Good To Great - by Narendra Achantani

01/05/20231 © Nokia 2014 Confidential

Good to Great

NARENDRA ACHANTANI


The Quest

Black Box

Great companies

Good companies

2


The ResearchTeam of 21 peopleFive yearsIt took 6 months to select a sample set of companies and 15 years of data was evaluatedCriteria for selection was cumulative stock returnsThose selected sample 28 Companies following aspects were studied:

- Acquisitions- Executive Compensation- Business Strategy- Layoff’s- Leadership Style- Financial Turnover and Ratios

Series of Weekly debatesTheory was directly built from ground, derived from evidence


Shocking FactsCelebrity leaders who ride in from outside are negatively correlated.Idea that salary structure of management is a key performance driver is not supported by dataNo evidence that Good to Great companies devised strategies differently than the comparison companiesGood to Great companies not only focused on WHAT TO DO but equally focused on WHAT NOT TO DOTechnology and Technology driven change has nothing to do while transformation to Good to Great.M&A virtually played no role in igniting a transfer from Good to GreatGood to Great companies paid scant attention to managing change and motivating peopleGood to Great companies were not by and large in great industries, but they were also present in terrible industries.


Good To Great Process


Level 5 Leadership(“You can accomplish anything in life, provided that you do not mind who gets the credit”.)

Conventional belief that we need high-profile leaders with big personalities who make headlines, are required to transform companies was not supported by the data (in fact negatively co-related)

Level 5 leader - an individual who blends extreme personal humility with intense professional will.

Level 5 leaders display compelling modesty and were understated. In contrast, 2/3rd companies that did not made it to Good to Great list had talented yet egocentric leader that contributed to decline in later years.

Level 5 leaders set up their successors for even greater success in next generation. They want to leave behind a company that would be great without him.

Level 5 leaders displayed unwavering resolve and determination to do what must be done to make the company great.

Level 5 leaders display a workman like diligence – more plow horse than a show horse.


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.”.)

Good to Great leaders began by first getting the right people on the bus (& wrong people off the bus) and then figured out where to drive it.

The key point is that “Who” questions come before “what” decision – before vision, before strategy, before organization structures.

They did not rely on layoffs and restructuring as a primary strategy for improving performance.

When in doubt, don’t hire. Limit growth based on ability to attract enough of right people.

Put your best people on your biggest opportunities not on your biggest problems.

No systematic pattern linking executive compensation to shift from Good to Great was evident.

Whether someone is “right person” has more to do with character traits and innate capabilities rather than specific knowledge or skills.


Confront The Brutal Facts(“There is no worse mistake in public leadership than to hold out false hopes soon to be swept away.”.)

Good to Great companies began the process of finding path to greatness by confronting the brutal facts of their current reality.

These companies did faced adversities as the comparison companies, but responded differently by hitting the realities head-on.

Important task in taking the company from Good to Great is to create a culture where in people have tremendous opportunity to be heard and ultimately for the “truth” to be heard.

They retained absolute faith that they can & will prevail in the end, AND at the same time confront the reality whatever they might be.

Charisma can be as much a liability as an asset, as the strength of your leadership personality can deter people from bringing you the brutal facts.


The Hedgehog Concept

Good to Great companies are more like hedgehog- simple creature that know “one big thing” and stick to it.

Comparison companies are more like foxes- crafty, cunning creatures that know many things yet lack consistency.

The key is to understand what your organization can be the best in the world at and equally important what it cannot be the best at.

This is different from core competence .

Each Good to Great company attained a deep understanding of the key Drivers in its economic engine and built its system in accordance with it.

The Hedgehog concept is a turning point in the journey from good to great.


Culture of DisciplineSustained great results depend upon building a culture full of self-disciplined people who take disciplined action consistent with the three circles.

Culture of discipline involves duality.

Requires people who adhere to a consistent system at the same time gives people freedom and responsibility within framework of that system.

Anything that does not fit within Hedgehog Concept, will not be done. Includes willingness to shun opportunities that fall outside the three circles.

“Stop doing” lists are equally important as “to do” lists.


Technology Accelerators

Good to Great companies used technology as an accelerator of momentum, not a creator of it.

None of the Good to Great companies began their transformation with pioneering technology, yet they all became pioneers in application of technology once they grasped how it fit with their three circles.

Certainly, a company cant remain a laggard and hope to be great, but technology by itself is never a primary cause of either greatness or decline.

“Crawl, walk, run” can be a very effective approach, even during times of rapid and radical technological changes.

Comparison companies in contrast were more motivated by the fear of being left behind.


Good is the enemy of Great

Jim Collins


THANK YOU

Leadership & Management

Good To Great - by Narendra Achantani