Good to Great: A culture of discipline

goodtogreat

In Good to Great, the structure follows three core disciplines. Disciplined people, disciplined thought and disciplined action.

Disciplined people covers Level 5 Leadership and First Who… Then What.

Disciplined thought covers Confront the Brutal Facts and Hedgehog Concept.

Disciplined action covers Culture of Discipline and Technology Accelerators.

Culture of discipline in good-to-great companies means that they have a consistent system with clear constraints but they also give people freedom and responsibility within that system. The company employees self-disciplined people who do not need to be managed, and instead manage the company instead of the people.

Jim Collins’s research of those companies uncovered consistent use of words like disciplined, rigorous, dogged, determined, diligent, precise, fastidious, systematic, methodical, workmanlike, demanding, consistent, focused, accountable and responsible.

The chapter states that great companies had people who were “extreme in their fulfillment of responsibilities bordering on fanaticism”. And it likened the fanaticism to athlete Dave Scott who won Hawaii Ironman Triathlon six times and was known to even rinse his cottage cheese to remove any extra fat.

Kind of makes me think of what the 2015 & 2016 fittest woman on earth must go through each day… You can’t have an off day. Or an off moment.

crossfit

The key takeaways for this topic were:

  • You need to build a culture of self-disciplined people that focus their disciplined action within the three circles
  • You don’t need bureaucracy in your workplace if you have the right people on the bus; it only exists when compensating for those self-disciplined people you need
  • A culture of discipline is a balance between two opposites: people who strictly adhere to a consistent system and also people who are given every freedom and responsibility within the framework of the system
  • People have to engage in disciplined thought and then take disciplined action
  • Good-to-great companies appear boring on the outside, but under the microscope are frantic with diligence and the intensity of rinsing their cottage cheese
  • A culture of discipline is not ruled by a tyrant; saviour CEOs ruling through force will fail to produce sustained results
  • People must strictly adhere to the Hedgehog Concept and leave behind any opportunities that fall outside of it; that will also ensure more opportunities for growth
  • AND most importantly “stop doing” lists are critical… even more so that “to do” lists

That last one is going to be a hard one. I will really have to review what I’m committing to.

Time to get out those weekly planning tools and really figure out what we’re going to achieve day by day, week by week, month by month…

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Good to Great: Hedgehog Concept

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In Good to Great, the second part of disciplined thought is the hedgehog concept (the simplicity withing the three circles).

The thought is that all companies (and perhaps people too, in order to achieve greatness that is) need a “deep” understanding of three areas that join together to form one simple concept (the Hedgehog Concept).

Hedgehog-Concept
So what you love = “what you are deeply passionate about”. What you’re good at = “what you can be the best in the world at” and I think it’s important to note the best-in-the-world part! And finally, what pays well = “what drives your economic engine”.

About the “what you can be the best in the world at”. It’s not about what you want to be the best at but what you can be the best at. Mr Collins says that the Hedgehog Concept is not a goal or strategy or an intention. Instead it is the understanding of your potential.

If, for instance, your core business is X but you can’t be the best in the world at X, then that cannot be the basis of your Hedgehog Concept. This is a severe stance and, rather than what you have a competency in, you instead need to pick what you could truly be the best in the world (to borrow a Jeremy Clarkson phrase) at. This also means that you might not be competent at something but actually be the best in the world at it!

To choose the drivers of your economic engine, you need to find indicators that have the greatest impact of your company. Profit per customer of employee (or cashflow per X in non-profits) must result in the greatest impact in order for you to become great.

The difference between great companies and their comparisons is that great companies set goals and strategies on this core understanding (what I can be the best at, what I’m passionate about, what drives economic value) rather than pure bravado.

How do you settle on your Hedgehog Concept? Setting up a Council might be an idea. The Council exists to work on understanding important issues the company is facing. It is assembled using leading executives (but it doesn’t necessary limit itself to members of the membership team; it can/should included) and ranges from five to twelve people in size. Council members can argue to their heart’s content, not to win some e

Finally, you don’t need to be in a great industry to be a great company. Great news: being great is industry agnostic!

Good to Great: First who… Then what

goodtogreat

Remember, the enemy of great is good. Companies and people are content in being good and with this contentedness fall short of becoming great.

Good to Great is structured into three areas: disciplined people, disciplined thought and disciplined action. And in each area, there are two concepts. The first concept in disciplined people is Level 5 Leadership. The second is “First who… then what”.

The key points on this concept are:

  • Transformation from being good to being great starts with getting the right people on the bus and the wrong people off before deciding where the bus is headed
  • That means that all the “who” questions are answered before any of the “what” decisions are made
  • Companies that don’t become great follow a model where a single leader genius (potentially a celebrity leader) is surrounded by hundreds/thousands of helpers… unfortunately this approach doesn’t work when this leader leaves the company
  • Good to Great companies are disciplined but not cruel with people and they do not simply restructure and lay people off as a strategy to improve performance by shuffling staff or cutting costs… In fact, if they have the right people on the bus and not the right role, they will find/create the right role instead of laying that person off
  • There were three principles for being thorough in this concept:
    • Don’t hire when doubtful about a person; keep looking
    • Act quickly if you need to make a people decision, but also make sure that you simply don’t have the right person but in the wrong seat
    • Get your best people on the biggest opportunities instead of fixing problems in an organisation, and if you rid your company of problems, make sure to keep your best people
  • Good to Great management teams have robust debates and arguments in search of optimum answers but unite behind decisions reached regardless of any self interest
  • Executive compensation has no particular link in becoming a great company; compensation should simply keep the right people on the bus and should not be used as a motivation for the right results from the wrong people
  • People are not your most important asset… The right people are
  • And, most importantly, whether someone is right for the bus has is to do with whether they possess the right character traits and natural abilities, rather than any particular knowledge, background or skill set

Jim Collins and his research team compared Wells Fargo vs Bank of America. While Wells Fargo continued to recruit the best people possible, Bank of America ran the “weak generals, strong lieutenants” model. The Bank of America model created a very unfortunate culture where people would not contribute to meetings fearing and submitting to domineering leadership.