Good to Great Chapter 9 Christopher Cook Chelle Hillis Lindsey Young From To Christopher Cook Chelle Hillis Lindsey Young Phillip Flick

The Role of Built to Last Collins’ research team did not want to reference Built to Last. Some were afraid of fundamental discrepancies. “I’m afraid that if we start with BTL as the frame of reference, we’ll just go around in circles proving our own biases.” Jim Collins “start from scratch.”

Four Conclusions Built to Last companies followed good to great framework. Good to Great is a prequel to Built to Last. Discover your core values and purpose beyond just making money. A tremendous resonance exists between the two studies.

Sam Walton began with a single store in 1945 , didn’t open his second store until 7 years later. Built incrementally, turn by turn of the flywheel. Hedgehog concept of discount marts popped out as a natural evolutionary step in the mid 60’s. Breakthrough came in the 70’s.

First who, then what. Bill Hewlett, David Packard met in grad school, founded HP in 1937. Mission, “design, manufacture, and sell products in the electrical engineering field.” “The question of what to manufacture was postponed.” Hired lots of fabulous people after WWII from government labs, with nothing specific in mind for them to do. Level 5 leadership: Modesty Humility Vision Passion

Breakthrough Buildup

Hedgehog Concept Flywheel Level 5 leadership

Core Ideology: The Extra Dimension of Enduring Greatness Just as Chris stated earlier… when looking at Built to Last and Good to Great side by side the authors discovered that Good to Great was more or less a prequel to Built to Last. In order to go from a Great company to an enduring company the central core concept from Built to Last must be implemented into the business strategy which is: Discover your core values and purpose beyond just making money and combine this with the dynamic of preserve the core/ stimulate the progress. So first I’m going to touch on discovering your core values.

Core Values Key to enduring greatness. Distinguishes the company more than any of its products. Profit is not the fundamental goal! Not about what core values but that you have core values at all. Core values are the key to enduring greatness! So good to great tells you how to become great and using the principles from built to last we can now see how that great company will endure. The core values of a company are the things that should distinguish the company more than any of its products. This is similar to what we talked about in the beginning chapters of Strategy a View from the Top with Core Competencies. Core values are ultimately what makes your company different from the rest however this something has to be completely opposite from the product you are offering. So basically the backbone of your HOW your company is ran not necessarily WHAT your company sells. The key to grasping this concept is by understanding that profits should never be a core value to a company wishing to endure greatness. Some examples of core values could include customer service, quality, responsibility to the environment (which we are seeing a lot more of now with all of these companies who are “going green”) One interesting fact that the writers of good to great found was that there was no correlation as far as what core values were needed to form an enduring company but rather than these companies did indeed have core values at all. So even though these core values are considered essential to enduring greatness, it doesn’t seem to matter what specifically those core values are. Therefore many different great companies value many different things. 9

Hewlett & Packard The “HP Way.” Impacted the way companies are managed around the world. Extra dimension of the “core ideology.” We have trust and respect for individuals. We focus on a high level of achievement and contribution. We conduct our business with uncompromising integrity. We achieve our common objectives through teamwork. We encourage flexibility and innovation. This was one of the first companies of its time to implement such core values that were not based on the product they sold nor where they based on profits. This idea was radical and progressive when it was enacted in the 1950s however it is very common now and HP is therefore credited with impacting the way companies are managed around the world. Not only did HP lead the way in innovative management with there core values termed the “hp way” they also exemplified an extra dimension of the core ideology which is having a core purpose. Which is what we will talk about next.

Core Purpose Core Values + Core Purpose = “core ideology.” Why is it important we exist? Ex: Merck So just as a recap we have said that in order to go from merely a great company into an enduring great company one must implement the core ideology which is a framework laid out in Built to Last. So as you can see core value+core purpose=core ideology. The core purpose of any company should answer the question: Why is it important we exist? Enduring and great companies don’t exist just to deliver returns to shareholders (which just backs up what I spoke about earlier when I said that profits should not be the leading motivator of any organization.) Indeed profits for a great company will flow in and they are essential but again it is not the main reason that company exists. Merck is a pharmaceutical company who has consistently outperformed the market as a highly profitably company however profits are not their main concern but rather the people whom they serve. “we try to remember that medicine is for the patient….It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remember it, the larger they have been.” So here we can see that by having a core purpose…in the case of merck remembering that the medicines are for real people not profits…. You can make an ordinary company into a great and induring company.

Merck – Core Values Our business is preserving and improving human life. We also work to improve animal health. We are committed to the highest standards of ethics and integrity. We are dedicated to the highest level of scientific excellence and commit our research to improving human and animal health and the quality of life. We expect profits, but only from work that satisfies customer needs and benefits humanity. Our ability to excel depends on the integrity, knowledge, imagination, skill, diversity and teamwork of our employees. I wanted to show here Mercks core values just as a reference that again they are following their core purpose by implementing all of these areas as valuable to the company…none of which have anything to do with profits. I’m not gonna read these but it may be interesting to compare these with each of your companies to try and distinguish if they each are striving for the same core values along with a core purpose which the book Good to Great suggests is necessary for a company that wants to be endure being great.

Preserving Your Core Ideology Preserve core values and purpose while continuously keeping pace with the changing world. Preserve the core and stimulate progress. So not only do we now see that we must implement core values and a core purpose but it is also necessary to make sure that these two are consistently altered to adapt to the changing business strategies and operating practices of our changing world. Therefore the idea is that by holding your core ideology which consists again of your values and your purpose…. By keeping these constant and changing strategies and practices over time will lead to one enduring as a great company.

Core Value: People, Service, Profits. Core Purpose: Get the Packages! The culture of FedEx radiates this core value which is referred to as the PSP Philosophy which stands for people, service, profits. FedEx believes that by first focusing on their number one asset which is their employees that they will be able to create committed people focused on Serving which is next in the PSP philosophy and again by offering such great service they will then begin to see the profits roll in. Then and only then. On FedEx’s first day of delivery only two packages where shipped out at an estimated cost of over $500,000 and this is when the notion of just get the packages first came into play. Fred Smith believed that as long as they got the packages to the destination when they said they would the volume would eventually come in. Researching FedEx I have found so many countless stories of how FedEx has stayed true to this core purpose of getting the packages. I’ll share one that happened very early on in FedEx about a women who had not received her wedding dress and she was getting married the next day. The customer service rep tracked down the package, booked a plane, and personally flew just that one package to the customer so that she would have it on her wedding day. The estimated cost for this one delivery definitely far surpassed what the customer paid but the customer service rep was simply acting on the core purpose of Get The Packages. Shortly after that RCA started shipping numerous packages through FedEx after hearing about a personal delivery they had made to a CEO’s family members wedding. So by this example we can see that even though we may not directly focus on profits if a company has strong core values and a purpose the profits will follow.

Good BHAGS, Bad BHAGS, and other conceptual links “Good to Great provides the core ideas for getting a flywheel turning from buildup to breakthrough, while Built to Last outlines core ideas for keeping the flywheel acceleration long into the future and elevating a company to iconic stature.”

Four Key Ideas from Built to Last 1).Clock Building, Not Time Telling 2). Genius of AND 3). Core Ideology 4). Preserve the Core/Stimulate Progress

From Good to Great to Built to Last: Conceptual Links Level 5 Leadership 1). Clock Building, Not Time Telling: Build company that can tick along without them. 2). Genius of AND: Personal humility and professional will. 3).Core Ideology: ambitious for the company, purpose beyond their own success. 4).Preserve the Core/ Stimulate Progress: relentless in stimulating results and achievement.

Conceptual Links Continued: First Who…Then What 1). First who=clock building First what=time telling 2). Get the right people on the bus AND the wrong people off the bus. 3). Practicing “first who” means selecting people more on their fit with the core values and purpose than on skills and knowledge. 4). First who means promoting from within, which reinforces core values. (FedEx)

Conceptual Links Continued: Confront the Brutal Facts 1).Climate where truth is heard is clock building. 2).Confront brutal facts of your current reality AND retain unwavering faith you will prevail in the end. (Stockdale Paradox) 3).Clarifies values an organization truly holds as core vs. those it would like to hold as core. 4).Brutal facts clarify what must be done to stimulate progress.

Conceptual Links Continued: Hedgehog Concept 1). Council mechanism is clock building. 2). Deep understanding AND incredible simplicity. 3).What you are passionate about circle: overlaps with core values and purpose. 4).Good BHAGs flow from understanding; bad BHAGs flow from bravado. Great BHAGs sit right in the middle of the three circles.

Conceptual Links Continued: Culture of discipline 1). Operating through sheer force and personality as disciplinarian: time telling Building an enduring culture of discipline: clock building. 2).Freedom AND responsibility. 3). Ejects those who do not share the values and standards of the organization. 4). Give people more freedom to experiment and find their own best path to results.

Conceptual Links Continued: Technology Accelerators 1). Technology accelerators are a key part of the clock. 2). Shun technology fads AND pioneer the application of technology. 3). In a great company, technology is subservient to core values, not the other way around. 4). Right technology accelerates momentum in the flywheel, toward achievement of BHAGs.

Conceptual Links Continued: Flywheel, Not Doom Loop 1).Flywheel creates sustained building of momentum, does not depend on presence of charismatic visionary to motivate people. 2).Evolutionary, incremental process AND revolutionary, dramatic results. 3).Doom loop makes it impossible to instill core values and purpose. 4).Smooth consistency of the flywheel and building of momentum to point of breakthrough create the perfect conditions for instilling core values while stimulating change and process.

Why Greatness?

Should We Seek Greatness? Working harder when it counts. Finishing strong Mass Comm 2300 Returning to the Hedgehog concept. Cutting the fat and getting lean. Removing the activities that do not add value.

Should We Seek Greatness? Being passionate. Turning whatever you are doing into greatness. Learning to fuel motivation, not create motivation.

Takeaways Good to great concepts were precursor to built to last companies. Good to great framework facilitates longevity. Using “Core Ideology” to go from greatness into enduring greatness. Good to Great ideas lay the groundwork for the ultimate success of the Built To Last ideas. Finish Strong and being passionate in your work while fueling motivation of those around you.