• The Great Atlantic & Pacific Tea Company and Kroger were both
old companies heading into the 1970s
•After society recovered from the World Wars and the Great
Depression, the grocery store industry started to change.
•Kroger faced the facts of the changing industry and launched a
campaign to revamp its business model to create value for its
customers
•A&P ignored these brutal facts
Notes:
1.Kroger transition point occurred in 1973.
2.Chart shows value of $1 invested on January 1, 1959.
3.Cumulative returns, dividends reinvested, to January 1, 1973
http://74.125.113.132/search?q=cache:sH3_IQilpEIJ:kimboal.ba.ttu.edu/MGT%25204380%2520SP%2520
09/094/Raynee%2520Bradley.ppt+good+to+great+kroger+A%26p&cd=3&hl=en&ct=clnk&gl=us
Kroger, A&P, and the market
Cumulative value of $1 invested
1973-1998
Notes:
1.Kroger transition point occurred in 1973.
2.Chart shows value of $1 invested on January 1, 1973.
3.Cumulative returns, dividends reinvested, to January 1, 1998
http://74.125.113.132/search?q=cache:sH3_IQilpEIJ:kimboal.ba.ttu.edu/MGT%25204380%2520SP%25200
9/094/Raynee%2520Bradley.ppt+good+to+great+kroger+A%26p&cd=3&hl=en&ct=clnk&gl=us
Adressograph
• “When you turn over rocks and look at all the squiggly things
underneath, you can either put the rock down, or you can say, ‘My
job is to turn over rocks and look at the squiggly things,’ even if what
you see can scare the hell out of you.
•Addressograph fell victim to strong leadership.
•“I…had no need for cheering dreams. Facts are better than
dreams.”
-Winston Churchill
The Shipping Industry and Total
Security Management
Terrorism, political upheaval, natural disasters,
accidents and other large scale disruptive events are
happening more frequently, and they are having a
more significant impact than in previous years.
 9/11 made evident the fact that the shipping
industry is extremely delicate, and that a disruption
can be measure in the trillions of dollars.

Transportation security initiatives that focus on security in the
context of a firm’s specific business imperatives have the
most potential to create a real return on security investment.

A firm’s reputation for delivering services and
performing under difficult circumstances is
intimately tied to its perceived brand equity

Supply chain visibility is a powerful tool or
businesses to keep customers fully informed of the
status and condition of their shipment



The ability to identify movement in the value
chain.
The ability to identify this movement can
represent a measure of success and
differentiation from one’s competitors where
business processes are concerned.
FedEx famously revolutionized package
delivery by providing clients the ability to
know precisely where packages were and if
they’d been delivered.

Motivating people
 Finding motivated people to begin with
 It’s about not demotivating motivated people.

Stop kidding yourselves
 Visionary style vs. truth style.

Leading with truth
 Using questions, not answers
 Dialogue and debate
 Autopsies without blame
 Red Flag mechanisms

Circuit City CEO Alan Wurtzel
 The prosecutor


Avoiding group think
Group think is always bad
 “Yes-men”

Nucor
 Absolutely horrible
 Began by seeking questions
▪ Furious debates
 Socratic method
▪ B. Law with Kelly Clark
▪ Dialogue rather than monologue


Analyzing failures without placing blame.
Philip Morris
 Acquired Seven-Up Company.
 Complete fiasco.

EBay
 Acquired Skype.
 Working to spin it off.

Developing a set of controls and measures
 Stanford Business School
 Know what is wrong quickly

Lockheed Martin
 Their Earned Value Management System EVM
▪ Allows for an early warning of poor performance
▪ Keeps project members focused

Six Sigma Quality Control
Scott
Paper
Procter &
Gamble
• Was the leader in the
paper-based consumer
business until late 1960s
• Enters the paper-based
consumer business in the
late 1960s
Procter &
Gamble
Scott
Paper
• Procter & Gamble takes
over and becomes the
leader in the market
• Scott Paper resigns to staying
second in the market and
gives up without a fight
• Tries to protect what it has



Kimberly-Clark
“I want everyone to rise in a moment of
silence. That was a moment of a silence for
P&G.”
Viewed competing against P&G as an asset,
an opportunity to make them better and
stronger
Kimberly
Clark
• Good to great companies leave themselves
stronger and more resilient
• “We will never give up. We will never
capitulate. It might take a long time, but we
will find a way to prevail.”
P&G
Scott Paper
• Companies that decide not to be good to
great leave themselves weaker and more
dispirited
• Scott Paper was eventually taken over by
Kimberly Clark

Robert Aders of Kroger
 “There was a certain Churchillian character to
what we doing. We had a very strong will to live,
the that we are Kroger, Kroger was here before
and will be here long after we are gone, and, by
god, we are going to win this thing. It might take
us a hundred years, but we will persist for a
hundred years, if that’s what it takes.”
 Compared to A&P talked about earlier

International Committee for the Study of
Victimization
(looked at people who had suffered serious adversity-cancer
patients, P.O.W’s, accident victims)
People fell into three categories:
1. Those permanently dispirited by event
2. Those who got their life back to normal
3. Those who used the experience as a defining event
that made them stronger (good-to-great companies
were like this group, with the “hardiness factor”)






David Maxwell and Fannie Mae; Began transition in early
80s
Had $56 billion in loans
Never had the goal to merely survive but to prevail as a
great company
Never entertained the possibility that they would fail
Six Million Dollar Man-didn’t use the fact that Fannie Mae
was bleeding and near death as a pretext to restructure
the company, but used it as opportunity to create
something much more stronger and powerful, rebuilt the
entire business model around risk management
Eventually generated stock returns nearly eight times the
market over fifteen years
Admiral Jim Stockdale

Every good-to-great company faces
significant adversity along the way to
greatness.
 Gillette and hostile takeover battles.

Accept reality but commit to prevail.
 “I never lost faith in the end of the story.” –Stockdale

The Optimists
 Circuit City

Those operating on both sides of the
Stockdale Paradox.
Retain
faith
Confront
Reality

Why Kroger and Pitney Bowes succeeded.
 Winston Churchill and strong leadership.
 Total Security management.
▪ Creating Value with visibility.



Group think and the Circuit City example.
Good to great companies remain strong and
resilient.
Stockdale Paradox.
 Retain faith but stay concise to the reality.