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We all have purpose, and the goal of this book is to serve as a directive for those who desire to capitalize on their possibilities. Many of us donate to charitable causes, and millions more work or volunteer for non-profit organizations. Yet virtually none of us have been taught what it means to succeed at doing good, let alone how to do so. How to be Great at Doing Good is a complacency-shattering guidebook for anyone who wants to actually change the world, whether as a donor, a volunteer, or a non-profit staffer.
In ascending to heaven, Jesus Christ gave the church the Great Commission to expand the gospel to all nations. Despite this biblical commission, it is still an unfinished task.
I called it "putting square pegs in square holes and round pegs in round holes. Instead of firing honest and able people who are not performing well, it is important to try to move them once or even two or three times to other positions where they might blossom. Two key questions can help. First, if it were a hiring decision rather than a "should this person get off the bus? Second, if the per- son came to tell you that he or she is leaving to pursue an exciting new opportunity, would you feel terribly disappointed or secretly relieved?
Practical Discipline 3: Put your best people on your biggest opportunities, not your biggest problems. In the early s, R.
Reynolds and Philip Morris derived the vast major- ity of their revenues from the domestic arena. Reynolds' approach to international business was, "If somebody out there in the world wants a Camel, let them call us. He identified international markets as the single best opportunity for long-term growth, despite the fact that the company derived less than 1 percent of its revenues from overseas.
Cullman puzzled over the best "strategy" for developing international operations and eventually came up with a brilliant answer: It was not a "what" answer, but a "who. At the time, international amounted to almost nothing-a tiny export department, a struggling investment in Venezuela, another in Australia, and a tiny operation in Canada.
Urbane and sophisticated, Weissman was the perfect person to develop markets like Europe, and he built international into the largest and fastest-growing part of the company.
The good-to-great companies made a habit of putting their best people on their best opportunities, not their biggest problems. The comparison compa- nies had a penchant for doing just the opposite, failing to grasp the fact that managing your problems can only make you good, whereas building your opportunities is the only way to become great.
For instance, when Kimberly-Clark sold the mills, Darwin Smith made it clear: The company might be getting rid of the paper business, but it would keep its best people.
Then, all of a sudden, the crown jewels are being sold off and they're asking, 'What is my future? We keep them. We interviewed Dick Appert, a senior executive who spent the majority of his career in the papermaking division at Kimberly-Clark, the same division sold off to create funds for the company's big move into consumer products.
T h e right people want to be part of building something great, and Dick Appert saw that Kimberly-Clark could become great by selling the part of the company where he had spent most of his working life. Not that every executive on the team became a fully evolved Level 5 leader to the same degree as Darwin Smith or Colman Mockler, but each core member of the team transformed personal ambi- tion into ambition for the company.
This suggests that the team members had Level 5 potential-or at least they were capable of operating in a manner consistent with the Level 5 leadership style. You might be wondering, "What's the difference between a Level 5 executive team member and just being a good soldier?
Yet each team member must also have the ability to meld that strength into doing whatever it takes to make the company great. An article on Philip Morris said of the Cullman era, "These guys never agreed on anything and they would argue about everything, and they would kill each other and involve everyone, high and low, talented peo- ple.
But when they had to make a decision, the decision would emerge. In the end, everybody stood behind the decision. In other words, is it possible to build a great company and also build a great life? The secret to doing so lies right in this chapter. I spent a few short days with a senior Gillette executive and his wife at an executive conference in Hong Kong.
During the course of our conver- sations, I asked them if they thought Colman Mockler, the C E O most responsible for Gillette's transition from good to great, had a great life. Colman's life revolved around three great loves, they told me: his family, Harvard, and Gillette.
Even during the darkest and most intense times of the takeover crises of the s and despite the increasingly global nature of Gillette's business, Mockler maintained remarkable balance in his life. He did not significantly reduce the amount of time he spent with his fam- ily, rarely working evenings or weekends.
He maintained his disciplined worship practices. He was so good at assem- bling the right people around him, and putting the right people in the right slots, that he just didn't need to be there all hours of the day and night.
That was Colman's whole secret to success and balance. He always seemed to find time to relax that way. This was a man who spent nearl y all his waking hours with people who loved him, who loved what they were doing, and who loved one another- at work, at home, in his charitable work, wherever. In wrapping up our interview with George Weiss- man of Philip Morris, I commented, "When you talk about your time at the company, it's as if you are describing a love affair.
Other than my marriage, it was the passionate love affair of my life. I don't think many people would understand what I'm talking about, but I suspect my colleagues would. A corridor at the Philip Morris world headquarters is called "the hall of the wizards of was. Similarly, Dick Appert of Kimberly-Clark said in his interview, "I never had anyone in Kimberly-Clark in all my forty-one years say any- thing unkind to me. I thank God the day I was hired because I've been associated with wonderful people.
Good, good people who respected and admired one another. In many cases, they are still in close contact with each other years or decades after working together. It was striking to hear them talk about the transition era, for no matter how dark the days or how big the tasks, these people had fun! They enjoyed each other's company and actually looked forward to meetings. A number of the executives charac- terized their years on the good-to-great teams as the high point of their lives.
Their experiences went beyond just mutual respect which they cer- tainly had , to lasting comradeship. Adherence to the idea of "first who" might be the closest link between a great company and a great life. For no matter what we achieve, if we don't spend the vast majority of our time with people we love and respect, we cannot possibly have a great life. But if we spend the vast majority of our time with people we love and respect-people we really enjoy being on the bus with and who will never disappoint us- then we will almost certainly have a great life, no matter where the bus goes.
The people we inter- viewed from the good-to-great companies clearly loved what they did, largely because they loved who they did it with. How did such a dramatic reversal of fortunes happen? Kroger transition point occurred in Cumulative returns, dividends reinvested, to January 1, But in the afflu- ent second half of the twentieth century, Americans changed.
They wanted nicer stores, bigger stores, more choices in stores. They wanted fresh-baked bread, flowers, health foods, cold medicines, fresh produce, forty-five choices of cereal, and ten types of milk.
They wanted offbeat items, like five different types of expensive sprouts and various concoc- tions of protein powder and Chinese healing herbs. Oh, and they wanted to be able to do their banking and get their annual flu shots while shop- ping. In short, they no longer wanted grocery stores.
They wanted Super- stores, with a big block "S" on the chest-offering almost everything under one roof, with lots of parking, cheap prices, clean floors, and a gazillion checkout lines. What's so interesting about that? Yet one of these two companies confronted the brutal facts of reality head-on and completely changed its entire system in response; the other stuck its head in the sand.
He tried to carry out, against all opposition, what he thought Mr. John [Hartford] would have liked. Hartford do? Hartford continued to be the dominant force on the board for nearly twenty years. Never mind the fact that he was already dead.
In one series of events, the company opened a new store called The Golden Key, a separate brand wherein it could experiment with new methods and models to learn what customers wanted. Customers really liked it.
Here, right under their noses, they began to discover the answer to the questions of why the! They didn't like the answers that it gave, so they closed it. Kroger also conducted experiments in the s to test the superstore concept.
The rise of Kroger is remarkably simple and straightforward, almost maddeningly so. During their interviews, Lyle Everingham and his prede- cessor Jim Herring CEOs during the pivotal transition years were polite and helpful, but a bit exasperated by our questions. To them, it just seemed so clear. When we asked Everingham to allocate one hundred points across the top five factors in the transition, he said: "I find your question a bit perplexing.
We also learned that you had to be number one or num- ber two in each market, or you had to exit. But once we looked at the facts, there was really no question about what we had to do.
So we just did it. The whole system would be turned inside out, store by store, block by block, city by city, , state by state. By the early s, Kroger had rebuilt its entire system on the new model and was well on the way to becoming the number one gro- cery chain in America, a position it would attain in Of course, the good-to-great compa- nies did not have a perfect track record.
But on the whole, they made many more good decisions than bad ones, and they made many more good decisions than the comparison companies. Even more important, on 7 the really big choices, such as Kroger s decision to throw all its resources into the task of converting its entire system to the superstore concept, they were remarkably on target.
This, of course, begs a question. Are we merely studying a set of com- panies that just happened by luck to stumble into the right set of deci- sions? O r was there something distinctive about their process that dramatically increased the likelihood of being right? The answer, it turns out, is that there was something quite distinctive about their process.
The good-to-great companies displayed two distinctive forms of disci- plined thought. The first, and the topic of this chapter, is that they infused the entire process with the brutal facts of reality. Kroger, like all good-to-great companies, developed its ideas by paying attention to the data right in front of it, not by following trends and fads set by others.
Interestingly, over half the good-to-great companies had some version of the "number one, number two" concept in place years before it became a management fad. When, as in the Kroger case, you start with an honest and diligent effort to determine the truth of the situation, the right decisions often become self-evident. Not always, of course, but often. And even if all decisions do not become self-evident, one thing is certain: You absolutely cannot make a series of good decisions without first confronting the brutal facts.
The good-to-great companies operated in accordance with this principle, and the comparison compa- nies generally did not. Consider Pitney Bowes versus Addressograph. It would be hard to find two companies in more similar positions at a specific moment in history that then diverged so dramatically. Until , they had similar revenues, profits, numbers of employees, and stock charts.
Both companies held near-monopoly market positions with virtually the same customer base- Pitney Bowes in postage meters and Addressograph in address-duplicating machines-and both faced the imminent reality of losing their monopo- lies. A self-described "conglomerateur," Ash had previously built Litton by stacking acquisitions together that had since faltered. According to Fortune, he sought to use Addressograph as a platform to reestablish his leadership prowess in the eyes of the world.
Yet the truth went unheard until it was too late. Ash some credit for being a visionary who tried to push his company to greater heights.
And, to be fair, the Address- ograph board fired Ash before he had a chance to fully carry out his plans. They all seemed a bit, well, to be blunt, neurotic and compulsive about Pitney's position in the world.
You'd better pay attention to this. Strong, charismatic leaders like Roy Ash can all too easily become the de facto reality driving a company. Throughout the study, we found comparison companies where the top leader led with such force or instilled such fear that people worried more about the leader-what he would say, what he would think, what he would do- than they worried about external reality and what it could do to the com- pany.
Recall the climate at Bank of America, described in the previous chapter, wherein managers would not even make a comment until they knew how the CEO felt. We did not find this pattern at companies like Wells Fargo and Pitney Bowes, where people were much more worried about the scary squiggly things than about the feelings of top manage- ment. The moment a leader allows himself to become the primary reality peo- ple worry about, rather than reality being the primary reality, you have a recipe for mediocrity, or worse.
This is one of the key reasons why less charismatic leaders often produce better long-term results than their more charismatic counterparts. Good to Great 73 Winston Churchill understood the liabilities of his strong personality, and he compensated for them beautifully during the Second World War.
Churchill, as you know, maintained a bold and unwavering vision that Britain would not just survive, but prevail as a great nation-despite the whole world wondering not if but when Britain would sue for peace. Dur- ing the darkest days, with nearly all of Europe and North Africa under Nazi control, the United States hoping to stay out of the conflict, and Hitler fighting a one-front war he had not yet turned on Russia , Churchill said: "We are resolved to destroy Hitler and every vestige of the Nazi regime.
From this, nothing will turn us. We will never par- ley. We will never negotiate with Hitler or any of his gang. We shall fight him by land. We shall fight him by sea. We shall fight him in the air. Until, with God's help, we have rid the earth of his shadow. He feared that his towering, charismatic personality might deter bad news from reaching him in its starkest form. So, early in the war, he created an entirely separate department outside the normal chain of command, called the Statistical Office, with the prin- cipal function of feeding him-continuously updated and completely unfiltered-the most brutal facts of reality.
As the Nazi panzers swept across Europe, Churchill went to bed and slept soundly: "I. Doesn't motivation flow chiefly from a compelling vision? One of the dominant themes that runs throughout this book is that if you successfully implement its findings, you will not need to spend time 7 and energy "motivating ' people.
If you have the right people on the bus, they will be self-motivated. The real question then becomes: How do you manage in such a way as not to de-motivate people?
And one of the single most de-motivating actions you can take is to hold out false hopes, soon to be swept away by events. How do you create a climate where the truth is heard?
We offer four basic practices: 1. Lead with questions, not answers. In , one year after he assumed C E O responsibility from his father, Alan Wurtzel's company stood at the brink of bankruptcy, dangerously close to violation of its loan agreements. At the time, the company then named Wards, not to be confused with Montgomery Ward was a hodgepodge of appliance and hi-fi stores with no unifying concept.
Over the next ten years, Wurtzel and his team not only turned the com- pany around, but also created the Circuit City concept and laid the foundations for a stunning record of results, beating the market twenty- two times from its transition date in to January 1, When Alan Wurtzel started the long traverse from near bankruptcy to these stellar results, he began with a remarkable answer to the ques- tion of where to take the company: I don't know. Unlike leaders such as Roy Ash of Addressograph, Wurtzel resisted the urge to walk in with "the answer.
We had some wonderful debates in the boardroom. It was never just a dog and pony show, where you would just listen and then go to lunch. He used the same approach with his executive team, constantly pushing and probing and prodding with questions.
Each step along the way, Wurtzel would keep asking questions until he had a clear picture of reality and its implications. Why, why, why? Furthermore, they used questions for one and only one reason: to gain understanding. They didn't use questions as a form of manipulation "Don't you agree with me on that?
When we asked the executives about their management team meetings during the transition era, they said that they spent much of the time "just trying to understand. Instead, they would start with questions like: "So, what's on your mind? Engage in dialogue and debate, not coercion.
In , you could hardly find a company more awful than Nucor. It had only one division that made money. Everything else drained cash. It had no culture to be proud of.
It had no consistent direction. At the time, Nucor was officially known as the Nuclear Corporation of America, reflecting its orientation to nuclear energy products, including the Scintillation Probe yes, they really named it that , used for radiation measurement. It had acquired a series of unrelated businesses in such arenas as semiconductor supplies, rare earth materials, electrostatic office copiers, and roof joists.
At the start of its transformation in , Nucor did not manufacture one ounce of steel. Nor did it make a penny of profit. Thirty years later, Nucor stood as the fourth-largest steelmaker in the and by made greater annual profits than any other American steel company.
First, Nucor benefited from the emergence of a Level 5 leader, Ken Iverson, promoted to C E O from general manager of the joist division. Second, Iverson got the right people on the bus, building a remarkable team of people like Sam Siegel described by one of his colleagues as "the best money manager in the world, a magician" and David Aycock, an oper- ations genius.
Like Alan Wurtzel, Iverson dreamed of building a. Instead, he played the role of Socratic moderator in a series of raging debates. We would stay there for hours, ironing out the issues, until we came to something. At times, the meetings would get so violent that people almost went across the table at each other. People yelled. They waved their arms around and pounded on tables. Faces would get red and veins bulged out. Nearly all the Nucor executives we spoke with described a climate of debate, wherein the company's strategy "evolved through many agonizing arguments and fights.
Conduct autopsies, without blame. In our interviews with the Philip Morris executives, we were struck by how they all brought up the debacle on their own and discussed it openly. Instead of hiding their big, ugly mistake, they seemed to feel an almost therapeutic need to talk about it.
He doesn't hold back the embarrassing truth about how flawed the deci- sion was. It is a five-page clinical analysis of the mistake, its implica- tions, and its lessons. Hundreds, if not thousands, of people hours had been spent in autop- sies of the 7UP case. Yet, as much as they talked about this conspicuous failure, no one pointed fingers to single out blame.
There is only one exception to this pattern: Joe Cullman, standing in front of the mirror, pointing the finger right at himself. He goes out of his way to give credit to those who were right in retrospect, naming those specific individuals who were more prescient than himself.
He set the tone: "I will take responsibility for this bad decision. But we will all take responsibility for extracting the maximum learning from the tuition we've paid.
Build "red flag" mechanisms. We live in an information age, when those with more and better infor- mation supposedly have an advantage. If you look across the rise and fall of organizations, however, you will rarely find companies stumbling because they lacked information. Bethlehem Steel executives had known for years about the threat of mini-mill companies like Nucor. They paid little attention until they woke up one day to discover large chunks of market share taken away.
Yet it often ignored those problems. With Halcion, for example, an insider was quoted in Newsweek saying, "dis- missing safety concerns about Halcion had become virtual company policy. In contrast, Carl Reichardt of Wells Fargo, called the ultimate realist by his predecessor, hit the brutal facts of deregulation head-on. We've got to be businessmen with as much attention to costs and effectiveness as McDonald's.
Good to Great 79 One particularly powerful way to accomplish this is through red flag mechanisms. Allow me to use a personal example to illustrate the idea. If you raise your hand with your red flag, the classroom will stop for you. There are no restrictions on when and how to use your red flag; the decision rests entirely in your hands. You can use it to voice an observa- tion, share a personal experience, present an analysis, disagree with the professor, challenge a C E O guest, respond to a fellow student, ask a question, make a suggestion, or whatever.
There will be no penalty whatsoever for any use of a red flag. Your red flag can be used only once during the quarter. Your red flag is nontransferable; you cannot give or sell it to another student. In one situation, a student used her red flag to state, "Professor Collins, I think you are doing a particularly ineffective job of running class today. You are leading too much with your questions and stifling our independent thinking.
Let us think for ourselves. A student survey at the end of the quarter would have given me that same information. But the red flag-real time, in front of everyone in the classroom-turned information about the short- comings of the class into information that I absolutely could not ignore. I got the idea for red flag mechanisms from Bruce Woolpert, who instituted a particularly powerful device called short pay at his company Graniterock. Short pay gives the customer full discretionary power to decide whether and how much to pay on an invoice based upon his own subjective evaluation of how satisfied he feels with a product or ser- vice.
Short pay is not a refund policy. He simply circles the offending item on the invoice, deducts it from the total, and sends a check for the balance. When I asked Woolpert his reasons for short pay, he said, "You can get a lot of infor- mation from customer surveys, but there are always ways of explaining away the data. With short pay, you absolutely have to pay attention to the data. You often don't know that a customer is upset until you lose that customer entirely.
Short pay acts as an early warning system that forces us to adjust quickly, long before we would lose that customer. Nonetheless, I've decided to include this idea here, at the urging of research assistant Lane Hornung. Hornung, who helped me systematically research and collate mechanisms across companies for a different research project, makes the compelling argument that if you're a fully developed Level 5 leader, you might not need red flag mechanisms.
But if you are not yet a Level 5 leader, or if you suffer the liability of charisma, red flag mech- anisms give you a practical and useful tool for turning information into information that cannot be ignored and for creating a climate where the truth is heard. Good to Great 81 the B category, it would be left alone by the big monster that had invaded its turf. Darwin Smith and his team felt exhilarated by the idea of going up against the best, seeing it as an opportunity to make Kimberly-Clark better and stronger.
They also viewed it as a way to stimulate the competitive juices of Kimberly people at all levels. At one internal gathering, Darwin Smith stood up and started his talk by saying, "Okay, I want everyone to rise in a moment of silence. Did some- one die? And so, after a moment of confusion, they all stood up and stared at their shoes in reverent silence. Save my name, email, and website in this browser for the next time I comment.
Sign in. Password recovery. Recover your password. Forgot your password? Get help. Source: amazon. How can good companies, mediocre companies, even bad companies achieve enduring greatness? The Study For years, this question preyed on the mind of Jim Collins. Are there companies that defy gravity and convert long-term mediocrity or worse into long-term superiority? And if so, what are the universal distinguishing characteristics that cause a company to go from good to great?
The Standards Using tough benchmarks, Collins and his research team identified a set of elite companies that made the leap to great results and sustained those results for at least fifteen years.
How great? After the leap, the good-to-great companies generated cumulative stock returns that beat the general stock market by an average of seven times in fifteen years, better than twice the results delivered by a composite index of the world's greatest companies, including Coca-Cola, Intel, General Electric, and Merck. The Comparisons The research team contrasted the good-to-great companies with a carefully selected set of comparison companies that failed to make the leap from good to great.
What was different? Why did one set of companies become truly great performers while the other set remained only good? Over five years, the team analyzed the histories of all twenty-eight companies in the study. After sifting through mountains of data and thousands of pages of interviews, Collins and his crew discovered the key determinants of greatness -- why some companies make the leap and others don't.
The Findings The findings of the Good to Great study will surprise many readers and shed light on virtually every area of management strategy and practice.
The findings include: Level 5 Leaders: The research team was shocked to discover the type of leadership required to achieve greatness.
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