Group 6 Brock Breedlove Christina Higgins Holt Martin Matt Lohr Jimmie Minchew Emily Applebaum Chris Nelson Shelby Bentley

Introduction  All Good-to-Great Companies find the path to greatness by first confronting the brutal facts of their reality.  A&P vs Kroger 1950s 1960s 1973 and beyond

Decisions  Good decisions  Kroger’s good decision  Being good at making right decisions

Pitney Bowes versus Addressograph

Squiggly Things  Confront the brutal facts  Confront problems  Pitney’s confrontation style “My job is to turn over rocks and look at the squiggly things,’ even if what you see can scare the hell out of you.” – Fred Purdue Pitney Bowes Executive

The Danger of Charisma  Roy Ash= failure  Winston Churchill= success  Managing charisma

Enron  Over charismatic leaders  Cult formation  Belief that fraud is “okay”

“Facts are better than dreams.” Vision is important, but the truth is essential Having the right people on board - Surround yourself with talent Creating a climate for success - “Being heard!”

First Step for the Truth  Destination “I don’t know” Alan Wurtzel and Circuit City  Lead with questions, not answers Gain understanding  Good to great transition

Attracting Talent Keeping Employees Involved Build on Ideas, Not a Vision

Nuclear Corporation of America  Nucor: A Good-to-Great Company In 30 years, went from being in complete shambles to being the 4 th largest steel manufacturer in the world.

Engage in dialogue and debate, not coercion  Got the right people on the bus and followed this strategy  Socratic Method: Key to Nucor’s success

Engage in dialogue and debate, not coercion  All good-to-great companies have an inclination for intense dialogue. ○ “loud debate” “heated discussions” “healthy conflict”

Conduct Autopsies, Without Blame  Philip Morris acquired Seven-Up Company, only to sell it after 8 years at a loss During interviews with executives, rought up the problem on their own and discussed it openly

Conduct Autopsies, Without Blame In his book, I’m a Lucky Guy, Joe Cullman dedicates five page analyzing the mistake ○ Doesn’t hold back the embarrassing truth Joe blames himself and took full responsibility for its failure, instead of pointing fingers ○ “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.”

Conduct Autopsies, Without Blame  When you conduct autopsies without blame, you go a long way toward creating a climate where the truth is heard  With the right people on the bus, you should never need to assign blame but need only to search for understanding and learning

-Something to immediately halt activity if it is creating failure. -Creates a climate where truth must be confronted -With information available constantly, companies must remain flexible with their plans

Using Red Flags- an experiment  Author gave students “red flags” to raise when he was teaching one semester.  Students could raise their red flag and the classroom would stop for them they wanted to voice their opinion, share an experience, disagree with the professor, make a suggestion, or whatever.

What happened?  One student used her red flag and said “Professor Collins, I think you are doing a particularly ineffective job of running class today. You are leading too much with your questions and stifling our independent thinking. Let us think for ourselves.”  Saved time in class and confronted Collins with brutal facts.

Graniterock & Short Pay  Bruce Woolpert from Graniterock company gave Collins the idea for red flag mechanisms.  Bruce instituted “short pay” which gave customers the power to decide how much to pay for services rendered by Graniterock.  Customers evaluated their satisfaction and paid accordingly.  Gave immediate feedback on how company performed “Short pay acts as an early warning system that forces us to adjust quickly, long before we cold lost that customer”

Power of Information  There is no evidence that good to great companies had better information, rather is was how they used the information available.  If you collect information that cannot be ignored a company can find truth and confront it head on.

Unwavering Faith Amid Brutal Facts  What good-to-great companies do when met with adversity:  Confront strong competition head on  Recognize the brutal facts that won’t disappear  Conscious of the necessary actions to rise to the top

Competitive Competition  Scott Paper v. P&G  Conceded to P&G  Content with falling into a “B” category company  Management gave up  Kimberly-Clark v. P&G  Viewed competition with P&G as an asset  Saw an opportunity to make the company stronger  Stimulated competitive juices of all employees  Never feared P&G, but respected them

The “Hardiness Factor”  Not only survive but prevail as a great company  Never consider failure, but manage risks  Use setbacks to restructure the company’s business model to create something much stronger and valuable

Ben & Jerry’s ice cream  Originally started out wanting to deliver bagels and newspapers to people’s homes  Eventually realized a switch to selling ice cream would be much more profitable  Pillsbury owned Haagen-Dazs, wanted to force competition out of industry by attempting to make Haagen-Dazs the only ice cream available for distribution  Ben & Jerry’s resisted, eventually sold company for $325 million to Unilever.

The Stockdale Paradox  Refers to Jim Stockdale Highest ranking officer during Vietnam war ○ POW for 8 years ○ Created set of code for POW’s to communicate while captive ○ 1 st man in the navy to be awarded the Medal of Honor His attitude reflected those of great companies ○ Maintain faith and deal with life as POW

The Stockdale Paradox  “Retain faith that you will prevail in the in end, regardless of difficulties”  “Confront the most brutal facts of your reality, whatever they might be” AND at the same time

What does this mean?  Its not the presence or absence of liberty, but how you deal with the inevitable difficulties of life EVERYONE is presented with troubling situations What can you make out of your situation?

How to be Great  Great leaders focus on the few things that would have the greatest impact  Great companies face adversity and competition just like every one else. The difference is great companies maintain unwavering faith in the endgame, and are committed to prevail despite the brutal facts

“Every good-to-great company faced diversity along the way to greatness…” Nucor – import competition Pitney Bowes – losing monopoly Wells Fargo – deregulation Abbott Labs – massive product recall Kroger – replace nearly 100 stores

What we’ve covered:  The idea that facts are better than dreams  A climate where the truth is heard  Engage in dialogue and debate, not coercion  Conduct autopsies, without blame  Build “red flag” mechanisms  Unwavering facts amid the brutal truth  The Stockdale Paradox