You are on page 1of 41

The name of


Umair Mehmood
Azeem Asghar
Aleem Khan
Chapter 3
First Who…Then What
“There are going to be times when we
can’t wait for somebody. Now, you’re
either on the bus or off the bus.” - Ken
Transforming From Good to
 The executives who ignited the transformations
from good to great did not first figure out where
to drive the bus and then get people to take it
 What did they do then?
 They FIRST got the right people on the bus and

the wrong people off of the bus, and THEN they

figured out where to drive it.
What They Said

“Look, I don’t really know where we should take

this bus. But I know this much: If we get the right
people on the bus, the right people in the right
seats, and the wrong people off the bus, then
we’ll figure out how to take it someplace great.”
Three Simple Truths
1. Begin with the “Who” rather than the “What”.
Helps you adapt to a changing world.

2. If you have the right people on the bus, the

problem of how to motivate and manage people
largely goes away. The right people are self-
motivated to produce the best results.

3. Going in the right direction with the wrong

people will never produce a great company.
Great vision without great people is irrelevant.
Wells Fargo
 CEO Dick Cooley foresaw that the banking
industry would eventually undergo change.

 Instead of focusing on change, he focused on

finding the right people.

 Focused on “injecting an endless stream of

talent” directly into the veins of the company.

 Hired outstanding people whenever and wherever

they found them, often without any specific job
in mind.
Wells Fargo

“That’s how you build the future,” Cooley said. “If

I’m not smart enough to see the changes that are
coming, they will. And they’ll be flexible enough to
deal with them.”
Wells Fargo’s Success

 By getting the right people on the bus, Wells

Fargo outperformed the market by over three

 This occurred at a time when its sector of the

banking industry fell 59% behind the general
stock market
Bank of America

 Bank of America took a different approach: “Weak

generals, strong lieutenants”

 If you pick strong generals for key positions,

their competitors will leave. But if you pick weak
generals – placeholders, rather than highly
capable executives – then the strong lieutenants
are more likely to stick around.
BOA – Management Climate
 Weak generals would wait for direction from

 Sam Armacost, who inherited the weak generals

model, said, “I came away quite distressed from
my first couple of management meetings. Not
only couldn’t I get conflict, I couldn’t even get
comment. They were all waiting to see which way
the wind blew.”
Bank of America’s Success

 Lost $1 billion

 Ended up recruiting a gang of strong generals to

turn the bank around.
Wells Fargo VS BOA

 In 1998, the cumulative value of $1 invested:

◦ Wells Fargo = $74.47
◦ General Market = $19.86
◦ Bank of America = $15.60
Good to Great Distinctions

1. Get the right people on the bus and the wrong

people off the bus before you figure out where
to drive it.

2. The degree of sheer rigor needed in people

decisions in order to take a company from good
to great.
David Maxwell
 CEO of Fannie Mae during its darkest days

 Held off on developing a strategy until he got the

right people in place, while the company was
losing $1 million every single business day with
$56 billion of loans underwater.

 Focused on getting the right people on the

Fannie Mae management team.
Maxwell’s A Team
 Maxwell made it absolutely clear that there would
only be seats for A players who were going to put
forth A+ effort, and if you weren’t up for it, you
better get off the bus, and get off now!
◦ Example: think of our teams – we want only A
players who will put forth an A+ effort. The
alternative is getting fired.

 14 of the 26 executives left the company

Wells Fargo and Fannie Mae
 “Who” questions come before “what” questions –
before vision, before strategy, before tactics,
before organizational structure and before

 Exemplified a Level 5 style

 “I don’t know where we should take this

company, but I do know that if I start with the
right people, ask them the right questions, and
engage them in vigorous debate, we will find a
way to make this company great.”
“Genius With a Thousand
 In this model, the company is a platform for the
talents of an extraordinary individual.
◦ In these cases, the towering genius, the primary driving
force in the company’s success, is a GREAT asset….. AS

 Company’s who take this approach are usually

successful UNTIL the “genius” of the company
Level 5+ A “Genius With
Management A Thousand
Team Helpers”
(Good To Great Companies) (Comparison Companies)

Level 5 Leader Level 4 Leader

First Who First What

Get the right people on Set a vision for where to drive
the bus. Build a superior the bus. Develop a road map
executive team. for driving the bus.

Then What Then Who

Once you have the right
Enlist a crew of highly
people in place, figure
capable “helpers” to
out the path to
make the vision happen.
Good to Not So Great
Companies- classic scenarios
 Eckerd Corporation, led by Jack Eckerd expanded the Eckerd Empire
with over 1000 stores across the southeastern U.S. In the late
1970’s, Eckerd’s revenues equaled Walgreens. But when Jack Eckerd
left to pursue his passion for politics, Eckerd Corp. took a toll for the
worse as the company began a long decline and eventually taken
over by J.C. Penny.

 Henry Singleton, owner of Teldyne had proclaimed a small enterprise

to number 293 in the Fortune 500 list in only 6 YEARS! The company
dominated the marketplace from exotic metals to insurance. Once
Singleton stepped away, soon the company crumbled.

 Each of these cases failed utterly at the task of building a great

It’s Who You Pay, Not How You
Pay Them
 Top Executives, Managers and Employees
 Compensation
 Stock Options
 Huge Incentives (Jets, Vacations, company
cars, etc)
 Examples: Big 3 Auto Makers, Lehman Brothers,
Merrill Lynch
 Do these things really increase performance and
create great results?
◦ NO!
Data Inputs
 Collected weeks of data from proxy statements
◦ Preformed 112 separate analyses looking at
patterns and correlations
 Qualifications: Cash vs. Stock, LT vs. ST
Incentives, Salary vs. Bonus, etc..
◦ Outcome: No significant patterns related to
executive compensation, and no systematic
differences on compensation packages
Main Point
 Good to Great
◦ Received slightly less total cash compensation
10 years after the transition than others in
mediocre companies
 Not that these people will work for free
◦ But do better work with less incentives because
they want what's best for the company
◦ The right people will do the right things and
deliver the best results they are capable of
regardless of the incentive system
Nucor Example
 Built on the idea that you can teach farmers to
make steel but you cant teach a farmer work
ethic, to people who don’t have it in the first
◦ Plants: Crawfordsville, Indiana; Norfolk,
Nebraska; Plymouth, Utah
 They generated as high as 50% turnover in the

first year, followed by very low turnover as the

right people settled in
Rigorous, Not Ruthless
 Good to great companies are not ruthless
cultures they are rigorous
◦ Ruthless – Hacking and Cutting or Wantonly
firing people without any thoughtful
◦ Rigorous – Consistently applying exacting
standards at all times and all levels
 The best people need not to worry about their
positions and can concentrate fully on their work
Wells Fargo Example
 Acquired Crocker Bank in 1986
 Consolidation
 Removed 1600 managers and top executives
◦ However some Crocker managers took
positions in Wells Fargo because they were
better qualified then the ones originally in that
 “The only way to deliver to the people who are

achieving is not to burden them with the people

who are not achieving.”
How to Be Rigorous
3 Practical disciplines for being rigorous rather
than ruthless

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.
When in doubt, don’t hire…
keep looking
 For growth, companies should not focus on:
◦ The markets
◦ Technology
◦ Competition
 Instead, they should concentrate on finding and
keeping enough of the right people.
Packard’s Law

“No company can grow revenues consistently

faster than its ability to get enough of the right
people to implement that growth and still
become a great company.”
Circuit City- Always Looking for
Great People
 Focused one getting the right people from top to

 Alan Wurtzel’s (CEO) goal was to build the best,

most professional management team in the

 Delivery drivers wore uniforms, were clean

shaving, and had to be professional.
Practical Discipline #2

 When you know you need to make a people

change, act.
◦ The best people don’t need to be managed, but
instead guided and taught
What Happens With The Wrong
 When you let the wrong people stay around, the
right people always need to be compensating for
the inadequacies of the wrong people

 They are constantly on your mind and are a

constant drain on your energy
Why Do People Wait
 Mainly cause it can be an inconvenience to get
rid of them, they constantly come up with
excuses on why they should wait
◦ But meanwhile it constantly affects the right
A+ Selections
 The good-to-great companies didn’t have the
theory of “try a lot of people and see who works”.
They took their time and would find the perfect
person for the position

 When Colman Mockler became CEO of Gillette, he

spent 55% of his time in his first 2 years
changing or moving 38 of the top 50 people of
his management team
When Is It Time?
 2 key questions can help:
◦ 1.) If you are trying to place someone
somewhere, ask your self, “Would you hire them
◦ 2.) If the person came to you and told you that
he/she was leaving would, “Would you feel
disappointed or relieved?”
Practical Discipline #3
 Put your best people on your biggest opportunities, not your biggest

 There is an important corollary to this discipline: When you decide to

sell off your problems, don’t sell off you best people. This is one of
those little secrets of change. 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.

 One of the crucial elements in taking a company from good to great

is somewhat paradoxical. You need executives, on the one hand,
who argue and debate – sometimes violently – in pursuit of the best
answers, yet, on the other hand, who unify fully behind a decision,
regardless of parochial interests.

 The good to great companies made a habit of putting their best

people on their best opportunities, not their biggest problems.
First Who, Great Companies, and
A Great Life
 Good to great management teams consist of people who
debate together vigorously in search of the best answers,
yet who unify behind decisions, regardless of parochial

 The old adage “People are your most important asset” is

wrong. People are not your most important asset. The
right people are.

 The “right person” has more to do with character traits

and innate capabilities than with specific knowledge,
background, or skills.
Conclusion: Main Points
 Find the right people for the job
 Focus on who is running the company, not what
is running it
 Find level 5 leaders
 Tie compensation into performance
 3 Disciplines

◦ When in doubt, don’t hire…..keep looking

◦ When you know you need to make a people
◦ Put your best people on your biggest
opportunities, not your biggest problems