Good to Great
First Who… Then What
TEAM 3
Ann Marie Nanny
James Everett
Brittany Fowlkes
Kara Vickers
Andrew Rich
Rick Henson
Riley Drummond
KEY POINT
• Not JUST getting the right people on the
team, but making sure that “who”
questions come before “what” decisions
• 1st “WHO?”
-personnel
• 2nd “WHAT”?
-vision, strategy, structure, tactics, destination
-”I don’t know where we should take this
company, but I do know that if I start with the right
people, ask them the right questions, and engage
them in vigorous debate, we will find a way to make
this company great.”
-Dick Cooley CEO, Wells Fargo Bank
-Instead of planning for unknown, ‘injecting an
endless stream of talent’ helped WF adapt to
changes.
• Choosing “who” before “what” allows you
to change “what” easier
• Bus example: If you choose your personnel
based on your strategy
(destination) and your
strategy (destination)
changes….your S.O.L.
Following the Genius
• The primary driving force of the company’s
success is the genius with its many followers.
– This is a great asset, as long as the genius stays
with the company and shares their strategies and
visions.
– Many geniuses rarely build great management
teams, simply because they don’t need one.
• Some just need an army of good workers to implement
their great ideas.
Losing a Genius
• When a genius leaves a company, it leaves workers
lost. This is because the strategies lay inside the
genius’s head.
– Even worse, the predecessor may try to mimic the genius
(while not being genius) and be very unsuccessful.
• Ex: Jack Eckerd, owner of Eckerd Corporation, was a genius on
“What” to do, but lacked in the ability to assemble the right
executive team. Eckerd’s revenues equaled Walgreens’ at the
companies peak, but when he left to become a senator, the
company began a long decline. Eventually being acquired by
J.C. Penney.
– The lack of developing a strong executive team, contributed to
the demise of Converse going bankrupt and being acquired by
Nike.
Selecting a Successor
• Finding and teaching the right successor is an
executives most important decision.
– This ensures the maintaining of a long lasting, successful
company.
• Ex: While Eckerd was a genius for picking the right
stores, Cork Walgreen had a genius for picking the right
people to hire and how to place them. Now Walgreen
has selected a superstar successor, who may prove to
be better than himself.
• Another genius whom left his fortune 500 (293)
company without a thought given to succession, is a
man named Henry Singleton of Teledyne.
“GENIUS WITH A THOUSAND HELPERS”
MODEL
Level 5+
A “Genius With a
Management Team Thousand Helpers”
(Good to Great Companies)
(Comparison Companies)
Level 5 Leader
Level 4 Leader
First Who
First What
Get the right People
Set a Vision
Then What
Then Who
Best path to Greatness
Vision happen
Enlist “Helpers” to make the
It’s Who You Pay, Now How You Pay Them
• There is no systematic pattern linking exec. compensation to
the process of going from good to great.
-Examined compensation data from proxy statements & performed 112
separate analyses looking for patterns & correlations for the top 5 officers
(cash vs. stock, long-term vs. short-term incentives, salary vs. bonus, and
so on)
-Relative to comparison companies, there were no systematic differences
found on the use of stock (or not), high salaries (or not), bonus incentives
(or not), or long-term compensation (or not).
-Only thing that was found was that good-to-great executives received
slightly less total cash compensation 10 yrs. after the transition than their
counterparts at the still-mediocre comparison companies.
It’s Who You Pay, Not How You Pay Them
• Good-to-great companies understand a simple truth: the right
people will do the right things & deliver the best results they’re
capable of, regardless of the incentive system
-It’s not how you compensate your execs., it’s which execs. you have to
compensate in the first place
-this goes back to the manifestation of the “first who” principle
• This does not mean that compensation & incentives are not
important in good-to-great companies. They are important in these
companies for very different reasons than an average or just good
company.
-the purpose of the compensation system should not be to get the right
behaviors from the wrong people, but to get the right people on the bus in the
first place, and to keep them there.
It’s Who You Pay, Not How You Pay Them
• In a good-to-great transformation, people are not
your most important asset. The right people are.
-Good-to-great companies place greater weight on character attributes
than on specific educational background, practical skills, specialized
knowledge, or work experience.
-Not that these are unimportant, but they believe these traits are more
teachable , whereas dimensions like character, work ethic, basic
intelligence, dedication to fulfilling commitments, and values are more
ingrained.
– One good-to-great exec. said his best hiring decisions often came from people with no
industry or business experience. In one instance he hired a manager who’d been
captured twice during World War II & escaped both times. “ I thought that anyone who
could do that shouldn’t have trouble with business.”
Rigorous, Not Ruthless
• Ruthless: firing without thoughtful
consideration
• Rigorous: consistently applying exacting
standards at all times and at all levels,
especially upper management
• To be rigorous and not ruthless: the best
people need not worry about their positions
and can concentrate fully on their work
Wells Fargo
• Acquired Crocker Bank in 1986
– “integrated management”
– Concluded vast majority of Crocker managers would
be the wrong people of the bus.
– “Look this is not a merger of equals; it’s an
acquisition; we bought your branches and your
customers; we didn’t acquire you.”
• 1600 Crocker manager gone by day one, nearly all top
executives
• On the surface, this looks ruthless
– Evidence suggests otherwise…
During Bank Deregulation Era
• Hundreds of thousands of lost jobs
• Interesting note:
– First, Wells Fargo did fewer big layoffs than its
comparison company, Bank of America
– Second, upper management suffered more on a
percentage basis than lower-level workers in the
consolidation
– Rigor in a good-to-great company is focused on
those who hold the largest burden of
responsibility
Good-to-Great Companies
• Rarely used head-count lopping as a tactic
– Almost never used as primary strategy
• In comparison companies
– Layoffs used five times more frequently
• Endless restructuring and mindless hacking
were never part of the good-to-great model
How to Be Rigorous
• 3 Practical Disciplines
1) When in doubt, don’t hire - keep looking.
2) When you know you need to make a people
change, act.
3) Put your best people on your biggest
opportunities, not your biggest problems.
How to be Rigorous
1) When in doubt, don’t hire – keep looking.
– “Packard’s Law”: If your growth rate in revenues
consistently outpaces your growth rate in
people, you simply cannot build a great
company.
– Cooper (Silo) vs. Wurtzel (Circuit City)
•
•
Cooper’s first goal: growing as fast as possible.
Wurtzel’s first goal: building the best management
team in the inudstry
How to Be Rigorous
2) When you know you need to make a people
change, act.
– “The moment you feel the need to tightly manage an
employee, you have made a hiring mistake”.
• When you do not make a change
– Wasted time and energy
– Unfair to both people
• Must determine if the person is in the wrong
seat, before you decide they are on the wrong
bus entirely.
Practical Discipline # 3
• Put your biggest people on your biggest
opportunities, not your biggest problems.
– Ex: Phillip Morris and R.J. Reynolds changing business
approach to international markets.
• Strategy for developing international markets not “what”
but “who.”
• Therefore put his number one executive George Weissman,
off domestic business and in charge of international.
– He went from running 99% of company to less than 1%.
• Marlboro became best selling cigarette in the world three
years before it became number one in the United States.
Practical Discipline # 3
• The RJR versus Phillip Morris case illustrates a
common pattern.
– Good to great companies made a habit of putting
their best people on their best opportunities
instead of biggest problems.
• Managing your problems can only make you good,
whereas building your opportunities is the only way to
become great.
• If you create a place where the best people always have
a seat on the bus, they’re more likely to support
changes in direction.
Practical Discipline # 3
• When you sell off your problems do not sell of
your best people.
– Ex: When Kimberly-Clark sold the mills, Darwin
Smith made it clear. The company might be
getting rid of paper business, but would keep its
best people.
– It turned from a paper mills to Proctor and
Gamble.
• Kimberly-Clark could become great by selling off the
part of the company where he had spent most of his
working life.
Practical Discipline # 3
• We have noticed a Level 5 atmosphere at the top
executive level of every good-to-great company,
especially during transition years.
– This suggest team members had Level 5 potential-or at
least they were capable of operating in a manner
consistent with Level 5 leadership style.
• You need executives on one hand, who argue and
debate in pursuit of best answers, yet who will unify
behind a decision, regardless of parochial interests.
• In the Nike brand, teams work across footwear, apparel and equipment
product engines; their core consumer categories headed by their best
people.
First who, Great Companies, and a
Great Life
• Good to Great = Balance
– Great Company, Great Life
• Build your superior team
– Nike Bill Bowerman and Phil Knight
• Show love, respect for team and what you do
• Become friends, maintain that friendship over time
• Have fun
Key Takeaways
• “Get the right people on the bus”
• “Who” questions come before “What” decisions
– Easier adaptability to a changing world.
• 3 practical disciplines for being rigorous in people
decisions:
1) When in doubt, don’t hire – keep looking.
2) When you know you need to make a people change,
act.
3) Put your best people on your biggest opportunities,
not your biggest problems.