TEAM 2
CAITLIN CLARK
STEPHEN MASSIMI
WILL MAYRATH
KATIE TREVINO
MATT VANTANKHAH
Chapter 1: Good is the Enemy of
Great

Overview
 While Jim Collins was presenting his first book,
Bill Meehan, the managing director of the San
Francisco office of McKinsey & Company, said,
○ “You know, Jim, we love Built to Last around here.
You and your coauthor did a very fine job on the
research and writing. Unfortunately, it’s useless.”
 This was the spark of curiosity that began five
years of research and resulted in Good to Great
Chapter 1: Good is the Enemy of
Great, continued

Overview
 The five-year research effort yielded many
insights, but one conclusion stands out
above the others
○ Most any organization can substantially
improve its stature and performance, perhaps
even become great, if it conscientiously
applies the framework of ideas we’ve
uncovered
Chapter 1: Good is the Enemy of
Great, continued

Phases of Research
 Phase 1—The Search
○ First task was to find companies that showed the
good-to-great pattern
○ Table 1, page 7
 Phase 2—Compared to What?
○ Direct comparisons and Unsustained comparisons
 Phase 3—Inside the Black Box
 Phase 4—Chaos to Concept
○ The Flywheel captures the gestalt of the entire
process of going from good to great
Chapter 1: Good is the Enemy of
Great, continued

The Black Box
 Research Phase
○ Systematically coded all materials into
categories, conducted interviews, and initiated
a wide range of analyses
Great
Results
Good
Results
What’s
Inside the
BLACK BOX?
Chapter 1: Good is the Enemy of Great, continued
BUILDUP…
LEVEL 5
LEADERS
FIRST WHO.. CONFRONT THEHEDGEHO
THEN WHAT BRUTAL FACTS
G
HIP
CONCEPT
DISCIPLINED PEOPLE
DISCIPLINED THOUGHT
CULTURE
TECHNOLOGY
ACCELERATOR
OF
DISCIPLIN
DISCIPLINED
E
THE FLYWHEEL
S
ACTION
Chapter 2: Level 5
Leadership
Every good-to-great company has a Level 5
leader in its transition year
 A Level 5 leader

 An individual who blends extreme personal
humility with intense professional will
 Self-effacing individuals who displayed the fierce
resolve to do whatever it takes to make the
company great
 Their ambition is first and foremost for the
institution, not themselves
Chapter 2: Level 5 Leadership, continued
Level 5 Hierarchy, page 20
Level 5
LEVEL 5 EXECUTIVE
Builds an enduring greatness through a paradoxical
blend of personal humility and professional will
Level 4
EFFECTIVE LEADER
Catalyzes commitment to and vigorous pursuit of a clear
and compelling vision, stimulating higher performance
standards
Level 3
COMPETENT MANAGER
Organizes people and resources toward the effective and
efficient pursuit of predetermined objectives
Level 2
CONTRIBUTING TEAM MEMBER
Contributes individual capabilities to the achievement of
group objectives and works effectively with others in a
group setting
Level 1
HIGHLY CAPABLE INDIVIDUAL
Makes productive contributions through talent,
knowledge, skills, and good work habits
Chapter 2: Level 5 Leadership,
continued

Humility + Will = Level 5
 Gillette-Colman Mockler

Ambition for the Company, Setting Up
Successors for Success
 Fannie Mae—David Maxwell to Jim Johnson

Modesty—good-to-great leaders do not talk
about themselves but about the company
and contributions of other executives
 Darwin Smith and Scott Paper
Chapter 2: Level 5 Leadership,
continued

Unwavering Resolve…To Do what Must Be
Done
 Abbott Laboratories: George Cain

The Window and the Mirror
 Level 5 leaders look out the window to give credit to
factors other than themselves and look in the mirror to
apportion responsibility, never blaming bad luck

Level 5 Leaders are rare because it’s hard for a
Board of Directors not not hire an ego-driven,
larger-than-life leader and the personal ambition
that drives people to the top stands in the way
of the humility required by a Level 5 leader
Chapter 3: First Who…Then What

Good-to-great companies first got the right
people on the bus and the wrong people off the
bus before figuring out where they were going
to drive it
 Wells Fargo

Not a “Genius With a Thousand Helpers”
 Level 4 leader—first what, then who

It’s who you pay, not how you pay them
 No executive compensation pattern acts as a key
lever in taking the company from good to great
 Compensation should only serve the purpose of
getting the right people on the bus and keeping them
there
Chapter 3: First Who…Then What,
continued

The RIGHT people are your most important
asset

Rigorous, Not Ruthless
 Applying exacting standards at all times and at
all levels
 The best people need not worry about their
positions and can concentrate fully on their jobs
 Example: Wells Fargo acquiring Crocker Bank
Chapter 3: First Who…Then What,
continued

How to be Rigorous
 When in doubt, don’t hire—keep looking
 When you know you need to make a people
change, act
 Put your best people on your biggest
opportunities, not your biggest problems

Great Lives
Chapter 3: First Who…Then What

Industry Analysis
 The RIGHT people are key assets
 Can allow for your company to compete in:
○ Research and Development
Chapter 4: Confront the Brutal
Facts (Yet Never Lose Faith)

A&P vs. Kroger
 In the 1970s, both Kroger and A&P were
relatively old and established companies
○ Kroger confronted the brutal facts that the
industry was changing, but A&P didn’t
 A&P tried to continue doing things the tried and true
way
Chapter 4: Confront the Brutal Facts
(Yet Never Lose Faith), continued

Facts Are Better Than Dreams
 When you honestly and diligently determine the truth
of your situation, the right decisions tend to present
themselves
 Pursuing greatness requires a constant redefining of
the path to greatness with the brutal facts of reality
 Charisma can be as much a liability as an asset
○ Because of a strong personality, people may filter brutal
facts
 Example: Bank of America—managers wouldn’t make a
comment until they knew how the CEO felt
- It is possible to overcome charisma as a liability without
conscious attention
Chapter 4: Confront the Brutal
Facts (Yet Never Lose Faith),
continued

A Climate Where the Truth is Heard
 Leadership is about creating a climate
where the truth is heard and the brutal facts
are confronted
 Creating this truth climate involves 4 steps:
○ Lead with questions, not answers
○ Engage in dialogue and debate, not coercion
○ Conduct autopsies, without blame
○ Build “red flag” mechanisms
Chapter 4: Confront the Brutal
Facts (Yet Never Lose Faith),
continued

A Climate Where the Truth is Heard,
continued
 Step 1: Lead with questions, not answers
○ Good-to-great leaders don’t necessarily need
to have all the answers
○ Good-to-great leaders need to be able to ask
the questions that will lead to the best
possible insights
Chapter 4: Confront the Brutal Facts
(Yet Never Lose Faith), continued
• A Climate Where the Truth is Heard,
continued
– Step 2: Engage in dialogue and debate, not
coercion
• Good-to-great companies didn’t just “let people
have their say” so that they would “buy in” to what
the company wanted
• Instead they engaged in intense dialogue to search
for the best answers
Chapter 4: Confront the Brutal Facts
(Yet Never Lose Faith), continued
• A Climate Where the Truth is Heard,
continued
– Step 3: Conduct autopsies, without blame
• This helps to create a climate where the truth is
heard
• IF the right people are on the bus there is no
reason to assign blame, only to search for
understanding and learning
Chapter 4: Confront the Brutal Facts
(Yet Never Lose Faith), continued
• A Climate Where the Truth is Heard,
continued
– Step 4: Build “red flag” mechanisms
• Good-to-great companies had the same
information as comparison companies
• Good-to-great companies turned information into
information that couldn’t be ignored
Chapter 4: Confront the Brutal Facts
(Yet Never Lose Faith), continued

The Stockdale Paradox
 Named for Admiral Jim Stockdale
Retain faith that you will prevail in the end,
regardless of the difficulties.
AND at the same time,
Confront the most brutal facts of your
current reality, whatever they might be.
Chapter 5: The Hedgehog
Concept (Simplicity within the
Three Circles)

The Hedgehog Concept
 Hedgehogs simplify a complex world into a
single organizing idea
 Their basic principle or concept unifies and
guides everything
Chapter 5: The Hedgehog Concept
(Simplicity within the Three Circles),
continued

The Three Circles
 Good-to-great companies founded their strategies
on deep understanding of three key dimensions—
the three circles
 Good-to-great companies took their
understanding and formed a simple, clear
concept that guided all their efforts
Chapter 5: The Hedgehog Concept
(Simplicity within the Three Circles),
continued

The Three Circles
Not “Let’s get
passionate about
what we’re doing.”
Instead, “Let’s do
things we’re
passionate about.”
What you are
deeply
passionate
about
What you can
be the best in
the world at
What drives
your
economic
engine
Chapter 5: The Hedgehog Concept
(Simplicity within the Three Circles),
continued

Hedgehog Concept
 The Hedgehog Concept is an understanding of what
you can be the best at, not what you want to be the
best at
○ Also, an understanding of what you cannot be the best
at
 Just because something is your core business
doesn’t mean you can be the best in the world at it
○ Does not matter how long you’ve been doing it
 If you cannot be the best in the world at something,
then it cannot be your Hedgehog Concept
 Doing what you are good at can only make you good
○ Focusing on what you can be the best at can potentially
make you great
Chapter 5: The Hedgehog Concept
(Simplicity within the Three Circles),
continued

The Council
 A useful mechanism for moving the process
of finding your Hedgehog Concept along
 Consists of a group of the right people,
asking questions guided by the three circles
debating those questions, making decisions,
and analyzing those decisions
○ All steps guided by the three circles
○ All steps repeated over and over
Chapter 6: A Culture of Discipline

Few successful start-ups become great
companies, in large part because they respond
to growth and success in the wrong way
 To help with problems, professional managers are
hired—often are able to “rein in the mess” but they
also kill the entrepreneurial spirit

A preferable alternative exists: Avoid
bureaucracy and hierarchy and instead create a
culture of discipline
 When you put these two complementary forces
together—a culture of discipline with an ethic of
entrepreneurship—you get a magical alchemy of
superior performance
Chapter 6: A Culture of Discipline,
continued

The Good-to-Great Matrix of Creative
Discipline, page 122
High
Hierarchical
Organization
Great
Organization
Culture of
Discipline
Bureaucratic
Organization
Start-Up
Organization
Low
Low
Ethic of
Entrepreneurship
High
Chapter 6: A Culture of Discipline,
continued


The main points of this chapter come down to one
central idea: Build a culture full of people who take
disciplined action within the three circles, fanatically
consistent with the Hedgehog Concept
Four important ideas:
 Build a culture around the idea of freedom and
responsibility, within a framework
 Fill that culture with self-disciplined people who are willing
to go to extreme lengths to fulfill their responsibility. They
will “rinse their cottage cheese.”
 Don’t confuse a culture of discipline with a tyrannical
disciplinarian
 Adhere with great consistency to the Hedgehog Concept,
exercising an almost religious focus on the intersection of
the three circles. Also, create a “stop doing list.”
Chapter 6: A Culture of Discipline,
continued

Freedom (and Responsibility) Within A
Framework
 The good-to-great companies built a
consistent system with clear constraints, but
they also gave people freedom and
responsibility within the framework of that
system
○ Hired self-disciplined people who didn’t need
to be managed, and then managed the
system, not the people
Chapter 6: A Culture of Discipline,
continued

Freedom (and Responsibility) Within A
Framework, continued
 A culture of discipline begins with disciplined people,
followed by disciplined thought, and finally disciplined
action
 The order is important
○ Disciplined action without self-disciplined people is
impossible to sustain, and disciplined action without
disciplined thought is a recipe for disaster
 The point is to get self-disciplined people who engage
in very rigorous thinking who then take disciplined
action within the framework of a consistent system
designed around the Hedgehog Concept
Chapter 6: A Culture of Discipline,
continued

Rinsing Your Cottage Cheese
 Much of the answer to the question of “good to great”
lies in the discipline to do whatever it takes to become
the best within carefully selected arenas and then to
seek continual improvement from there
 Everyone would like to be the best, but most
organizations lack the discipline to figure out with
egoless clarity what they can be the best at and the
will do to whatever it takes to turn that potential into
reality
○ They lack the discipline to “rinse their cottage cheese”
Chapter 6: A Culture of Discipline,
continued

A Culture, Not A Tyrant
 Discovered that unsustained comparisons
showed themselves to be just as disciplined
as the good-to-great companies
 Important difference: Good-to-great
companies had Level 5 leaders who built an
enduring culture of discipline, but the
unsustained comparisons had Level 4
leaders who personally disciplined the
organization through sheer force.
Chapter 6: A Culture of Discipline,
continued

A Culture, Not A Tyrant, continued
 A pattern in every unsustained comparison:
○ A spectacular rise under a tyrannical
disciplinarian, followed by an equally
spectacular decline when the disciplinarian
stepped away, leaving behind no enduring
culture of discipline, or when the disciplinarian
himself became undisciplined and strayed
wantonly outside the three circles
Chapter 6: A Culture of Discipline,
continued

Fanatical Adherence to the Hedgehog
Concept
 The good-to-great companies at their best
followed a simple mantra: “Anything that does
not fit within our Hedgehog Concept, we will not
do.”
 A lack of discipline to stay within the three
circles was a key factor in the demise of nearly
all the comparison companies; all either
○ Lacked the discipline to understand its three
circles; or,
○ Lacked the discipline to stay within the three
circles
Chapter 6: A Culture of Discipline,
continued

Fanatical Adherence to the Hedgehog Concept,
continued
 Few companies have the discipline to discover their
Hedgehog Concept, much less to build consistently
within it
○ Fail to grasp a simple paradox: The more an
organization has the discipline to stay within its three
circles, the more it will have attractive opportunities for
growth
 A great company is much more likely to die from too much
opportunity than starvation from too little
 The challenge becomes not opportunity creation, but
opportunity selection
Chapter 6: A Culture of Discipline,
continued

Start A “Stop Doing” List
 Those who built the good-to-great companies made
as much use of “stop doing” lists as “to do” lists—they
displayed a remarkable discipline to unplug all sorts of
extraneous junk
 Good-to-great companies displayed remarkable
courage to channel their resources into only one or a
few arenas
○ The most effective investment strategy is a highly
undiversified portfolio when you are right
 “Being right” means getting the Hedgehog Concept—it just
isn’t that hard if you have all the pieces in place
 “Highly undiversified” means investing fully in those things that
fit squarely within the three circles and getting rid of everything
else
Chapter 7: Technology
Accelerators

Technology and the Hedgehog Concept
 Technology-induced change is nothing new
○ The real quest is, “How do good-to-great
organizations think differently about
technology?”
 In every good-to-great case, there was
technological sophistication through the
pioneering application of carefully selected
technologies
○ The table on page 150 discusses technologies
used by each good-to-great company
Chapter 7: Technology
Accelerators, continued

Technology as an Accelerator, Not a
Creator, of Momentum
 When used right, technology becomes an
accelerator of momentum, not a creator of it
○ The good-to-great companies never began
their transitions with pioneering technology, for
the simple reason that you cannot make good
use of technologies are relevant
 Those that are relevant are only those that link
directly to the three intersecting circles of the
Hedgehog Concept
Chapter 7: Technology
Accelerators, continued

Technology as an Accelerator, Not a Creator, of
Momentum, continued
 To make technology productive in a transformation
from good to great means asking the following
questions
○ Does the technology fit directly with your Hedgehog
Concept?
 If yes, then you need to become a pioneer in the application of
that technology
 If no, then ask the second question
○ Do you need this technology at all?
 If yes, then all you need is parity
 If no, then the technology is irrelevant, and you can ignore it
Chapter 7: Technology
Accelerators, continued

The Technology Trap
 The evidence from the study does not support the
idea that technological change plays the principal
role in the decline of once-great companies (or
the perpetual mediocrity of others)
 Technology is important, but technology by itself
is never a primary cause of either greatness or
decline
 A basic truth: Technology cannot turn a good
enterprise into a great one, nor by itself prevent
disaster
Chapter 7: Technology
Accelerators, continued

The Technology Trap, continued
 Thoughtless reliance on technology is a
liability, not an asset
 When used right, technology is an essential
driver in accelerating forward momentum
 When used wrong, technology simply
accelerates your own self-created demise
Chapter 7: Technology
Accelerators, continued

Technology and the Fear of Being Left
Behind
 Those who built the good-to-great
companies weren’t motivated by fear
○ They were motivated by a deep creative urge
and an inner compulsion for sheer
unadulterated excellence for its own sake
 Those who build and perpetuate mediocrity,
in contrast, are motivated more by the fear
of being left behind
Chapter 7: Technology
Accelerators, continued

No technology, no matter how amazing, can
by itself ignite a shift from good to great

Those that stay true to the fundamentals and
maintain their balance, even in times of great
change and disruption, will accumulate the
momentum that creates breakthrough
momentum
Chapter 8: The Flywheel and the
Doom Loop

Buildup and Breakthrough
 The flywheel image captures the overall feel of
what it was like inside companies as they went
from good to great
○ Though it may look like a revolutionary event from
the outside, the transformation occurs through a
cumulative process—step by step, action by action,
decision by decision, turn by turn
 The transition from good to great feels like an
organic, natural process. There is no miracle
moment.
Chapter 8: The Flywheel and the
Doom Loop, continued

Not Just a Luxury of Circumstance
 Companies do not achieve breakthrough simply
by luck
○ Good-to-great companies followed the flywheel
model no matter how dire the short-term
consequences
 The good-to-great companies were subject to the
same short-term pressure as the comparison
companies
○ The good-to-great companies had patience and
discipline which ultimately led to extraordinary
results by Wall Street’s own measure of success
Chapter 8: The Flywheel and the
Doom Loop, continued

The “Flywheel Effect”
 The simple truth: Tremendous power exists in the
fact of continued improvement and the delivery of
results
○ Point to tangible accomplishments—however
incremental at first—and show how these steps fit
into the context of an overall concept
 When you let the flywheel do the talking, you
don’t need to eagerly communicate your goals
○ People will feel and see the momentum, they will
line up with enthusiasm, and they will strive to make
it work
Chapter 8: The Flywheel and the
Doom Loop, continued

The Doom Loop
 Instead of a quiet, deliberate process of figuring
out what needed to be done and simply doing it,
the comparison companies frequently launched
new programs with hopes of extraordinary results
only to see the programs fail to produced
sustained results
 They would push the flywheel in one direction,
stop, and completely change directions. Then
they would repeat the process
○ Instead of building momentum, the companies fell
into what is called the doom loop
Chapter 8: The Flywheel and the
Doom Loop, continued

The Misguided Use of Acquisitions
 To understand the role of acquisitions in the
process of going from good to great, Collins
undertook a systematic qualitative and
quantitative analysis of all acquisitions and
divestitures of all the companies in his study
 The good-to-great companies had a
substantially higher success rate with
acquisitions because their big acquisitions took
place after development of their Hedgehog
Concept and after the flywheel had built
significant momentum
○ They used acquisitions as an accelerator of
flywheel momentum, not a creator of it
Chapter 8: The Flywheel and the
Doom Loop, continued

Leaders Who Stop the Flywheel
 The other frequently observed doom loop pattern
is that of new leaders who stepped in, stopped an
already spinning flywheel, and threw it in a
completely new direction
 When a company has a successful Hedgehog
Concept and a spinning flywheel, there should be
no reason to stop the momentum or change the
direction
○ While some may believe they have a revolutionary
new idea for the company, most companies find
their flywheel coming to a grinding halt
Chapter 9: From Good to Great to
Built to Last

An Overview of Built to Last
 When Collins began the Good to Great project, he
confronted a dilemma: How should he think of the
ideas in Built to Last while doing Good to Great
research?
 Built to Last was a six-year research project in which
he answered the question, “What does it take to start
and build an enduring great company from the ground
up?”
○ 18 total companies that had reached success were
studied
 In the end, Collins made an important decision: to
conduct the research for Good to Great as if Built to
Last didn’t exist
Chapter 9: From Good to Great to
Built to Last, continued

The Four Conclusions
 Considering the great companies from Built to Last,
there is substantial evidence that their early leaders
followed the good-to-great frameworks
 Collins sees Good to Great not as a sequel to Built to
Last, but as a prequel
 To make the shift from a company with sustained
results to a great company, apply the general concept
from Built to Last: Discover core values and purpose
and combine with the dynamic of preserving the
core/stimulate progress
 Good to Great answers something brought up, but not
answered, in Built to Last: “What is the difference
between ‘good’ BHAG* and ‘bad’ BHAG?”
*Big Hairy Audacious Goal
Chapter 9: From Good to Great to
Built to Last, continued

Core Ideology: The Extra Dimension of
Enduring Greatness
 Enduring great companies don’t exist only to deliver
returns to shareholders
○ Profits and cash flows become “like blood and water to a
healthy body”—they are essential, but they are not the
point of life
 Instead, enduring great companies preserve their
core values and purpose while their business
strategies and operating practices endlessly adapt to
a changing world
 This is the combination of “preserve the core and
stimulate progress”
Chapter 9: From Good to Great to
Built to Last, continued

The Four Key Ideas from Built to Last
 Clock Building, Not Time Telling
○ Build an organization that can endure and adapt through
multiple generations of leaders and multiple product life cycles
 Genius of AND
○ Embrace both extremes on a number of dimensions at the
same time
○ Instead of choosing A OR B, figure out how to have A AND B
○ Purpose AND Profit
 Core Ideology
○ Instill core values and core purpose as principles to guide
decisions and inspire people throughout the organization over
a long period of time
 Preserve the Core/Stimulate Progress
○ Preserve the core ideology as an anchor point while
stimulating change, improvement, innovation and renewal in
everything else
Chapter 9: From Good to Great to
Built to Last, continued

Good BHAGs, Bad BHAGs, and other
Conceptual Links
 The three circles of the BHAGs chart consist of
○ What you are deeply passionate about
○ What you can be the best in the world at
○ What drives your economic engine
 A BHAG serves as an unifying focal point of
effort, galvanizing people and creating team spirit
as people strive toward a finish line
 Bad BHAGs are set with bravado. Good BHAGs
are set with understanding.
Chapter 9: From Good to Great to
Built to Last, continued

Why Greatness?
 When asked, “Why achieve greatness? Why not just
settle for success?” Collins offers two answers
○ It is no harder to build something great than to build
something good. It may be statistically rarer to achieve
greatness, but it does not require more suffering.
○ The search for meaning, or more precisely, the search
for meaningful work.
 The real question is not, “Why greatness?” but “What
work makes you feel compelled to try to create
greatness?”
○ Collins claims that if one has to ask the question, “Why
should we try to make it great? Isn’t success enough?”
then they are probably engaged in the wrong line of
work.
Chapter 9: From Good to Great to
Built to Last, continued

Why Greatness?, continued
 The quest to build something great may not
fall in your corporate life. It may be
somewhere else.
 The point is to get involved in something you
care so deeply about that you strive to make
it the greatest it can be, not because of what
results may yield, but just because it can be
done
 When you do this, you will start to grow,
inevitably, toward becoming a Level 5 leader