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Management Good to Great

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Anthony Kim

on 27 April 2010

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Transcript of Management Good to Great


Christina Baran
Anushka Chang
Anthony Kim
Richard Treichel
The Fly-Wheel Concept

Small steps vs. organization wide interventions
Benefits of the Fly-Wheel Concept
Helps to reduce the resistors to change
Easier to evaluate and adjust
Build up of momentum

Counter Intuitive Results

According to Collins’ research, the type of executive compensation does not affect the transformation from good to great.

No significant differences were found in using the following types of compensation.
Only Difference Found

Good to Great executives’ cash compensation was somewhat lower than that of the comparison executives’ compensation.

Purpose of Compensation

Not to give the wrong people the incentive to do the right things

Ultimate Purpose: to get the right people into the company in the first place Recent Example
Bob Nardelli
- CEO of Home Depot: $210 million severance
- Price remained flat
- Lowes stock doubled

- CEO of Chrysler
Reportedly cut his pay to $1 when coming to Chrysler yet rumored to be receiving other undisclosed compensation
Applicability to Any Organization

Collins suggests that the findings of Good to Great can help any organization (schools, government agencies, non-profits, etc.).
Corporations are analyzed primarily because their performance data is readily available.
Other organizations can use different performance measures, but the need for a Level 5 leader, a culture of discipline, a Hedgehog Concept, etc. remains the same.
Economic Denominators

“The key is to use the question of the denominator to gain understanding and insight into your economic model. “

Example: Walgreens
- Previously had a denominator of profit per store and changed into profit per customer visit
- Reflects a “symbiotic relationship” between convenient store sites and sustainable economics
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