From Good to Great

1. From Good to Great Chapter 1: Good is the Enemy of Great Cynthia, Ben, Peyton, Russell

2. Introduction Vast majority of companies never become great-because most of them are quite good and they remain that Is the disease of being “good” incurable? Journey to explore the inner workings of good to great

3. Companies that made leap: From good results to great results and sustained those results for at least fifteen years Averaging stock returns of 6.9 compared to GE 2.8 471 increase compared to 56 increase See pages 2 and 4

4. Phase 1: The Search • First found companies that showed the good-to-great pattern • 15-yr cumulative stock returns at or below the general stock market • Transition point • Cumulative returns at at least three times the market over the next 15 yrs • Pattern must be independent of the industry it was in • This ruled out lucky breaks • 6 mo “death march of financial analysis” looking for such companies

5. Phase 1 Continued Found 11 companies that showed good-to-great characteristics Many of these companies were surprising Showed that it was possible to go from good to great in the most unlikely of situations List on page 7

6. Phase 2: Compared to What? • Contrasted good-to-great companies to comparison companies • What did the good-to-great companies share in common that distinguished them from the comparison companies? • Direct comparisons • Companies in the same industry with same opportunities and similar resources at the time of the transition that did NOT show the good-to-great transition • Unsustained comparisons • Companies that made a short-term shift from good to great but failed to maintain the trajectory

7. Phase 2 cont. • Study set of 28 companies • 11 good-to-great companies • 11 direct comparisons • 6 unsustained comparisons

8. Phase 3: Inside the Black Box Each step of research was like installing another light bulb to shed light on the inner workings of the good-to-great process Collected and coded articles Interviewed most of the good-to-great executives who held key positions during the transition periods Initiated wide range of quantitative and qualitative analyses Total of 10.5 people years of effort

9. Phase 3 cont. • Weekly team debates • Present each of the 28 companies then debate about “what it all means” • Built a theory from the ground up directly from the evidence • Asked “what is different?”

10. Phase 3 cont. • Studied what they didn’t find: • Celebrity leaders negatively correlated with taking a company from good to great • No systematic pattern linking specific forms of executive compensation to the process of going good to great • Strategy did not separate the good-to-great companies from comparison companies • Good-to-great companies did not focus principally on what to do to become great, but focused on what NOT to do and what to STOP doing

11. Phase 3 cont. • Technology and technology-driven change has nothing to do with transformation from good-to-great • Mergers and acquisitions play no role in transformation • Good-to-great companies paid little attention to managing change • Good-to-great companies has no name, tag line, launch event or such to signify their transformations • Good-to-great companies were not in “great” industries-no company was sitting in an industry that was about to turn great

12. Phase 4: Chaos to Concept Took lump of unorganized information, saw patterns, and extracted order from the mess Every primary concept in the final framework showed up as a change variable in 100% of the good-to-great company and less than 30% of the comparison companies during the pivotal years

13. Phase 4 cont. • 8 Stages of a company going from good to great: • Level 5 Leadership: • Self-effacing, quiet, reserved leaders that are a paradoxical blend of personal humility and professional will • First Who … Then What? : • First got the right people, got rid of wrong people, put them in place, then went into action • Confront the Brutal Facts (Yet Never Lose Faith): • Embraced the Stockdale Paradox • Maintain unwavering faith with discipline to confront the most brutal facts of your current reality • The Hedgehog Concept (Simplicity within the Three Circles) • If you cannot be the best in the world at your core business then your core business absolutely cannot form the basis of a great company

14. Phase 4 cont. • A Culture of Discipline • If you have disciplined people you do not need hierarchies, bureaucracy, or excessive controls • Combine this discipline with entrepreneurship • Technology Accelerators • Pioneers of carefully selected technologies • The Flywheel and the Doom Loop • Process of good-to-great transformation resembled relentlessly pushing against a giant heavy flywheel, building momentum until a point of breakthrough • From Good to Great to Built to Last • Requires core values and purpose beyond just making money combined with the key dynamic of preserve the core/stimulate progress

15. The Timeless “Physics” of Good to Great Specific application will change, but certain immutable laws of organized human performance will endure (the physics will endure) This book is about how you take a good organization and turn it into one that produces sustained great results using whatever definition of results best applies to your organization “The best students are those who never quite believe their professors.” But, “One aught not to reject the date merely because one does not like what the data implies.”

16. TAKEAWAYS Phase 1: Searched for companies that had a cumulative returns of 3x’s the market and sustained these returns for 15 years Phase 2: Produced direct comparisons and unsustained comparisons and ended with 28 companies to study Phase 3: Collected information, had team debates, found surprising correlations Phase 4: Took random information and found patterns within the information producing the 8 stages of going from good to great The concepts in this book are basically timeless and can be applied across industries and organizations (not just those in the business setting