Good to Great Chapter 4: Confront the Brutal Facts (But Never Lose Faith)

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 hopessoon to be swept away” -Winston Churchill

Confront the Brutal Facts

BUILD UP

BREAKTHROUGH

FLYWHEEL

Level 5 First Who Confront the HedgeHog Culture of Technology

Leadership Then What Brutal Facts Concept Discipline Accelerations

Disciplined 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 BetterThan Dreams

Disciplined Thought

Good to Great companies showed to have twodistinct forms of disciplined thought

Companies infused the entire process with the brutal facts ofreality

Basis of this chapter

Next, they developed a simple, yet deeply insightful, frame ofreference for all decisions

Covered in later chapters

Good Decisions

All Good to Great companies made multiple gooddecisions, diligently executed that accumulated oneon top of the other.

The process to success was constantly refined.

Before a company can make a series of gooddecisions, it must face the brutal facts.

Once the brutal facts were faced, the right decisionsoften became self-evident.

Facing Brutal Facts….

Old-model grocery stores were becoming extinct

Kroger’s CEO Lyle Everingham said, “The super combination stores werethe way of the future…once we looked at the facts, there was really noquestion what we had to do.”

Kroger transformed all of their stores therefore reconstructing traditional marketboundaries to break from the competition and create a Blue Ocean.

A&P opened The Golden Key in order to experiment with the new trends inthe market

A&P didn’t like the facts they faced and shut down the new successful store inorder to preserve the traditional store, which soon failed.

A Second Example

Mr. Ash of Addressograph had a vision to emerge aboveIBM, 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 forbankruptcy, he still refused to confront reality, saying: “We lost somebattles, but we were winning the war,”

There is nothing wrong with pursuing a vision forgreatness, but Good to Great companies continuallyrefined the path to greatness with brutal facts of reality.

Leaders

Strong charismatic leaders can become the de factoreality driving the company

You don’t want celebrity leaders

Fear of the leader causes employees to be moreafraid of what the leader would say or think thenwhat external forces could do to the company.

Employees don’t give honest opinions but instead say whatthey 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 entiremanagement team opens themselves up for searingquestions and challenges from the sales people whodeal directly with customers.

Instead of bragging, Pitney Bowes executives thinkthat their accomplishments, no matter how great,are never good enough to sustain the company.

Pushes them from good to great

A Climate Wherethe 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 othersor put people down

Ask questions that will lead to the best possible insights

Many Good to Great companies conducted informal meetingswith no agenda where current realities tended to bubble to thesurface 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 oftenallow companies to iron out issues.

Ken Iverson of Nucor acted simply as a mediator fordebates that turned Nucor from a nuclear business toa 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 completefailure, but executives aren’t ashamed of thedownfall. Instead they talk about it and analyze thesituation.

Dissect mistakes and learn from them as PhillipMorris did.

Do not place blame for failure, only search forunderstanding and learning

Build Red Flag Mechanisms

All companies in any given industry have the sameaccess to information. The key, then, lies in turninginformation into information that CAN NOT beignored

Red flags cause immediate attention to importantinformation.

Unwavering FaithAmid the BrutalFacts

Persistence is Key

When P&G entered the market, Scott Paperimmediately threw in the towel and accepted defeat.

With P&G as number 1, Scott Paper only sought to keep afloatin their industry.

Kimberly-Clark, however, decided to fight back.

Kimberly-Clark is about the only company that P&G didn’ttrump.

They were exhilarated by the idea of going up against the best,seeing it as an opportunity to make Kimberly-Clark better andstronger

Unwavering Faith

Good to Great companies face competition and leavethemselves stronger and more resilient rather thanweak 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 inthe end.

The StockdaleParadox

Stockdale Paradox

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

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

In adopting this duality you will dramatically increaseyour odds of making a series of good decisions andultimately discovering a simple, yet deeply insightfulconcept for making really big choices.

Stockdale Paradox

Retain faith that youwill prevail in theend, regardless ofthe difficulties.

AND at the

same time

Confront the mostbrutal facts of yourcurrent reality,

Whatever they mightbe.

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