Good To Great Chapter 3 - Texas Tech University

Good To Great Chapter 3 - Texas Tech University

Group 3; Mason Mitchell Sarah Yelverton Randy Greinert Alec Cooper GOOD TO GREAT CHAPTER 3 There are going to be times when we cant wait for somebody. Now, youre either on the bus or off the

bus. -Ken Kesey First Who... Then What If you begin with who. rather than what, you can more easily adapt to a changing world. If people join the bus primarily because of where it is going, what happens if you get ten miles down the road and you need to change directions?

-Could be a major problem. But if people are on the bus because of who else is on the bus, its much easier to change directions. First Who... Then What If you have the right people on the bus, the problem of how to motivate and manage people largely goes away. If you have the wrong people, it

doesnt matter whether you discover the right direction; you still wont have a great company. Great vision without great people is irrelevant. Wells Fargo Dick Cooley 1970s-1980s Built the best team, according to investor Warren Buffett. Foresaw that the banking industry would eventually undergo wrenching

change. Team reminded people of the famed whiz kids recruited to Ford Motor Company in the late 1940s. Bank of America Took a different approach than Wells Fargo. Weak generals, strong lieutenants model If you pick strong generals for key positions, their competitors will

leave. But if you pick weak generals placeholders , rather than highly capable executives then strong lieutenants are The real truth Per one dollar invested in the firm Bank of America $15.60 Banking Market (avg) $19.86 Wells Fargo

Not a Genius with a thousand helpers Good to great companies are built deep and have strong executive teams Contrastingly other companies followed genius with a thousand helpers model Genius cases Primary driving force in companys

success is the genius Geniuses seldom build great mgmt teams because they dont need/want one Problems arise when genius leaves Eckerd What before who 2 stores in Delaware to 1000 stores in SE USA Left when neck and neck with

Walgreens to pursue his passion, politics Began long decline eventually being acquired by JC Penney Eckerd vs. Walgreen Eckerds Genius at Walgreen Genius at... Picking right stores to Picking right people to

buy Picking store locations hire Seeing which people should go in what seats Eckerd vs. Walgreen Eckerds Failure Walgreens sucess

Selection of a Developed multiple successor Built no executive team, just helpers outstanding candidates Built best executive team in industry

L Level 5 mgmt e T v Fi h e r el s 5 Good-to-great n

t W L w h e h a o d t e r

vs Genius w/1000 helpers Comparison companies Its who you pay, not how you pay them First who principle: Its not how you compensate your execs, its which execs you have to compensate in the first place If you have right execs on bus, they

will do everything within their power to build a great company, not because of what they will get for it, but because they cant imagine settling for less Simple Truth Good to great companies understand a simple truth: The right people will do the right things and deliver the best results they are capable of, regardless of the incentive system

Nucor example Built idea on you can teach people how to make steel, but cant teach work ethic to people who dont have it in the first place Located plants in known hardworking farm towns like Norfolk, Nebraska

Paid workers more than any other steel company in the world we hire five, work them like ten, and pay them like eight Hired right people by focusing more on attributes than on educational background or experience Food for thought Good-to-great exec said his best hiring decision often came from people with no industry or business experience

One case hired a manager whod been captured twice during WWII and escaped both times. Said that anyone who could do that shouldnt have trouble with business Rigorous, Not Ruthless According to the text: Rigorous culture: consistently applying exacting standards at all times and at all levels, especially in upper management Ruthless culture: hacking and

cutting, epecially in difficult times, or firing people without any thoughtful Wells Fargo acquired Crocker Bank 1986 Wells Fargo terminated most of the Crocker management team The majority of Crocker managers were the wrong people for Wells Fargos bus Wells Fargo standards were ferocious and consistent Crocker managers did not have the same ability as Wells

Fargo managers and would have soon failed in the Wells Fargo performance culture Wells Fargo was rigorous by dealing with it up front and letting people get on with their lives Layoffs Upper management suffered more on a percentage basis than lower-level workers in the consolidation Rigor, in good-to-great companies, starts at the top and focuses on the people who hold the largest responsibility

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 only reported one or two layoffs. Layoffs were used five times as frequently in comparison companies Three Practical Steps on how to be Rigorous 1. When in doubt, dont 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 Practical Discipline # 1 When in doubt, dont hire-keep looking Great companies are built by those who have the ability to get and keep enough of the right people

When asked at what point to compromise when looking to fill a position, Alan Wurtzel said, You dont compromise. We find another way to get through until we find the right people. Circuit City vs. Silo Circuit City: Focused on getting the right people on the bus Built the best, most professional management team Made simple deliveries a priority

Silo: Focused on the right stores to buy Goal to grow as fast as possible Reputation for not being able to do the basics Practical Discipline #2 When you know you need to make a people

change, act Act when people need to be tightly managed The right people only need to be guided, taught, and led Act when time is invested trying to properly manage the person Act when energy is spent on an individual when it should be spent on developing and working with all the right people Continued Waiting to long before acting is unfair to the

people who need to get off the bus In good-to-great companies people either stay on the bus for a long time or got of the bus quickly Colman Mockler (CEO of Gillette) invested time in finding the right seat for individuals - He moved 38 of the top 50 people in the management team to different positions How do you know when you know? Here are a few questions to ask:

1. Rather than asking yourself if this person should get off the bus, ask yourself if you would hire this person again? 2. If the person told you they are leaving to pursue another job opportunity, would you be disappointed or secretly relieved? PRACTICAL DISCIPLINE #3 Put your best people on your biggest opportunities, not your biggest problems.

Phillip Morris Kimberly-Clark First who, great companies, and a great life Build a great company and also build a great life? Love affair Love what you do Be with people you love and respect And have fun

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