Rinsing your cottage and embracing technology.

Hey there! Ready to dive int and keep on learning what makes companies go from good to great? You're in the right place!

• 🎯 The importance of discipline and the Hedgehog Concept

• 🧀 Rinsing your cottage cheese (it's not what you think!)

• 🏭 Nucor's success secret

• 🚀 Technology accelerators 📈 Walgreens' "crawl, walk, run" approach to the internet

  Estimated read time: 5 minutes

  Culture of Discipline

Abbott
Discipline was at the heart of Abbott's corporate culture. They encouraged innovation and flexibility while maintaining a strict focus on their Hedgehog Concept. This culture of discipline was a key finding in our study: companies need to create a culture where disciplined action is taken within the three circles, consistently aligned with the Hedgehog Concept.

To achieve this, companies should:

• Build a culture around freedom and responsibility within a framework.

• Fill that culture with self-disciplined people who go to extreme lengths to fulfill their responsibilities.

• Don't confuse a culture of discipline with tyranny.

• Stay consistent with the Hedgehog Concept, exercise focus, and create a "stop doing list" to eliminate distractions.

Using the airline pilot model, good-to-great companies built a consistent system with clear constraints, giving people freedom and responsibility within the framework of the system. They hired self-disciplined people who didn't need to be managed, and managed the system instead.

Discipline starts with having the right people on board, then moves to disciplined thought, and finally to disciplined action. Companies that try to jump straight to disciplined action without the right people or disciplined thought often fail. A culture of discipline, combined with rigorous thinking and disciplined action, is what sets great companies apart.

Rinsing Your Cottage Cheese

This phrase comes from this hardcore athlete, Dave Scott (6 time Ironman Triathalon winner) , who'd wash the fat off his cottage cheese just to get that extra edge. The point isn't whether rinsing the cheese actually made a difference – it's about doing whatever it takes to be the best.

Think about it: becoming great isn't about having some genius strategy. It's about figuring out what you're awesome at and then pushing yourself to be even better. Sadly, a lot of companies just don't have the guts to do that.

Take Wells Fargo and Bank of America, for example. Carl Reichardt, the head of Wells Fargo, knew that the only way his bank would thrive was by getting rid of all the unnecessary stuff. He started with his own peeps, freezing exec salaries and shutting down the fancy dining room. Dude even got rid of free coffee in the executive suite!

Meanwhile, the bigwigs at Bank of America were living it up in their swanky tower, even when they were losing billions of dollars. Sure, they eventually made some changes, but they never really got the whole "rinsing your cottage cheese" thing.

So, what Jim's saying is that the secret to going from good to great is having the discipline to do whatever it takes, even if it means making some sacrifices. In the end, it's all about rinsing that cottage cheese, man.

Nucor

When Jim and his team talked to Ken Iverson, the guy who led Nucor to great success, they learned that the company's secret sauce was all about sticking to a simple idea and being disciplined about it. Nucor turned into a massive Fortune 500 company, but they kept things super down-to-earth, like having a tiny corporate office that looked like a dentist's waiting room. No fancy corporate dining room either; they'd just take visitors to the sandwich shop across the street.

Nucor made sure executives didn't get better benefits than the regular workers. In fact, they had fewer perks. One example is that all workers (except the big bosses) could get $2,000 per year for each of their kids' post-high school education. One dad with nine kids was so blown away by this, he couldn't help but cry.

When Nucor did well, everyone shared in the success. But when times were tough, everyone took a hit, with the top brass getting hit the hardest. Nucor went out of its way to make sure everyone felt equal, like listing all 7,000 employees in the annual report and making everyone wear the same color hard hats. Sure, some folks griped about it, but Nucor was like, "If you need that status symbol, then maybe this isn't the place for you."

On the flip side, you've got companies like Bethlehem Steel, which built a huge, fancy office building just for their execs. They even designed it in the shape of a cross to make sure all the VPs got corner offices with windows on two sides. John Strohmeyer wrote a book about the company and revealed all kinds of crazy stuff, like using the corporate planes for personal trips and having a super fancy executive golf course.

Technology Accelerators

Here's the lowdown on what separates the awesome companies from the just-okay ones when it comes to technology:

• The best companies think differently about tech and how it changes. They're not just following trends or jumping on the latest fad.

• When deciding whether to use a new technology, these companies ask if it fits with their main goal (their Hedgehog Concept). If it does, they go all in. If not, they don't sweat it.

• Great companies use technology to boost their momentum, not to start it. They might not start off as tech pioneers, but they become experts once they see how it fits with their goals.

• Even if you gave the same cool tech to a not-so-great company, they wouldn't get the same amazing results.

• How a company deals with tech changes can really show you if they're striving for greatness or just trying to keep up with the competition.

• Now, here are some surprising findings:

Tech change isn't the main reason companies lose their edge or stay mediocre. Sure, they can't lag behind, but tech alone isn't the make-or-break factor.

Most of the execs in top-notch companies didn't even list tech as one of the top five factors in their success. That's true even for companies that are known for their tech, like Nucor.

Taking a "crawl, walk, run" approach can work super well, even when tech is changing super fast. So, no need to panic and rush things!

Walgreens crawl, walk, run

So, back in July 1999, drugstore.com, one of the first online pharmacies, went public and its shares skyrocketed in seconds. People were going nuts, saying the internet would change everything and revolutionize businesses. It was all about being first and fast, even if you didn't have a real company, let alone a great one. Jim Collins talks about how the mantra "Built to Flip" became popular and everyone was trying to cash in on the internet hype.

During this internet frenzy, Walgreens, a well-established company, faced some challenges. At first, its stock took a hit, but instead of panicking, Walgreens took a step back and carefully thought about their approach to the internet. They didn't get swept up in the hype; instead, they stayed true to their principles and focused on what made them great in the first place.

They started slow, experimenting with a website and figuring out how it connected to their core business. Then, they picked up the pace and found ways to integrate the internet into their inventory and distribution systems. Finally, they went all in and launched an impressive website that was as good as any other dot-com at the time.

Walgreens' stock rebounded and continued to grow, while drugstore.com struggled and lost most of its initial value. The lesson here isn't just about the internet bubble; it's about how great companies think differently about technology.

Jim Collins points out that Walgreens has a history of embracing technology, like their groundbreaking Intercom system back in the 1980s. So, it's no surprise that they figured out the internet, too. The key is that great companies adapt and endure, even as technology changes. The real question isn't about the role of technology, but how good-to-great organizations think differently about it.