TEAM 6

WILL KERLICK MOLLY MURDOCK REECE MACDONALD BRYAN FETTERMAN JOHN FLETCHER

Good to GreatChapter 4: Confront the Brutal Facts (But Never

Lose Faith)

“There is no worse mistake in public leadership than to hold out false hopes soon to be swept away” -Winston Churchill

Confront the Brutal Facts

BUILD UP

BREAKTHROUGH

FLYWHEEL

Level 5 First Who Confront the HedgeHog Culture of TechnologyLeadership Then What Brutal Facts Concept Discipline AccelerationsDisciplined People

Disciplined Thought

Disciplined Action

Confront the Brutal Facts

Facts are better then dreams

A climate where truth is heard

Unwavering faith amid the brutal facts

The Stockdale paradox

Facts Are Better Than

Dreams

Disciplined Thought

Good to Great companies showed to have two distinct forms of disciplined thought

Companies infused the entire process with the brutal facts of reality Basis of this chapter

Next, they developed a simple, yet deeply insightful, frame of reference for all decisions Covered in later chapters

Good Decisions

All Good to Great companies made multiple good decisions, diligently executed that accumulated one on top of the other. The process to success was constantly refined.

Before a company can make a series of good decisions, it must face the brutal facts.

Once the brutal facts were faced, the right decisions often became self-evident.

Facing Brutal Facts….

Old-model grocery stores were becoming extinct Kroger’s CEO Lyle Everingham said, “The super combination stores were

the way of the future…once we looked at the facts, there was really no question what we had to do.” Kroger transformed all of their stores therefore reconstructing traditional market

boundaries to break from the competition and create a Blue Ocean.

A&P opened The Golden Key in order to experiment with the new trends in the market A&P didn’t like the facts they faced and shut down the new successful store in

order to preserve the traditional store, which soon failed.

Store Type Number of StoresCombination Food & Drug Stores 2,183

Multi-Department Stores 123Marketplace Stores 35

Price Impact Warehouse Stores 145Convenience Stores 782

Jewelry Stores 394

A Second Example

Mr. Ash of Addressograph had a vision to emerge above IBM, Xerox, and Kodak in office automation Addressograph had previously only dominated the envelope-

address-duplication business Ash refused to face evidence that his plan was doomed to fail After Ash was thrown out of office and the company had filed for

bankruptcy, he still refused to confront reality, saying: “We lost some battles, but we were winning the war,”

There is nothing wrong with pursuing a vision for greatness, but Good to Great companies continually refined the path to greatness with brutal facts of reality.

Leaders

Strong charismatic leaders can become the de facto reality driving the company You don’t want celebrity leaders

Fear of the leader causes employees to be more afraid of what the leader would say or think then what external forces could do to the company. Employees don’t give honest opinions but instead say

what they think the CEO would like to hear

Pitney Bowes Example

There is no fear of executives at Pitney Bowes. Instead they hold sales meetings where the entire management team opens themselves up for searing questions and challenges from the sales people who deal directly with customers.

Instead of bragging, Pitney Bowes executives think that their accomplishments, no matter how great, are never good enough to sustain the company. Pushes them from good to great

A Climate Where the

Truth is Heard

Four Basic Practices for Creating the Right Climate

Lead with questions, not answers

Engage in dialogue and debate, not coercion

Conduct autopsies, without blame

Build red flag mechanisms

Lead with Questions, Not Answers

Questions are used to gain a better understanding

They are not a form of manipulation or used to blame others or put people down

Ask questions that will lead to the best possible insights

Many Good to Great companies conducted informal meetings with no agenda where current realities tended to bubble to the surface after asking conversational questions So, What’s on your mind? Can you tell me about that? What should we be worried about? Can you help me understand?

Engage in Dialogue and Debate, NOT Coercion

Intense dialogues, arguments, and debates often allow companies to iron out issues.

Ken Iverson of Nucor acted simply as a mediator for debates that turned Nucor from a nuclear business to a steel producer.

The process is more like a heated scientific debate, with people engaged in a search for the best answers.

Conduct Autopsies, without Blame

Phillip Morris’s acquisition of 7UP was a complete failure, but executives aren’t ashamed of the downfall. Instead they talk about it and analyze the situation.

Dissect mistakes and learn from them as Phillip Morris did.

Do not place blame for failure, only search for understanding and learning

Build Red Flag Mechanisms

All companies in any given industry have the same access to information. The key, then, lies in turning information into information that CAN NOT be ignored

Red flags cause immediate attention to important information.

Unwavering Faith Amid the

Brutal Facts

Persistence is Key

When P&G entered the market, Scott Paper immediately threw in the towel and accepted defeat. With P&G as number 1, Scott Paper only sought to

keep afloat in their industry.

Kimberly-Clark, however, decided to fight back. Kimberly-Clark is about the only company that P&G

didn’t trump. They were exhilarated by the idea of going up against

the best, seeing it as an opportunity to make Kimberly-Clark better and stronger

Unwavering Faith

Good to Great companies face competition and leave themselves stronger and more resilient rather than weak and more dispirited. They use difficult experiences as defining events

Never entertain the possibility that you might fail, but instead have confidence that you will prevail in the end.

The Stockdale Paradox

Stockdale Paradox

Stockdale paradox is the duality of stoically accepting the brutal facts and maintaining an unwavering faith.

It’s not the presence or absence of difficulty, but how you deal with the inevitable difficulties in life.

In adopting this duality you will dramatically increase your odds of making a series of good decisions and ultimately discovering a simple, yet deeply insightful concept for making really big choices.

Stockdale Paradox

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.

“Once you have that simple, unifying concept, you will be very close to make a sustained transition to breakthrough results.” -Jim Collins