-------Home- Book And Etudes- Recomendations- Know The Concepts------

CONCEPTS

Here in one place are the timeless concepts that emerged from more than 25 years of rigorous research into the question of what makes great companies tick. These concepts are used widely by leaders throughout the business and social sectors.

First Who, Then What

Those who build great organizations make sure they have the right people on the bus and the right people in the key seats before they figure out where to drive the bus. They always think first about who and then about what. When facing chaos and uncertainty, and you cannot possibly predict what's coming around the corner, your best "strategy" is to have a busload of people who can adapt to and perform brilliantly no matter what comes next.

Confront The Brutal Facts

Productive change begins when you confront the brutal facts. Every good-to-great company embraced what we came to call "The Stockdale Paradox": you must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time, have the discipline to confront the most brutal facts of your current reality, whatever they might be.

The Hedgehog Concept

A simple, crystalline concept that flows from deep understanding about the intersection of three circles: 1) what you are deeply passionate about, 2) what you can be the best in the world at, and 3) what best drives your economic or resource engine. Transformations from good to great come about by a series of good decisions made consistently with a Hedgehog Concept, supremely well executed, accumulating one upon another, over a long period of time.

BHAG

A BHAG (pronounced “Bee Hag,” short for "Big Hairy Audacious Goal") is a powerful way to stimulate progress. A BHAG is clear and compelling, needing little explanation; people get it right away. Think of the NASA moon mission of the 1960s. The best BHAGs require both building for the long term AND exuding a relentless sense of urgency: What do we need to do today, with monomaniacal focus, and tomorrow, and the next day, to defy the probabilities and ultimately achieve our BHAG?

The Flywheel

No matter how dramatic the end result, good-to-great transformations never happen in one fell swoop. In building a great company or social sector enterprise, there is no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. Rather, the process resembles relentlessly pushing a giant, heavy flywheel, turn upon turn, building momentum until a point of breakthrough, and beyond.

20 Mile March

Enterprises that prevail in turbulence self-impose a rigorous performance mark to hit with great consistency—like hiking across the United States by marching at least 20 miles a day, every day. The march imposes order amidst disorder, discipline amidst chaos, and consistency amidst uncertainty. The 20 Mile March works only if you actually hit your march year after year; if you set a 20 Mile March and then fail to achieve it, you may well get crushed by events.

Preserve the Core/Stimulate Progress

Enduring great organizations exhibit a dynamic duality. On the one hand, they have a set of timeless core values and purpose that remain constant over time. On the other hand, they have a relentless drive for progress—change, improvement, innovation, and renewal. Great organizations keep clear the difference between their core values (which never change), and operating strategies and cultural practices (which endlessly adapt to a changing world).

Genius of .. AND

Builders of greatness reject the "Tyranny of the OR" and embrace the "Genius of the AND." They embrace both extremes across a number of dimensions at the same time—purpose AND profit, continuity AND change, freedom AND responsibility, discipline AND creativity, humility AND will, empirical analysis AND decisive action,etc.

Clock Building, Not Time Telling

Leading as a charismatic visionary—a “genius with a thousand helpers”—is time telling; shaping a culture that can thrive far beyond any single leader is clock building. Searching for a single great idea on which to build success is time telling; building an organization that can generate many great ideas over a long period of time is clock building. Enduring greatness requires clock building.

Five Stages of Decline

Every institution is vulnerable to decline, no matter how great. We found that great companies often fall in five stages: 1) Hubris Born of Success, 2) Undisciplined Pursuit of More, 3) Denial of Risk and Peril, 4) Grasping for Salvation, and 5) Capitulation to Irrelevance or Death. Institutions can be sick on the inside and yet still look strong on the outside; decline can sneak up on you, and then—seemingly all of a sudden—you're in big trouble.

Return on Luck

Our research showed that the great companies were not generally luckier than the comparisons—they did not get more good luck, less bad luck, bigger spikes of luck, or better timing of luck. Instead, they got a higher return on luck, making more of their luck than others. The critical question is not, Will you get luck? but What will you do with the luck that you get?

Productive Paranoia

The only mistakes you can learn from are the ones you survive. Leaders who stave off decline and navigate turbulence assume that conditions can unexpectedly change, violently and fast. They obsessively ask, What if? By preparing ahead of time, building reserves, preserving a margin of safety, bounding risk, and honing their disciplines in good times and bad, they handle disruptions from a position of strength and flexibility.

Culture of Discipline

Disciplined people who engage in disciplined thought and who take disciplined action—operating with freedom within a framework of responsibilities—this is the cornerstone of a culture that creates greatness. In a culture of discipline, people do not have jobs; they have responsibilities. When you blend a culture of discipline with an ethic of entrepreneurship, you get a magical alchemy resulting in superior performance.

Clock Building, Not Time Telling

Leading as a charismatic visionary—a “genius with a thousand helpers”—is time telling; shaping a culture that can thrive far beyond any single leader is clock building. Searching for a single great idea on which to build success is time telling; building an organization that can generate many great ideas over a long period of time is clock building. Enduring greatness requires clock building.

Productive Paranoia

The only mistakes you can learn from are the ones you survive. Leaders who stave off decline and navigate turbulence assume that conditions can unexpectedly change, violently and fast. They obsessively ask, What if? By preparing ahead of time, building reserves, preserving a margin of safety, bounding risk, and honing their disciplines in good times and bad, they handle disruptions from a position of strength and flexibility.

Five Stages of Decline