Group 3;
Mason Mitchell
Sarah Yelverton
Randy Greinert
Alec Cooper
GOOD TO GREAT
CHAPTER 3
 “There are going to be times when we can’t
wait for somebody. Now, you’re either on the
bus or off the bus.”
-Ken Kesey
First Who... Then What
 If you begin with “who.” rather than “what,”
you can more easily adapt to a changing
world.
 If people join the bus primarily because of
where it is going, what happens if you get ten
miles down the road and you need to change
directions? -Could be a major problem.
 But if people are on the bus because of who
else is on the bus, its much easier to change
directions.
First Who... Then What
 If you have the right people on the bus, the
problem of how to motivate and manage
people largely goes away.
 If you have the wrong people, it doesn’t
matter whether you discover the right
direction; you still wont have a great
company.
 Great vision without
great people is irrelevant.
Wells Fargo –Dick Cooley
1970’s-1980’s
 Built the best team, according to investor
Warren Buffett.
 Foresaw that the banking industry would
eventually undergo wrenching change.
 Team reminded people of the famed “whiz
kids” recruited to Ford Motor Company in the
late 1940s.
Bank of America
 Took a different approach than Wells Fargo.
 “Weak generals, strong lieutenants” model
 If you pick strong generals for key positions,
their competitors will leave. But if you pick
weak generals – placeholders , rather than
highly capable executives –
then strong lieutenants are
more likely to stick around.
The real truth
Per one dollar invested in the firm
Bank of America
$15.60
Banking Market (avg)
$19.86
Wells Fargo
$74.47
(nearly 5 times as much profit as BoA)
Not a Genius “with a thousand
helpers”
 Good to great companies are built deep and
have strong executive teams
 Contrastingly other companies followed
“genius with a thousand helpers” model
Genius cases
 Primary driving force in company’s success is
the genius
 Geniuses seldom build great mgmt teams
because they don’t need/want one
 Problems arise when genius leaves
Eckerd
 What before who
 2 stores in Delaware to 1000 stores in SE USA
 Left when neck and neck with Walgreens to
pursue his passion, politics
 Began long decline eventually being acquired
by JC Penney
Eckerd vs. Walgreen
Eckerd’s Genius at…
Walgreen Genius at...
 Picking right stores to buy
 Picking right people to hire
 Picking store locations
 Seeing which people
should go in what seats
Eckerd vs. Walgreen
Eckerd’s Failure
Walgreen’s sucess
 Selection of a successor
 Developed multiple
 Built no executive team,
outstanding candidates
 Built best executive team
in industry
just helpers
Level 5 mgmt vs Genius w/1000
helpers
Good-to-great
Comparison companies
Level 5
Leader
Level 4
Leader
First
who
First
what
Then
What
Then
Who
Its who you pay, not how you
pay them
 First who principle: It’s not how you
compensate your execs, it’s which execs you
have to compensate in the first place
 If you have right execs on bus, they will do
everything within their power to build a great
company, not because of what they will “get”
for it, but because they can’t imagine settling
for less
Simple Truth
 Good to great companies understand a
simple truth: The right people will do the
right things and deliver the best results they
are capable of, regardless of the incentive
system
Nucor example
 Built idea on you can teach people how to make
steel, but can’t teach work ethic to people who




don’t have it in the first place
Located plants in known hardworking farm
towns like Norfolk, Nebraska
Paid workers more than any other steel company
in the world
“we hire five, work them like ten, and pay them
like eight”
Hired right people by focusing more on
attributes than on educational background or
experience
Food for thought
 Good-to-great exec said his best hiring
decision often came from people with no
industry or business experience
 One case hired a manager who’d been
captured twice during WWII and escaped
both times.
 Said that anyone who could do that shouldn’t
have trouble with business
Rigorous, Not Ruthless
According to the text:
Rigorous culture: consistently applying
exacting standards at all times and at all
levels, especially in upper management
Ruthless culture: hacking and cutting, epecially
in difficult times, or firing people without any
thoughtful consideration
Wells Fargo acquired Crocker
Bank 1986
 Wells Fargo terminated most of the Crocker management team
 The majority of Crocker managers were the wrong people for
Wells Fargo’s bus
 Wells Fargo standards were ferocious and consistent
 Crocker managers did not have the same ability as Wells Fargo
managers and would have soon failed in the Wells Fargo
performance culture
 Wells Fargo was rigorous by dealing with it up front and letting
people get on with their lives
Layoffs
 Upper management suffered more on a percentage basis
than lower-level workers in the consolidation
 Rigor, in good-to-great companies, starts at the top and
focuses on the people who hold the largest responsibility
 “Six of the eleven good-to-great companies recorded zero
layoffs from ten years before the breakthrough date all the
way through 1998, and four others only reported one or
two layoffs.”
 Layoffs were used five times as frequently in comparison
companies
Three Practical Steps on how to
be
Rigorous
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
Practical Discipline # 1
When in doubt, don’t hire-keep looking
 Great companies are built by those who have the
ability to get and keep enough of the right
people
 When asked at what point to compromise when
looking to fill a position, Alan Wurtzel said, “ You
don’t compromise. We find another way to get
through until we find the right people.”
Circuit City vs. Silo
Circuit City:
 Focused on getting the right people on the bus
 Built the best, most professional management
team
 Made simple deliveries a priority
Silo:
 Focused on the right stores to buy
 Goal to grow as fast as possible
 Reputation for not being able to do the basics
Practical Discipline #2

-


When you know you need to make a people
change, act
Act when people need to be tightly managed
The right people only need to be guided,
taught, and led
Act when time is invested trying to properly
manage the person
Act when energy is spent on an individual
when it should be spent on developing and
working with all the right people
Continued
 Waiting to long before acting is unfair to the
people who need to get off the bus
 In good-to-great companies people either stay
on the bus for a long time or got of the bus
quickly
 Colman Mockler (CEO of Gillette) invested time
in finding the right seat for individuals
- He moved 38 of the top 50 people in the management team to
different positions
How do you know when you know?
Here are a few questions to ask:
1. Rather than asking yourself if this person
should get off the bus, ask yourself if you
would hire this person again?
2. If the person told you they are leaving to
pursue another job opportunity, would you
be disappointed or secretly relieved?
PRACTICAL DISCIPLINE #3
Put your best people on your biggest opportunities, not your biggest
problems.
Phillip Morris
Kimberly-Clark
First who, great companies,
and a great life
Build a great company and also build a great life?
Love affair
 Love what you do
 Be with people you love and respect
 And have fun