Good To Great

Jim Collins

Chapter 4

Confront The Brutal Facts

A&P and Kroger as grocery stores are used as examples to demonstrate organizations that either fail to acknowledge brutal facts (in this case changing times), or look at the facts and make the, sometimes tough, changes necessary to remain competitive.  Both were good companies in the 1970’s but Kroger adapted to the concept of a super store and A&P did not.  A&P just let their store quality degrade and didn’t ever re-align to a strategy.

A&P’s CEO had such a strong personality that it skewed the view from the brutal facts.  Churchill is another example of a person who had a strong personality who was focused on the end game, but didn’t let it skew his view of reality.  He kept a “Statistical Office” so he would always be aware of the Truth.  Charisma is good, but cover up the brutal reality.

Create a Climate where the truth is heard

1. Lead with Questions, not answers.
   1. The front line employes sometimes have the best information
   2. Use questions to get information DON’T try to prove a Point
2. Engage In Dialogue and Debate, not coercion
   1. People can get mad, heated, thats okay – encourage a bit of chaos.
   2. Nucor used chaos and debate to create competitiveness.
   3. Real in the chaos eventually to come to a conclusion.
   4. Keep it scientific and focus on facts.
3. Conduct Autopsies, Without Blame
   1. Philip Morris failed with a 7-UP acquisition.  Big Time.
   2. Don’t brush it under the rug, own the failure and learn from it.
4. Red Flag Mechanisms
   1. Have controls in place to know that something is going wrong.  Don’t wait for it to have gone wrong.
   2. Be creative, even if it means risking a tad bit of revenue.
5. Have Unwavering Faith Amid the Brutal Facts
   1. Scott Paper got destroyed by P&G and Kimberly-Clark
   2. Kimberly Clark always has faith it would compete with P&G and win.
   3. They viewed competitors as good that would push them to their best.
   4. KNOW you will prevail.
   5. When you are knocked down, your not out.  Use it as an opportunity to rebuild.

The Skockdale Paradox

Admiral Jim Stockdale – POW Vietnam 1965-73

“Who were the ones who didn’t make it out?”

“The Optimists.  Oh they were the ones who said, ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go.  Then They’d say, We’re going to be out by Easter.’  And easter would come, and Easter would go.  And then Thanksgiving , and and then it would be Christmas again.  And they died of a broken heart.  … This is a very important lesson.  You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be” (85)

Realize the brutal facts, but maintain resolve.

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