Barriers to Retirement 4: Lack of Savings, Lots of Debt

This continues our examination of why most people will reach retirement ill prepare to retire

We discussed that most people rely on 5 sources of money to retire: 1) a pension, 2) Social Security, 3) home equity, 4) savings & 401K, and 5) investments. Previously, we analyzed that most people will lack a benefit-defined pension. Only 12% contribute fully of their pension. We explored the uncertainties of Social Security and the illusion of a paid off mortgage.

Today we confront the brutal facts about savings.

Most People Don’t Save—They Go Into Debt

Statistics indicate the average savings rate at 6%. That represents that the average amount of money we maintain in a savings account. Some of us save significantly more than 6%. The more saved, the better chances we can retire.

Unfortunately, others save significantly less than 0%.  25% have no savings at all. They not only do not save, they sell future savings—at an interest—on credit cards.  Some people owe between $7-20,000. The average American owes $117,000 in debt: house, consumer, and more. While most intend to pay the card down to $0 each month, they make minimum payments. Cars breakdown. Medical problems occur. Life happens. Since very few of us maintain sufficient savings, we use the money we targeted to pay the card down to cover the emergency. Consequently, most of us will reach retirement age in debt, rather than enriched with savings.

And I did not include student debt of $30-400,000 which prevents adequate savings.

We Lose the Power of Compound Simple Interest

Most of us remember the lesson on compound simple interest. If we started with a bank balance of $500, and put $25 a month into a normal savings account every month for 40 years—and do not take it out—that the multiplying effect of compound simple interest will increase our savings to 353,442. If we begin saving from 50 to 60 and put $500 a month for 15 years we would have only $252,788. Try this yourself using a compound interest calculator.

Yet, we still wait until the last years of work to start building our savings. I waited. You probably waited. I taught the principle to my children. They waited. Most young people let other things distract them from saving. Most older people regret they did not save.

Join me on Wednesday we I discuss the realities most of us face with investments

Barriers to Retirement 3: Lack of Home Equity

This continues my 6-part series exploring some barriers that may prevent people from retiring

In my earlier posts, I suggested that most people plan on retirement income from 5 main sources: 1) a pension, 2) Social Security, 3) home equity, 4) savings and 401ks, and 5) investments.

Prior to the industrial revolution, the family homestead provided housing security for most Americans. Home ownership decreased as people moved off of the farm into the cities near the factories. Many families rented rather than owned homes. Many lost their homes during the great depression. The boom following World War II, combined with the migration to the suburbs, increased the ability for families to own homes.

Reasons People May Lack Home Equity for Retirement

Nevertheless, many people will find themselves approaching retirement still paying on a mortgage. Several factors contribute to why people still owe on their home as they approach retirement. I do not judge why you may not have any home equity. I merely share possible reasons:

• The recent burst of the housing bubble leaves many homes worth significantly less than anticipated
• Decreased home values in your neighborhood for several reasons
• You moved frequently to follow job transfers and job changes. As a result, you could not live in one home long enough to build equity
• Home equity loans or frequent refinancing that added debt to your mortgage leave you with no equity rather than a paid off mortgage
• You decided to put your money to work rather than just sit doing nothing.
• Financial experts told you to maintain a high loan balance to reduce taxes
• Frequently upgrading to larger and costlier homes
• Taking out a second mortgage to cover a debt or business failure of children or other family members

Whatever the reason, and without casting blame, many people will not have home equity to help fund their retirement.

Join me next Monday as we analyze how savings and 401Ks may prevent retirement

Barriers to Retirement 2: Social Security Uncertainty

This continues my 6-part series examining why people may not be able to retire

Previously, I suggested that many people plan to retire with 5 sources of retirement income: 1) a pension, 2) Social Security, 3) home equity, 4) savings and 401Ks, and 5) investments.

Most Americans doubt that Social Security will deliver funds when they need it. I do not offer a political discussion on Social Security. I intend to explore the situations that may prevent people from counting on Social Security for their retirement.

3 Basic Problems

I share some problems with the basic structure that will cause a breakdown in the system. Links in my post will take you to much more detailed analysis and supporting data for my statements:

1. People Collect Social Security Longer: The median age at death in 1935 for males was about 65 and 68 for females. Currently, median age at death for males is 78 and for females 83. Most people try to retire between ages 62 to 70. In 1935 the majority of men only cashed maybe 13 Social Security checks before they died. Today, the majority will cash 80+ checks. The system will also pay a median of 144 more survivor benefits checks than originally anticipated. A large percentage of retirees will cash more Social Security checks than the number of paychecks they cased while working.
2. Reduced number contributing compared to receiving: The Social Security and Medicare Boards of Trustees recently published “Costs for both programs increase substantially through 2035 because (1) the number of beneficiaries rises rapidly as the baby-boom generation retires and (2) the lower birth rates that have persisted since the baby boom cause slower growth of both the labor force and GDP.”
3. More people with disabilities collect: Medical science allow people who would have died from certain disabilities to live. The number of beneficiaries from the Social Security Disability Income rose 84% since 1990. I personally applaud a country that provides for those who cannot care for themselves and recognize we can improve the system.

Unless our leaders address these issues Social Security will stop paying benefits in 2035.

Join me on Friday when I discuss how continuing mortgages jeopardize retirement

Barriers to Retirement 1: Insufficient Pensions

This begins a 6-part series outlining the barriers that may prevent many from retiring

You probably harbor a dream of retiring in your 60s. Your retirement will rely on a combination of 5 pillars: 1) a pension, 2) Social Security, 3) home equity, 4) a 401K and other savings, and 5) investments. Unfortunately, you may not retire—and not know it. Your 5 pillars, if you are like most people, have crumbled and will collapse under the weight of neglect or erosion.

Typical Pension Plans

America offers 2 main pension plans to workers. Most, especially the middle aged workers, do not comprehend the difference in the two. The difference will imperil their retirement.

1. The defined benefit (DB) plan guaranteed pensioners a predetermined retirement income (benefit) based on their longevity, salary, and terms defined by the employer. A defined benefit will continue until the person’s death.
2. The defined contribution (DC) plan guarantees the employer will contribute to the person’s pension (usually a 401K or variation) or match the individual’s contribution by a certain percent. The individual then lives on the money they have until the money runs out.

Vanishing and Frozen Defined Benefit Pensions

Most defined benefit plans are vanishing. The consulting firm Towers Watson published an article in September 2010 called Pension Freezes Continue Among Fortune 1000 Companies in 2010,  The article stated that Fortune 1000 companies

• Offering, and not freezing, DB plans dropped from 59% in 2004 to only 38% in 2010
• Freezing DB plans more than quadrupled — from 45 in 2004 to 208 in 2010
• With one or more frozen pension plans rose from 7% to roughly 36%.”

Ellen Schultz, the author of Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers, shared this insight about why the decrease in an interview. She said “It wasn't an accident. It is the result of actions companies took starting in the 1990s to profit from their plans. Employers took perfectly healthy plans with a quarter trillion dollars in aggregate surpluses, and they siphoned out the money through a variety of means."

Mark Miller wrote in Are Vanishing Pensions Just Another Case of Corporate Greed? “The fate of DB plans is a critical retirement policy issue. Like Social Security, DB pensions are key to retirement security because they do something private accounts cannot: provide lifetime income. DB pensions and Social Security are far more valuable than private accounts because they insure against longevity risk -- the risk that you'll run out of money before you run out of time.”

Reasons You May Not Have a Pension when You Retire

1. You changed jobs so frequently that you never vested in a pension plan
2. You worked 2-3 part-time jobs. Part-time employees seldom qualify for pensions.
3. You worked for very small companies that did not provide any kind of pension
4. You either never contributed or contributed to little to a defined contribution plan
• The Journal of Financial Services Research in 2007 found that while 71% contribute to their Defined Contribution plans, only 12% make maximum contributions.
• The data also infers that 29% will have no pension to rely on for retirement. In addition, 88% will have much less than they can afford to live on)
5. Your company (like GM, Hostess, and others) “receive relief of their pension debts” by declaring bankruptcy

Join me on Wednesday when we discuss why you may not rely on Social Security

Find a Job: Discover Company Goals & Problems

Monday and Tuesday we discussed that phone calls must focus on the goals and needs of the hiring authority to get interviews..

Hiring authorities set goals for themselves, or their bosses set the goals for them. In addition, problems frequently beset businesses. They need to resolve the problems and achieve the goals.

What Information You Need to Discover

Decision makers will hire someone that convinces them that they can:

1. Do the job they want done (either achieve the goal or solve the problem)
2. Fit into their work team or organization
3. Provide a good return on investment (make or save them at least 5 times what they pay)

You need to discover their goals and problems. Prepare questions that will gather the information about:

• Goals, problems, or jobs they want done
• Team or organization’s strengths, roles, and holes they need to fill
• Definition of a good return on investment

Write down the answers you receive. Then, include 2 questions at the end of each conversation:

• “You have been most helpful. Is it OK if I call you again if I have more questions?”
• “Who else would you recommend I talk to?”

Where to Gather the Information

• Search the Internet. Read the company’s web site. Look for news releases, staff, sales information, and company history. Also, search for articles and other comments about the company in publications, trade journals, or other web sites.
• Talk to people you know who work for the company, know people who do, compete with the company, or buy from the company. Ask the questions you prepared. Include the 2 questions I mentioned earlier.
• Talk to the people your friends recommend. Identify the person that gave you their name. Request permission to ask a few questions. End your conversation with the same 2 questions.
• Call employees working in the group you want to join. Explain that you are preparing for a meeting with their supervisor (That is your goal isn’t it?) and would like to gather information.

Join me on Monday when I share methods to define where you want your career to go

Find a Job: Focus on The Goals & Needs Of Companies

On Monday we discussed that many people looking for jobs fail to get interviews because they focus on their personal needs when talking to hiring authorities. Today we continue this thought by reviewing how to focus on the company’s needs..

Hiring authorities hire you because you will help them achieve their goals or solve their problems. You have about 10-30 seconds to give them a good reason to let you into their office.

Possible Phone Script

The following phone outline allows you to give them 2 solid reasons for letting you into their office. Please note that the entire focus of the phone call is on what they want to achieve—and how you have already done what they want to do:

1. Introduce yourself by using your name and the name of someone who referred you
2. Ask if now is a good time for a 1-3 minute phone call
3. Tell them that the person who referred you said the hiring authority was looking to either achieve a specific goal or solve a specific problem. State that goal or problem.
4. Verify that this is indeed what the authority wants to achieve
5. State the 3rd base portion of 2 home run statements that apply to their goal or problem. Share measurable success that includes#s, $s, or %s.
6. Verify that the results you just described are the kind of results they want
7. Set an appointment to discuss how you can help them achieve their goal (or solve their problem).

Ensure that the entire phone call takes only 1-3 minutes. Do not try to tell your whole story in one phone call. You want them to set an appointment to learn more.

I taught this to most of the people who failed to get interviews. 10 of the 12 had jobs within 3 weeks. In fact, I shared this with one man the Wednesday before Thanksgiving. He received a job offer and started the next Monday. They just needed to give hiring authorities a reason to let them into their offices. A reason that meant something to the hiring authority.

Join me Friday when we discuss how to discover the hiring authority’s goals or problems

Find a Job: Don’t Focus on Your Needs to Impress Them

This week I will discuss effective phone calls to find a job.

Several clients recently complained that their phone calls to potential employers failed to generate interviews. In addition, one employer told me that the people I referred to him wasted his time and were ill prepare for the phone call. He commented that they did not know what he wanted and did not answer questions he asked on the phone. In others words, he said, they did not give him any reason to let them into his office.

I role played a phone call with 12 people. I played the hiring authority (not Human Resources) for their ideal employer. I answered the phone with “XYZ Company, Larry Stevenson speaking” I then followed their lead on the phone call. The reason for their failure revealed itself in 10-20 seconds.

Do Not Focus on Your Needs

In almost every single phone call the client failed to give a good reason for me to let them into my office. They though they had done so but did not. After the call I asked “What reason did you give me to let you in my office?”. Their answers included:

• “I’m looking for a job?”
• “I’ve completed your online application”
• “I sent you my resume.”
• “So-and-so told me to call you.”

In every circumstance, the client felt that those answers would impress the hiring authority.

They were wrong.

They could not grasp that the reasons they gave, while important to them, do not mean anything to the hiring authority. You see, the reasons listed above focus on the needs of the job seeker.

Hiring authorities do not have time to respond to your needs—especially if they do not know you. They worry that if you waste their time on the phone, you will waste even more time once you trap them in their office. You have to give them a reason that—focuses on their goals and problems—and how you can help them achieve them. That impresses them.

Join me on Wednesday when I share a phone outline that gets interviews

Collins’: BHAG

While this post continues talking about Jim Collins’ Good to Great it is about another concept

Jim Collins and his team discovered that Level 5 leaders, Good to Great and Built to Last organizations shared one concept. They create big, hairy, audacious goals. Collins shortened the term to BHAG.

Collins provides a an insight with a diagnostic tool. He said “Great companies have a purpose—a reason for being—that goes far beyond just making money, and they translate this purpose into BHAGs (Big Hairy Audacious Goals) to stimulate progress.”

Collins writes “To build a visionary company, you need to counterbalance its fixed core ideology with a relentless drive for progress. While core ideology provides continuity, stability, and cohesion, the drive for progress promotes change, improvement, innovation, and renewal.

One way to bring that drive for progress to life is through BHAGs (short for Big Hairy Audacious Goals). With his very first dime store in 1945, Sam Walton set the BHAG to “make my little Newport store the best, most profitable in Arkansas within five years.” As the company grew, Walton set BHAG after BHAG, including the still-in-place goal to become a $125-billion company by the year 2000. The point is not to find the “right” BHAGs but to create BHAGs so clear, compelling, and imaginative that they fuel progress. ”

I work for an organization with a Level 5 Leader that set not one, but six, BHAG’s. While he is no longer the CEO, the organization continues moving on the BHAGs. His vision and challenge continue to inspire the organization to move to greatness.

Big Hairy Audacious Goals generate feelings of excitement and purpose. They enhance your dedication to your work. Look for companies and leaders that set them.

Collins’: Great to Built to Last

This concludes our 8-part series reviewing Jim Collins research on Good to Great

Jim Collins and his team researched and wrote Built to Last six years prior to Good-to-Great.  Built to Last tried to answer. “What does it take to start and build an enduring great company from the ground up?…I studied eighteen enduring great companies—institutions that stood the test of time, tracing their founding in some cases back to the 1800s, while becoming the iconic great companies of the late twentieth century.”

“Similar to this book, we used direct comparison…In short, we sought to identify the essential distinctions between great companies and good companies as they endure over the decades, even centuries.”

Role of Built to Last in the Good to Great Research

When writing Good to Great, Collins and his team  “…we made a very important decision. We decided to conduct the research for Good to Great  as if Built to Last  didn’t exist. This was the only way to clearly see the key factors in transforming a good company into a great one with minimal bias from previous work. Then we could return to ask, ‘How, if at all, do the two studies relate.:”

Collins concluded “Now, five years later, with this book complete, we can stand back to look at the two works in the context of each other. Surveying across the two studies, I offer the following four conclusions:”

1. “When I consider the enduring great companies from Built to Last, I now see substantial evidence that in their early years their leaders followed the good-to-great framework. The only real difference is that they did so as entrepreneurs in small, early-stage enterprises trying to get off the ground, rather than as CEOs trying to transform established companies from good to great.”
2. In an ironic twist, I now see Good to Great not as a sequel to Built to Last, but as a prequel . Apply the findings in this book to create sustained great results, as a start-up or an established organization, and then apply the findings in Built to Last to go from great results to an enduring great company.
• Established company or Start-up + Good to Great Concepts –>Sustained Great Results + Built to Last concepts –> Enduring Great Company”
3. “To make the shift from a company with sustained great results to an enduring great company of iconic stature, apply the central concept from Built to Last: Discover your core values and purpose beyond just making money (core ideology) and combine this with the dynamic of preserve the core/stimulate progress.
4. A tremendous resonance exists between the two studies; the ideas from each enrich and inform the ideas in the other. In particular, Good to Great answers a fundamental question raised, but not answered , in Built to Last: What is the difference between a “good” BHAG (Big Hairy Audacious Goal) and a “Bad” BHAG?” (Jim Collins, Good to Great, 2001, pg188-190)

Apply the Framework to Your Career

Jim Collins and his team discovered how you, as an individual or an organization, can not only move from good-to-great, but also build something that will last. Sometime in the future I will review the principles of Built to Last.

Collins reminds one of his former students that size does not matter in the journey to greatness. Individuals, as well as organizations, may improve their career because of the framework found in Good to Great. I encourage you again to read both Good to Great and Built to Last.Do not rely on one reading to understand the framework. Read it many times. Study it. Apply it to your career. Become something great.

We will examine the Collins concept of BHAG (Big Hairy Audacious Goal).on Friday Join us!

Collins’: Avoid Doom Loops

This was originally part of last Friday’s post, but it was too long. So I conclude today.

On Friday, we discussed how great organizations, once they get the momentum going in the right direction, maintain that momentum with less energy. We likened them to the merry go round on the playground. The runner had to expend a lot of energy to get the merry go round going.refer back to Flywheels to recognize doom loops

Doom Loops Destroy the Momentum

Unfortunately, most leaders (remember Collins started with 1,485 companies and ended with only 11 great ones) let their egos get in the way. This is especially true when a new leader steps in place. Rather than continue the momentum established by the previous leader, many leaders begin their administration with a major change of the organization. They feel the need to “put their stamp” onto the legacy of the company. They don’t just tweak, they overhaul.

Jim Collins calls this thinking the Doom Loop. Returning to our metaphor of the merry go round. A doom loop occurs when the person pushing the merry go round decides to stop it and start pushing it the other direction. Slowing down or stopping a fully circling merry go round requires even more strength than to start it. Then, once it is stopped the runner must expend energy to begin moving it in the opposite direction. Now imagine the waste of resources used if every time the merry go round achieved velocity, you decided to reverse it. The runner would lose strength and finally give up.

Personal Experiences with Doom Loops

I worked for two organizations that institutionalized doom loops. They both could have been great. They did not achieve their potential because they constantly changed. Almost every new director or managing director began their administration with a major review. The purpose of the review was not to understand what was happening, but to make changes. Every change

• Stifled momentum and reduced productivity
• Paralyzed the organization with speculation, uncertainty, and worry
• Distracted both management and employees from achieving results
• Diverted financial and social capital from results to change

College students who frequently change majors exemplify personal doom loops. People who constantly change careers, starting at the bottom of each new one, represent personal doom loops. People who focus so much on the next promotion or job, that they fail to deliver on the current job implement doom loops.

Not Against Change

Before I finish, I am not against change. Many people and organizations required change, especially when they move in the wrong or unproductive direction. Confronting the brutal facts recognizes change. The intent and the reason for the change become important. Change that enhances or accelerates the Hedgehog Concept moves the organization to greatness.

Too many times change occurs because of ego, faulty implementation, or changing economies. Great organizations changed. Walking away from the principles that made them great creates a doom loop. Collins found this out when he analyzed why several of the great companies failed in Why the Might Fall.

Flywheels may take time to build the momentum, but maintaining the momentum compensates for the expenditure of time and energy. Unless, of course, once you get going you decide to move in another direction. Doom Loops, in the long run, cost much more and deliver much less satisfaction. Doom loops, however, seem to appeal to leaders more than flywheels. Remember, it is your choice.

Join me Wednesday when we conclude our review of Good to Great with Build to Last

Collins’: Maintain Flywheels

We are almost to the end of our 8-part series on Jim Collins principles of Good-to-Great

I know that we cannot prioritize which of the principles that Jim Collins discovered in his good-to-great research. They all seem very important: who first…then what…, rinsing your cottage cheese, the Hedgehog Concept, or any of the others. Yet, my top votes would go to the Hedgehog Concept and todays topic: Flywheels or Doom Loops. I see the benefits created when organizations or individuals expend the effort to identify their Hedgehog Concept. The biggest deterrent I’ve seen to organizations becoming great, however, remains the institutionalization of doom loops.

Flywheels Maintain the Momentum Towards Greatness

Collins uses the metaphor of a giant flywheel used in machinery to describe this concept. I didn’t grow up in a manufacturing environment. I don’t think most of my readers did either.  I will use a different picture to describe the same concept. I still refer to it as the flywheel, however.

Do you remember the merry go rounds on playgrounds (before OSHA deemed they were too dangerous). A bunch of kids would stand or sit on the merry go round. One child would run pushing one of the bars so the merry go round would turn. The runner used a lot of energy at first to overcome the inertia and weight of all the kids. Eventually, however, the merry go round would begin to turn easier. It created a momentum of its own. Finally, the runner could just stand at the side and slap on of the bars to keep the whole thing turning fast. It was a great ride.

Great organizations use the same social physics. They recognize that moving an organization to greatness requires an huge expenditure in financial and social energy. Aligning all of the following efforts does not happen easily:

• Getting the right people on the right seats in the bus
• Confronting the brutal facts,yet never losing faith
• Recognizing and implementing your Hedgehog Concept
• Establishing a culture of discipline that rinses its cottage cheese

Once in place, however, they create a momentum of their own. Leaders spend less time maintaining great organizations than they do creating them—if they allow the flywheel to perform. Unfortunately, too many leaders allow ego and insecurity to stifle the momentum and create Doom Loops instead.

The same can be said for personal careers. If you take the time to confront the brutal facts, find your personal Hedgehog Concept, establish your personal discipline, and get in the right seat on the right bus; then, you can maintain your personal flywheel. You will get the biggest raises, the best promotions, and the right assignments. Your satisfaction will increase. Your momentum will carry you forward with much less effort. That is the beauty of flywheels whether personal or organizational.

Discussing Flywheels & Doom Loops created a very long post. So, join me Monday when we explore the waste of Doom Loops

Collins’: Tech Accelerators

This continues our 8-part review of Jim Collins’ research on Good-to-Great companies

The good-to-great principles that Jim Collins and his research team discovered not only will help organizations move from good-to-great, but can also help you move your career from good-to-great. You need to study and understand the principles to 1) identify companies that will accept your good-to-great leadership and 2) implement the principles into your career so you stand out.

Today we explore how technology can accelerate growth or destroy the company. I should point out that Collins published his work in 2001. He witnessed the dot.com craze that thought they would rewrite the rules. He also saw the tip of the bubble burst, but not the complete melt down. His insights proved very accurate.

The Role of Technology in Great Companies

Collins wrote “Technology-induced change is nothing new. The real question is not, What is the role of technology? Rather, the real question is, How do good-to-great organizations think differently about technology?”

He continues “In every good-to-great case, we found technological sophistication. However, it was never technology per se, but the pioneering application of carefully selected technologies. Every good-to-great company became a pioneer in the application of technology, but the technologies themselves varied greatly”.

Collins shares several examples of how Walgreens, Kroger, Pitney Bowes and others used technology to accelerate the success of their Hedgehog Concept.

Accelerator, Not Creator of Momentum

“This bring us to the central point of the chapter.” Collins stated “When used right, technology becomes an accelerator of momentum, not a creator of it. The good-to-great companies never began their transitions with pioneering technology, for the simple reason that you cannot make good use of technology until you know which technologies are relevant. And which are those? Those—and only those—that link directly to the three intersecting circles of the Hedgehog Concept.”

“We could make a long list of companies that were technology leaders but that failed to prevail in the end as great companies. It would a fascinating list in itself, but all the examples would underscore a basic truth: Technology cannot turn a good enterprise into a great one, nor by itself prevent disaster.”

“Indeed, thoughtless reliance on technology is a liability, not an asset. Yes, when used right—when linked to a simple, clear, and coherent concept rooted in deep understanding—technology is an essential driver in accelerating forward momentum. But when used wrong—when grasped as an easy solution, without deep understanding of how it links to a clear and coherent concept—tehcnology simply accelerates your own self-created demise.”

Collins concludes the chapter by warning leaders to avoid grasping at technology from fear of falling behind.

I recognize the validity of this chapter in my career. I personally chased after technological solutions to my business and my career without that “single, clear and coherent concept”. I’ve been a member of a change team that turned the development of the technology to someone that still didn’t’ understand the business nor it’s Hedgehog Concept. In all circumstances, it led to disaster. I strongly suggest you read this chapter—especially if you think technology will change your business or your career.

Don’t miss Friday’s discussion of flywheels and doom loops. It can change your future.

Collins’: Culture of Discipline

This post continues our 8-part review of Jim Collins Good-to-Great research

Jim Collins describes the work he and his research team did to publish the book Good to Great Why Some Companies Make the Leap and Others Don’t in an article on his web site. He wrote “Start with 1,435 good companies. Examine their performance over 40 years. Find the 11 companies that became great. Now here's how you can do it too. Lessons on eggs, flywheels, hedgehogs, buses, and other essentials of business that can help you transform your company”.

I feel that studying Good to Great will enhance your career. Understanding and applying the principles he discovered will improve your supervision, management, and leadership. I share these 8 posts to tickle your fancy to read more. I hope you take the time to do so.

Building a Culture of Discipline

Collins states on pages 123-124 “By its nature, ‘culture’ is a somewhat unwieldy topic to discuss, less prone to clean frameworks like the three circles. The main points of this chapter, however, boil down to one central idea: Build a culture full of  people who take disciplined action within the three circles, fanatically consistent with the hedgehog concept: More precisely this means the following:

1. Build a culture around the idea of freedom and responsibility, within a framework
2. Fill that culture with self-disciplined people who are willing to go to extreme lengths to fulfill their responsibilities. They will ’rinse their cottage cheese’
3. Don’t confuse a culture of discipline with a tyrannical disciplinarian
4. Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection of the three circles. Equally important, create a ‘stop doing list’ and systematically unplug anything extraneous”.

Discipline Based on Previous Good-to-Great Elements

You find the keys to building a culture of discipline in the previous good-to-great elements.

• Getting the right people in the right seats on the bus “The good-to-great companies built a consistent system with clear constraints, but they also gave people freedom and responsibility within the framework of that system. They hired self-disciplined people who didn’t need to be managed, and then managed the system, not the people. “
• Establishing the Hedgehog Concept provided a foundation
• “Everyone would like to be the best, but most organizations lack the Discipline to figure out with egoless clarity what they can be best at and the will do whatever it takes to turn that potential into reality. They lack the discipline to ‘rinse their cottage cheese’” (an analogy from an Iron Man athlete who would try to gain an edge in the competition by washing excess fat from his non-fat cottage cheese diet).
• “The good-to-great companies at their best followed a simple mantra ‘Anything that does not fit with our Hedgehog Concept, we will not do. We will not launch unrelated businesses. We will not make unrelated acquisitions. We will not do unrelated joint ventures. If it doesn’t fit, we don’t do it. Period.’”
• “It takes discipline to say ‘No, thank you’ to big opportunities. The fact that something is a ‘once-in-lifetime opportunity’ is irrelevant if it doesn’t fit within the three circles.”

Collins concludes this chapter “The real question is, once you know the right thing, do you have the discipline to do the right thing and, equally important, to stop doing the wrong thing?”

A very good question. One that you must ask yourself in building your career. Good luck with finding the answer. Let us know what you discover.

Join us Wednesday to explore what Jim Collins discovered about technology accelerators