Good to Great – CH03

First Who, Then What

“There are going to be times when we can’t wait for somebody. You’re either on the bus or off the bus.” –Ken Kesey

FIRST STEP: First get the right people on the bus, the wrong people off the bus, and THEN figure out where to drive it!

  1. This makes change simple
  2. The right people don’t need to be managed & motivated, they are already self-motivated by the inner drive to product the best results & to be part of creating something great
  3. Having the wrong people prevents you from EVER becoming a great company regardless of finding “right direction”

You get the best people, you build them into the best managers in the industry, & you accept the fact that some of them will be recruited to become CEOs of other companies.

This is not just about assembling the right team. It’s that FIRST fix the people and THEN find the direction.

Sheer rigor needed in people decisions in order to take a company from Good to Great.

Nothing to do with executive pay structures, incentives, or compensation packages!

The right people will do the right things & deliver the best results they’re capable of, regardless of the incentive system.

Compensation system is ONLY about attracting and retaining the RIGHT people, who are already self-motivated to deliver results because it’s who they are. The wrong people can NEVER be incentivized enough to deliver.

“We hire 5, work them like 10, and pay them like 8.”

Rigorous, NOT ruthless!

Consistently applying exacting standards at all times & at all levels, especially in upper management. When rigorous, not ruthless – the best people need not worry about their positions & can concentrate fully on their work.

“The only way to deliver to the people who are achieving is to not burden them with the people who are not achieving.”

  1. When in doubt, don’t hire – keep looking
  2. When you know you need to make a people change – ACT!
    1. The moment you feel the need to tightly manage someone, you’ve made a hiring mistake! The best people do NOT need to be managed! They don’t need to be disciplined, motivated, incentivized, etc. Bad business all around. Act right away and let the wrong person go.  Be sure to first ask, “is it the wrong person or the wrong seat on the bus?”
  3. Put your best people on your biggest opportunities, not our biggest problems
  4. When you decide to sell off your problems, don’t sell off your best people.
    1. 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
  5. You need executives who argue & debate – sometimes violently – in pursuit of the best answers yet who unite fully behind a decision, regardless of personal or parochial interests.

Good to Great – CH02

Level 5 Leadership

“You can accomplish anything in life, provided that you do not mind who gets the credit.” –Harry S. Truman

  • Level1-Highly capable individual
  • Level2-Contributing team member
  • Level3-Competent manager
  • Level4-Effective leader
  • Level5-Executive

“I never stopped trying to become qualified for the job.”

Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. Their ambition is first and foremost for the institution, not themselves.

Fight for future greatness

Described as: quiet, humble, modest, reserved, shy, gracious, mild-mannered, self-effacing, understated, did not believe his own clippings

It is very important to grasp that Level 5 Leadership is not just about humility and modesty. It is equally about ferocious resolve to do whatever needs to be done to make the company great.

If you have a cancer in your own arm, you have to have the guts to cut off your own arm.

10 out of 11 G2G CEOs came from INSIDE the company, 3 by family inheritance. Comparison CEOs turned to outside saviors & failed to produce sustained results.

Level 5 Leaders look out the windows to apportion credit to factors outside themselves when things go well (& if they cannot find a specific person or event to give credit to, they credit good luck). At the same time, they look in the mirror to apportion responsibility, never blaming bad luck when things go poorly. Comparison leaders do the opposite.

Those who can never become Level 5 leaders are people who could NEVER let go of their ego to build something greater, larger, & more lasting than themselves. They will never become Level 5 Leaders.

Those who can grow and can evolve into Level 5 Leaders.  Under the right circumstances: self-reflection, conscious personal development, mentors, great teachers, loving parents, significant life experience, Level 5 boss, or any # of other factors – they begin to develop. Some of these leaders went through cancer, ww2 experience, religion, religious conversion, etc.

Humility & will; ambitious for the company!

  • Level 5 Leaders set up their successors for even greater success
  • They are fanatically driven to produce sustained results, whatever it takes
  • They have workmanlike diligence; more plow horse than showhorse
  • They look externally for causes of success & internally for causes of setbacks/blame.

Mr Golden and TSgt Rogers – definitely Level 5 Leaders

Larger than life CEOs and egos will FAIL!


Good to Great – CH01

Required Traits

Every single company that made the cut into the study, only 11 out of over 1450, had these similar traits

  1. Level 5 Leadership – Lincoln/Socrates vs Patton or Caesar
  2. First Who Then What – gather right people, kick out wrong people, THEN plan path (the where)
  3. Confront brutal facts – Stockdale Paradox – unwavering faith that we’ll prevail, regardless of difficulties, & have the discipline to confront the brutal facts of your current reality, whatever they are
  4. Hedgehog concept – transcend “curse of competence”. If you cannot be the best in the world at your core business, then your core business cannot form the basis of a great company. It must be replaced with a simple concept that reflects deep understanding of 3 intersecting circles
  5. A culture of discipline – Combine culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance. No hierarchy, bureaucracy, or control necessary.
  6. Technology accelerators – Never use tech as a primary means of transformation. But pioneer carefully selected tech
  7. Flywheel vs. Doom Loop – no big overhauls, slow steady progress pushing the flywheel until point of breakthrough and beyond

Good -> Great + Built to Last = Great company

Adhere to certain basic principles with rigor and discipline

Good is the enemy of great. Not a business problem, but a human problem.

Disciplined people, disciplined thought, disciplined action.

Applies outside of business. Principles apply across all life.