The Flywheel and the Doom Loop

Here are my favorite quotes from Good to Great by Jim Collins Chapter 8 - The Flywheel and the Doom Loop.

It was all of them [pushes on the flywheel] added together in an overall accumulation of effort applied in a consistent direction.

No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop.

Good to great comes about by a cumulative process – step by step, action by action, decision by decision, turn by turn of the flywheel – that adds up to sustained and spectacular results. (165)

We’ve allowed the way transitions look from the outside to drive our perception of what they feel like to those going through them on the inside. From the outside, they look like dramatic, almost revolutionary breakthroughs. But from the inside, they feel completely different, mor like an organic development process.

It was a whole bunch of interlocking pieces that built one upon another. (168)

…it was a quiet, deliberate process of figuring out what needed to be done to create the best future results and then simply taking those steps, one after the other, turn by turn of the flywheel. (169)

…our success was evolutionary as opposed to revolutionary…

We realized that evolution is a whole different concept than change. (171)

…no matter how short or long it took, every good-to-great transformation followed the same basic pattern – accumulating momentum, turn by turn of the flywheel – until buildup transformed into breakthrough. (172)

…the time-honored discipline of under-promising and over-delivering.

Tremendous power exists in the fact of continued improvement and the delivery of results. Point to tangible accomplishments – however incremental at first – and show how these steps fit into the context of an overall concept that will work. (174)

What do the right people want more than almost anything else? They want to be part of a winning team. (177)

Peter Drucker once observed that the drive for mergers and acquisitions comes less from sound reasoning and more from the fact that doing deals is a much more exciting way to spend your day than doing actual work. (180)

When I look over the good-to-great transformations, the one word that keeps coming to mind is consistency. (182)

Equally important is to remember the Stockdale Paradox: We’re not going to hit breakthrough by Christmas, but if we keep pushing in the right direction, we will eventually hit breakthrough. (184)

Alignment principally follows from results and momentum, not the other way around. (187)

Technology Accelerators

I recently finished reading Good to Great by Jim Collins. Here are my favorite quotes from Chapter 7 - Technology Accelerators.

[A company] will only become a great company if it figures out how to apply technology to a coherent concept that reflects understanding of the three circles.

Technology-induced change is nothing new. The real question is not, What is the role of technology? Rather, the real question is, How do good-to-great organizations think differently about technology? (147)

Walgreens remained resolutely clear: Its Hedgehog Concept would drive its use of technology, not the other way around. (148)

When used right, technology becomes an accelerator of momentum, not a creator of it. (152)

…technology alone cannot create sustained great results.

Technology without a clear Hedgehog Concept, and without the discipline to stay within the three circles, cannot make a company great. (153)

…they emphasized other factors even more – getting people with a farmer work ethic on the bus… (157)

If you ever find yourself thinking that technology alone holds the key to success, then thinking again of Vietnam. (159)

We’re just never satisfied. We can be delighted, but never satisfied.

…motivated by a deep creative urge and an inner compulsion for sheer unadulterated excellence for its own sake. (160)

No technology can instill the simple inner belief that leaving unrealized potential on the table – letting something remain good when it can become great – is a secular sin. (161)

Crawl, walk, run can be a very effective approach, even during times of rapid and radical technological change. (163)

A Culture of Discipline

I recently finished reading Good to Great by Jim Collins. Here are my favorite quotes from Chapter 6 - A Culture of Discipline.

Few successful start-ups become great companies, in large part because they respond to growth and success in the wrong way.

The professional managers finally rein in the mess.

The cancer of mediocrity begins to grow in earnest.

…entrepreneurial death spiral.

Avoid bureaucracy and hierarchy and instead create a culture of discipline. (121)

We used financial discipline as a way to provide resources for the really creative work.

Abbot recruited entrepreneurial leaders and gave them freedom to determine the best path to achieving their objectives. On the other hand, individuals had to commit fully to the Abbott system and were held rigorously accountable for their objectives. (123)

Build a culture full of people who take disciplined action within the three circles, fanatically consistent with the Hedgehog Concept.(124)

…freedom and responsibility within the framework of a highly developed system.

…[hire] self-disciplined people who didn’t need to be managed, and then [manage] the system, not the people. (125)

…it all starts with disciplined people.

…the point is to first get self-disciplined people who engage is very rigorous thinking, who then take disciplined action within the framework of a consistent system designed around the Hedgehog Concept. (126)
Much of the answer to the question of “good to great” lies in the discipline to do whatever it takes to become the best within carefully selected arenas and then to seek continual improvement from there. It’s really just that simple. And it’s really just that difficult. (128)

It is absolutely clear that the unsustained comparison CEOs brought tremendous discipline to their companies, and that is why they got such great initial results. (129)

Build an enduring culture of discipline, rather than discipline the organization by sheer force. (my paraphrase of 130)

…discipline is essential for great results, but disciplined action without disciplined understanding of the three circles cannot produce sustained great results. (133)

Disciplined diversification – the key point is that every step of diversification and innovation stayed within the three circles. (134)

The more an organization has the discipline to stay within its three circles, the more it will have attractive opportunities for growth.

It takes discipline to say “No, thank you” to big opportunities. The fact that something is a “once-in-a-lifetime opportunity” is irrelevant if it doesn’t fit within the three circles. (136)

When Nucor faced difficult times, everyone from top to bottom suffered. But people at the top suffered more. In the 1982 recession for example, worker pay went down 25 percent, office pay went down 60 percent, and the CEO’s pay went down 75 percent. (137)

…to create great results requires a nearly fanatical dedication to the idea of consistency within the Hedgehog Concept. (139)

Purpose of a budget – budgeting is a discipline to decide which arenas should be fully funded and which should which should no be funded at all. In other words, the budget process is not about figuring out how much each activity gets, but about determining which activities best support the Hedgehog Concept and should be fully strengthened and which should be eliminated entirely. (140)

…they displayed remarkable courage to channel their resources into only one or a few arenas. (140-141)

“highly undiversified” mean investing fully in those things that fit squarely within the three circles and getting rid of everything else.

The real question is, once you know the right thing, do you have the discipline to do the right thing and, equally important, to stop doing the wrong things? (141)

“Stop doing” lists are more important than “to do” lists. (143)

The Hedgehog Concept (Simplicity within the Three Circles)

In honor of Labor Day Weekend here are my favorite quotes from Chapter 5 - The Hedgehog Concept (Simplicity within the Three Circles) from Good to Great by Jim Collins.

Hedgehogs – simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guide everything.

For a hedgehog, anything that does not somehow relate to the hedgehog idea holds no relevance.

Hedgehogs see what is essential, and ignore the rest. (91)

[take] one simple concept and just [do] it with excellence and imagination. (93)

The Three Circles of the Hedgehog Concept
What you Can be the best in the World at?
What Drives Your Economic Engine?
What you are deeply Passionate About? (96)
And if we can’t be the best at it, then why are we doing it at all? (97)

A Hedgehog Concept is…an understanding of what you can be the best at. (98)

…if you cannot be the best in the world at your core business, then your core business cannot form the basis of your Hedgehog Concept. (99)

Suffering from the curse of competence but lacking a clear Hedgehog Concept, they rarely become great at what they do.

…[focus] solely on what you can potentially do better than any other organization is the only path to greatness. (100)

Our study clearly shows that a company does not need to be in a great industry to become a great company.

If you could pick one and only one ratio – profit per x (or, in the social sector, cash flow per x) – to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine? (104)

…pushing for a single denominator tends to produce better insight than letting yourself off the hook with three or four denominators. (105)

…the sake of gaining insight that ultimately leads to more robust and sustainable economics. (106)

If you successfully apply these ideas, but then stop doing them, you will slide backward, from great to good, or worse. The only way to remain great is to keep applying the fundamental principles that made you great. (108)

You can’t manufacture passion or “motivate” people to feel passionate. You can only discover what ignites what ignites your passion and the passions of those around you. (109)

The passion circle can be focused equally on what the company stands for. (110)

..[ask] the right questions – prompted by the three circles

…not one of the good-to-great companies focused obsessively on growth. (111)

…if you have the right Hedgehog Concept and make decisions relentlessly consistent with it, you will create such momentum that your main problem will not be grow, but how not to grow too fast. (112)

It took about four years on average for the good-to-great companies to clarify their Hedgehog Concepts.

…getting a Hedgehog Concept is an inherently iterative process, not an event.

Do we really understand what we can be the best in the world at, as distinct from what we can just be successful at.

Do we really understand the drivers in our economic engine, including our economic denominator?

Do we really understand what best ignites our passion? (114)

…consensus decisions are often at odds with intelligent decisions. (116)

To get insight into the drivers of your economic engine, search for the one denominator (profit per x or, in the social sector, cash flow per x) that has the single greatest impact. (119)