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Good To Great: Chapter 6 A Culture Of Discipline


Good To Great: Chapter 6 A Culture Of Discipline Zane Barnes Nolan Bosworth Johnnie Davis Clay Jones Kimberly Smith Anna Sterling Shaina Weaver Talk about the ... – PowerPoint PPT presentation

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Title: Good To Great: Chapter 6 A Culture Of Discipline

Good To Great Chapter 6A Culture Of Discipline
  • Zane Barnes
  • Nolan Bosworth
  • Johnnie Davis
  • Clay Jones
  • Kimberly Smith
  • Anna Sterling
  • Shaina Weaver

A Culture of Discipline
  • Few start-ups become great companies partly
    because they respond to growth and success in the
    wrong way
  • They become to trip over their own success
  • Too many new people
  • New customers
  • New orders
  • New products
  • Lack of planning, accounting, systems, and hiring
    constraints create friction

A Culture of Discipline
  • Entrepreneurial success is fueled by
  • Creativity
  • Imagination
  • Bold moves into uncharted waters
  • Visionary zeal
  • Although these things are important, if a company
    is not prepared for the results, it can create

A Culture of Discipline
  • When companies grow and become a big company
  • Sometimes the entrepreneurial spirit is killed
  • Employees are not as driven because of new rules,
    paper work, meetings, etc.
  • The cancer of mediocrity begins

How to Avoid Mediocrity
  • Have the right people in the first place
  • Avoid bureaucracy and hierarchy
  • Have a culture of discipline with an ethic of
  • Set goals for the year and record them you can
    change your plans, but never what you measure
    yourself against
  • Be rigorous at not just the beginning of the
    year, but also the end, adhering to exactly what
    you said was going to happen
  • Results a magical alchemy of superior
    performance and sustained results

The Good-to-Great Matrix of Creative Discipline
Hierarchal Organization Great Organization
Bureaucratic Organization Start-up Organization
High Culture of Discipline Low
Ethic of


Main Points to Remember
  • The main idea Build a culture full of people who
    take disciplined action within the 3 circles,
    fanatically consistent with the Hedgehog concept
  • Build a culture around freedom and responsibility
  • Have self-disciplined people willing to fulfill
    their responsibilities
  • Dont be a tyrannical disciplinarian
  • Adhere to the Hedgehog Concept, and create a
    stop doing list

Freedom (And Responsibility Within A Framework)
  • Example Pro Football Player
  • Freedom
  • Choose to be the greatest or mediocre.
  • Can treat his body with respect or can do drugs
    and stay out all night.
  • Can create good or bad publicity for your team
    and earn or lose fans respect.
  • Framework
  • Contracts
  • Practice schedules/curfews
  • Game day routines

Steps in creating a culture of discipline
  • Disciplined people
  • Self disciplined people
  • Get the right people on the bus
  • Disciplined thought
  • Confront the brutal facts of reality
  • Absolute faith that you will create a path to
  • Disciplined Action
  • Use steps 1-3 within a framework designed around
    the Hedgehog Concept you get a Great company.

How To Go From Good To Great Using Discipline
  • First get disciplined people who engage in
    very rigorous thinking, who then take disciplined
    action within the framework of a consistent
    system designed around the Hedgehog Concept.

Rinsing Your Cottage Cheese
  • Disciplined, Rigorous, Dogged, Determined,
    Diligent, Precise, Systematic, Methodical,
    Workmanlike, Demanding, Consistent, Focused,
    Accountable, and Responsible.
  • These are all words used to describe
    good-to-great companies. People within these
    companies become somewhat extreme on the
    fulfillment of their responsibilities.

Rinsing Your Cottage Cheese
  • The analogy comes from a disciplined world-class
    athlete named Dave Scott, who won the Hawaii
    Ironman Triathlon six times!
  • Much of the question of good to great lies in
    the discipline to do whatever it takes to become
    the best within carefully selected arenas and
    then to seek continual improvement from there.
    Jim Collins

Rinsing Your Cottage Cheese
  • Example Edward Jones

A Culture, Not A Tyrant
  • On one hand, the good-to-great companies became
    more disciplined than the direct comparison
  • On the other hand, the unsustained comparisons
    showed themselves to be just as disciplined as
    the good-to-great companies.
  • It was clear that the unsustained comparison CEOs
    brought tremendous discipline to their companies,
    and that is why they got such great initial
  • Discipline doesnt pass as a distinguishing

  • Despite surface appearances, there were huge
    differences between the two sets of companies in
    their approach to discipline.
  • Good-to-great companies had Level 5 leaders who
    built an enduring culture of discipline, the
    unsustained comparisons had Level 4 leaders who
    personally disciplined the organization through
    sheer force.

Burroughs Corporation Example
  • Ray MacDonald took over Burroughs Corporation in
    1964. He got things done through sheer pressure
    which came to be known as The MacDonald Vise.
  • He produced remarkable results during his time at
    Burroughs and for every dollar invested in 1964
    taken out at the end of 1977 produced returns 6.6
    times better than the general market.
  • Although while he was there he produced great
    results, after retiring the company had no
    culture of discipline to continue and Burroughs
    returns began falling 93 below the market from
    the end of the MacDonald era until the year 2000.

Chrysler Example
  • Lee Iacocca became president of Chrysler in 1979.
    He produced wonderful results Chrysler became
    one of the most celebrated turnarounds in
    industrial history. 
  • During 1st half of tenure he produced remarkable
    results, taking the company from near bankruptcy
    to almost 3 times the general market. 
  • About midway through his tenure he seemed to lose
    focus the company began to decline once again.
  • During the 2nd half of his tenure, the company
    fell 31 behind the market and faced another
    potential bankruptcy.

  • In every unsustained comparison there were the
    following patterns
  • -a rise under a tyrannical disciplinarian,
    followed by an equally spectacular decline when
    the disciplinarian stepped away, leaving behind
    no enduring culture of discipline
  • or
  • -the disciplinarian become undisciplined and
    strayed outside of the 3 circles

  • Discipline is essential for great results, but
    disciplined action without disciplined
    understanding of the 3 circles cannot produce
    sustained great results.

Adherence to the Hedgehog Concept
  • Those companies that break through the threshold
    from good to great all stay true to their
    hedgehog concepts.
  • Pitney Bowes started out in the 1920s as a
    postage meter machine manufacturer and by the 50s
    had a monopoly on the metered mail market.
  • In 1955 PB was ordered by the government to
    license its patents to competitors, thus ending
    the monopoly.
  • Panic ensued over the next 25 years as PB tried
    to diversify in an effort to supplement its
    sliding market share in the mail meter market.
  • PB formed a series of miserable mergers with
    companies that had no place in PBs 3 circles.

Adherence to the Hedgehog Concept
  • Fred Allen becomes CEO in late 1973 after PBs
    first money losing year.
  • Allen established a hedgehog concept based on his
    belief that PB could be the best at servicing
    the back rooms of businesses (G2G pg. 134). PBs
    other 2 circles became building profit per
    customer via high-end copiers and fax machines,
    and an unwavering passion for innovating back
    room business machines.
  • As a testament to how well the new strategy
    worked, by the late 1980s, Pitney consistently
    derived over half its revenues from products
    introduced in the previous three years (G2G pg.
  • According to CNN Money, PB has recaptured nearly
    all of the market share it lost controlling an
    80 percent share of the domestic postal-meter

Nucor Hedgehog Concept
  • Built around harnessing culture and technology
  • Idea of aligning workers interests with
    management and shareholders interests
  • Nucor Live like no one else so you can live
    like no one else

Nucor Hedgehog Concept
  • Executives do not receive perks
  • Pay for schooling of workers children
  • Everyone suffers together
  • Did away with social standings

Nucors Three Circles 1970-1995
Bethlehem Steel
  • Huge corporate offices
  • Corporate aircrafts
  • Private golf course

  • Over a 34 year period
  • Nucor posted positive earnings 34 consecutive
  • Bethlehem lost money 12 times.

Stop Making a To Do List and Start Making a
Stop Doing List
  • Companies waste too much time getting caught up
    in what they have to do that they forget about
    what they shouldnt do.
  • Budgeting is NOT about managing costs, or
    determining how much money each activity costs.
    It IS about deciding which activities support
    your Hedgehog concept and providing them with
    funding, while not funding the activities that
    dont fit.
  • Ex Kimberly-Clark

Student Examples
To Do List Stop Doing List
Go to class today. Dont miss any class.
Do homework this weekend. Stop procrastinating.
Print out slides for the exam after watching a little TV. Stop wasting time.
When Its Right, Its Right
  • What makes an effective investment strategy?
  • Being Right- Knowing your Hedgehog Concept.
  • Highly undiversified- only investing in those
    things that fit within your 3 circles throw out
    the rest.
  • How do you know youre right?
  • If you have Level 5 leaders who get the right
    people on the bus, if you confront the brutal
    facts of reality, if you create a climate where
    the truth is heard, if you have a Council and
    work within the three circles, if you frame all
    decisions in the context of a crystalline
    Hedgehog Concept, if you act from understanding,
    not bravado.
  • But can you stop doing the wrong things??

Chapter Summary
  • Finding great people to build a disciplined
    culture, consistent with the 3 circles, is vital
    for great ongoing results.
  • You dont need a bureaucratic culture if you have
    the right people in the first place.
  • A culture of discipline involves both people who
    can follow a consistent system and freedom and
    responsibility within that system.
  • Disciplined people and disciplined thought lead
    to disciplined action.
  • The good-to-great companies look boring on the
    outside, but if you look close enough they are
    diligent and intense (rinsing their cottage

  • A tyrant who disciplines is very dysfunctional,
    but a culture of discipline is highly functional
    and leads to sustained results.
  • Adherence to the Hedgehog Concept and willingness
    to throw out opportunities that are not in the 3
    circles are most important for sustained results.
  • More discipline to stay within the 3 circles a
    greater chance for growth.
  • Once-in-a-lifetime opportunities are irrelevant
    if they dont fit in with the 3 circles.
  • Spend more time figuring out which projects need
    funding and which do not, rather than how much
    each one gets.
  • Finally, Stop doing lists are more important
    that to do lists.
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