The NUS MBA Consulting Club

Totally Awesome !

If there is a soul who wants to know what is this Wal*Mart all about, this is the book to pick (besides "Made in America" by Sam Walton which is more of an autobiography than Wal*Mart Story). After reading this book, I started to respect Sam more than what I did after knowing him through his own eyes in his book !

The book begins with a soft introduction followed by listing 12 factors which led to the Wal*Mart Success story ( as per Don....the list obviously is what he thinks were the main reasons ). While the list may not be exhaustive but it sure is compelling.

After listing the factors, the book is neatly divided into 12 chapters. Yes ! you guessed it right...One chapter for each factor. Written in a part preaching-part memoir way, It is very authoritarian and humble at the same time. It keeps you on the toe and you want to know more about it all the time !

There are so many fine points mentioned in the book which I loved. Some of them are :

1) Quoting Don : " I wouldsuggest to you that nothing will demoralize those who work for you more quickly than when you no longer have an active knowledge of what's going on in the business"

2)Fred Smith, founder and CEO of Federal Express commented that every person, at one time or another in his career, will have five questions that he asks himself or heself.

a) "What is expected of me?" - What is my job? On what basis will you measure me? What am I supposed to be doing?

b) "How am I doing?" - Am I doing what you asked me to do? Are the results what you wanted? Is it good? It is basically getting a continual feedback rather than judging yourself with the year end evaluation.

c) "How can I get ahead?" - How can I be promoted? How can I take on more responsibility? How can I grow? How can I be challenged further?

d) "Where can I get justice?" - Where do I go when things are going badly, when I think I am being treated poorly, when I think something has been done unfairly?

e) "Is what I am doing important?" - Knowing if you are contributing to the well being of the organization

(I wonder if Fred Smith never asked these 5 questions to Mr Madan Birla as he never cared to mention about these in his book "FedEx Delivers")

There are numerous little examples and teachings which will simply put you in awe ! Like Sam declining to come to Cincinnati for meeting P&G CEO because the room which was booked was costing one hundred dollars a day! These little things tells about the character of a person and what values he would have instilled in his company.

No wonder Wal*Mart has evolved as the largest company in the world and still growing like a start-up does !

A Must read !!

I will keep coming with my book reviews. Hope you find it interesting. I would strongly encourage all of you to use the comments to share your thoughts.

Introduction: Faced with the question – Can a good company become great and if so, how? (Probed by Bill Meehan, Managing Director of McKinsey & Company, San Francisco), Jim Collins embarked on a five year research effort, a journey to explore the inner workings of good to great.

Phase 1: The Search

A 21 member team formed by Jim Collins, working on the project, started the daunting task of sifting the Fortune 500 companies from 1965 to 1995.

Criteria for selection:

• The company shows a pattern of good performance (a cumulative total stock return no better than 1.25 times the general stock market for the fifteen years prior to the point of transition) punctuated by a transition point, after which it shifts to a great performance (a cumulative total stock return of at least 3 times the general stock market for fifteen years from the point of transition)
• It should be a company shift and not industry shift
• The company should have operations for at least 25 years prior to the transition point
• Transition had to occur before 1985 (so that 15 years cumulative returns can be calculated. This is where GE could not make it)
• Company should still be good enough (It should appear in 1995 Fortune 500) and having an upward trend in stock returns.

Several other criteria were applied and the screening was done at 4 stages.

Cut 1
1435 Companies
Fortune 500 1965-95
Cut 2
126 Companies
Stock Prices
Cut 3
19 Companies
11 more criteria
Cut 4
11 Companies
Industry Analysis

Phase 2: Compared to what?

After 11 companies were selected for the research, “comparison companies” were also selected to facilitate comparisons. There were 2 sets of comparison companies. The first set consisted of “direct comparison” – companies that were in the same industry as the G-G companies with the same opportunities and similar resources, but did not show the leap from good to great.

The second set consisted of “unsustained comparisons” – companies that made a short term shift from good to great but failed to maintain the trajectory. In all, this gave a set of 28 companies: 11 good-to-great companies, 11 direct comparisons, and 6 unsustained comparisons.

Good-to-Great Companies ________Direct Comparisons
Abbott _________ Upjohn
Circuit City _________ Silo
Fannie Mae ________ Great Western
Gillette ________ Warner-Lambert
Kimberly-Clark ________ Scott Paper
Kroger _________ A&P
Nucor __________ Bethlehem Steel
Philip Morris __________ R.J. Reynolds
Pitney Bowes __________ Addressograph
Walgreens ___________ Eckerd
Wells Fargo _________ Bank of America

Unsustained Comparisons
Burroughs
Chrysler
Harris
Hasbro
Rubbermaid
Teledyne


Phase 3: The research (What’s inside the BLACK BOX?)

Once the companies were selected, the deep research began. 6000 articles dating 50 years or more, 2000 pages of interview transcript (with the business leaders of these companies), analysis, strategy study, acquisition analysis, executive compensation research et al became the became the back bone of the study and consumed 10.5 people years of effort

Phase 4: The Concept

Level 5 Leadership:

Compared to high-profile leaders with big personalities who make headlines and become celebrities, the good-to-great leaders seem to be totally different. Self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will.

First Who….Then What:

Good-to-great leaders DO NOT begin by setting a new vision and strategy. Instead, they first get the right people on the bus, the wrong people off the bus, and the right people in the right seats – and then they figure out where to drive it.

Confront the brutal facts (Yet Never Lose Faith):

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 (Simplicity within the Three Circles):

Good-to-great companies do things which fit their hedgehog concept, the intersection of the three circles.

What are you deeply passionate about?
What you can be the best in the world at?
What drives your economic engine?

A Culture of Discipline:

All companies have a culture, some companies have discipline, but few companies have a culture of discipline. When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls. When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance.

Technology Accelerators:

Don’t use technology as the primary means of igniting a transformation. Technology was used as a catalyst but not as a reactant.

The Flywheel and the Doom Loop:

Those who launch revolutions, dramatic change programs, and wrenching restructurings will almost certainly fail to make the leap from good to great. Good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. The process resembles pushing a giant flywheel in one direction, turn upon turn, building momentum until a period of breakthrough, and beyond