“The important thing is this: to be
able at any moment to sacrifice
what we are for what we could
become.” --Charles DuBois
The difficult task of leadership
is to make sure the
organization raises its ability to
handle growth as rapidly as it
does its revenue line.
(The Breakthrough Company, pg 14)
small entrepreneurial firm
to
Entrepreneurial Enterprise
The Ladder
The Ladder Survey
Advantages of Sovereign Company
Better able to recruit and retain:
 People want to be part of something bigger than one person.
 More highly committed to sovereign company vision than “go
back to work and leave the driving to us” senior management.
 Can adapt and make decisions more quickly since people
throughout the organization have an understanding of the vision
and how it plans to get there.
 Like George Washington who didn’t accept a crown,
breakthrough leaders are motivated by a sense of confidence in
the potential of people to accomplish great things.
Upping the Ante
Progress always involves risk;
you can’t steal second base and
keep your foot on first base.
--Frederick Wilcox
Upping the Ante
 Understanding when to up the.
 Bet big in order to grow big.
 88% reported their success was mainly due to
“exceptional execution of an ordinary idea.”
 Willingness to place bigger and bigger bets actually
decreased its risk, making the firm’s long-term
prospects even safer.
 Only companies that continue to adapt through
progressively bigger bets will reach breakthrough.
Peeling the Onion
 Thinking deeply about where the market is going.
 Does this bet help us change the field of play in our
market?
 Refuse to see other companies as bit players.
 1+1+1=6 is the power of the exponential bet relation to
other bets.
Placing Big Bets
Company Character
People seem not to see that
their opinion of the world is also
a confession of their character.
--Ralph Waldo Emerson
Company Character
 Bedrock foundation: Lining up what people say with
what people do.
 Success . . . Focus first on the way their company
treated its people and its customers.
 The leaders of breakthrough companies put enormous
faith—and power—in the hands of their employees.
Company Character
 We were struck by how carefully and precisely the
companies had defined their business models so that
they could build jobs in which people know exactly
what was expected of them and also had the tools to
achieve high levels of performance.
 He found that people tended to be most creative,
effective, and connected to their work when they were
challenged without being defeated. People flourish,
he found, when they are given, “clear goals,
unambiguous feedback, and a sense of control.”
Company Character Leadership
 What one characteristic did all of the breakthrough
leaders we studied share? Charisma . . .
 But it turns out that the word “charisma” doesn’t mean
what many people think it does . . .
 Charismatic leaders inspire with their character.
 For these companies character is sacred.
Company Character
Strategic Miser:
 They scrimp on the frivolities so they can spend real
money where it counts.
Navigating the Business Bermuda Triangle
We cannot direct the wind,
but we can adjust the sails.
--Bertha Calloway
Bermuda Triangle
 Often have to spend some money.
 Avoid premature diversification – companies often
move on to the next product before fully mastering the
ones they’ve already got.
 When it is time to diversify, let the customers be your
guide.
 Nothing kills speed, hurts customer satisfaction, and
erodes a cost advantage faster than unnecessary layers
of management.
Erecting Scaffolding
Human beings, who are almost
unique in having the ability to
learn from the experience of others,
are also remarkable for their
apparent disinclination do so.
--Douglas Adams
Erecting Scaffolding
 “Our biggest risk is that we stop listening to our
customers and start reacting to our competitors
instead.” SAS CIO
 Everyone . . . should have people to turn to for support
when they are faced with a challenge.
 Too many growing companies continually try to
reinvent the wheel instead of seeking out the very best
wheel-makers.
Erecting Scaffolding
 Net Promoter Score: Ask customers, on a scale of one
to ten, how willing they would be to recommend a
company’s product to their friends: 9 & 10 Promoters,
7 & 8 Passives, 1-6 Detractors. Zero in on the
detractors and find out how to turn them into
promoters.
 “There are only two requirements for growth,” Cook
has said. “Happy customers and profitable customers.
NPS was exactly what we needed to get back in touch
with our customers and make the kinds of changes
they wanted us to make.”
Erecting Scaffolding
 Peer Networks: The research shows that one of the main reasons
people participate in peer groups is to hold themselves accountable for
improving the performance of their firms.
 Boards and Advisory Boards that challenge management thinking
 Serving on Boards – access and learn from fellow Board members
 Professional Associations & outside mentors
 Investors
 Customers and Vendors: “…new technologies and ideas they provide us
for our products are critical to our success.”
 Colleges and Universities
Insultants
It is difficult to lay aside a
confirmed passion.
--Caius Valerius Catullus
Insultants
Not only are they open to people questioning the
fundamental assumptions of the business, breakthrough
companies encourage people to buck the system.
 Consultants from the inside.
 Someone willing to ask the tough questions that cause
a company to think critically about its fundamental
assumptions.
Why Companies Need Insultants
1.
Ideas the CEO initially doesn’t like are regularly
implemented at our company: True or False (9060)
2. Our CEO encourages thinking that challenges our
current beliefs: True or False (77-47)
Insultants
 Insultants are masters at getting their ideas heard, and
they never resort to insulting someone. They work
quietly within existing systems to get the organization
to question its assumptions and change its thinking.
 The power of insultants is directly proportional to the
free flow of information in a company.
Insultants: Strategy Development
 Expand beyond the CEO and senior management
team.
 Created strategy faster and with much higher levels of
commitment and follow through.
Three Leverage Points Leadership
There are three places a leader
can have the greatest impact
on an organization: strategy,
people, and execution.
Reinventing Strategy
 The purpose of strategy is to help the members of an
organization learn to triage issues, to sort out what is
truly essential to the firm’s success.
 Executives kid themselves that they are better at
strategy than their troops, but fail to recognize that
they have one key advantage—they are drinking from a
very large data pipe. Give people on the frontlines
access to key strategic information and train them how
to use it, and they’ll surprise you every time.
Compressing Strategy Cycle Time
 The faster a company can accumulate and prioritize
insights, convert the most important insights into
decisions, and translate those into actions, the more
readily it will outpace competitors.
Strategy Learning Cycle
1.
What have been our most important strategic
accomplishments during the past ninety days?
2. What are the most important ways we fell short of
our strategic potential during the past ninety days?
3. What are the most important things we have learned
about our strategy during the past ninety days?
Getting the Most Out of People
 When people are enrolled at all levels of the
organization in crafting a strategy, those people
invested more of themselves in making sure the
company reached the goals it outlined.
 Hire people that you think can scale.
 Breakthrough leaders understand it is their
responsibility to develop new hires into the right
people.
Getting the Most Out of People
 The breakthrough companies we visited were filled
with great coaches—people skilled at helping people
do their very best.
Execution
 Relentless focus on improving the company’s ability to
execute.
 Effective execution is vital to breakthrough.
 Don’t wrap up the strategy meeting until the group has
distilled the top priorities into specific, measurable
initiatives and action plans, ones that have both a
deadline and a person responsible.
Strategy Cycle at Work
 Those companies that follow the 90-day dynamic
approach to strategy, focus on getting the most out of
its people, and drive effective execution are at a
significant advantage.
The art of progress is to preserve
order amid change and to
preserve change amid order.
--Alfred North Whitehead
Organizations
that crowned
the leaders
Strategy
Ethos
Management views
its job as
CEO/Founder makes major
strategic decisions, often with
the input of a handful of close
advisors
Organizations
that crowned
the company
Strategic issues openly and
actively debated throughout
the organization; all the major
functional areas (product
development, finance,
operations, sales) contribute
meaningfully to strategy
formulation
Personal loyalty to the
leader and his vision
Commitment to doing the very
best job possible for the
organization, even if that
means “bucking the system” or
questioning the firm’s
fundamental assumptions
Running the business
Creating an environment
where people get better at
spotting what is important,
and at making and
implementing decisions
Organizations
that crowned
the leaders
Culture
New Ideas
Interdepartmental
conflict is resolved by
Organizations
that crowned
the company
Often purely a reflection of
the personal characteristics of
the leader or founder
Though strongly influenced by
the leader, tends to more
broadly reflect the people who
make the organization, as
expressed in their stories of
shared experiences
Come primarily from senior
management
Regularly and systematically
come from throughout the
firm
Kicking the issue upstairs
Affected departments sitting
down and discussing the issue
People are
celebrated for
Biggest no-no
Organizations
that crowned
the leaders
Organizations
that crowned
the company
Heroics (saving the customer,
solving the big problem, etc.)
Bricklaying (helping to build
robust and sound processes
that make organizational
heroics less necessary
Act in a way that might be
misinterpreted as disloyalty
Fail to have the best interest of
the company at heart
Successful Change Management
Duration (D)
2. Integrity of Performance (I)
3. Management Commitment
1.
Commitment of Senior Management (C1)
 Local Level Commitment (C2)

4. Effort (E)
 DICE Score = D + 2I + 2C1 + C2 + E
Successful Change Management
Sources:
 The Breakthrough Company: How Everyday Companies
become Extraordinary Performers
--by Keith McFarland
 http://www.breakthroughcompany.com/
 “The Hard Side of Change Management,” Harvard
Business Review, October 2005.