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Good to Great (Selected Notes) - Coggle Diagram
Good to Great (Selected Notes)
Level 5 Leadership
Humility + Will
Sets successors up for success
Channel their ego away from themsleves and into the larger goal, but still extremely ambitious for the company
The antithesis: Dazzling larger-than-life personal egos typically contribute to the demise or continued mediocrity of companies
Aportions credit to factors outside themselves (incl. good luck) when things go well; blame themselves (not others or bad luck) when things go wrong
More plow horse than show horse
First Who, Then What
First, get the right people on the buss (and the wrong people off the bustt, then figure out where to drive it
There's no pattern linking executive compensation with good-to-great companies
Be rigorous, not ruthless
When in doubt, don't hire - keep looking
When you know you need to amke a people change, act
Bipolar pattern at top management: People stayed on the bus for a long time, or got off in a hurry
Put your best people on your biggest opportunities, not your biggest problems
If you create a place where the best people always have a seat on the bus, they're more likely to support changes in direction
Great management teams consist of people who debate vigorously in search of the best answers, yet who unify behind decisions, regardless of parochial interests
The "right people" has more to do with character traits and innate capabilities rather than specific knowledge, background or skills
Confront the Brutal Facts
Good-to-great companies continually refined their path to greatness with brutal facts of reality
Create a climate where truth is heard and brutal facts are confronted
Lead with questions, not answers
Engage in dialogue and debate, not coercion
Conduct autopsies, without blame
Build a "red flag" mechanism
Have the humility to grasp the fact that you do not yet undersatsnd enough to have the answers, and then to ask the questions that will lead to the best possible insights
The Stockdale Paradox: Retain faith that you will prevail in the end, regardless of the difficulties, yet also confront the most brutal facts of your current reality, whatever they might be
When you start with an honest and diligent effort to determine the truth, the right decisions often become self-evident
Good-to-great companies hit realities of their situation head-on
Leadership does not begin just with vision - it begins with getting people to confront the brutal facts and to act on the implications
Spending time & energy to "motivate" people is a waste of effort - if you have the right people, they will be self-motivated. The key is not to de-motivate them, and one primary way to de-motivate people is to ignore the brutal facts of reality.
The Hedgehog Concept
The fox knows many things, able to devise a myriad of complex strategies for sneak attacks onto the hedgehog
The hedgehog only knows one big thing - rolling up into a ball of spikes, every single time
Good-to-great companies were hedgehogs, while competitors companies were scattered, diffused and inconsistent
The 3 Circles
1) What you can be the best in the world at
The Hedgehog Concept is not a goal, a strategy, an intention, or a plan to be the best. It is an understanding of what you can be the best at.
Just because something is your core business does not necessarily mean you can be the best at it
Just because we're making money and generating growth from something, doesn't necessarily mean you can be the best at it
If you cannot be the best in the world at your core business, then your core business cannot form the basis of your Hedgehog Concept
2) What drives your economic engine
A company doesn't need to be in a great industry to be a great company
Having a single economic denominator tends to produce better insights into your economic model eg. Profit per customer
3) What are you deeply passionate about
Two essential strategic differences
1) Good-to-great companies founded their strategies on deep understanding along the 3 Circles
2) Good-to-great companies translated that understanding into a simple, crystalline concept that guided all their efforts
For competitor companies, the exact same world that had become so simple & clear to good-to-great companies remained complex and shrouded in mist
1) Competitor companies never asked the right questions prompted by the 3 Circles
2) They set goals & strategies more from bravado than from understanding
Establish a Council that participates in dialogue, guided by the 3 Circles, about vital issues and decisions facing the company
1) Ask questions, guided by the 3 Circles
2) Dialogue and debate, guided by the 3 Circles
3) Execute decisions, guided by the 3 Circles
4) Conduct autopsies and analysis, guided by the 3 Circles
This is an iterative / cyclical process
It took an average of 4 years for good-to-great companies to get a Hedgehog Concept
A Culture of Discipline
Good-to-great companies built a consistent system with clear constraints, but they also gave people freedom & responsibility within the framework
They hired self-disciplined people who didn't need to be managed, and then managed the system, not the people
Bureaucratic cultures arise to compensate for incompetence and lack of discipline, which arise from having the wrong people on the bus in the first place
Good-to-great companies appear boring and pedestrian from the outside, but upon closer inspection, they're full of people who display extreme diligence and stunning intensity
Level 5 leaders built an enduring culture of disciplined; The unsustained competitors had Level 4 leaders who personally disciplined the organisation through sheer force
Say "no" to opportunites that do not fit within the 3 Circles
It takes discipline to say "no" to big opportunities - the fact that something is a "once-in-a-lifetime" opportunity is irrelevant if it doesn't fit within the 3 Circles
Budgeting is a discipline to decide with arenas should be fully funded and which should not be funded at all
Good-to-great companies followed this mantra: "Anything that does not fit within our Hedgehog Concept will not be done."
"Stop doing" lists are more important thatn "to do" lists
Technology Accelerators
When used right, technology becomes an accelerator of momentum, not a creator of it
Good-to-great companies never began their transitions with pioneering technology - technology is only relevant if it links directly to the 3 Circles of the Hedgehog Concept
Technology by itself was never found to be a primary cause of either greatness or decline
Good-to-great companies ignored technology fads and bandwagons, only carefully selecting relevant technologies
"Crawl, walk, run" can be a very effective approach, even during times of rapid and radical technological change
The Flywheel and The Doom Loop
From the outside, great transformations look like dramatic, revolutionary breakthroughs - but from the inside, they feel completely different, more like a long, organic development process
Good-to-great companies had no name for their transformations - no launch event, no tag line, no miracle moment
Good-to-great companies didn't spend much effort on alignment to manage change - under the right conditions, the problems of commitment, alignemnt, motivation and change take care of themselves. Alignment principally follows from results and momentum.
When you let the flywheel (and accompanying results) to the talking, there's no need to fervently communicate your goals
Sustainable transformations follow a predictable pattern of buildup and breakthrough (no dramatic single defining action, program or innovation)
Like pushing a giant flywheel, it takes a lot of continuous step-by-step effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough
Competitor companies followed a different pattern - the doom loop. Rather than accumulating momentum, they tried to skip buildup and jump immediatley to breakthrough, lurching back and forth, failing to maintain a consistent direction
Those internal to good-to-great companies were often unaware of the magnitude of their transformation at the time - only later in retrospect did it become clear
Built to Last
Enduring great companies don't exist merely to deliver returns to shareholders. Profits and cashflow are still essential for life, but they are not the very point of life.
Enduring great companies preserver their core values and purpose while their busienss strategies and operating practices endlessly adatp to a changing world
Preserve core values
Preserve core purposes
Stimulate progress - change in cultural & operating practices
Stimulate progress - change in specific goals & strategies
The real question is not "Why greatness?" but What work makes you feel compelled to try to create greatness?"
If you have to ask "Why should we try to make it great? Isn't success enough?" then you're probably engaged in the wrong line of work