1. Good to Great Issued by: Eric Way 2006-12, Slide 1 Good to Great Why some companies make the leap… and others don’t.

2. Good to Great Issued by: Eric Way 2006-12, Slide 2 Author: Jim Collins Professor at Stanford Graduate School of Business Founded his Management Laboratory in Boulder, Colorado Quantitative and Qualitative Scientific Study of Business

3. Good to Great Issued by: Eric Way 2006-12, Slide 3 Company Selection: Only 11 companies found (Fortune 500) Average performing company compared to peers (15yrs) Transition Beat market by >3 times for at least 15 years Analysis based on Published Financial Data Press Articles/ Interviews Direct interview with Managers Method

4. Good to Great Issued by: Eric Way 2006-12, Slide 4 Method

5. Good to Great Issued by: Eric Way 2006-12, Slide 5 Good to Great Companies AbbotMedical Supplies4x Circuit CityAppliances/ Electronics Retailer18x Fanny MaeReal Estate Finance8x GilletteShaving Products7x Kimberly ClarkConsumer paper products3x KrogerSupermarkets4x Nucor Mini Steel Mills5x Philip MorrisTobacco7x Pitney BowesPostal Machines7x WalgreensDrugstores7x Well FargoBank 4x Compared to Market average

6. Good to Great Issued by: Eric Way 2006-12, Slide 6 Comparison Companies Direct Comparison: Upjohn Silo Great Western Warner-Lambert Scott Paper A&P Bethlehem Steel R.J. Reynolds Addressograph Eckerd Bank of America Unsustained Results: Burroughs Chrysler Harris Hasbro Rubbermaid Teledyne

7. Good to Great Issued by: Eric Way 2006-12, Slide 7 Findings 1. Level 5 Leadership: Modest; Determined 2. The Right People First, in the Right Job 3. Stockdale Paradox: Reality + Hope 4. Hedgehog Principle: Do one thing better than anyone else 5. Flywheel: Continually build momentum 6. Culture of Discipline, not restraining bureaucracy 7. Vision: Core Ideology + Envisioned Future

8. Good to Great Issued by: Eric Way 2006-12, Slide 8 1. Level 5 Leadership 100% of Companies had managers with the same personality type “We were lucky.” “I had the chance to work with an exceptional group of people.” “It just sort of happened.” Often people who had a life changing experience: cancer/ religious/ etc. Modest and Willful. Shy and Fearless. Self-Effacing = weak Ambitious for the cause, not for self Successful successor = “Après moi, le déluge”

9. Good to Great Issued by: Eric Way 2006-12, Slide 9 “Great” Leaders Darwin Smith Colman Mockler Joseph F Cullman Ken Iverson Charles “Cork” Walgreen George Cain Alan Wurtzel – Kimberly Clark – Gillette – Ph Morris – Nucor – Walgreen – Abbott Labs – Circuit City (beat Jack Welsh x6 ‘81-’00)

10. Good to Great Issued by: Eric Way 2006-12, Slide 10 Level 5 Leadership Charisma can be a hindrance People fear the boss more than they fear reality (Wasa Ship) Dialogue and Debate among management is good Can you learn to be a Level 5? …. Maybe. Advice: Do what they “do” Why isn't level 4 the best for long term?

11. Good to Great Issued by: Eric Way 2006-12, Slide 11 Leadership in Non-Profits CEO of Girlscouts: Frances Hesselbein "What's it like being on top?” "I'm here in the center"

12. Good to Great Issued by: Eric Way 2006-12, Slide 12 Leadership in Non-Profits "You always have power, …If you just know where to find it." Executive vs. Legislative Power Level 5 leadership is then even more essential to the Social Sectors Humble Determined

13. Good to Great Issued by: Eric Way 2006-12, Slide 13 2. The Right People First The people were brought on board before deciding on a Strategy Human issues first. Get the best fit for the person and the job, as soon as possible and everyone is happier The company or group had a strong identity, and those who didn't identify weren't happy and looked elsewhere Companies hired qualified people even w/out a job opening: a real "human resource"

14. Good to Great Issued by: Eric Way 2006-12, Slide 14 Motivation Level 5 CEOs on average were paid slightly LESS than their peers People had the impression they were part of “something big,” “something great” People are motivated by participating in a successful undertaking Manage the system, not the people Focus on avoiding what “demotivates” people, not how to motivate them These companies were not a "neutral" place to work. You love it or you hate it

15. Good to Great Issued by: Eric Way 2006-12, Slide 15 Non-Profits Can't fire and hire. BUT… You can still be selective! Teach for America: Wendy Kopp, Princeton Class of 1988 1st yr: 500 grads from the Ivy League $26,000 2005: 97,000 applicants for 14,100 spots $40 MUSD Annual Support

16. Good to Great Issued by: Eric Way 2006-12, Slide 16 Non-Profits Craving for Meaning Money is a commodity, Talent is not. Time and talent can compensate for lack of money, But Money can never compensate for the lack of the Right People.

17. Good to Great Issued by: Eric Way 2006-12, Slide 17 3. Stockdale Paradox: Reality + Faith James B. Stockdale P.O.W. in Vietnam “The optimists were the first to go.” Courage to stare reality in the face Unwavering Faith that obstacles will be overcome Need a culture where the Truth can be Heard No “Emperor's New Clothes” Autopsies w/out Blame

18. Good to Great Issued by: Eric Way 2006-12, Slide 18 ex:Abbot: Pharmaceuticals Nucor: Instruments for Nuclear Reactors Kimberly Clark: Bulk Paper 4. Hedgehog Principle: Be the Best at One Thing A hedgehog can do basically one thing: dig a hole. But he does it very well. Not a fox. Decided what their organization COULD do better than anyone (not necessarily what they do best internally, today): GE: ? GE: General Managers Cost Saving Medical Supplies Mini-Steelmills Consumer Paper Products

19. Good to Great Issued by: Eric Way 2006-12, Slide 19 Hedgehog Principle: Three Circles *includes core values and purpose

20. Good to Great Issued by: Eric Way 2006-12, Slide 20 Hedgehog Principle: Be the Best at One thing Find your passion! Stop doing the wrong things: “Sell the mills” Determine your “Profit per X”, the Denominator. BHAG: Big Hairy Audacious Goal = The Mountain to Climb

21. Good to Great Issued by: Eric Way 2006-12, Slide 21 5. Flywheel: Continually Build Momentum Continual small pushes in the same direction No big “programs,” no “save the world” projects or campaigns Internally people can’t pinpoint a transition date/ program/ decision

22. Good to Great Issued by: Eric Way 2006-12, Slide 22 Flywheel: Keep pushing in the same direction Feet planted on the Ground Arms and Body Pushing Forward

23. Good to Great Issued by: Eric Way 2006-12, Slide 23 Flywheel: Social Sectors - Building the Brand Virtuous Circle of Credibility Success breeds Support and Commitment Time telling vs. Clock Building Tangible results and emotional "Share of Heart" Supporters believe in your Mission, …and in your Ability to carry it out.

24. Good to Great Issued by: Eric Way 2006-12, Slide 24 6. Culture of Discipline Not a Police State or Procedure-ocracy People don’t have jobs, They have responsibilities Avoid unnecessary bureaucracy that hinders self-motivating/ self-disciplined individuals Opportunistic flexibility Freedom within a Framework Entrepreneur

25. Good to Great Issued by: Eric Way 2006-12, Slide 25 7. Vision: Core Ideology + Envisioned Future People were “Fanatical” about Company Purpose and Vision is Bigger than any one Person/ Leader Maintains Focus for the Hedgehog Concept Maintains Endurance for pushing the Flywheel Outcome is the BHAG: The Mountain to Climb = Challenging Long Term Goal

26. Good to Great Issued by: Eric Way 2006-12, Slide 26 “Core Purpose” Examples Walt DisneyTo make people happy Boeing To push the leading edge of Aviation, taking on huge challenges and doing what others cannot do Sony To experience the sheer joy of advancing and applying technology for the benefit of the public Merck To preserve and improve human life Nike To experience the emotion of competition, winning, and crushing competitors Teaching Co To ignite in all people the passion for learning Fannie Mae To strengthen the social fabric by democratizing home ownership Marriott To make people away from home feel they are among friends and really wanted Mary Kay To give unlimited opportunity to women WL Gore To have fun doing innovative things that make money Patagonia To be a role model and tool for social change Wal-Mart To give ordinary folk the chance to buy the same things as rich people Even a 10yr old can “get it!”

27. Good to Great Issued by: Eric Way 2006-12, Slide 27 Michelin Contribuer de manière durable au progrès de la mobilité des personnes et des biens en facilitant toujours plus la liberté, la sécurité, l’efficacité et le plaisir de se déplacer. To make a sustainable contribution to progress in the mobility of people and goods by constantly enhancing freedom of movement, safety, efficiency and pleasure when on the move.

28. Good to Great Issued by: Eric Way 2006-12, Slide 28 To create a better everyday life for the many. Offer a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.

29. Good to Great Issued by: Eric Way 2006-12, Slide 29 What? No mention of Profits? Passion? If you go to a Famous French Restaurant and see a sign that says: “We wash our plates after every use.” Would this sign reassure you? Or scare you? "For Great Companies, profitability is a necessary condition for existence and a means to an end, but not the end in itself. Profit is like oxygen, food, water and blood for the body, they are not the point of life but without them, there is no life."

30. Good to Great Issued by: Eric Way 2006-12, Slide 30 Example of Vision Framework:

31. Good to Great Issued by: Eric Way 2006-12, Slide 31 How do we bring out our Passion? Are we sitting on untapped resources? How do we formulate our purpose and values to better pull out that Passion among Club Members?

32. Good to Great Issued by: Eric Way 2006-12, Slide 32 Level 5 Management: very compatible with FAWCO leadership historically Flywheel: For 75 years FAWCO has pushed in the same direction Passion is about “Pull” not “Push.” A more sexy Statement of Purpose would perhaps evoke greater Passion Passion has to touch the child/ soul in you – and that’s a GOOD thing, don’t be ashamed of it. Conclusions/ Further Investigations

33. Good to Great Issued by: Eric Way 2006-12, Slide 33 4 Phases to Greatness Disciplined People: Level 5 management "People First" Disciplined Thought: Confront the Brutal Facts, with Hope The Hedgehog Concept Disciplined Action: Culture of Discipline Flywheel Building Greatness to Last: Clock Building vs. Time telling Preserve the Core and Stimulate Progress Breakthrough Build-Up

34. Good to Great Issued by: Eric Way 2006-12, Slide 34 In our Organizations Define our circles Hedgehog Concept: - Core Values & Purpose - Passion - Best in the World - Profit Lever/ Resource Engine - Then BHAG (Big Hairy Audacious Goal) with Vivid Description of the Future

35. Good to Great Issued by: Eric Way 2006-12, Slide 35 More Info & Workshop Guidelines www.jimcollins.com