GOOD TO GREAT

1. GOOD TO GREAT CH. 7 : TECHNOLOGY ACCELORATORS • Lauren Sterna • Craig Crowell • Collin Gillaspie • Jennifer Eccles • Scott Addison • Clint Chapman

2. vs. VS • Drugstore.com launched and online pharmacy and mailed prescriptions to customers causing Walgreens stock to drop 40% • Walgreens coined the phrase “crawl, walk, then run” referring to entering the internet market slowly and picking up momentum along the way. • Drugstore.com did the opposite and went from run, walk, then crawl. Walgreens carefully planned their internet strategy and won the head to head with drugstore.com.

3. Technology and the Hedgehog Concept • Technological sophistication is present in every good to great company, but Hedgehogs pioneer the application of carefully selected technology, not the technology itself. • pioneered the application of bar code scanners, it helped them keep up with inventory by linking backroom storage with frontline purchases. • pioneered laser welding on relatively inexpensive items that are used repeatedly (razor blades).

4. Technology and the Hedgehog Concept • Good companies (Foxes) apply new technologies only after they have been pioneered by better companies. • Other companies (Wal-mart) decided to follow Kroger’s successful example by implementing the bar code system to keep track of inventory.

5. Technology Accelerators in the Good-to-Great Companies • Abbott- computer technology to increase economic denominator of profit per employee. • Circuit City- sophisticated point-of-sale and inventory-tracking technologies. • Fannie Mae- sophisticated algorithms and computer analysis to more accurately assess mortgage risk. • Gillette- sophisticated manufacturing technology. • Kimberly-Clark- application of manufacturing-process technology to support their passionate pursuit of product superiority • Kroger- first to experiment with scanners, which it linked to the entire cash-flow cycle.

6. Technology Accelerators in the Good-to-Great Companies • Nucor- application of the most advanced mini-mill steel manufacturing technology. • Philip Morris- packing and manufacturing technology. • Pitney Bowes- advanced technology in the mailroom. • Walgreens- application of satellite communications and computer network technology. • Wells Fargo- application of technologies that would increase economic denominator.

7. TECHNOLOGY AS AN ACCELERATOR, NOT A CREATOR OF MOMENTUM • Does the technology fit directly with your Hedgehog Concept? • Yes → Become a pioneer in the application of that technology • No → Then ask, do you need this technology at all? • Technology must create a clear Hedgehog Concept and stay within the three circles in order to make a great company.

8. TECHNOLOGY AS AN ACCELORATOR, NOT A CREATOR OF MOMENTUM • Unsustained pioneering in the application of technology • Chrysler (computer-aided design) • Made excellent use of advanced computer-aided and other design technologies, but failed to link those technologies to a consistent Hedgehog Concept • Fannie-Mae • CEO, Jim Johnson and lead technology audit consultant, Bill Kelvie, took Fannie Mae from a 2 (nearly Stone Age technology) to a 3.8 (almost cutting edge) • Technology was a key part of what Fannie Mae leaders called “the second wind” of the transformation and acted as an accelerating factor

9. The Technology Trap • Albert Einstein named “Person of the 20th Century” by Time Magazine • Known for his advances in science and technology • 20th century will be remembered for civil rights, democracy, and mostly technology

10. The Technology Trap • When good to great leaders were asked the top 5 factors in transition- technology was not one in 80% of cases • Mediocrity results from management failure not technology failure • Technology is not the primary cause of greatness or decline • Technology cannot turn a good firm into a great one or prevent disaster

11. Nucor and Bethlehem Steel • Nucor was known as one of the most aggressive pioneers when it came to the application of mini-mill steel manufacturing • Became a cornerstone case at business schools • “The primary factors were the consistency of the company and our ability to project its philosophers throughout the whole organization, enabled by our lack of layers and bureaucracy.” • Bethlehem Steel tried the same type of technology, but it did not work as well. • Technology was the accelerator of Bethlehem’s demise.

12. Technology and the fear of being left behind • Good to great companies were not motivated by fear. They were driven by the fear of what they didn’t understand. • Good to great companies are motivated by a creative urge and an inner compulsion for excellence • No amount of technology can make you a level 5 leader or company

13. Technology and the fear of being left behind • In the late 1990’s during the technology bubble many companies were worried about how their company would adapt to the new technology • Great companies responded quietly and calmly. Others were fearful and frantic

14. ADVANCES IN PRODUCTS • Coke teams up with Chromocell Corp. to develop innovative sweetener technology. • Cutting Carbon Emissions • Creating Sustainable Packaging (85 percent of our volume delivered in recyclable bottles)

15. ADVANCES IN DISTRIBUTION • Coke Free-style (touchscreen dispensers) • Climate Friendly Refrigeration with Greenpeace

16. ADVANCES WITHIN • The Coca-Cola Company announced that it has agreed to test fuel cells powered by environmentally friendly biogas to power its Odwalla juice packaging plant in Dinuba, Calif. • Panama’s 100 Percent Green Water Treatment Plant • First LED-Certified Coca-Cola Bottling Facility Opens In Baton Rouge

17. summary • Technology and the Hedgehog Concept • Hedgehogs pioneer the application of carefully selected technology • Technology as an Accelerator • Does technology fit directly with your Hedgehog Concept? • Technology Trap • Technology and the fear of being left behind