The mindset

The good-to-great leaders began the transformation by first getting the right people on the bus and the wrong people off the bus then figuring out where to drive it.

If people join the bus primarily because of where it is going, what happens if you get ten miles down the road and you need to change direction?

If people are on the bus because of who else is on the bus, then it's much easier to change direction.

If you have the right people on the bus, the problem of how to motivate and manage people largely goes away. The right people don't need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great.

If you have the wrong people, it doesn't matter whether you discover the right direction; you still won't have a great company. Great vision without great people is irrelevant.

The main point is not assembling the right team. The main point is FIRST WHO, BEFORE WHAT - before vision, strategy, tactics, organizational structure, technology.

Not a "genius with a thousand helpers"

The geniuses seldom build great management teams, for the simple reason that they don't need one, and often don't want one.

When the genius leaves, the helpers are often lost. Or worse, they try to mimic their predecessor with bold, visionary moves, trying to act like a genius, without being a genius, that prove unsuccessful.

It's who you pay, not how you pay them

The right people will do the right things and deliver the best results they're capable of, regardless of the incentive system.

If you have the right executives on the bus, they will do everything within their power to build a great company, not because of what they will "get" for it, but because they simply cannot imagine settling for anything less. Their moral code requires building excellence for its own sake, and you're no more likely to change that with a compensation package than you're likely to affect whether they breathe.

There's no systematic pattern linking executive compensation to the shift from good to great. The purpose of a compensation system should not be to get the right behaviors from the wrong people, but to get the right people on the bus in the first place, and to keep them there.

People are not your most important asset. The right people are.

Whether someone is the "right person" has more to do with character traits and innate capabilities than with specific knowledge, educational background, practical skills, or work experience. Not that specific knowledge or skills are unimportant, but these traits are teachable, or at least learnable, whereas the dimensions like character, work ethic, basic intelligence, dedication to fulfilling commitments, and values are more ingrained.

Rigorous, not ruthless

The good-to-great companies probably sound like tough places to work, and they are. If you don't have what it takes, you probably won't last long. But they're not ruthless cultures, they're rigorous cultures. This distinction is crucial.

To be ruthless means hacking and cutting, especially in difficult times, or wantonly firing people without any thoughtful consideration. To be rigorous means consistently applying exacting standards at all times and all levels, especially in upper management.

How to be rigorous

Discipline 1: When in doubt, don't hire, keep looking

Packard's Law: No company can grow revenues consistently faster than its ability to get enough of the right people to implement that growth and still become a great company. If your growth rate in revenues consistently outpaces your growth rate in people, you simply will not, indeed cannot, build a great company. A company should limit its growth based on its ability to attract enough of the right people.

Q: I'm really wearing down trying to find the exact right person to fill this position or that position. At what point do I compromise?

A: You don't compromise. We find another way to get through until we find the right people.

Discipline 2: When you know you need to make a people change, act!

The moment you feel the need to tightly manage someone, you've made a hiring mistake. The best people don't need to be managed. Guided, taught, led - yes, but not tightly managed.

Letting the wrong people hang around is unfair to all the right people, as they inevitably find themselves compensating for the inadequacies of the wrong people. Worse, it can drive away the best people. Strong performers are intrinsically motivated by performance, and when they see their efforts impeded by carrying extra weight, they eventually become frustrated. The only way to deliver to the people who are achieving is to not burden them with the people who are not achieving.

Waiting too long before acting is equally unfair to the people who need to get off the bus. For every minute you allow a person to continue holding a seat when you know that person will not make it in the end, you're stealing a portion of his life, time that he could spend finding a better place where he could flourish.

Indeed, if we're honest with ourselves, the reason we wait too long often has less to do with concert for that person and more to do with our own convenience.

The good-to-great leaders would not rush to judgment. They often invested substantial effort in determining whether they had someone in the wrong seat before concluding that they had the wrong person on the bus entirely.

"Instead of firing honest and able people who are not performing well, it's important to try to move them once or even two or three times to other positions where they might blossom" - Alan Wurtzel of Circuit City.

How do you know when you know?

Ask yourself 2 questions:

1. If it were a hiring decision, rather than a "should this person get off the bus?" decision, would you hire the person again?

2. If the person came to tell you that he or she is leaving to pursue an exciting new opportunity, would you feel terribly disappointed or secretly relieved?

Discipline 3: Put your best people on your biggest opportunities, not your biggest problem

The good-to-great companies made a habit of putting their best people on their best opportunities, not their biggest problems.

Managing your problems can only make you good, whereas building your opportunities is the only way to become great.

Instead of focusing on solving problems, it's much better to build and manage your opportunities.

The paradox

The good-to-great management teams consist of people who debate vigorously, sometimes violently, in search of the best answers, yet who unify fully behind decisions, regardless of parochial interests. All of the debates were for the common good of the company, not their own interests.

First who, great companies, and a great life

Q: Is it possible to build a great company and also build a great life?

A: For no matter when we achieve, if we don't spend the vast majority of our time with people we love and respect, we cannot possibly have a great life. But if we spend the vast majority of our time with people we love and respect, people who really enjoy being on the bus with and who will never disappoint us, then we will almost certainly have a great life, no matter where the bus goes.

The good-to-great people clearly loved what they did, largely because they loved who they did it with.