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BOOK REVIEW GOOD-TO-GREAT

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Title: BOOK REVIEW GOOD-TO-GREAT


1
BOOK REVIEWGOOD-TO-GREAT
  • PRESENTED BY
  • Norhasliza Ibrahim
  • Sitynoryasmin Ahmad Khairuddin
  • Azlida

2
INTRODUCTION
  • Author James C. Collins
  • Language English
  • Publisher William Collins
  • Publication date October 16, 2001
  • Media type Hardcover
  • Pages 320

3
  • Chapter 9 chapters include
  • 1. Good is the enemy of great
  • 2. Level 5 leadership
  • 3. First Who..Then What
  • 4. Confront the Brutal Facts (Yet never lose
    faith)
  • 5. The Hedgehog Concepts (Simplicity within the
    three circles)
  • 6. A culture of Discipline
  • 7. Technology accelerators
  • 8. The Flywheel and the Doom Loop
  • 9. From Good to great to built to last

4
HISTORY OF AUTHOR
  • James C. "Jim" Collins, III (born 1958, Boulder,
    Colorado) is an American business consultant,
    author, and lecturer on the subject of company
    sustainability and growth.
  • Jim Collins frequently contributes to Harvard
    Business Review, Business Week, Fortune and other
    magazines, journals, etc.
  • He is also the author of several books How the
    Mighty Fall And Why Some Companies Never Give
    In, Built to Last Successful Habits of Visionary
    Companies, and Good to Great.

5
James C. Collins
6
  • Books
  • 1994 Built to Last by James C. Collins and
    Jerry I. Porras (Paperback, Hardcover, CD)
  • 1995 Beyond Entrepreneurship Turning Your
    Business into an Enduring Great Company by
    James C. Collins and William C. Lazier
    (Paperback Hardcover)
  • 2001 Good to Great Why Some Companies Make
    the Leap And Others Dont by James C. Collins
    (Paperback, Hardcover, CD).
  • 2005 Good to Great and the Social Sectors by
    James C. Collins (Paperback)
  • 2009 How the Mighty Fall And Why Some
    Companies Never Give In by James C. Collins

7
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8
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9
CHAPTER 1 GOOD IS THE ENEMY OF GREAT
  • Emphasis on how the good company can be
    transform to the great company
  • This research is a journey on getting the inner
    working of good to great
  • Concept research
  • identifying the company that has make leap from
    goods to great
  • Comparison GTG companies with the comparison
    companies.
  • performance of the companies were measured based
    on their cumulative return stocks
  • There is no warranty that the huge company
    could leap to great company. The Walgreens has
    beat 1 invest in Intel by 2 Times, General
    Electric by 5 and Coca Cola by 8 times.
  • The successful of Walgreens bring the curiosity
    on why Eckerd with the similar resources and
    opportunity were not being able to make a leap.

10

The research has four phases Phases
1 Establishing team - The teams consist of four
to six people teams have to identify the
company with good to great pattern in at least 15
years. Phases 2 Identify factors that good to
great company share in common then distinguished
them against the comparison companies.
11
  • Phase 3
  • Inside The black Box
  • Collected publish material / interview
  • Coded according to strategy, technology and
    leadership
  • Analyzed and be debated to further drawing the
  • potential conclusion of the involving company
  • and the teams are welcome to raise their
  • voices on any comment

12
  • Phase 4
  • Chaos to Concept
  • Simulate the outcomes by testing against data in
    order to build framework, break it and rebuild it
    against.
  • The simulation shows good to good has change 100
    of while comparison company make changed
    estimated 30 .
  • Level 5 Leadership
  • occurs during the transition from good to great
    and most of them are sticking on the Stockdale
    Paradox, and believe the businesses not
    definitely good in their core business.
  • discipline culture in each company.
  • Enduring Great Companies
  • Good To Great Concept Sustained Great Result
    Built To last Concept Enduring Great Companies

13
Findings
  • Based on the study, the research team found that
  • Larger than life Most of the inner celebrity
    shows the positive correlation with taking good
    to good. Its proved whereby 10 out of 11 good to
    great s leader are from inside
  • There is no linking between executive
    compensation and the process of going good to
    great
  • Both good to great and comparison companies has
    their range of strategic planning
  • Most of the good to great company focus on what
    they should stop instead of what they should do
  • Technology were not cause the transformation in
    the good to great company

14
  • Mergers and acquisition has no impact on the
    movement of good to great company
  • The good to great company has very few attained
    in managing change, motivation and creating
    alignment
  • There also unaware of official launch event for
    the transformation
  • It is not necessary the good to great company
    shall be at large and in great industry , since
    they are company in the terrible industry has
    move from good to greats.

15
LESSON LEARNT
  • The author has taken the good move on this
    research, it tremendously give us the
    information and facts that we never expect
  • The company that success on the transformation
    has the level 5 leadership. The transition
    process may create the leaders level 5.
    Nowadays, the organization should take serious
    action on the talent management practices since
    it were proven the leadership is came from the
    inner organization. The huge investment to launch
    the transformation never worth for the value,
    this is because it has never happened in one
    slope. Small company in terrible industry also
    has a chances to success in their transformation.

16
CHAPTER 2 LEVEL LEADERSHIP
  • This chapter will distinguished traits of good
    to great leader or Level 5 leaders.
  • Kimberly Clark Case Study
  • Darwin E smith, decision with switching the
    business from coated paper company to paper
    based products.
  • He believed the competition and the good economy
    will make the succeed
  • The level 5 leaders usually will to cuts against
    controversy as long as their ambition is achieve.

17
  • Gillette Company Case Study
  • CEO of Gillette, Colman Mockler -threat when
    Revlon lead by Ronald Perelman
  • implement the hostile taking over with the
    purchase of 44 of their stock and
  • their stock also bought by Coniston Partners as
    much of 5.9.
  • not to take for granted on the acquisition - many
    people investing Mockler and team invest on
    technology and they finally developed new product
    called Sensor and Mach 3, and it was success and
    totally drown the demand for the existing
    product
  • accept the offered by Ronald Perelman and wish it
    worth.
  • Forbes magazine that really gave negative
    impression to the Gillette team, Mockler was died
    with heart attack

18
  • Ambition for the Company
  • David Maxwell, the CEO for Fannie Mae make lost
    1 Million each
  • day before he decided to transform to Wall
    Street firm. With the transformation his business
    earns 4 Million each day. Day after, he has to
    retire, and get the benefit of his retirement
    package, with the gracious heart, Maxwell is
    willing to contribute the money to low housing
    income.
  • Henry v111 with Biggest Dog Syndromes
  • Comparison companies, while for example Scott
    Paper a leaders at Kimberly Klarks earn the
    165,000 per day and to maintain his earn, the
    business has to cut down on the workforce and
    Research and development expenses.

19
  • Level 5b leader see windows as a way to
    segregate credited factors when things goes
    well and were not blaming bad luck when
    something goes wrong.
  • There researcher categorized two hypotheses where
    as those leaders in the level 5 leaders and other
    categories which do not have level 5 leaders.
    This categories need to has greater ambition of
    building something larger and more lasting
    than themselves.
  • Level 5 leaders are naturally born with
    capability and its believed they might have
    significance experience in their life.
  • Steps to becoming leaders level 5
  • Level 5 leaders are the key component for
    business to move from good to great company.
    Satisfying and powerful idea may enhance the best
    transition from good to greats. Symbiotic
    relationship between level 5 and remaining
    findings would help each level to develop level 5
    leaders.
  • Lesson Learnt
  • The transformation requires the brave decision,
    because sometimes it requires abnormal decisions,
    such cases of Abbot Laboratory to remove all
    nepotism. Level 5 leaders always put the
    organization as the number one priority and
    always think about the grow of the company. Level
    5 leaders is developed at the time of transition
    and the most important the organization has to be
    open in get the powerful ideas that would
    enhance the transformation and developing level 5
    leaders.

20
CHAPTER 3 FIRST WHOTHEN WHAT
  • This chapter is about to get right people on the
    business before you
  • figure out where to drive It
  • First who, then what
  • It is not necessary to set new directions,
    strategy and to get new people to ensure the
    successful of the transformation. Good to great
    companies always understand on whom leaders
    should join the organization
  • Well Fargo Case Study
  • Dick Cooley began his talented management team
    prepare the wrenching change.
  • efficient when the business is outperform 3
    times against general stock market while others
    bank fell behind.
  • Contrast to Bank of America, where they followed
    weak generals, strong lieutenants. Weak generals
    are the employee where as wait for the direction
    from above. After losing I billions, Bank of
    America realized strong general to turn the
    bank around. Strong general is approach of
    recruiting the talented people from the
    competitor, mostly from Well Fergo

21
  • Henry Singleton Case study
  • The small enterprise has evolved to the
    corporation and success by has more than 100
    acquisition, but once Singleton moved out, and
    the business were merged with Allegheny, it was
    failed to be great.
  • This study also reveals there is no linking
    between executive compensation and the process
    from good to great. They believed, right people
    will do everything with their power. Compensation
    is more to get right people in business at place
    and keep them.
  • Good To Great Company always seems for rigorous,
    they usually consistency with exact standard at
    all levels especially at upper management. There
    are three steps on how the companies can be
    rigorous
  • Practice Discipline, when it doubt, dont hire
    and keep looking
  • When you know there is need to make people
    change, do it.
  • Put the best people on the biggest opportunity
    not the problems.
  • Lesson Learnt
  • Good to Great Company usually take advantage on
    the level 5 leaders, to get
  • maintain them, the right people shall be at right
    places and it appears the crucial
  • the Human resources in recruiting and retains the
    best resources.

22
CHAPTER 4
  • CONFRONT THE BRUTAL FACT
  • (YET NEVER LOSE FAITH)

23
  • Facts are better than dreams
  • Good to great companies did not have a perfect
    track record.
  • But on the whole, they made many more good
    decisions than the comparison companies.
  • Even more important on the really big choices
    such as Krogers decision to thrown all its
    resources into the task of converting its entire
    system to the superstore concept, they were
    remarkably on target.

24
  • Let the Truth be Heard
  • To accomplish this, 4 basic practices must
  • engaged
  • 1. Lead with question, not answer
  • Leading from good to great does not mean coming
    up with the answer and motivating everyone to
    follow your messianic vision. It means having the
    humility to grasp the fact that you do not yet
    understand enough to have the answers and then to
    ask the questions that will lead to the best
    possible insights.

25
  • 2. Engage in dialogue and debate, not coercion
  • All good to great companies have a penchant for
    intense debates, discussions and healthy
    conflict. Dialogue is not used as sham process to
    let people have their say so they can buy into
    a predetermined decision rather it is used to
    engage people in the search for the best answers.
  • 3. Conduct autopsies, without blame
  • Good to great leaders must take an honest look
    at decisions his or her company makes, rather
    than simply assigning blame for the outcomes pf
    those decisions. These autopsies go a long way
    toward establishing understanding and learning,
    creating a climate where the truth is heard.

26
  • 4. Build red flag mechanisms that turn
    information into information that cannot be
    ignored
  • Good to great companies have no better access to
    information than any other company. They simply
    give their people and customers ample
    opportunities to provide unfiltered information
    and insight that can act as early warning for
    potentially deeper problems.

27
CHAPTER 5
  • THE HEDGEHONG CONCEPT
  • (SIMPLICITY WITHIN THE THREE CIRCLES)

28
  • A simple crystalline concept that lows from deep
  • understands about the intersection of the
  • following circles.

29
  • At what you can be best in the world
  • This standard goes far beyond core competence.
  • It is because you possess a core competence
    doesnt necessarily mean you are the best in the
    world at that competence.
  • Conversely, what you can be best in the world at
    might not even be something in which you are
    currently engaged.
  • The Hedgehog concept is not a goal or strategy
    to be the bet at something, it is an
    understanding of what you can be the best at and
    almost equally important on what you cannot be
    the best at.

30
  • What drives your economic engine
  • To get insight into the drivers of your economic
    engine, search for the one dominator (profit per
    x, for example or cash flow per x) that has the
    single greatest impact, if you could pick one and
    only one ratio to systematically increase over
    time to make a greater impact on what that ratio
    be. This denominator can be subtle and sometimes
    even unobvious. The key is to use the denominator
    to gain understanding and insight into your
    economic model.

31
  • What you are deeply passionate about
  • Good to great companies did not pick a course of
    action and then encourage their people to become
    passionate about their direction. Rather, those
    companies decide to do only those things that
    they could get passionate about. They recognized
    that passion cannot be manufactured nor can it be
    the end result of a motivation effort. You can
    only discover what ignites your passions of those
    around you.

32
  • Critical point is the hedgehog concepts is not a
    goal to be the best, its a strategy to be the
    best, an intention to be the best, a plan to be
    the best.
  • It is an understanding of what you can be the
    best at.
  • The distinction is absolutely critical.
  • Collins points out how companies that stray
    outside their core competency pay for it dearly.
  • In contrast, when a great company can no longer
    do a certain thing better than someone else,
    despite the fact that it had been doing it for a
    long time, it dropped that line at work and it
    never looked back.

33
Getting the hedgehog concepts (an interactive
process)
Ask Question, Guided by the three circles
Dialogue and debate,
THE
Autopsies and analysis
Guided by the three circles
COUNCIL
Guided by the three circles
Executive Decisions
34
  • Characteristics of the Council
  • 1. The Council exists as a device to gain
    understanding about important issues facing the
    organization.
  • 2. The Council is assembled and used by the
    leading executive and usually consists of five to
    twelve people.
  • 3. Each council member has the ability to argue
    and debate in search of understanding, not from
    the egoistic need to win a point or protect a
    parochial interest.
  • 4. Each council member retains the respect of
    every other council member without exception.
  • 5. Council member come from a range of
    perspectives but each member has deep knowledge
    about some aspect of the organization and/or the
    environment in which it operates.

35
  • 6. The Council includes key members of the
    management team but is not limited to members of
    the management team, nor is every executive
    automatically a member.
  • 7. The council is a standing body, not an ad hoc
    committee assembled for a specific project.
  • 8. The Council meets periodically, as much as
    once a week or as infrequently as once per
    quarter.
  • 9. The Council does not seek consensus,
    recognizing that consensus decisions are often at
    adds with intelligent decisions. The
    responsibility for the final decision remains
    with the leading executive.

36
  • 10. The Council is an informal body, not listed
    on any formal organization chart or in any
    formal documents.
  • 11. The Council can have a range of possible
    names, usually quite innocuous. In the good to
    great companies, they had benign names like
    Long-Range Profit Improvement Committee,
    Corporate Products Committee, Strategic Thinking
    Group and Executive Council.

37
CHAPTER 6
  • A CULTURE OF DISCIPLINE

38
The Good to Great Matrix of Creative Discipline
Hierarchical Organization
Great Organization
High
Culture of
Start-up Organization
Bureaucratic Organization
Discipline
Low
Low
High
Ethic of
Entrepreneurship
39
  • This means following
  • Build a culture around the idea of freedom and
    responsibility, within a framework.
  • Fill that culture with self-disciplined people
    who are willing to go to extreme lengths to
    fulfill their responsibilities. They will rinse
    their cottage cheese
  • Dont confuse a culture of discipline with a
    tyrannical disciplinarian.
  • Adhere with great consistency to the Hedgehog
    Concept, exercising an almost religious focus on
    the intersection if the three circles.

40
  • To create a culture of discipline, you must
  • ? Build a culture around the idea of freedom and
    responsibility, within a framework.
  • Good-to-great companies built a consistent
    system with clear constraints, but they also gave
    people freedom and responsibility within the
    framework of that system.
  • Fill your culture with self-disciplined people
    who are willing to go to extreme lengths to
    fulfill their responsibilities.
  • People in good-to-great companies tend to be
    almost fanatical in the pursuit of greatness,
    they possess the discipline to do whatever it
    takes to become the best within carefully
    selected arenas and then seek continual
    improvement from there.

41
  • Dont confuse a culture of discipline with a
    tyrannical disciplinarian.
  • Many companies that could not sustain their
    success had leaders who personally disciplined
    the organization through sheer force. Good to
    Great companies had Level 5 leaders who built an
    enduring culture of discipline, powered by
    self-disciplined people who acted in the
    companys best interests without strict dictums
    from leadership.
  • Adhere with great consistency to the Hedgehog
    Concept, exercising an almost religious focus on
    the intersection of the three circles.
  • The good-to-great companies at their best
    followed a simple mantra Anything that does
    not fit with our Hedgehog Concept, we will not
    do. They did not launch unrelated businesses or
    joint ventures in an effort to diversify.

42
CHAPTER 7 Technology Accelerators
  • Good to Great organizations think differently,
    about technology and technological change than
    mediocre ones.
  • Good to great organizations also avoid
    technology fads and bandwagons and they become
    pioneers in the application of carefully selected
    technology.
  • The good to great companies used technology as
    an accelerator of momentum, not a creator of it.
  • None of the good to great companies began their
    transformations with pioneering technology.
  • so, they are become pioneers in the application
    of technology once they grasped how it fit with
    their three circles and after they hit
    breakthrough.
  • we discuss how a company reacts to technological
    change is good indicator of its inner drive for
    greatness versus mediocrity.
  • So, great companies respond with thoughtfulness
    and creativity, driven by a compulsion to turn
    unrealized potential into results, mediocre
    companies react and lunch about motivated by fear
    of being left behind.

43
  • The Flywheel Effect
  • The Doom Loop

44
CHAPTER 8 The Flywheel and the Doom Loop
  • Good to great transformation often look like
    dramatic, revolutionary events to observing from
    the outside, but they feel like organic,
    cumulative processes to people on the inside. The
    confusion of end outcomes (dramatic result) with
    process ( organic and cumulative) skews our
    perception of what really works over the long
    haul.
  • No matter how dramatic the end result, the
    good-to-great transformation never happened in
    one fell swoop. There was no single defining
    action, no grand program, no one killer
    innovation, no solitary lucky break, no miracle
    moment.

45
  • Sustainable transformations follow a predictable
    pattern of buildup and breakthrough. Like pushing
    on a giant, heavy flywheel, it takes a lot of
    effort to get the thing moving at all, but with
    persistent pushing in a consistent direction over
    a long period of time, the flywheel builds
    momentum, eventually hitting a point of
    breakthrough.
  • The comparison companies followed a different
    pattern, the doom loop. Rather than accumulating
    momentum-turn by turn of the flywheel-they tried
    to skip buildup and jump immediately to
    breakthrough. Then, with disappointing result,
    theyd lurch back and forth, failing to maintain
    a consistent direction.
  • The comparison companies frequently tried to
    create a breakthrough with large, misguided
    actuations. The good-to-great companies, in
    contrast, principally used large acquisitions
    after breakthrough, to accelerate momentum in an
    already fast-spinning flywheel.

46
CHAPTER 9 From Good to Great to Built to Last
  • From this chapter, the good to great research
    project, they discuss about the ideas in build to
    last while doing the good to great research.
    Actually, built to last, based on six year
    research project conducted at Stanford Business
    School in the early 1990s. for example, this
    group research examined companies like Procter
    Gamble (founded in 1937)
  • So they found early in the research, then they
    made a very important decision. They decided to
    conduct the research for Good to Great as if
    built to last didnt exist. This was the only way
    to clearly see the key factors in transforming a
    good company into a great one with minimal bias
    from previous work.

47
  • Concept in Good To Great
  • Level 5 leadership
  • Relationship to Concept in Built to Last
  • Clock Building, Not Time Telling Level 5 leaders
    build a company that can tick along without them,
    rather than feeding their egos by becoming
    indispensable. 
  • Genius of AND Personal humility AND professional
    will.
  • Core Ideology Level 5 leaders are ambitious for
    the company and what it stands for they have a
    sense of purpose beyond their own success.
  • Preserve the Core/Stimulate Progress Level 5
    leaders are relentless in stimulating progress
    toward tangible result and achievement, even if
    it means firing their brothers.

48
LESSON LEARN
  • The company use both Good to Great and Built to
    Last to understand why they great, so, they can
    keep doing the right thing. For example, if you
    feel you right or failure, so better is to be
    successful without being resolutely clear about
    why are successful.( Robert Burgelmen)- Prof.
    from Stanford Business School.
  • To create and find the value from Good to Great
    and will commit to applying what we learn to
    whatever we do for our company, social sector
    work and your own life.
  • The Good to Great performance pattern must be
    a company shift, not an industry event. In other
    word. The company must demonstrate the pattern
    not only relative to the market, but also
    relative to its industry.

49
  • At the transition point, the company must have
    been established, ongoing company, not a startup.
  • This was defined as having operations for at
    least twenty five year prior to the transition
    point.
  • Additionally, it had to have been publicly
    traded with stock return data available at least
    ten years prior to the transition point.
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