Chapter 1 ‐ Good is the Enemy of Great
Phase 1: The Search
Phase 2: Compared to What
Phase 3: Inside the Black Box
Phase 4: Chaos to Concept
Chapter 2: Level 5 Leadership
Level 5 – Level 5 Executive
Builds enduring greatness through a paradoxical blend of personal humility and professional will
Level 4 – Effective Leader
Catalyzes commitment to and vigorous pursuit of clear and compelling vision stimulating higher
Level 3 – Competent Manager
Organizes people and resources toward the effective and efficient pursuit of predetermined
Level 2 – Contributing Team Member
Contributing individual capabilities to achievement of group objectives and works effectively with
others in a group setting
Level 1 – Highly Capable Individual
Makes productive contributions through talent, knowledge, skills, and good work habits
Humility & Will
Never let your ego get in the way of your ambition for the company and concern for its success.
Compelling modesty – always attributing success to other factors other than themselves
Typical descriptions of interviews with the Level 5 leaders included: quiet, humble, modest, reserved,
shy, gracious, mild‐mannered, self‐effacing, understated…
Unwavering Resolve to do what must be done
A ferocious resolve and determination to produce results – fanatically driven
Inspired standards – could not stand mediocrity
The Window & Mirror
Most of the CEOs stated luck as a factor to their company’s success, which most likely can be traced back their humility. “When comparing the good‐to‐great companies with the comparison group they found: Level 5 leaders look out the window to apportion credit to factors outside themselves and if they can’t find someone to give credit to ‐ they credit luck, and look in the mirror to apportion responsibility, never blaming bad luck when things go poorly. Conversely, the comparison leaders did the opposite, looking out the window for something to blame and in the mirror to credit themselves.
Cultivating Level 5 Leadership – Can you learn to become Level 5?
Nothing concrete to suggest Level 5 leadership is engrained or learned. The biggest obstacle is the balance of personal ambition and humility putting aside egotistical needs for the betterment of building something greater than oneself. For most people work is about what they get.
Chapter 3 First Who…Then What
Get the right people on the bus, the wrong people off, and then figure out where to drive it. Must begin with “who” rather than “what” – Reason, if people are on the bus because of ‘where’ then what happens when the bus changes direction? The right people on the bus eliminate the need to motivate and manage. Get the wrong people off the bus – great vision without great people is irrelevant.
“Genius with a Thousand Helpers”
The comparison companies were more concerned with getting one individual as the primary driving force for the company’s success. The genius at top rarely built strong management teams – they didn’t want one. All they wanted was good soldiers, but when the genius left the soldiers couldn’t make decisions on their own.
First who then what vs first what then who
Great companies file executive seats with excellent people before trying to figure out what the company should do
It is who you pay, not how you pay them
The study found no systematic pattern linking executive compensation to the process of going from good to great. The use of stock options, high salaries, bonus incentives, or long term compensation weren’t a factor in making the transition. The most important factor was getting the right people on the bus.
Rigorous, Not Ruthless
To be rigorous means to apply exacting standards at all levels. During most acquisitions the good‐to‐great companies would terminate large portions on the old firm’s employees, only keeping the best.
How to be Rigorous
1. When in doubt don’t hire, keep looking.
2. When you know you need to make a people change, ACT.
3. Put your best people on your biggest opportunities, not your biggest problems.
Chapter 4 – Confront the Brutal Facts
Facts are better than dreams
When it came to making tough decisions the good‐to‐great companies infused the entire process with the brutal facts of reality. When your honest about your situation the solutions are generally self evident.
Create a culture where people have an opportunity to be heard
Don’t focus on motivating people through the vision, get the right people on the bus and share with them the finding of the company. The best way to de‐motivate people is to hold out false hope.
4 Basic principles in creating the culture
1. Lead with questions not answers
Use questions for one and one reason, to gain understanding. Don’t question to manipulate or place blame
2. Engage in dialog and debate, not coercion
Create intense dialog, don’t use discussions as a sham process to people buy in to a predetermined decision.
3. Conduct autopsies, without blame
When you conduct autopsies without blame, you go a long way toward creating a climate where the truth is heard
4. Build red flag mechanisms
Turn information into information that can’t be ignored
The Stockdale Paradox
Never doubt that you can achieve your goals, no matter how lofty they may be and no matter how many critics and naysayers you may have. But at the same time, always take honest stock of your current situation. Don’t lie to yourself for fear of short-term embarrassment or discomfort, because such deception will only come back to defeat you in the end. 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.
Chapter 5 – The Hedgehog Concept
The Hedgehog concept
The hedgehog concept is not a goal, strategy, or intention; it is an understanding. Is a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles:
You want to find the intersection of what you can be best at, what drives your economic engine, and what you are passionate about. Don’t just settle for what you are good at; focusing solely on what you can potentially do better than any other organization is the only path to greatness. Economic Insight – “If you could pick one and only one ratio –profit per x (or, in the social sector, cash flow per x) – to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?” Understanding Passion – Don’t try to inspire passion about what you are doing, do things that we can get passionate about.
Chapter 6 – A Culture of Discipline
Avoid bureaucracy and hierarchy and instead create a culture of discipline. Set your objectives for the year in concrete, you can change your plans but never change what you measure yourself against.
Discipline Action within the Three Circles
1. Build a culture around the idea of freedom and responsibility, within a framework.
The good‐to‐great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of that system. They hired self disciplined people who didn’t need managed, and then managed the system, not the people.
2. Fill that culture with self‐disciplined people who are willing to go to extreme lengths to fulfill their
responsibility. People in good‐to‐great companies became somewhat extreme in the fulfillment of their
responsibilities, bordering in some cases on fanaticism. They will do whatever it takes to turn potential into reality – “Raising Your Cottage Cheese”
3. Don’t confuse a culture of discipline with a tyrannical disciplinarian.
The good‐to‐great companies had level 5 leaders who built an enduring culture of discipline, the unstained comparisons had level 4 leaders who personally disciplined the organization through sheer force.
4. Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on
the intersection of the three circles. Equally important, create a ‘stop doing list’ and systematically unplug anything extraneous. The good‐to‐great companies followed a simple mantra: “Anything that does not fit with our Hedgehog Concept, we will not do. We will not launch unrelated business. We will not make unrelated acquisitions. We will not do unrelated joint ventures. If it doesn’t fit, we don’t do it. Period.”
Start a ‘Stop Doing’ List
Chapter 7 – Technology Accelerators
Technology and the Hedgehog Concept
The good‐to‐great companies slowly adapted the technology to fit their Hedgehog Concept.
Technology as an Accelerator, Not a Creator, of Momentum
Technology alone cannot create sustained great results.
Technology is never the primary cause of either greatness or decline.
Technology and the Fear of Being Left Behind
No technology can make you level 5.
No technology can turn the wrong people into the right people.
No technology can create a culture of discipline.
Chapter 8 – The Flywheel and the Doom Loop
No breakthrough is made from one push. It is an accumulation of momentum.
Buildup and Breakthrough
The good‐to‐great companies came about by a cumulative process – step by step, similar to spinning the flywheel above. There was no single defining action, no one killer innovation, and no solitary lucky break.
The Flywheel Effect
Think of a circular model that continues to wrap around highlighted by four themes:
1. Accumulation of visible results
2. People line up, energized by results
3. Flywheel builds momentum
4. Steps forward, consistent with Hedgehog Concept
The Doom Loop
Comparison companies tried to skip buildup and jump immediately to breakthrough. Then, with disappointing results, they’d lurch back and forth, failing to maintain a consistent direction.
Doom Loop Model:
1. No buildup; no accumulated momentum
2. Disappointing results
3. Reaction, without understanding
4. New direction, program leader, event, fad, or acquisition
Chapter 9: From Good to Great to Built to Last
Four conclusions when looking at both studies
1. The enduring great companies from Built to Last followed the good‐to‐great framework. There was a buildup‐breakthrough flywheel process for many.
2. Good to Great is not a sequel to Built to Last but a prequel.
Apply the finding of Good to Great to create sustained great results, as a start‐up or an established company, and then apply the findings Built to Last to go from great results to an enduring great company.
3. To make the shift form a company with sustained great results to an enduring great company of
iconic stature, apply the central concept from Built to Last: Discover your core values and purpose
beyond making money and combine this with the dynamic of preserve the core/stimulate progress.
4. Good to Great answers a fundamental question raised, but not answered, in Built to Last: What is the difference between a “good” BHAG (Big Hairy Audacious Goal) and a “bad” BHAG.
A. Clock building, not time telling Build an organization that can endure and adapt through multiple generations of leaders and multiple life cycles.
B. Genius of AND Instead of choosing A or B, figure out how to have A and B – purpose AND profit, continuity AND change, freedom AND responsibility
C. Core ideology
Instill core values and core purpose as principles to guide decisions and inspire people
D. Preserve the core/stimulate the progress
Preserve the core ideology as an anchor point while stimulating change, innovation, and
renewal in everything else.