Chapter One: Good is the
Enemy of GreatKaty Lovett, Matt
Snowden, and CJ Baker
How do companies go from go to great?
What methods were used in research?
What concepts exemplified good-to-great companies?
Chapter Overview
Phase 1: The Search Find companies that showed the good-to-
great pattern
Companies that had cumulative returns over 15 years
Companies whose growth was independent of the industry
Good to Great CasesCompany Results from
Transition Point to 15 Years later
Transitional Period
Abbot 3.98 times the market
1974-1989
Circuit City 18.5 times the market
1982-1997
Fannie Mae 7.56 times the market
1984-1999
Gillette 7.39 times the market
1980-1995
Kimberly-Clark 3.42 times the market
1972-1987
Kroger 4.17 times the market
1973-1988
Nucor 5.16 times the market
1975-1990
Philip Morris 7.06 times the market
1964-1979
Pitney Bowes 7.16 times the market
1973-1988
Walgreens 7.34 times the market
1975-1990
Wells Fargo 3.99 times the market
1983-1998
Phase 2: Compared to What? Contrasted the good-to-great companies to
a selected set of “comparison companies”
Distinguishing factor
“Direct comparisons” and “unsustained comparisons”
Comparison Companies Good-to-Great Companies
Direct Companies Unsustained Comparisons
Abbot Upjohn Burroughs
Circuit City Silo Chrysler
Fannie Mae Great Western Harris
Gillette Warner-Lambert Hasbro
Kimberly-Clark Scott Paper Rubbermaid
Kroger A&P Teledyne
Nucor Bethlehem Steel
Philip Morris R.J. Reynolds
Pitney Bowes Addressograph
Walgreens Eckerd
Wells Fargo Bank of America
Researchers stepped into a “black-box” to shed light on inner workings
Debated results to come to conclusions
Phase 3: Inside the Black Box
Surprising results: CEO Ego-maniacs Executive compensation Strategy Focusing on what to do Technology Mergers/Starting Events Managing people Industry
Phase 3: Inside the Black Box
“Iterative process of looping back and forth…”
Concepts are based on fact, not opinion
Phase 4: Chaos to Concept
Great Traits Level 5 Leadership First Who…. Then What Confront the Brutal Facts, Yet Never Lose
Faith The Hedgehog Concept A Culture of Discipline Technology Accelerators The Flywheel and the Doom Loop.
Level 5 Leadership Level 5 Leaders are not we expect to see! Level 5 Leaders are often shy and reserved,
unlike their charismatic counterparts. Level 5 Leaders almost always are
promoted from within the company. Level 5 Leaders care more about building
something great, than being someone great.
First Who…. Then What Your team is more important than your plan. The right people must be selected before a
great strategy can be devised. This may seem obvious but note the
nuance.
Confront the Brutal Facts Pretending that obstacles are not there WILL
NOT make them go away. Believing that you can overcome obstacles
WILL help you to succeed.
The Hedgehog Concept Simplicity within the three circles.
◦ What are you passionate about?◦ What can you be the BEST at?◦ What drives your economic engine?
“It’s not about being great at everything, it’s about being the best in the world at something.”
A Culture of Discipline A culture of discipline is highly elusive. Having discipline eliminates the need to
spend energy on micromanagement. For a culture of discipline, you need:
◦ Disciplined People◦ Disciplined Thought◦ Disciplined Action
Technology Accelerators Technology can never be the driver of
change. Powerful technologies must be used as
powerful tools.
The Flywheel and the Doom Loop
Greatness is achieved through persistence, not sweeping change.
Persistent effort has a cumulative effect on the companies’ “momentum.”
Concepts apply not to new economy, or old economy, but both
What makes enduring organizations of any type?
Take the data as evidence and make your own conclusions
In Summary