1. Team 2: Ty Parasiliti Victor Hemmati Brent Hare Lance Hollister Vincent Ukwu Josh Fernino Chris Kerschen

2.  From Good to Great – About Hedgehogs and Flywheels  The 4+2 Formula for Sustained Business Success ◦ Excelling at Four Primary Practices ◦ Embracing Two of Four Secondary Practices  Strategy and Performance: A Conceptual Framework ◦ Strategy, Purpose, and Leadership ◦ Strategy and Organizational Change ◦ The Balanced Scorecard ◦ Performance and Control  The Role of the Board

3.  Jim Collins conducted two cited studies of companies that were sustainable for superior performance.  The first study published was titled, “Built to Last.” This described what makes great companies great and how they stayed great over time.  The second, “Good to Great: Why Some Companies Make the Leap…and Others Don’t”, which asked the question: what can merely good companies do to become truly great?

4.  Collins defined “great” in terms of metrics, like financial statements that exceeded the market average and stayed that way for a period of time.  Level 5 Leadership  This is the top of the Level 5 Hierarchy that ranges from just competent supervision to strategic extreme decision making.  Level 5 Leader: A person with intense determination and profound humility that does not let ego and individual gain get in their way. He/She plans to be with the company for the long-haul as they try to climb the company’s ranks.

5.  Before creating a game plan for a company, the right people have to be in place. Willingness to Identify and Assess Defining Facts  Company as well as the larger business environment must meet market trends in what consumers desire, is constantly changing. The inability to do so results in failure. Hedgehog Metaphor  The way to go from good to great is not doing numerous things well, but instead, doing “one” thing better than anyone else in the world. 1. Determine what the company can and cannot be best at. 2. Determine what drives the company’s economic engine. 3. Determine what the company’s people or deeply passionate about.

6. Overarching organizational culture of discipline  Creating a organization with people that have an unrelenting determination.  Great companies are not dependant on technology  Apply few technologies to their Hedgehog Concept Flywheel and Doom Loop Flywheel: when companies make decisions and take actions that reinforce the company’s hedgehog competencies, which in return brings positive outcomes Doom Loop: is characterized by reactive decision making and over involvement in too many diverse areas of concentration, in the end this will bring negative outcomes Collins “core-values” to achieve long term sustainable success

7.  Studies found management practices that help a company produce superior results  Four primary management practices: ◦ Strategy, Execution, Culture, and Structure ◦ Plus mastery of two or more secondary practices (Ex. Talent, innovation) ◦ Must have strength in all six (or more) areas to excel

8.  Executives have tried TQM and other strategies in an effort to improve execution  No single alternative will bring a company success  The most consistently successful companies for the past 10 years have implemented these four strategies

9.  The chosen strategy must be clear and consistently communicated  Focus on growth

10.  Consistently exceed customer expectations  Increased productivity  Realistic goals

11.  Right Culture ◦ The right combination of high-performance and ethical behavior  Everyone responsible for success, not just upper-level management

12.  High-performance companies try to eliminate extra layers of management, an abundance of rules and regulations, and outdated formalities  They want their structures and processes simple for their employees, vendors and customers  Findings confirm the “how” is more important than the “what” of organizational structure

13.  The four secondary practices are talent, innovation, leadership, and mergers and partnerships  Winning companies had superior performance in two of the four practices (it did not matter which two)  There was no difference if the company excelled in all four or just two, going beyond “4+2” was not rewarded

14.  Hold on to talented employees and find more  Best test of a company’s talent base is ability to replace from within  In-house talent is often cheaper, more reliable, and promotes loyalty

15.  Make Industry-transforming innovations  Companies apply new technologies to their business processes  Yield huge savings and sometimes have the power to transform an industry

16.  Find leaders who are committed to the business and its people  The right CEO can raise performance significantly  They must build relationships with people at all levels and inspire the rest of the management team  Must spot opportunities and problems early  Seize opportunities before their competitors do

17.  Seek growth through mergers and partnerships  The second most popular avenue of growth  Winners created value in most deals they struck  Winning companies often drew lessons from experience enabling them to more consistently choose the right partners and integrate quickly  Underperformers destroyed shareholder value

18.  Within today’s complex business environments, no single person or small group can acquire all that is necessary to make a company successful.  Corporate success depends on the ability of every manager to not just meet their own divisional responsibilities, but how they can influence the company as a whole.  Organizational performance is the result of thousands of decisions made every day by individuals at all levels of organization

19.  When strategy is not effective, focus should be shaping the organizational environment to encourage productive decision making  First step to realigning the organizational environment is to understand why and where suboptimal decisions are made  Success requires the right people, armed with the right information and motivated by the right incentives

20.  In developing the right organizational model, Companies must focus on three critical dimensions 1. People 2. Knowledge 3. Incentives

21. Strategy Purpose Leadership Structure Systems Processes Culture Performance/Control People

22.  Strategy-structure-systems paradigm dominated thinking about the role of corporate leaders for many years.  This doctrine remained dominant for most of the twentieth century and helped companies cope with high growth, integrate operations, and manage diversified business portfolios.  Corporate leaders began to articulate broader, long- term strategic intent to deal with more intense global competition.  Successful strategy development require obtaining commitment, focus, and control at all levels of organization.

23.  There are five organizational variables that are key to crating effective organizational change. ◦ Structure ◦ Systems ◦ Process ◦ People ◦ Culture They are all interrelated, so a new strategy often requires change in variables.

24.  The issue of structure is not just one of deciding whether to centralize or decentralize decision making.  The goal should be to create an organizational environment that gathers resources effectively and is naturally self- correcting as strategic changes need to be made.

25.  Corporate structures typically reflect on of five dominant approaches to organization: ◦ Functional organizational structures ◦ Geographically based structures ◦ Decentralized (divisional) structures ◦ Strategic business units ◦ Matrix structures

26.  Having the right systems and process enhances organizational effectiveness and facilitates coping with change.  Support systems, such as company’s planning, budgeting, accounting, information, and reward and incentive systems, can be critical to successful strategy implementation.

27.  A process is a systematic way of doing things.  Processes can be formal or informal.  They define organizational roles and relationships, and they can facilitate or obstruct change.

28.  Attracting, motivating, and retaining the right people have become important strategic objectives.  Many companies have come to realize that developing tomorrow’s skills, individually and collectively, is key to strategic flexibility.

29.  Performance is linked to the strength of a company’s corporate culture.  A company’s corporate culture is a shared system of values, assumptions, and beliefs among a firm’s employees that provides guidance on how to think, perceive, and act.

30.  A set of measures designed to provide strategists with a quick, yet comprehensive, view of the business  Traditionally, performance has focused on annual budget and operating plan; this promotes short-term, tactical behavior  These must be replaced by a set of measurements that promote performance- and strategy-focused behavior

31.  Asks managers to view the business from four different perspectives: customer, company capability, innovation and learning, and financial  Provides answers to 4 questions 1.How do customers see us? 2.At what must we excel? 3.Can we continue to improve and create value? 4.How do we look to our shareholders?

32. 1. Customer Concerns ◦ Product quality, on-time delivery, product performance, service, and cost ◦ Each factor must be measured based on customers’ perspectives and expectations 2. Company Capability ◦ Must achieve operation objectives such as cycle time, product quality, productivity, and cost ◦ This area focuses on inter business processes that enable the organization to meet the customers’ needs

33. 3. Innovation and Learning ◦ Deals with ability to create new products, provide value to customers, and improve operating efficiencies ◦ These abilities allow for entering into new markets increasing revenue, margins, and shareholder value 4. Financials ◦ Signal whether strategy is achieving objectives that relate to profitability, growth, and shareholder value ◦ Measures cash flow, sales growth, operating income, market share, ROA, ROI, ROE, and stock price

34.  Balanced Scorecard encompasses four management processes: 1.Translating a vision 2.Communicating goals and linking rewards to performance 3.Improving business planning 4.Gathering feedback and learning

35.  Most performance evaluation is focused on outcome control, the attainment of specific targets in specific goals  Outcome control is achieved by altering incentive structures for managers and executives  Sometimes outcome control is not enough when we need to change the existing corporate culture, such as M&A’s  In these instances behavior control is needed, where the company directly monitors behavior rather than providing incentives

36. 1. Define its role, agenda, and information needs. 2. Ensure that management not only performs, but performs with integrity. 3. Set expectations about the tone and culture of the company. 4. Formulate corporate strategy with management 5. Ensure that the corporate culture, the agreed strategy, management incentive compensation, and the company’s approach to audit and accounting, internal controls, and disclosure are consistent and aligned. 6. Help management understand the expectations of shareholders and regulators.

37.  From Good to Great – About Hedgehogs and Flywheels  The 4+2 Formula for Sustained Business Success ◦ Excelling at Four Primary Practices ◦ Embracing Two of Four Secondary Practices  Strategy and Performance: A Conceptual Framework ◦ Strategy, Purpose, and Leadership ◦ Strategy and Organizational Change ◦ The Balanced Scorecard ◦ Performance and Control  The Role of the Board