Good to Great: Some Lessons for
Government
Edwin C. Thomas, M.Ed., MPA
Ed Thomas/Leadership, LLC
The Research
ƒ Companies that had fifteen-year cumulative
stock returns at or below the general market
average
ƒ A transition point
ƒ Followed by cumulative returns at least three
times the market over fifteen years
ƒ Pattern independent of its industry
The Research
Good-to-Great Companies
ƒ Abbott
ƒ Circuit City
ƒ Fannie Mae
ƒ Gillette
ƒ Kimberly-Clark
ƒ Kroger
ƒ Nucor
ƒ Philip Morris
ƒ Pitney Bowes
ƒ Walgreens
ƒ Wells Fargo
Direct Comparisons
ƒ Upjohn
ƒ Silo
ƒ Great Western
ƒ Warner-Lambert
ƒ Scott Paper
ƒ A&P
ƒ Bethlehem Steel
ƒ R.J. Reynolds
ƒ Addressograph
ƒ Eckerd
ƒ Bank of America
The Research
ƒ The crucial question was not “What did the
good-to-great companies share in common?
ƒ Rather, the crucial question was “What did the
good-to-great companies share in common that
distinguished them from the comparison
companies.
What is Greatness?
ƒ A great organization is one that delivers
superior performance and makes a distinctive
impact over a long period of time.
ƒ In government and the social sector, the
critical question is not “How much money did
we make per dollar of invested capital?” but
“How effectively do we deliver on our mission
and make a distinctive impact relative to
resources?”
The Findings
ƒ Celebrity CEO’s brought in from the outside were negatively
correlated with taking a company from good to
great. Virtually all the great companies found their CEO’s
from within their own ranks.
ƒ There was no systematic pattern linking specific forms of
executive compensation to the process of going from good to
great.
ƒ Strategy per se did not separate good-to-great companies from
the rest. There was no evidence that good-to-great companies
spent more time on strategic planning than the other
companies.
ƒ Good-to-great companies did not focus principally on what to
do to become great; they focused equally on what not to do
and what to stop doing.
The Findings
ƒ Technology and technology-driven change has
virtually nothing to do with igniting a transformation
from good to great. The study found that technology
can accelerate a transformation, but it did not cause a
transformation.
ƒ Mergers and acquisitions play virtually no role in
igniting a transformation from good to great. Putting
two mediocre companies (or agencies) together never
makes a great company.
The Findings
Good-to-great companies paid scant attention to
managing change, motivating people, or creating
alignment. Under the right conditions, the problems
of commitment, alignment, motivation, and change
largely melt away.
Sidebar…
This is consistent with numerous studies of
workplace motivation. Most of us strive for
excellence and derive satisfaction from
membership in great and enduring
organizations that have important purposes and
that make significant contributions to society.
Those who are fortunate enough to work for
great organizations do not need to be
motivated.
The Findings
ƒ The good-to-great companies had no name, tag line,
launch event, or program signifying their
transformation. Indeed some reported being unaware
of the magnitude of the transformation at the
time. Only later, in retrospect, did it become
clear. They produced a revolutionary leap in results,
but not by a revolutionary process.
ƒ The good-to-great companies were not in great
industries. Greatness was not a function of
circumstance. Greatness, it turned out, was largely a
matter of conscious choice.
Key Concepts
ƒ Level 5 Leadership
ƒ First Who…Then What
ƒ Confronting the Brutal Facts (Yet Never Lose
Faith)
ƒ The Hedgehog Concept
ƒ A Culture of Discipline
ƒ Technology Accelerators
ƒ The Flywheel and the Doom Loop
Level 5 Leadership
The study found that companies that recruited
“star” CEO’s may have performed better during
their tenure, but did not sustain this performance
after they left the company. Star CEO’s were
typically much more interested in the perks and
trappings of office, pay packages, stock options,
airplanes, limousines, country club memberships,
and perhaps writing books about their success
than they were about building great companies.
Level 5 Leadership
By contrast, Level 5 leaders were described as
having a combination of personal humility and
professional will. They were passionate and
driven, but it was for the company and what it
stands for rather than their personal
success. They were relentless in the pursuit of
tangible results and achievement.
It is not that they thought less of themselves, it is
that they thought of themselves less.
Sidebar…
ƒ Level 5 leadership is similar to Servant
Leadership and Collaborative Leadership
ƒ Can a Level 5 leader be successful in the
fragmented, shared-power environment in
which public sector leaders must function?
First Who, Then What
Leaders of good-to-great companies did not begin by
setting a new vision and strategy. First they got the
right people in the organization, and the wrong
people out of the organization. They focused on
building a superior executive team. Once they got
the right people, they then figured out where to
go. Indeed the great companies refused to fill a
position until they found the right person in terms of
skill and experience and in terms of fit with the
culture, core values and purpose of the organization.
Small Group Discussion:
First Who, Then What
ƒ Given our human resources policies,
procedures, and constraints, can we really get
the “right people on the bus and the wrong
people off the bus?
ƒ How can this concept be applied in
government?
Confronting the Brutal Facts
Great companies were distinguished by their ability to
confront honestly the brutal facts about their current
environment and situation. They managed to create a
culture where people could be heard. They asked
questions, engaged in dialogue and debate, analyzed
failures without blame, and kept in touch with their
environment.
And along with the ability to confront the brutal facts of
their current reality, they maintained an absolute belief
that they could and would prevail in the end. They
believed they were great.
Sidebar:
Some Brutal Facts About SC
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Teen Pregnancy
Life Expectancy
Infant Mortality
Death from Stroke
Unemployment
Per Capita Income
Violent Crime Rate
Property Crime
Mileage Fatality Rate
Graduation Rate
10th
48th
3rd
1st
4th
45th
1st
3rd
3rd
49th
Source: South Carolina Indicators Project (www.ipspr.sc.edu/scip)
Sidebar:
On Our Lack of BHAG’s
ƒ A BHAG (big, hairy, audacious goal) is clear
and compelling and serves as a unifying focal
point of effort – often creating immense team
spirit. It has a clear finish line, so the
organization can know when it has achieved
the goal
What Are the Brutal Facts in Your City
or County?
The Hedgehog Concept
Small Group Discussion:
The Hedgehog Concept
ƒ How would you answer the questions in the
three circles for your organization?
A Culture of Discipline
The great companies in the study were characterized
by disciplined people, disciplined thought, and
disciplined action. They had, first and foremost, the
discipline to stay within the three circles as described
above. While there was great discipline, this does not
imply a rigid system run by a strict disciplinarian. It
requires that people have the discipline to adhere to a
consistent system, but it allows them freedom and
responsibility within the framework of that system.
A Culture of Discipline
As government, like business, seeks to remove nonvalue adding layers of bureaucratic oversight, it is
critical that we have a culture of discipline in
place. The study found that bureaucratic cultures
arise to compensate for incompetence and a lack of
discipline. In part, this relates back to the concept of
getting the right people in the organization.
Technology Accelerators
The study found that the great companies thought
about technology differently than the comparison
companies. They adapt to changes in technology
over time. They didn’t implement the latest
technology just for the sake of being state-of-the-art
or out of fear of being left behind. The great
companies understand that “mediocrity results first
and foremost from management failure, not
technological failure.” (Collins, 2001, p. 156.)
The Flywheel and the Doom Loop
The study found that those companies that launch
revolutions, dramatic change programs, and wrenching
restructurings will almost certainly fail to make the leap
from good to great. No matter how dramatic the end
result, the good-to-great transformations never happened
in one fell swoop. There was no single defining action,
no grand program, no killer innovation, no solitary lucky
break and no miracle moment. Rather, the process
resembled relentlessly pushing a giant heavy flywheel in
one direction, turn upon turn, building momentum until a
point of breakthrough and beyond.
The Flywheel and the Doom Loop
This stands in stark contrast to the government
environment with its constant changes in direction,
leadership, philosophy about the mission and scope
of government, and the endless calls for reform.
The Flywheel and the Doom Loop
ƒ How can we avoid the “doom loop” in
government?
Some Lessons for Government
Conditions for greatness:
ƒ Servant leaders who are genuinely concerned with
South Carolina’s (your county’s) future rather than
their own.
ƒ Getting and keeping the right people working in
government (dedicated, skilled, talented, innovative
public servants).
ƒ A positive attitude and unwavering belief that we are
a great state (and a great county) and that by working
together (all parties, all branches, all levels of
government, in partnership with other sectors) we can
overcome any obstacles we may face.
Some Lessons for Government
Conditions for greatness:
ƒ The will and courage to make the hard choices and investments
required to focus the mission of government on those programs
that can move us toward those things we are passionate about (a
statewide vision and goals for education, economic development,
public safety, health, and the environment for example); that we
can do better than anyone else (eliminating or privatizing the rest);
and that drive our economic engine (thought of in terms of return
on investment).
ƒ Appropriate investments in technology to facilitate the
achievement of our goals.
ƒ Patience, persistence and a long-term view that will enable us to
pursue our statewide (and county) vision consistently in a manner
that transcends changes in leadership.
References
Jim Collins. Good to great: Why some companies make the
leap…and others don’t. New York, NY: Harper Collins Publishers,
2001.
Jim Collins and Jerry Porras. Build to last: Some successful habits of
visionary companies. New York, NY: Harper Business Essentials,
2002.
Jim Collins. Good to Great and the Social Sectors: Why Business
Thinking is not the Answer. Jim Collins, 2005.
Edwin C. Thomas. Good to Great: Some Lessons for Government.
Public Policy and Practice, Vol. 2, No.4, November 2004.
www.ipspr.sc.edu/ejournal