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Transcript of Good to Great
A Book Discussion
I am developing this as a possible presentation at the MIT Sloan Alumni Club of Boston. While it is not complete it is comprehensive enough to demonstrate my presentation style.
Lindsey Anderson
Selection Process
1,435 CompaniesSelected from the Fortune 500
1965 1970 1975 1980 1985 1990 1995
126 CompaniesSelected into full CRSP data
pattern analysis
19 CompaniesSelected into industry analysis
11 CompaniesGood toGreat
1
2
3
4
Good to Great Companies
Company T Year+15 Beat the MarketAbbot 1974-1989 3.98Curcuit City 1982-1997 18.5Fannie Mae 1984-1999 7.56Gillette 1980-1995 7.39Kimberly-Clark 1972-1987 3.42Kroger 1973-1988 4.17Nucor 1975-1990 5.16Phillip Morris 1964-1979 7.06Pitney Bowes 1973-1988 7.16Walgreens 1975-1990 7.34Wells Fargo 1983-1998 3.99
Direct Comparisons
Good to Great Direct ComparisonsAbbot Upjoin
Curcuit City SiloFannie Mae Great Western
Gillette Warner-LambertKimberly-Clark Scott Paper
Kroger A&PNucor Bethleham Steel
Phillip Morris R.J. ReynoldsPitney Bowes Addressograph
Walgreens EckardWells Fargo Bank of America
Unsustained Comparisons
BurroughsChryslerHarrisHasbroRubbermaidTeledyne
Focus of Research
What'sinside the
Black Box?Good Results
Great Results!
Overview
Level 5 Leader
Level 5 Leadership
Level 5 Executive
Effective Leader
Competent Manager
Level 5
Level 3
Level 4
Level 2
Level 1
Organizes people and resources toward the effectiveand efficient pursuit of predetermined objectives.
Contributing Team Member
Highly Capable IndividualMakes productive contributions through talent,knowledge, skills, and good work habits.
Contributes individual capabilities to the achievements of groupobjectives and works effectively with others in a group setting.
Catalyzes commitment to and pursuit of a clear and compellingvision, stimulating higher performance standards.
Builds enduing greatness through a paradoxicalblend of personal humility and professional will.
Level 5Leadership
Humility + Will
Level 5Leadership
Level 5 Leaders
Set up successors for success In over 75% of Unsustained Comparison
Companies executives set up their successors for failure or picked a weak successor
Insiders: 10 out of 11 Good to Great CEOs came from within the company, 3 from family inheritance High profile, shake-things-up outsiders
negatively correlated with Good to Great
Level 5Leadership
Is Level 5 Learnable?
2 Kinds of people: those who have the seed and those who don’t
Seed may develop under the right circumstances—self reflection, conscious personal development, a mentor, a great teacher, loving parents, level 5 boss, personal crisis
Level 5Leadership
Why aren’t there more level 5 leaders? There are plenty of
Level 5 leaders, but Board of Directors have a tendency to select dazzling, celebrity leaders rather than Level 5
Level 5Leadership
Symbiotic Relationship
Level 5 traits enable you to implement the other findings, while practicing the other traits helps you become a Level 5 leader
We’ve talked about what Level 5 leaders are, the rest of the talk will be on what they do
Level 5Leadership
First Who…Then What
Who or What’s on First
First Who…Then What
Advantages of a Strong Executive Team
Continuity and Longevity Agility Through debate and passion come
up with the best vision of the company—many heads better than one Debate then Unify
First Who…Then What
The Right People
People aren’t your most important asset, the right people are
Self motivated—don’t need to be tightly managed or fired up
Will do the right things and deliver the best results regardless of the incentive system Negative correlation: Good to Great
executives got slightly less compensation than their mediocre counterparts First Who…
Then What
Rigor
Tremendous rigor needed in people decisions to take a company from good to great
Greater weight on character attributes than on a specific educational background, practical skills, work experience
First Who…Then What
Rigorous, not Ruthless
Best people don’t need to worry about their jobs and can concentrate on their work 6 out of 11 Good to Great had no
layoffs and 4 just had 1 Comparison companies used layoffs 5
times more frequently than Good to Great companies
Lead a Great LifeFirst Who…Then What
How to be Rigorous
When in doubt, don’t hire—keep looking
Act when you know you need to make a change Unfair to everyone to let the wrong
people hang around Off the Bus or move to another seat?
First Who…Then What
Focus on Opportunities
Put your best people on your biggest opportunities, not your biggest problems
Managing your problems can only make you good, building your opportunities can make you great
When you decide to sell off your problems don’t sell of your best people
First Who…Then What
Confront the Brutal Facts
Don‘t De-Motivate
Expending energy on motivating people is largely a waste of time
The key is not to de-motivate people Nothing more demoralizing than
ignoring the brutal facts of reality
Confront theBrutal Facts
Don‘t De-Motivate
“There is no worse mistake in Public Leadership than to hold out false hopes soon to be swept way” Winston S. Churchill
Confront theBrutal Facts
Creating a culture where the truth can be heard Lead with Questions not Answers
Understanding and not manipulation or put downs Engage in dialog and debate—not coercion
Search for the best answers Conduct Autopsies without Blame
“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
Build a red flag mechanisms that turn information into information that can’t be ignored
Confront theBrutal Facts
Level 5 Leadership
The strength of a leader’s personality doesn’t deter people from bringing him or her the brutal facts
Leadership isn’t just vision, it’s getting people to confront the brutal facts and act on the implications
Confront theBrutal Facts
Stockdale Paradox
Retain faith that you will prevail in the end, regardless of the difficulty
Confront the most brutal facts of your current reality, whatever they may be
AND at the same time
Hardiness
By hitting the realities of their situation head-on Good-to-Great emerged from adversity even stronger
Confront theBrutal Facts
Hedgehog Concept
UnconsciousNatural Selection Relativity
Hedgehog Concept
Simply a complex world into a single organizing idea Essence of profound insight is simplicity E=MC2
Good to Great took a simple concept and implemented it with fanatical consistency
The Three Circles
What are you deeplyPassionate About
Whatyou canbe the Bestin the Worldat
Whatdrives yourEconomic
Engine
HedgehogConcept
Being the Best Not a goal to be the best Not a strategy to be the best Not an intention to be the best Not a plan to be the best Understanding of what you can be the best at Just because you have been doing something for years
your core business does not necessaryily mean you can be the best at it
Curse of competency “Just because your good at it--just because we’re making money and generating growth--doesn’t necessaryly mean we can be the best at it
Doing only what your good at will only make you good; focusing only what you can do better than any other oranization is the only path to greatness
A Culture of Discipline
TechnologyAccelerators
Culture ofDiscipline
HedgehogConcept
Confront theBrutal Facts
First Who…Then What
Level 5Leadership
Disciplined People Disciplined Thought Disciplined Action
Matrix of Creative Discipline
HeirarchicalOrganization
GreatOrganization
BureaucraticOrganization
Start-upOrganization
High
High
Low
Low Ethic ofEntrepreneurship
Culture ofDiscipline
Culture ofDiscipline
DisappointingResults
Reaction, withoutUnderstanding
New Direction,Program, Leader,
Event, Fad, orAcquisition
No Buildup; NoAccumulatedMomentem