Post on 16-Dec-2015
transcript
Good To Great Chapter Eight
The Fly Wheel and the Doom LoopMamie Dupre
Bess LukerAlicia EstradaRyan Dupriest
Taylor Watts
Each turn of the flywheel builds upon work done earlier
“What was the one big push that caused this thing to go so fast?”◦ An accumulation of effort
BREAKTHROUGH!
There was no one single defining action Good-to-great comes about by a cumulative
process Media does not cover a company until after
transformation Circuit City
◦ First national article on August 27, 1984◦ After transition-97 articles
What’s so Important?◦ Outside vs. Inside
There was no miracle moment!
Buildup and Breakthrough
UCLA Bruins Basketball◦ 1960s and early 1970s◦ Won ten NCAA Championships in twelve years◦ A sixty-one-game winning streak, under Coach
John Wooden Before Wooden’s first NCAA Championship
◦ Coached 15 years ◦ From 1948-1963, 1964
An Example
Circuit City◦ Nine years
Nucor◦ Ten years
Gillette◦ Five years
Fannie Mae◦ Three years
Pitney Bowes◦ Two years
The Breakthrough Stage
Same basic pattern◦ Accumulating momentum◦ Turn by turn of the fly wheel◦ Until buildup transformed into breakthrough
Good-to-Great Transformation
Following the buildup-breakthrough flywheel model is not just a luxury of circumstance
The key◦ To harness the flywheel to manage short-term
pressures
Not Just a Luxury of Circumstance
The simple truth:◦ Tremendous power exists in the fact of continued
improvement and the delivery of results
◦ ADD THE CHART TO THIS SLIDE…IF IT FITS!
The “Flywheel Effect”
“The one about commitment, alignment, and how they managed change”
Want to be consistent across the interviews. ◦ We’ve got to understand how they overcome
resistance to change and got people lined up. They expected “creating alignment” would be
one of the top challenges faced by executives They did not find the question of alignment to
be a key challenge
The Question
Good-to-great companies tended not to publicly proclaim big goals at the outset
They began to spin the flywheel◦ Understanding action◦ Step after step◦ Turn after turn
After the flywheel built up momentum◦ “There’s no reason we can’t accomplish X”
The Flywheel
Began turning the flywheel in 1965 Discovered they had a knack for making
steel better and cheaper◦ Built more mini-mills◦ Gained customers
Took over two decades, but Nucor generated greater profits than any other steel company on the Fortune 1000 list
Nucor
When you let the flywheel do the talking, you don’t need to fervently communicate your goals
As people decide among themselves to turn the fact of potential into the fact of results, the goals almost sets itself
Cause and Effect
The comparison companies start in one direction and then go in a complete direction
After back and forth the comparison companies would fail to build sustained momentum and fell into the doom loop
The Doom Loop
Doom Loop
Good-to-Great Companies: used acquisition as an accelerator of the flywheel momentum not as the creator
Comparison Companies: tried to jump right to breakthrough with acquisition◦ Never learned while you can buy your way to
growth you cannot buy your way to greatness
Misguided use of Acquisitions
New leaders would stop the motion the company was already headed in◦ Harris Corporation, applied many of the greatness
concepts in the early 1960’s◦ 1978 Joseph Boyd became CEO◦ Boyd moved head quarters to Melbourne, Florida
from Cleveland
Leaders who stop the flywheel
It is only through consistency over time, through multiple generations
Every factor work together to create the pattern
Each component produces and push on the flywheel
Starts with level 5 leaders Example right people right seat
Flywheel as a Wraparound Idea
Follow a pattern of buildup leading to breakthrough
Confront the brutal facts Attain consistency with a clear Hedgehog Concept Follow the pattern of disciplined people Harness appropriate technologies to your
Hedgehog Concepts Make major acquisitions after breakthrough Spend little energy trying to motivate or align
people Maintain consistency over time
Signs That You’re on the Flywheel
Skip build up and jump right to breakthrough Embrace fads and engage in management
hoopla Demonstrate chronic inconsistency Jump right to action Run about like Chicken Little in reaction to
technology Make major acquisitions before breakthrough Spend a lot of energy trying to align and
motivated people Demostrate inconsistency over time
Signs That You’re in the Doom Loop