1. To make the leap from good to great, there needs to be a Level 5 leader.
2. Level 5 leader = Professional Will + Personal Humility.
3.Two sides of Level 5 leadership:
- Professional Will:
- Create superb results, a clear catalyst in the transition from good to great.
- Demonstrates an unwavering resolve to do whatever must be done to produce the best long-term results, no matter how difficult.
- Sets the standard of building an enduring great company; will settle for nothing less.
- Looks in the mirror, not out the window, to apportion responsibility for poor results, never blaming other people, external factors, or bad luck.
- Personal Humility:
- Demonstrates a compelling modesty, shunning public adulation; never boastful.
- Act with quiet, calm determination; relies principally on inspired standards, not inspiring charisma, to motivate.
- Channels ambition into the company, not the self; set up successors for even greater success in the next generation.
- Looks out the window, not in the mirror, to apportion credit for the success of the company - to other people, external factors, and good luck.
4. Every goo-to-great company had level 5 leadership during the pivotal transition years.
5. Level 5 leaders embody a paradoxical mix of personal humility and professional will. They are ambitious, to be sure, but ambitious first and foremost for the company, not themselves.
6. Level 5 leaders set up their successors for even greater success in the next generation.
7. Level 5 leaders display a compelling modesty, are self-effacing and understated.
8. Level 5 leaders are fanatically driven, infected with an incurable need to produce sustained results. They are resolved to do whatever it takes to make the company great, no matter how big or hard the decisions.
9. Level 5 leaders display a workmanlike diligence - more plow horse than show horse.
10. One of the most damaging trends in recent history is the tendency (especially by boards of directors) to select dazzling, celebrity leaders and to de-select potential Level 5 leaders.
11. I believe that potential Level 5 leaders exist all around us, if we just know what to look for, and that many people have the potential to evolve into Level 5.
12. Larger-than-life, celebrity leaders who ride in from the outside are negatively correlated with going from good to great. Ten of eleven good-to-great CEOs came from inside the company.
13. Level 5 leaders attribute much of their success to good luck, rather than personal greatness.
Chapter 3 Highlights:
1. Level 5 + Management Team (Good-to-Great Companies) = Level 5 Leader → First Who (Get the right people on the bus. Build a superior executive team.) → Then What (Once you have the right people in place, figure out the best path to greatness.)
2. We found no systematic pattern linking executive compensation to the process of going from good to great. The evidence simply does not support the idea that the specific structure of executive compensation acts as a key lever in taking a company from good to great. (It's who you pay, not how you pay them.)
3. The purpose of a compensation system should not be to get the right behaviours from the wrong people, but to get the right people on the bus in the first place, and to keep them there.
4. People are not your most important asset. The right people are.
5. 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 reported only one or two layoffs.
6. Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people.
7. The good-to-great companies showed the following bipolar pattern at the top management level: People either stayed on the bus for a long time or got off the bus in a hurry. In other words, the good-to-great companies did not churn more, they churned better.
8. It might take time to know for certain if someone is simply in the wrong seat or whether he needs to get off the bus altogether. Nonetheless, when the good-to-great leaders knew they had to make a people change, they would act.
9. There is an important corollary to this discipline: When you decide to sell off your problems, don't sell off your best people. This is one of those little secrets of change. If you create a place where the best people always have a seat on the bus, they're more likely to support changes in direction.
10. Indeed, one of the crucial elements in taking a company from good to great is somewhat paradoxical. You need executives, on the one hand, who argue and debate - sometimes violently - in pursuit of the best answers, yet, on the other hand, who unify fully behind a decision, regardless of parochial interests.
11. The good-to-great leaders began the transformation by first getting the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.
12. The key point of this chapter is not just the idea of getting the right people on the team. The key point is that "who" questions come before "what" decisions - before vision, before strategy, before organization structure, before tactics. First who, then what - as a rigorous discipline, consistently applied.
13. The comparison companies frequently followed the "genius with a thousand helpers" model - a genius leader who sets a vision and then enlists a crew of highly capable "helpers" to make the vision happen. This model fails when the genius departs.
14. The good-to-great leaders were rigorous, not ruthless, in people decisions. They did not rely on layoffs and restructuring as a primary strategy for improving performance. The comparison companies used layoffs to a much greater extent.
15. We uncovered three practical disciplines for being rigorous in people decisions:
16. Good-to-great management teams consist of people who debate vigorously in search of the best answers, yet who unify behind decisions, regardless of parochial interests.
17. Whether someone is the "right person" has more to do with character traits and innate capabilities than with specific knowledge, background, or skills.
Chapter 4 Highlights:
1. There is nothing wrong with pursuing a vision for greatness. After all, the good-to-great companies also set out to create greatness. But, unlike the comparison companies, the good-to-great companies continually refined the path to greatness with the brutal facts of reality.
2. Indeed, for those of you with a strong, charismatic personality, it is worthwhile to consider the idea that charisma can be as much a liability as an asset. Your strength of personality can sow the seeds of problems, when people filter the brutal facts from you. You can overcome the liabilities of having charisma, but it does require conscious attention.
3. Yes, leadership is about vision. But leadership is equally about creating a climate where the truth is heard and the brutal facts confronted. There's a huge difference between the opportunity to "have your say" and the opportunity to be heard. The good-to-great leaders understood this distinction, creating a culture wherein people had a tremendous opportunity to be heard and, ultimately, for the truth to be heard.
4. Leading from good to great does not mean coming up with the answers and then motivating everyone to follow your messianic vision. It means having the humility to grasp the fact that you do not yet understand enough to have the answers and then to ask the questions that will lead to the best possible insights.
5. Like Nucor, all the good-to great companies had a penchant for intense dialogue. Phrases like "loud debate," "heated discussions," and "healthy conflict" peppered the articles and interview transcripts from all the companies. They didn't use discussion as a sham process to let people "have their say" so that they could "buy in" to a predetermined decision. The process was more like a heated scientific debate, with people engaged in a search for the best answers.
6. When you conduct autopsies without blame, you go a long way toward creating a climate where the truth is heard. If you have the right people on the bus, you should almost never need to assign blame but need only to search for understanding and learning.
7. Indeed, we found no evidence that the good-to-great companies had more or better information than the comparison companies. None. Both sets of companies had virtually identical access to good information. They key, then, lies not in better information, but in turning information into information that cannot be ignored.
8. A powerful device short pay by Bruce Woolpert at 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 service. Short pay is not a refund policy. The customer does not need to return the product, nor does he need to call Graniterock for permission. He simply circles the offending item on the invoice, deducts it from the total, and sends a check for the balance. REASONS for short pay: "You can get a lot of information 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." said Bruce Woolpert.
9. Scott Paper's and Kimberly-Clark's differing reactions to P & G bring us to a vital point. In confronting the brutal facts, the good-to-great companies left themselves stronger and more resilient, not weaker and more dispirited. There is a sense of exhilaration that comes in facing head-on the hard truths and saying, "We will never give up. We will never capitulate. It might take a long time, but we will find a way to prevail."
10. The Stockdale Paradox: (a key psychology for leading from good to great)
Retain faith that you will prevail in the end, regardless of the difficulties. AND AT THE SAME TIME Confront the most brutal facts of your current reality, whatever they might be.
11. All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality.
12. When you start with an honest and diligent effort to determine the truth of your situation, the right decisions often become self-evident. It is impossible to make good decisions without infusing the entire process with an honest confrontation of the brutal facts.
13. A primary task in taking a company from good to great is to create a culture wherein people have a tremendous opportunity to be heard and, ultimately, for the truth to be heard.
14. Creating a climate where the truth is heard involves four basic practices:
a. Lead with questions, not answers.
b. Engage in dialogue and debate, not coercion.
c. Conduct autopsies, without blame.
d. Build red flag mechanisms that turn information into information that cannot be ignored.
15. The good-to-great companies faced just as much adversity as the comparison companies, but responded to that adversity differently. They hit the realities of their situation head-on. As a result, they emerged from adversity even stronger.
16. Spending time and energy trying to "motivate" people is a waste of effort. The real question is not, "How do we motivate our people?" If you have the right people, they will be self-motivated. They key is to not de-motivate them. One of the primary ways to de-motivate people is to ignore the brutal facts of reality.
Chapter 3 Highlights:
1. Level 5 + Management Team (Good-to-Great Companies) = Level 5 Leader → First Who (Get the right people on the bus. Build a superior executive team.) → Then What (Once you have the right people in place, figure out the best path to greatness.)
2. We found no systematic pattern linking executive compensation to the process of going from good to great. The evidence simply does not support the idea that the specific structure of executive compensation acts as a key lever in taking a company from good to great. (It's who you pay, not how you pay them.)
3. The purpose of a compensation system should not be to get the right behaviours from the wrong people, but to get the right people on the bus in the first place, and to keep them there.
4. People are not your most important asset. The right people are.
5. 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 reported only one or two layoffs.
6. Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people.
7. The good-to-great companies showed the following bipolar pattern at the top management level: People either stayed on the bus for a long time or got off the bus in a hurry. In other words, the good-to-great companies did not churn more, they churned better.
8. It might take time to know for certain if someone is simply in the wrong seat or whether he needs to get off the bus altogether. Nonetheless, when the good-to-great leaders knew they had to make a people change, they would act.
9. There is an important corollary to this discipline: When you decide to sell off your problems, don't sell off your best people. This is one of those little secrets of change. If you create a place where the best people always have a seat on the bus, they're more likely to support changes in direction.
10. Indeed, one of the crucial elements in taking a company from good to great is somewhat paradoxical. You need executives, on the one hand, who argue and debate - sometimes violently - in pursuit of the best answers, yet, on the other hand, who unify fully behind a decision, regardless of parochial interests.
11. The good-to-great leaders began the transformation by first getting the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.
12. The key point of this chapter is not just the idea of getting the right people on the team. The key point is that "who" questions come before "what" decisions - before vision, before strategy, before organization structure, before tactics. First who, then what - as a rigorous discipline, consistently applied.
13. The comparison companies frequently followed the "genius with a thousand helpers" model - a genius leader who sets a vision and then enlists a crew of highly capable "helpers" to make the vision happen. This model fails when the genius departs.
14. The good-to-great leaders were rigorous, not ruthless, in people decisions. They did not rely on layoffs and restructuring as a primary strategy for improving performance. The comparison companies used layoffs to a much greater extent.
15. We uncovered three practical disciplines for being rigorous in people decisions:
- When in doubt, don't hire - keep looking. (Corollary: A company should limit its growth based on its ability to attract enough of the right people.)
- When you know you need to make a people change, act. (Corollary: First be sure you don't simply have someone in the wrong seat.)
- Put your best people on your biggest opportunities, not your biggest problems. (Corollary: If you sell off your problems, don't sell off your best people.)
16. Good-to-great management teams consist of people who debate vigorously in search of the best answers, yet who unify behind decisions, regardless of parochial interests.
17. Whether someone is the "right person" has more to do with character traits and innate capabilities than with specific knowledge, background, or skills.
Chapter 4 Highlights:
1. There is nothing wrong with pursuing a vision for greatness. After all, the good-to-great companies also set out to create greatness. But, unlike the comparison companies, the good-to-great companies continually refined the path to greatness with the brutal facts of reality.
2. Indeed, for those of you with a strong, charismatic personality, it is worthwhile to consider the idea that charisma can be as much a liability as an asset. Your strength of personality can sow the seeds of problems, when people filter the brutal facts from you. You can overcome the liabilities of having charisma, but it does require conscious attention.
3. Yes, leadership is about vision. But leadership is equally about creating a climate where the truth is heard and the brutal facts confronted. There's a huge difference between the opportunity to "have your say" and the opportunity to be heard. The good-to-great leaders understood this distinction, creating a culture wherein people had a tremendous opportunity to be heard and, ultimately, for the truth to be heard.
4. Leading from good to great does not mean coming up with the answers and then motivating everyone to follow your messianic vision. It means having the humility to grasp the fact that you do not yet understand enough to have the answers and then to ask the questions that will lead to the best possible insights.
5. Like Nucor, all the good-to great companies had a penchant for intense dialogue. Phrases like "loud debate," "heated discussions," and "healthy conflict" peppered the articles and interview transcripts from all the companies. They didn't use discussion as a sham process to let people "have their say" so that they could "buy in" to a predetermined decision. The process was more like a heated scientific debate, with people engaged in a search for the best answers.
6. When you conduct autopsies without blame, you go a long way toward creating a climate where the truth is heard. If you have the right people on the bus, you should almost never need to assign blame but need only to search for understanding and learning.
7. Indeed, we found no evidence that the good-to-great companies had more or better information than the comparison companies. None. Both sets of companies had virtually identical access to good information. They key, then, lies not in better information, but in turning information into information that cannot be ignored.
8. A powerful device short pay by Bruce Woolpert at 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 service. Short pay is not a refund policy. The customer does not need to return the product, nor does he need to call Graniterock for permission. He simply circles the offending item on the invoice, deducts it from the total, and sends a check for the balance. REASONS for short pay: "You can get a lot of information 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." said Bruce Woolpert.
9. Scott Paper's and Kimberly-Clark's differing reactions to P & G bring us to a vital point. In confronting the brutal facts, the good-to-great companies left themselves stronger and more resilient, not weaker and more dispirited. There is a sense of exhilaration that comes in facing head-on the hard truths and saying, "We will never give up. We will never capitulate. It might take a long time, but we will find a way to prevail."
10. The Stockdale Paradox: (a key psychology for leading from good to great)
Retain faith that you will prevail in the end, regardless of the difficulties. AND AT THE SAME TIME Confront the most brutal facts of your current reality, whatever they might be.
11. All good-to-great companies began the process of finding a path to greatness by confronting the brutal facts of their current reality.
12. When you start with an honest and diligent effort to determine the truth of your situation, the right decisions often become self-evident. It is impossible to make good decisions without infusing the entire process with an honest confrontation of the brutal facts.
13. A primary task in taking a company from good to great is to create a culture wherein people have a tremendous opportunity to be heard and, ultimately, for the truth to be heard.
14. Creating a climate where the truth is heard involves four basic practices:
a. Lead with questions, not answers.
b. Engage in dialogue and debate, not coercion.
c. Conduct autopsies, without blame.
d. Build red flag mechanisms that turn information into information that cannot be ignored.
15. The good-to-great companies faced just as much adversity as the comparison companies, but responded to that adversity differently. They hit the realities of their situation head-on. As a result, they emerged from adversity even stronger.
16. Spending time and energy trying to "motivate" people is a waste of effort. The real question is not, "How do we motivate our people?" If you have the right people, they will be self-motivated. They key is to not de-motivate them. One of the primary ways to de-motivate people is to ignore the brutal facts of reality.
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