Good to Great

WHY SOME COMPANIES MAKE THE LEAP…

AND OTHERS DON’T

FARZIN FARDISS, PARS SAMAN BOARD MEMBER,

FARDISS@PARSSAMAN.COM
 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
Good to Great
“Good is the enemy of great.”
-JIM COLLINS
“Can a good company become
Great?”
 Any organization can become

Yes
great if it consistently applies the
concepts and ideas that will be
presented in this presentation.
Before we begin, what is
considered a Great company
Great companies have
returns that are at least
3 times the general market

General
Market
What are some of the
good companies out
there?
All of these companies
only broke the general
market by 2.5 times
What are the great
companies?
 Good to Great Cases
Results from Transition point to 15  T‐year to T‐year 
Company 
years beyond transition point +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
 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.
 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
 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
¾How did this Great companies
transition from Good to Great?

¾What did these companies do

that made them great?
Great Results

Good Results What’s 
inside the 
Black Box?
So What’s in the Black Box?

What’s 
inside the 
Black Box?
Buildup

THIS
Simplified version of Mr. Collins
framework
Disciplined People
Level 5 Leadership First Who….Then What

Disciplined Thought
Confront The Brutal Facts Hedgehog Concept

Disciplined Action
Culture of Discipline Technology Accelerators
 Level 5 Leadership
But this isn’t any ordinary leadership, It’s Level
5 Leadership.

So what is Level 5 Leadership?

Level 5 Leadership
Level 5: Builds enduring greatness
What are the traits of a Level 5
Leader?
Level 5 Leaders set their company
up for success after they leave, by
finding a successor that will
succeed.
Level 5 leaders are very modest.
Level 5 leaders are fanatically
driven to produce results.
Almost all Level 5 Leaders came
from within the company.
 Level 5 leaders always take the
blame, and always give away the
credit to their subordinates.

Gives Credit
Level 5
Leader
Level 5 Leadership Formula

HUMILITY
+
WILLPOWER
=
LEVEL 5
 We just went over WHO Level 5
Leaders are. The rest of the
process of transitioning from good
to great shows what they DO.

Buildup
Level 5  First  Confront the  Hedgehog  Culture of  Technology 
Leadership Who…Then  Brutal Facts Concept Discipline Accelerators
What

Disciplined People Disciplined Thought Disciplined Action

 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.
 First Who…Then What

Collins uses a bus

Good
analogy
Bad People
People
to describe
what he and the team found.
 First Who…Then What

Collins states that it is important to

begin with “who”, instead of “what
 First Who…Then What

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

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

The problem of motivation and

management goes away when you
have the right people on the bus.
 First Who…Then What

“great vision without great people is irrelevant”

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

The Good to great companies would lead

with questions, not answers.
 Confront the Brutal Facts

They would engage in dialogue and debate,

not coercion.
Confront the Brutal Facts

The Good to great companies would

conduct autopsies, without blame.
 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.”
 Confront the Brutal Facts
Now that the Good to Great companies know
the brutal facts, they need to conceptualize
their ideas .
 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.
 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.
But how did the Good to Great companies
come up with these great, simple, ideas?
 HEDGEHOG
CONCEPT
What you are
deeply Passionate
About
These great, simple, ideas came from
the answers of three questions.

What you can be What drives your

the best in the economic engine
world at
 Hedgehog Concept

Collins states that it took an average of four

years for the good-to-great companies to
clarify their hedgehog concept.
 All aspects of The Council are guided with
the three circles (hedgehog concept) in mind

Ask
Questions

A useful mechanism that Collins creates to

help Autopsies
move the process along is called
Dialogue
“The
THE
and
Analysis
Council”.
COUNCIL
and
Debate

Executive
Decisions
Now that the Good to Great companies have
disciplined people and discipline thought,
it’s time for action
 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
 Culture of Discipline

The Good to Great companies build a culture

around the idea of freedom and
responsibility, within a framework.
 Culture of Discipline

Fill the culture with self-disciplined people

who are willing to go extreme lengths to
fulfill their responsibilities.
 Culture of Discipline

Adhere with great consistency to the

hedgehog concept, exercising an almost
religious focus on the intersection of the
three circles.
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.
 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.
 Technology Accelerators
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.
 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.
The last Concept in the framework is the
flywheel. This takes all of the concepts put
together, and provides the breakthrough.

Buildup

Disciplined People Disciplined Thought Disciplined Action

 Flywheel
Following all of the six concepts within the
framework will begin to push the wheels
momentum.
 Flywheel
Over time, the Wheel will begin to develop
more and more momentum
 Flywheel
Until finally, the wheel will gather enough
momentum, that a breakthrough will occur,
and the company will finally transition from
good to great.
 Steps Forward,
Consistent with
Hedgehog Concept

Over time, as the wheel began to spin, the

Thisemployees
only madewithintheir resolve stronger and the
those good-to-great
Collins came to call this the “flywheel effect”
companies wheel
became
Flywheel Builds spin evenenthusiastic,
more faster. and
Accumulation of Visible
more motivated then before
Momentum Results

People Line Up,

Energized by Results
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?
Mr. Collins came up with these two
connections between his two books.
 The difference is that they used the
framework at an early stage in their
company,
The leaders trying to get
in Built to it Lastoff used
the ground, the same as
oropposed to the CEOs in Good to Great, who
Established Company Good to Great Sustained Great Enduring Great
Good-to-Great
Start-up Concepts
framework
Results
to breakthrough.
Built to Last Concepts
Companies

used the frame work in companies that were

already established and grown.
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.
http://www.jimcollins.com/