Good to Great

Chapter 6 – Culture of Discipline

Team members:

Ravi Bavaria
Abhishek Pawar
 What does the title
“Culture of Discipline”
bring to your mind?

The title “Culture of Discipline” gives the

impression of a recipe for a company that is run
like a dictatorship with set schedules,
procedures and protocols. One in which
creativity, fulfillment, and passion are
unnecessary. We hope to explain the true
meaning of this chapter’s title.
Typical Progression of Businesses
Start-up

Number of Employees
Increase as Business Grows

Business Restructures Business Crumbles as Entrepreneur

Fails to Grow with Business

Culture of Discipline Dictatorship (Tyrannical Rule)

-Business grows and -Business eventually becomes
has potential of being stagnant
“great”.
Culture of Discipline Companies that don’t
Companies
make the leap
 Amgen
○ Few successful start-
– Lubbock Barber College
ups become great • Found a blue ocean in
companies 1955.
○ Avoid bureaucracy and • Over 49 years, the
hierarchy and instead college grew from 8
create a culture of students to 50
discipline students.
 Abbott Laboratories • Ownership then
○ Allow employee passed to another
creativity and freedom family member and
within designated business started to
perimeters. stagnate.
THE GOOD TO GREAT MATRIX
OF CREATIVE DISCIPLINE
High
Hierarchical Great
Organization Organization

Culture of
Discipline

Bureaucratic Start – Up
Organization Organization

Low

Low High
Ethics of
Entrepreneurship
 Culture of Discipline’s Primary Idea

 “Build a culture full of people who take disciplined action

within the three circles, fanatically consistent with the
Hedgehog Concept.” (Collins, 124)
Four Key Points

1. Freedom and responsibility within a framework

2. Fill the company with self-disciplined people who are willing to go

the extra mile and rinse their “Cottage Cheese”

3. Don’t confuse a Culture of Discipline with a tyrannical disciplinarian

4. Fanatical adherence to the hedgehog concept and start a “Stop-

Doing” list
FREEDOM (AND RESPONSIBILITY)
WITHIN A FRAMEWORK
 A Culture of Discipline:
 People must stick to a consistent system
 Allows people freedom within the framework of
the system
 A highly developed system has both freedom
and responsibility
Example: Airline Pilot
FREEDOM (AND RESPONSIBILITY)
WITHIN A FRAMEWORK
 Disciplined People:
Not trying to discipline the wrong people into the right
behaviors, but getting self-disciplined people on the
bus in the first place

 Disciplined Thought:
You need to confront the brutal facts of reality, while
retaining resolute faith that you can and will create a
path to greatness

 Disciplined Action:
Primary subject of this chapter
The comparison companies often tried to skip this
jump right to disciplined plan
FREEDOM (AND RESPONSIBILITY)
WITHIN A FRAMEWORK

 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-disciplines people who didn’t need
to be managed, and then managed the system,
not the people
RINSING YOUR COTTAGE CHEESE
 People in the Good to Great Companies became
extreme in the fulfillment of their responsibilities
 The cottage cheese analogy comes from Dave
Scott:
Ironman Tri-Athlete
Would literally rinse his cottage cheese to get
the extra fat off
Rinsing the cottage cheese was one more small
step he believed would make him that much
better, one more small step added to all the
other steps to create a consistent program of
“super-discipline”
RINSING YOUR COTTAGE CHEESE
 Everyone would like to be the best, but most
organizations lack the discipline to figure out
with egoless clarity what they can be the best at
 They will do whatever it takes to turn potential
into reality
 They lack their discipline to rinse their cottage
cheese
Example: Wells Fargo v. Bank of America
A CULTURE, NOT A TYRANT

 Good to Great companies had Level 5

leaders who built an enduring culture of
discipline
 Comparison companies had Level 4 leaders
who personally disciplined the organization
through sheer force
A CULTURE, NOT A TYRANT
 Examples:
Ray MacDonald
Stanley Gault of Rubbermaid
Lee Iacocca of Chrysler
Each example illustrate a pattern:
○ A spectacular rise under a tyrannical disciplinarian,
followed by a decline with the disciplinarian stepped
away
Disciplined action without disciplined
understanding of the 3 circles cannot produce
sustained great results.
Adhering to the Hedgehog Concept

 Pitney Bowes, attained 100% of the

metered mail market.
 By 1950, nearly half of all U.S. mail
passed through Pitney Bowes.
 There wasn’t any competition in this
market, and Pitney wasn’t really a great
company as it was a wonderful
monopoly
Adhering to the Hedgehog Concept

 The long slide for Pitney, began when

they were required to license its patents
to competitors.
 Within 6 years, they had 16 competitors
and were in a freefall as they had to be
rid of ill-fated acquisitions and joint
ventures.
 Company lost money for the first time in
its tenure in 1973.
Adhering to the Hedgehog Concept

 Fred Allen stepped in and took the

company in the right direction.
 Thought of specializing in faxing and
special copiers.
 George Harvey was Allen’s successor
and they instituted a disciplined
diversification model.
Adhering to the Hedgehog Concept
 Pitney then attained a 45% of the high-end
fax market.
 Also began the Paragon mail processor
that seals and sends letters.
 By the late 1980’s, these recent
technological advances by Pitney and their
business model drove over half of its
revenues.
 Also linked these advances to the internet,
which brought forth another opportunity.
Adhering to the Hedgehog Concept

 After falling 77% behind the market in

1973, they changed their course and
rose to over 11 times the market by
1999.
 Outperformed Coca Cola, 3M, Johnson
& Johnson, Merck, Motorola and many
other fortune 500 companies.
Adhering to the Hedgehog Concept
 The goal is to stay within the three circles
of the hedgehog concept.
If it doesn’t fit, don’t do it.
 RJ Reynolds, a tobacco company, was the
best in the 1960’s.
 When the Surgeon General’s Office traced
tobacco to cancer, RJR diversified from the
tobacco industry.
 They took part in the shipping industry,
which had nothing to do with what their
company was founded on.
Adhering to the Hedgehog Concept

 Phillip Morris took a better path.

 They sought the not-so-healthy
consumables market.
 In November 1988, RJR they accepted
the $24.88 billion offered by Kohlberg
Kravis Roberts & Co. (KKR).
 Phillip Morris beat RJR by 4 times since
the Surgeon General’s news.
Adhering to the Hedgehog Concept
 Nucor, built around the hedgehog concept,
produced steel.
 There weren’t any class distinctions in regards to
workers.
 Grew into a $3.5 billion fortune 500 company with
only four layers of management.
 The perks were for the workers, not the
executives, who did the work.
 All 7,000 employees appeared in the annual
report, and Nucor stuck by their concept through
thick and thin.
 Still trading On the NYSE
Bentley Motors
 “To build a good car, a fast car, the best in class”. W.O.
Bentley’s mission statement since the beginning.

 Located in Crewe, England since 1946 and owned since

1998 by Volkswagen AG, Bentley Motors is dedicated to
making responsive and powerful Grand Tourers with the
stamina to cross continents at pace, and drive in refined
comfort and style. 
 They know their cars are expensive, but they stick to their
hedgehog concept, of producing the best cars in style,
comfort, and performance.
 Which they only advertise to the people who are willing to
pay for the cream of the crop. They haven’t changed their
business model since 1946.
Nucor’s Opposite
 Bethlehem Steel

Culture was built

upon a class system
○ executive “corner”
offices
○ executive country club
○ executive fleet of jets
 Bethlehem survived the 1970’s and 1980’s
due to the technological advances in the
industry.
 By the 1990’s, the corporate culture was so
focused on the class system, that the
business forgot about the clients.
 $1 invested in Nucor was worth 200 times
more than $1 in Bethlehem Steel
 Nucor chose to fanatically follow their
Hedgehog concept and made a leap from
“Good to Great.”
“STOP DOING” LIST
 “To Do” List- Rarely Work
 Kimberly Clark
-Darwin Smith, CEO
 Company Titles
- Can you justify
 Budgeting?
 Understanding YOUR Hedgehog Concepts

Examples: Kroger- Superstores

Walgreens- Best, Most Convenient
The Real Question?
Once you know the right thing, do you have the
discipline to do the right thing and , equally
important, to stop doing the wrong things?