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Chapter 6 : SMac

Chapter 6 : SMac. Great by Choice By: Jim Collins Team 1 MGT 4380 – 001 Patrick Morales, William Turner, Becky Alvarado, Christopher Mathis, Jared Stowe. SMaC Recipe. Specific, Methodical, and Consistent Operating practices that are replicable and create success into the future

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Chapter 6 : SMac

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  1. Chapter 6: SMac Great by Choice By: Jim Collins Team 1 MGT 4380 – 001 Patrick Morales, William Turner, Becky Alvarado, Christopher Mathis, Jared Stowe

  2. SMaC Recipe • Specific, Methodical, and Consistent • Operating practices that are replicable and create success into the future • Contains practices “to do” and “not to do” • Must adhere to recipe • Precise, not bland • Guides companies amidst crisis • Deregulation of airline industry

  3. Southwest Airlines: SMaC Recipe • Remain a short-haul carrier • Boeing 737 is primary aircraft • Quick turns; ten min. in most cases • Passenger is #1 product; no air freight • Low fares and frequency of service • Stay out of food services • No interlining • Texas is #1 primary market • Employees are a strong asset • Keep it simple

  4. Adhering to the SMaC Recipe with Fanatic Discipline • 10X companies kept any ingredient in the mix for more than twenty years and proved durable • Progressive Insurance: 20+ years of durability and little change since 2002 • Some might argue that poor operating models, not changes in the recipe, contributed to downfall

  5. Southwest and PSA • Southwest Airlines began as a copy of Pacific Southwest Airlines • Both faced deregulation, disruptive environments, and nearly identical recipes • Southwest, not PSA, endured in the 20 years since deregulation . Why?

  6. Southwest and PSA • PSA decided to move away from a proven recipe to follow another model (US Air) • PSA, having invented a successful recipe, should have been the most successful airline in history • Because they did not adhere to their proven recipe, they were forced to sell to US Air.

  7. Apple and Microsoft • 1985-1997 • Microsoft did very well while Apple struggled • Apple constantly changed its recipe while Microsoft pursued theirs, relentlessly

  8. John Wooden • UCLA men’s basketball coach during 1960’s and 1970’s • 10 championships in 12 years as coach • “Pyramid of success”

  9. SMaC Recipe • “The signature of mediocrity is not an unwillingness to change; the signature of mediocrity is chronic inconsistency”

  10. Amending the SMaC recipe: paranoid, creative consistency • When is the right time to change the SMaC recipe? • Intel: Microchips to Microprocessors – Very subtle change in overall recipe • How much change is necessary? • AMD: overhauled SMaC recipe multiple times – No long-term momentum • Which approach to take? • Microsoft: “Zoom out” then “Zoom in” approach taken – allowed Bill Gates to embrace the internet while keeping SMaC recipe in-tact

  11. American Apparel: SMaC recipe

  12. Consistency and Change • The Constitution • Flexible and durable framework • Amendments

  13. Conclusion • SMAC Recipe • Three Key Factors • Figuring out what works and why?

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