Good to Great - Jim Collins - ***

Good is the enemy of great, because it's easy to settle for good things.

Good-to-great companies didn't principally focus on what to do to become great; they focused equally on what NOT to do and what to STOP doing.
Technology can accelerate a transformation but not cause one.

Level 5 leadership: a blend of personal humility and professional will
First who, then what: get good people, get rid of bad people, put the right people in the right seats
Stockdale paradox: confront the brutal facts, yet maintain faith that you will prevail
The hedgehog concept: if you can't be the best in the world at your core business, your core business can't be the basis for a great company
Technology: used to accelerate existing transformations
Gradual success: keep pushing in the same direction
A culture of discipline

The other levels of leader are: capable individual, contributor, manager, effective leader
The "leadership is the answer to everything" approach to business is the equivalent of the "God is the answer to everything" approach to science.

Some leaders have "biggest dog" syndrome: they don't mind other dogs, as long as they remain the biggest one.

Comparison leaders, concerned with their reputation for personal greatness, often failed to set the company up for success in the next generation. After all, what better testament to your own personal greatness than that the place falls apart after you leave?

The good-to-great leaders never wanted to become larger-than-life heroes. They were seemingly ordinary people with an incurable need to produce results.

Bethlehem Steel blamed imported steel as the cause of their problems. Ken Iverson of Nucor saw the challenge from imports as a blessing: steel was heavy, and the competition had to ship it all the way across the ocean, giving the American companies a huge advantage.

The window and the mirror:
Level 5 leaders look out the window to give credit to people, but look in the mirror to assign responsibility. Comparison leaders do the opposite.

If you have the right people, the problem of how to motivate and manage people largely goes away. The right people are self-motivated: you just need to to avoid de-motivating them.

The Wells Fargo story:
The CEO of Wells-Fargo knew the banking industry would undergo substantial change, but he didn't know what that change would be. Instead of mapping out a strategy for change, his strategy was to hire outstanding people. "If I'm not smart enough to see the changes that are coming, they will. And they'll be flexible enough to deal with them."

The "genius with a thousand helpers" model is not a sustainable vision.

The right people will deliver the best results they're capable of, regardless of the incentive system.
-- the incentive system is what makes them deliver the results to you, not other people

Nucor built its entire system on the idea that you can teach farmers how to make steel, but you can't teach a farmer work ethic to people.

"The only way to deliver to the people who are achieving is to not burden them with the people who are not achieving." -- a Wells Fargo executive
Letting the wrong people hang around is unfair to the right people.
-- every system that yokes a man to a community needs effective methods of identifying and excommunicating community members who don't pull their weight

Practical disciplines:
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.

The Philip Morris story:
Philip Morris took their best executive off their domestic business and put him in charge of international operations, their best opportunity. The end result was that Marlboro became the best-selling cigarette in the world three years before it became number one in the United States.

At a good-to-great company, the people either stayed on the bus for a long time or got off the bus quickly.

You don't need to sell off good people.
If you have trouble with someone in one capacity, try moving them to another capacity where they might blossom.

You can't reject data because you don't like its implications.
The Kroger story:
Both Kroger and A&P did studies on what consumers wanted, and both companies' studies came back with the same answer: superstores. A&P ignored the data. Kroger converted all its facilities to superstores or eliminated them. Within years, Kroger was the number one grocery chain in America, and A&P was in sad decline.

If you can't be number one or number two in a market, there's no place for you in that market.

People need to be worried about the company's problems, not the feelings of management.

Charisma can be a liability as well as an asset.
Charismatic people need to be especially conscientious about making decisions based on facts.

How to create a climate where the truth is heard:
1. Lead with questions, not answers.
2. Debate. Don't coerce.
3. Conduct autopsies without blame.
-- conducting autopsies is not limited to failures or even to what you yourself are doing
4. Build "red flag" mechanisms, where people have opportunities to say things that would ordinarily go unsaid.

Hosting "debates" to convince people to buy in to a predetermined decision is a waste of time.

Use the opportunity provided by crises and challenges to grow stronger.
The difficulty of the challenge matters less than the response to it.

The optimists didn't make it out of POW camps. The people who made it saw the facts for what they were, yet still had faith in their ability to prevail.
-- optimism is a dangerous delusion, especially when the assets in question aren't the optimist's
-- a way to differentiate optimism from morale-boosting hype is that hype either goes away or changes targets when buzzkilling facts appear

"Are you a hedgehog or a fox?"
-- I'm a fox
"Each day, the battle between the hedgehog and the fox takes place, and despite the greater cunning of the fox, the hedgehog always wins."
-- actually, foxes used their cunning to develop an exploit: they roll the hedgehog into water, where its one defense doesn't work, and then eat it
-- man I hate reading corollary points based on flawed reasoning - this isn't the first time fact-checking has revealed something like this, but it is the first time the conclusion that's been drawn is the exact opposite of the one the reality of the analogy supports

Integrate your thinking into a unifying vision.
See what's essential and ignore the rest.
-- fox note: as essential things are being completed, niceties that are compatible with the vision should be experimented with on a smaller scale
-- fox note: if you do one thing really well, but 30% of your market wants something you're not providing, your maximum return on your product is 70% of market share. No matter how good you get at providing your service, you can never win the 30% of customers your service doesn't appeal to. Fox thinking overcomes this limitation through diversification.

Walgreens' strategy:
- The best, most convenient drugstores.
- High profit per customer visit.
That's it. More convenience led to more visits, and with high profit per visit, Walgreens prospered.

Eckerd's strategy:
- make good deals
- grow grow grow
While Walgreens executives understood that profitable growth would come from pruning away all that did not fit with the Hedgehog Concept, Eckerd executives lurched after growth for growth's sake. Eckerd threw itself into the home video market with its purchase of American Home Video Corporation. Eckerd's CEO told Forbes magazine, "Some feel the purer we are, the better we'll be. But I want growth, and the home video industry is only emerging -- unlike, say, drugstore chains." Eckerd's home video foray produced $31 million in losses.
-- fox note: what if their experiment had been a success? Philip Morris derives over 1/3 of its revenue from non-essential sources.

The Hedgehog Concept Venn diagram:
1. What you can be the best in the world at -- analyzing, deconstructing, and recompiling systems and experiences to improve them
2. What drives your economic engine -- multiple sources of income, each with different requirements regarding scales and balances
3. What you are deeply passionate about -- learning, improvement, truth, evolution, righting wrongs, personal development, creativity, teamplay

Being the best at what you do:
Wells Fargo realized they couldn't be better than Citicorp at global banking, so they pulled the plug on the majority of their international operations. Wells Fargo then turned their attention to what they COULD be the best in the world at: running a bank like a business, with a focus on the western United States. [presumably where their strengths were]
Abbot: Recognized that they couldn't compete with Merck in pharmaceuticals, switching instead to diagnosis tools and economic healthcare solutions.
Fannie Mae: Figured out that they could develop a unique capability to assess risk in mortgage-related securities and become a full capital markets player.
Kimberly-Clark: Saw they had a latent skill at creating brands where the name of the product is synonymous with the category (Huggies, Kleenex, Depends)
Nucor: Found that they had tremendous skill in creating a performance culture and making far-sighted bets on technology.
Philip Morris: Built brand loyalty and diversified into non-tobacco areas as a defensive measure.
Hasbro: Built classics and recycled them.

You don't need to be in a great industry to produce great results.

Try to find your performance denominator - how you measure where your profits stem from.
-- sales * critical reviews * customer reviews at various intervals (first impression, two one month, three months, whatever)

Finding your Hedgehog Concept is not a weekend affair.
A Council made of 5-12 people from a wide range of perspectives can help determine this concept.
Rules for the Council: governed by leading executive, informal, does not seek consensus

Try to find your performance denominator - how you measure where your profits stem from.
-- sales * critical reviews * customer reviews at various intervals (first impression, two one month, three months, whatever)

Build a culture around the idea of freedom and responsibility, within a framework.
Fill that culture with self-disciplined people.
Adhere to the Hedgehog Concept.

Level 5 leaders created a culture of discipline. Level 4 leaders disciplined the organization.

The fact that something is a once-in-a-lifetime opportunity doesn't make it a good one to take, especially if it doesn't fit within the vision.

Nucor made workers' hard hats the same color. When the foremen complained, Nucor responded, "Your status comes from your leadership capabilities, not your position. If you need a class distinction, Nucor is not the place for you."

Most people have to-do lists, but not "stop doing" lists.

You can't make good use of technology until you know which technologies are relevant.
Early technology pioneers rarely prevail in the end.
-- the later you get into the tech game, the further your dollar goes, but you lose opportunities to establish market share

Success is built upon accumulated momentum, not miracles.
Changing your course reduces your momentum.

How do you get a company of 50,000 people to embrace a radical new strategy? Start little by little, then let them see it's working.

You can buy your way to growth, but not greatness.