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CHAPTER 3: FIRST WHO, THEN WHAT One would think that companies with a great vision hire people and then direct them to go in a

CHAPTER 3: FIRST WHO, THEN WHAT

One would think that companies with a great vision hire people and then direct them to go in a certain direction. However, this is not the case. In fact, the reverse is true because even the executives who hire Level 5 leaders often don't know what they want to achieve. They just know that they need the right individuals to get in and the wrong people to simply get off. The right people are utmost important because they come before even the strategies, vision, structure and other plans are made.

When a firm hires the right people, various problems plaguing the company are bound to dissipate automatically. Even if it seems like it takes a lot of effort to get the best executives out there, it's all worth it at the end. It's also possible that you aren't sure about the people you want to hire, so it's best to keep looking in such scenarios. There's no hurry - remember you need the best. Some companies follow a model where the leader enlists several 'helpers' to make his vision come true, but unfortunately, such models are doomed to fail since the company falls apart as soon as the leader quits.

Additionally, great leaders encourage people to speak up. They want voices to be heard because it's the best way to ensure that they arrive at the right decision. Yes, it invites a lot of debate, but such teams will also stand united with each other behind all their decisions. At the end of the day, what makes these leaders outstanding are their character traits and ability to perform rather than their background or knowledge in any specific skill.

CHAPTER 4: CONFRONT THE BRUTAL FACTS (YET NEVER LOSE FAITH)

During the 1950s, A&P (General Atlantic and Pacific Tea Company) was one of the best and largest retail organizations in America. In contrast, Kroger, a grocery chain, was not only smaller than A&P, but the performance wasn't noteworthy either. After a decade, though, things began to change, and while A&P faltered a bit, Kroger began its transition to becoming a great company. After about 25 years, Kroger generated returns that were at least ten times more than the market. What's more, their returns were about 80 times higher than A&P! How did that happen?

Both Kroger and A&P were old companies with a good understanding of the market. Back then, Americans were frugal and content with cheap grocery items; however, pretty soon, they wanted more. They wanted fancy foods, different types of meat, milk, and almost everything that was modern and exotic. A&P didn't change its model, but Kroger did. While A&P refused to face the truth, Kroger decided to change its course and adapt to reality, which was the fundamental difference between the two companies.

Companies that want to forge ahead successfully must be willing to identify and analyze several facts that could change the course of the company. Markets change constantly, and only the organizations that adapt swiftly will stand a chance. Ignoring the market will only push the company towards failure since it's impossible to make coherent decisions without being honest about the problem in the first place.

  • Read chapters 3 & 4
  • Simplify and explain.
  • What are the 3 main points of each chapter?

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