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Reaction Paper on "good to Great"

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Good to Great: Responding to Change. I think that Jim Collins' book is essential for future entrepreneurs, managers, and leaders in the Philippines. The tips given by the author are useful in the dynamic, ever-changing, and constantly fluctuating business environment of the Philippines. Jim Collins described the kind of leader who can address these changes as a Level 5 leader - "a paradoxical blend of personal humility and professional will." The Level 5 leader is not the "corporate savior" or "turnaround expert". Most of the CEOs of the Good To Great companies as they made the transition were company insiders. They were more concerned about what they could "build, create and contribute" than what they could "get - fame, fortune, adulation, power, whatever". No Ken Lay of Enron or Carly Fiorina of HP, the larger-than-life CEO, led a Good To Great company. This kind of executive is "concerned more with their own reputation for personal greatness" than they are with "setting the company up for success in the next generation". Transformations from Good to Great start when a company finds a CEO who is humble but iron-willed, and who is ambitious for the company, not necessarily for himself or herself.

In this book, Jim Collins also challenges the notion that "people are your most important asset" and postulates, instead, that "the right people are." Despite the author's emphasis on finding the right people, there's no evidence that a company has to have concern for its employees as a core value for it to be great. There are a number of inherently great companies that didn't have this. I don't think Walt Disney cared about his people. He cared about films, and Disneyland, and smiles of kids. On the other side, with Hewlett-Packard and IBM, you had the antithesis of Walt Disney. When you look at corporate history, what matters is not what core values you have but that you have core value, and that you believe them. As another example, take David Maxwell's bus ride. When he became CEO of Fannie Mae in 1981, the company was losing $1 million every business day, with $56 billion worth of mortgage loans under water. The board desperately wanted to know what Maxwell was going to do to rescue the company. Maxwell responded to the "what" question the same way that all good-to-great leaders do: He told them, "That's the wrong first question." He told his management team that there would only be seats on the bus for A-level people who were willing to put out A-plus effort. He interviewed every member of the team. He told them all the same thing: It was going to be a tough ride, a very demanding trip. If they didn't want to go, fine; just say so. Now's the time to get off the bus, he said. No questions asked, no recriminations. In all, 14 of 26 executives got off the bus. They were replaced by some of the best, smartest, and hardest-working executives in the world of finance. With the right people on the bus, in the right seats, Maxwell then turned his full attention to the "what" question. He and his team took Fannie Mae from losing $1 million a day at the start of his tenure to earning $4 million a day at the end. Even after Maxwell left in 1991, his great team continued to drive the flywheel -- turn upon turn -- and Fannie Mae generated cumulative stock returns nearly eight times better than the general market from 1984 to 1999. (Research taken from the actual Good to Great book.) Good to Great companies can more easily adapt to a fast-changing world. The company will be much faster and smarter in responding to changing conditions. Motivating these people also wouldn't be a problem. The right people are self-motivated: Nothing beats being a part of a team that is expected to produce great results. Getting the wrong people off the bus is also important because great vision with mediocre people still produces mediocre results.

There are two sides to that coin. If you don't have concern for employees as a core value, don't say that you do. That will cause more harm. Fundamentally, if your value system is the mission, then be honest about it and pursue it fanatically. The author had stressed on the importance of giving an honest and objective analysis of the company. Organizations have to embrace reality, but they must believe they will prevail. The other side of the coin is equally important: there's no evidence that you're at a competitive disadvantage if you do have a tremendous concern for your people. You can have a great company having that as a core value. So the real question is, what are your company values? Live them fanatically. These values must prevail in the changing world.

Relevance to Filipino Entrepreneurs. Dean Rudy Ang would always say that entrepreneurs are greatly needed to help boost the Philippine economy. Entrepreneurs who create successful businesses "give something back to their community." They create jobs and lessen the increasing unemployment rate in the country, they uphold the talents and skills of their kababayans, they are able to make efficient use of the country's natural resources, and so on. In particular, Level 5 Leaders are those that our country needs. Who are these leaders? No one knows for sure because there is a direct relationship between the absence of celebrity and the presence of Good to Great results in a company. First, when you have a celebrity, the company turns into "the one genius with 1,000 helpers." It creates a sense that the whole thing is really about the CEO. At a deeper level, for leaders to make something great, their ambition has to be for the greatness of the work and the company, rather than for themselves. That doesn't mean that they don't have an ego. It means that at each decision point - at each of the critical junctures when Choice A would favor their ego and Choice B would favor the company and the work -- time and again the Good to Great



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