </li></ul><ul><li>Publication date: October 16, 2001 </li></ul><ul><li>Media type: Hardcover </li></ul><ul><li>Pages: 320 </li></ul>

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HISTORY OF AUTHOR <ul><li>James C. &quot;Jim&quot; Collins, III (born 1958, Boulder, Colorado) is an American business consultant, author, and lecturer on the subject of company sustainability and growth. </li></ul><ul><li>Jim Collins frequently contributes to Harvard Business Review, Business Week, Fortune and other magazines, journals, etc. </li></ul>

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Level 5 Leadership First Who… Then What Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined People Disciplined Thought Disciplined Action Good To Great Frame work Flywheel Buildup Breakthrough

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GOOD IS THE ENEMY OF GREAT <ul><li>The study started with 1,435 good companies </li></ul><ul><li>companies from 1965 to 1995, looking for those that, for 15 years, either tracked or underperformed the stock market. </li></ul><ul><li>Followed by a transition, and subsequently returning at least 3 times the stock market for at least 15 years. </li></ul><ul><li>Further filtering was performed in order to ensure that companies also outperformed their industries. </li></ul><ul><li>Eleven companies were located that matched these criteria, and were studied in depth, and compared to competitors in their fields </li></ul>

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Brain storming ! Write at least ten points which lead any company a great company ?

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<ul><li>The 11 G2G companies were : </li></ul>

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Research Findings <ul><li>Based on the study, the research team found that ; </li></ul><ul><li>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. </li></ul><ul><li>There is no linking between executive compensation and the process of going good to great </li></ul><ul><li>Both good to great and comparison companies has their range of strategic planning </li></ul><ul><li>Most of the good to great company focus on what they “should stop” instead of what they “should do” </li></ul><ul><li>Technology were not cause the transformation in the good to great company </li></ul>

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<ul><li>Mergers and acquisition has no impact on the movement of good to great company. </li></ul><ul><li>There also unaware of official launch event for the transformation. </li></ul><ul><li>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. </li></ul>Research Findings

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Level 5 Leadership First Who… Then What Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined People Disciplined Thought Disciplined Action Level 5 Leadership Good To Great Flywheel Buildup Breakthrough

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Brain storming ! Write what are the traits of any company a great company ?

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Level 5 Leadership 5–Level 5 Executive 4–Effective Leader 3–Competent Manager 2–Contributing Team Member 1–Highly Capable Individual

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Level-5 Executive <ul><li>Very humble on a personal level, but who possesses a great deal of drive and desire to succeed, where “success” is not personal. </li></ul><ul><li>AVOID – got an ego and wants credit </li></ul><ul><li>Level 5 leaders look outside the window to accredit </li></ul><ul><li>Thanked others and luck </li></ul><ul><li>Also never blamed bad luck when things when poorly, took credit for mistakes (unlike other leaders) </li></ul><ul><li>Level 5 leaders infected with an incurable need to produce sustained results. </li></ul>

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<ul><li>Rather talk about the company than themselves. </li></ul><ul><li>Good to great leaders never wanted to be larger-than life. </li></ul><ul><li>Level 5 leaders set up successors for success </li></ul>

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<ul><li>Lesson Learnt </li></ul><ul><li>The transformation requires the brave decision, such as Abbot Laboratory to remove all nepotism. </li></ul><ul><li>Nowadays, the organization should take serious action on the talent management practices since it were proven the leadership is came from the inner organization. </li></ul><ul><li>Absence of Level 5 leaders was the consistent factor that hindered greatness </li></ul>

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Level 5 Leadership First Who… Then What Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined People Disciplined Thought Disciplined Action First Who… Then What Good To Great Flywheel Buildup Breakthrough

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FIRST WHO…THEN WHAT <ul><li>Ensured the right people “on the bus” before anything else, </li></ul><ul><ul><li>get the wrong people off the bus, </li></ul></ul><ul><ul><li>then figure out where to drive It. </li></ul></ul>The research indicated that compensation did not correlate at all with the “good to great” process. No particular compensation scheme appeared to be advantageous.

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FIRST WHO…THEN WHAT <ul><li>First who, then what </li></ul><ul><li>“… the ‘who’ questions come before the ‘what’ questions – before vision, before strategy, before tactics, before organizational structure, before technology.” </li></ul>G2G companies don’t depend on the brilliance of any one person ;a “lone genius”.

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<ul><ul><li>If you have the wrong people, doesn’t matter whether you have the right direction b/c company will still not be great. </li></ul></ul>Why do it this way? <ul><ul><li>If you have the right people on the bus, problem of motivation and people managing are diminished </li></ul></ul>

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<ul><li>Leaders were rigorous, not ruthless in people decisions. </li></ul><ul><ul><li>There are three steps on how the companies can be rigorous: </li></ul></ul><ul><ul><li>Don’t hire someone unless you’re %100 sure that they’re the right person. It’s better to wait and get someone that you know is a good fit </li></ul></ul><ul><ul><li>Once you realize you need to fire someone, don’t put it off. Do it quickly and fairly. </li></ul></ul><ul><ul><li>Put the best people on the biggest opportunity not the problems. </li></ul></ul><ul><li>Lesson Learnt </li></ul><ul><ul><li>People are NOT your most important asset. The RIGHT people are. </li></ul></ul>

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Level 5 Leadership First Who… Then What Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined People Disciplined Thought Disciplined Action Confront the Brutal Facts Good To Great Flywheel Buildup Breakthrough

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<ul><li>CONFRONT THE BRUTAL FACT </li></ul><ul><li>(YET NEVER LOSE FAITH) </li></ul><ul><li>Must create a culture wherein people have an opportunity to be heard the truth. </li></ul><ul><li>Having lofty goals can be good, but you can never lose sight of what the reality is on the ground. </li></ul>

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<ul><li>accepted the brutal facts of reality while maintaining an unwavering faith in the endgame—that he would prevail despite the brutal facts. </li></ul><ul><li>Who didn’t make it out? The optimists. </li></ul><ul><li>Those who think it will all be a quick fix and everyone will be out by Christmas are the ones that lose heart and fail. </li></ul>James Bond Stockdale (December 23, 1923 – July 5, 2005)

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<ul><li>Stockdale Paradox: </li></ul>AND at the same time confront the most brutal facts of your current reality, whatever they might be with discipline . Retain absolute faith that you can and will prevail in the end.

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<ul><li>Let the Truth be Heard </li></ul><ul><li>To accomplish this, 4 basic practices must engaged: </li></ul><ul><ul><li>Lead with questions, not answers. </li></ul></ul><ul><ul><li>Engage in dialogue and debate, not coercion. </li></ul></ul><ul><ul><li>Conduct autopsies, without blame </li></ul></ul><ul><ul><li>Build red flag mechanisms where information cannot be ignored </li></ul></ul>

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Level 5 Leadership First Who… Then What Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined People Disciplined Thought Disciplined Action Hedgehog Concept Good To Great Flywheel Buildup Breakthrough

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THE HEDGEHOG CONCEPT <ul><li>An ancient Greek parable: </li></ul><ul><ul><li>The fox knows many things. </li></ul></ul><ul><ul><li>The hedgehog knows one big thing and stick to it. </li></ul></ul>

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THE HEDGEHOG CONCEPT <ul><li>The Hedgehog concept is not a goal or strategy to be the best at something, it is an understanding of what you can be the best at. </li></ul><ul><li>Hedgehogs simplify the world into a basic principle, see what’s essential, and ignore the rest. </li></ul><ul><li>It took an average of four years for the G2G companies to get a Hedgehog Concept </li></ul>

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Hedgehog Concept Simplicity within the three circles One Big Thing What you are deeply passionate about What you can be the best in the world at What drives your economic engine

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Hedgehog Concept The Council All Guided by the Three Circles Ask Questions Dialogue & Debate Autopsies & Analysis Executive Decisions An Iterative Process

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Lets Unite Again….. !!! What should be the Characteristics of The Council in Great Company ?

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<ul><li>The Council is usually consists of five to twelve people , to discuss and gain insights into the organization. </li></ul><ul><li>It should meet regularly, not a one-time group. </li></ul><ul><li>They need to freedom to speak their minds, and always have the respect of the other Council members. </li></ul><ul><li>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. </li></ul><ul><li>The Council exists to help the chief executive, not reach a consensus. </li></ul>Characteristics of the Council

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<ul><li>7. The Council can have a range of possible names, usually quite mild. In the good to great companies, they had gentle names like Long-Range Profit Improvement Committee, Corporate Products Committee, Strategic Thinking Group and Executive Council. </li></ul>Characteristics of the Council <ul><li>The Council is an informal body, not listed on any formal organization chart or in any formal documents. </li></ul>

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Level 5 Leadership First Who… Then What Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined People Disciplined Thought Disciplined Action Culture of Discipline Good To Great Flywheel Buildup Breakthrough

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Culture of discipline is not just about action. It is about getting disciplined people who engage in disciplined thought and who then take disciplined action In a culture of discipline, people do not have jobs ; “they have responsibilities”. <ul><li>A CULTURE OF DISCIPLINE </li></ul>

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The Good To Great Matrix of Creative Discipline Hierarchical Organization Start-up Organization Bureaucratic Organization Great Organization High Culture of Discipline Low Low High Ethic of Entrepreneurship

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<ul><li>To create a culture of discipline, you must: </li></ul><ul><li>Build a culture around the idea of freedom and responsibility, within a framework. </li></ul><ul><li>Fill your culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities. </li></ul><ul><li>Don’t confuse a culture of discipline with a dictatorial disciplinarian. </li></ul><ul><li>“ Stop doing” lists are more important than “to do” lists. </li></ul><ul><li>Anything that does not fit with our Hedgehog Concept, will not do. </li></ul>

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Level 5 Leadership First Who… Then What Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined People Disciplined Thought Disciplined Action Technology Accelerators Good To Great Flywheel Buildup Breakthrough

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Technology Accelerators <ul><li>The key question about any technology is: </li></ul><ul><li>Does the technology fit directly with your Hedgehog Concept? If yes, </li></ul><ul><li>then you need to become a pioneer in the application of that technology . If no, then you can settle for parity or ignore it entirely. </li></ul><ul><li>Technology by itself is never a root cause of either greatness or decline. </li></ul>

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Technology Accelerators <ul><li>The ideal approach to technology with the following cycle: </li></ul><ul><li>&quot;Pause -- Think -- Crawl -- Walk -- Run.&quot; </li></ul><ul><li>Do not rush into a new technology revolution before having an understanding that it can be used to support your business. </li></ul>

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Level 5 Leadership First Who… Then What Confront the Brutal Facts Hedgehog Concept Culture of Discipline Technology Accelerations Disciplined People Disciplined Thought Disciplined Action Flywheel Good To Great Flywheel Buildup Breakthrough

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The Flywheel and the Doom Loop <ul><li>A flywheel is a heavy wheel that takes a lot of energy to set in motion - to do so usually requires constant, steady work, rather than a quick acceleration. Great companies’ transformations were like this as well. </li></ul>

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<ul><li>The Flywheel Effect </li></ul><ul><li>The Flywheel Effect </li></ul><ul><li>The Doom Loop </li></ul>The Doom Loop

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<ul><li>Conversely, the “ doom loop” is the vicious circle that unsuccessful companies fall into. </li></ul><ul><li>First rushing in one direction, then another, in the hope of creating a sudden, sharp break with the past that will propel them to success. </li></ul><ul><li>Some attempt to do this through acquisitions, others through bringing in a new leader who decides to change direction completely, in a direction incompatible with the company. </li></ul><ul><li>The results are never good </li></ul>

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Good To Great – Summary