Good to Great

1. Good to Great Chapter 4 Confront the brutal facts never lose faith Presented by : Jonathan Alvarez, Chris Hill, Shawn Stults

2. Kroger vs. A&P Same type of companies: • Both invested all assets into the traditional grocery store. • Both had strongholds outside the major growth areas of the US. • Both had knowledge of how the world around them was changing. • Both had different strategies to deal with the new era of grocery stores.

3. A&P • Ralph Burger • “What would Mr. Hartford do?” • “You can’t argue with a hundred years of success.” • The Golden Key • Separate brand to experiment with new methods/models to learn what customers wanted • Pep Rallies, radical price cutting strategies, hiring/firing CEO’s

4. Kroger • Started to realize the ‘Superstore’ concept • Moved away from traditional store setup (100% of their business) • Jim Herring, CEO • “…learned that you had to be number one or number two in each market, or you had to exit.” • Concept didn’t hit the mainstream for another 10 yrs. • Decided to eliminate, change, or replace every store and get rid of every region that didn’t fit the new realities

5. Facts Are Better Than Dreams • Good-to-Great companies showed two forms of disciplined thought: 1) They looked at each situation focusing on the brutal facts of reality • “You absolutely cannot make a series of good decisions without first confronting the brutal facts.” 2) Developed a simply frame of reference for all decisions (chapter 5)

6. Cont’d • Roy Ash • CEO of Adressograph • Bold vision to dominate the likes of Xerox, Kodak, and IBM • Didn’t show signs of a good leader • First who, then what • Didn’t recognize the brutal facts of reality • Too strong and charismatic • “The moment a leader allows himself to become the primary reality, rather than reality being the primary reality, you have a recipe of mediocrity, or worse.”

7. Winston Churchill • Strong personality, bold vision • BUT made sure to keep a close eye on the brutal facts • Statistical Office • Knew his personality might scare people from giving him bad news • Principal function was to feed him the most brutal facts of reality • “Facts are better than dreams.”

8. A Climate Where the Truth is Told • How do you motivate people with brutal facts? You do not need to waste your time or energy on trying to motivate people if you have the right people on the bus they will be self-motivated

9. Creating a Climate Where the Truth is Heard 1.Lead with questions not answers 2.Engage in dialogue and debate, not coercion 3.Conduct autopsies, without blame 4.Build “red flag” mechanisms

10. Building Truthful Climates • Leading with questions not answers -Means having the humility to grasp the fact that you don’t yet understand enough to have the answers and then to ask the questions that will lead to the best possible answers • Alan Wurtzel believed in this system after having the right employees in place

11. Building Truthful Climates Cont. • Engage in dialogue and debate, not coercion • Generate debates where everyone is listened to and not just heard as a formality. • There can be no predetermined decisions for this to be an effective way of conveying the truth

12. Building Truthful Climates Cont. • Conduct autopsies, without blame • Figure out what went wrong and where a lesson can be learned on how to change it in the future • Don’t point the finger at anyone unless it is at yourself in the mirror.

13. Building Truthful Climates Cont. • “I will take responsibility for this bad decision. But we will all take responsibility for extracting the maximum learning from the tuition we’ve paid” • Joe Cullman (Phillip Morris Co.)

14. Building Truthful Climates Cont. • Build “red flag” mechanisms • The red flags allow you to get immediate feedback, and addresses what needs to be done NOW • Ex. Short Pay…. With short pay you have to pay attention to the data now instead of waiting for the customer to be too unsatisfied without even knowing it

15. Proctor & Gamble Vs. Scott Paper • 1960 P&G invaded the paper based industry • The industry leader, Scott paper, rolled over without a fight

16. Proctor & Gamble Vs. Kimberly-Clark • Kimberly-Clark viewed competing against P&G not as a liberty but as an asset • In confronting brutal facts they left themselves stronger and more resilient, not weaker and more desperate • “We respected them so much they are bigger and talented. They beat the hell out of all their competitor, except one, Kimberly-Clark”

17. “Hardiness” • International Committee for the Study Of Victimization • Those who are permanently dispirited by an event • Those who got their life back to normal • Those who used the experience as a defining event that made them stronger

18. Jim Stockdale • Highest ranking U.S. officer in the “Hanoi Hilton” POW camp • Tortured over twenty times during eight year imprisonment 1965-1973

19. Jim Stockdale • What separates people is not the presence or absence of difficulty, but how they deal with the inevitable difficulties of life • Stockdale Paradox • “You must never confuse faith that you will prevail in the end-which you must never lose-with the discipline the most brutal facts of your current reality”