Good To Great by Jim Collins: Chapter 7: Technology Accelerators Team 1

Good To Great
By Jim Collins
Chapter 7: Technology Accelerators
Team 1
Crawl, Walk, then Run
Companies should respond to new
technologies by first crawling, then walking,
and finally running
 Crawl – Experiment with the new technology and
determine if it fits into the Hedgehog Concept
 Walk – Find unique ways to utilize and implement
the new technology within the Hedgehog Concept
 Run – Fully implement the new technology and
become an expert in that field
Walgreens vs. drugstore.com
 During the dotcom era, drugstore.com posed a
threat to Walgreens
 In light of new internet technology, Walgreens
began by experimenting with a Web site (crawl)
 Walgreens then found ways it could tie the Internet
to its inventory-and-distribution model as well as its
convenience concept (walk)
 Walgreens then launched its Internet site and
pioneered a computer network system (run)
 What about drugstore.com?
 Massive losses and layoffs
“A company will only become a great
company if it figures out how to apply
technology to a coherent concept that reflects
understanding of the three circles.” (p. 147)
Technology and the Hedgehog
Concept
 Great companies adapt and endure through
technology changes
 Good-to-great companies think differently
about technology
 Technology is used as a tool to accelerate
momentum after breaking through
 Good-to-great companies are pioneers in the
application of their selected technologies
Examples
 Abbott – pioneered the application of computer technology to
increase profit per employee
 Circuit City – pioneered the application of point-of-sale and
inventory-tracking technologies
 Fannie Mae – pioneered the application of algorithms and
computer analysis
 Gillette – pioneered the application of manufacturing technology
 Kimberly-Clark – pioneered application of manufacturing-process
technology
 Kroger – pioneered the application of bar code scanners
Examples
 Nucor – pioneered the application of mini-mill steel
manufacturing technology
 Philip Morris – pioneered the application of packaging
and manufacturing technology
 Pitney Bowes – pioneered the application of
technology in the mailroom
 Walgreens – pioneered the application of satellite
communications and computer networks technology
 Wells Fargo – pioneered the application of technology
that would increase profit per employee
Technology as a Momentum
Accelerator, not Creator
 Technology becomes important only after a
company discover its Hedgehog Concept and
after it reaches a breakthrough
 “The pioneering application of technology
usually came late in the transition and never
at the start.” (p. 152)
Ask These Questions
 Does the technology fit directly with the
Hedgehog Concept?
 If yes, then become pioneers in the application of
the technology
 If no, ask, do we need the technology at all?
 If yes, then all you need is parity (you don’t need the
best)
 If no, then the technology is irrelevant (you don’t need
the technology at all)
Technology as a Momentum
Accelerator
 It is important to note that good-to-great
companies remain disciplined within the
frame of their Hedgehog Concept when they
pioneer the application of technology
 Once they understand the relevant
technologies, they become fanatical and
creative
What Technology Cannot Do…
 Make a company great
 Create sustained results
 Examples:
 Chrysler and computer-aided design
 Harris and printing electronics
 Rubbermaid and manufacturing
 “Technology without a clear Hedgehog Concept,
and without the disclipine to stay within the three
circles, cannot make a company great.” (p. 153)
Technology and Culture
 Time Magazine picked Albert Einstein as
“Person of the 20th Century”
 Time also picked Jeff Bezos of Amazon.com
as “Person of the Year” for 1999
 This shows our cultural obsession with
technology and its implications
Technology in the Study
 “We were quite surprised to find that fully 80
percent of the good-to-great executives we
interviewed didn’t even mention technology
as one of the top five factors in the transition.”
(p. 155)
 Take for example Nucor:
 Technology was part of their equation, but a
secondary part
The Technology Trap
 “Technology is important – you can’t remain a
laggard and hope to be great. But
technology by itself is never a primary cause
of either greatness or decline.” (p. 157)
 Examples:
 Remington Rand and UNIVAC
 De Havilland and the Comet
 Westinghouse and the AC electrical system
Strategy
 Good-to-great companies have strategies
that focus on creativity, improvement, and
excellence
 Wayne Sanders of Kimberly-Clark: “We’re just
never satisfied. We can be delighted, but never
satisfied.” (p. 160)
 The comparison companies have strategies
that are reactionary – they form their strategy
in response to what their competition is doing
“Those that stay true to these fundamentals
and maintain their balance, even in times of
great change and disruption, will accumulate
the momentum that creates breakthrough
momentum.” (p. 161)
Takeaways
 Good-to-great companies think differently
about technology
 Good-to-great companies only use a
technology if it fits within their Hedgehog
Concept and then become a pioneer in the
application of that technology
 Technology is only an accelerator of
momentum, not a creator of momentum

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