SOME OF THE GOOD TO GREAT RESEARCH TEAM

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T-15 Transition Point T+15

Ratio of Cumulative Stock ReturnsTo General Market

Good to GreatCompanies

ComparisonCompanies

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RESULTS FROM TRANSITION POINT TO 15 YEARS RESULTS FROM TRANSITION POINT TO 15 YEARS BEYOND TRANSITION POINTBEYOND TRANSITION POINT

CompanyCompany Results from T +15Results from T +15 T +15T +15

AbbottAbbott 3.98 times the market3.98 times the market 1974-19891974-1989

Circuit CityCircuit City 18.50 times the market18.50 times the market 1982-19971982-1997

Fannie MaeFannie Mae 7.56 times the market7.56 times the market 1984-19991984-1999

GilletteGillette 7.39 times the market7.39 times the market 1980-19951980-1995

Kimberly-ClarkKimberly-Clark 3.42 times the market3.42 times the market 1972-19871972-1987

KrogerKroger 4.17 times the market4.17 times the market 1973-19881973-1988

NucorNucor 5.16 times the market5.16 times the market 1975-19901975-1990

Philip MorrisPhilip Morris 7.06 times the market7.06 times the market 1964-19791964-1979

Pitney BowesPitney Bowes 7.16 times the market7.16 times the market 1973-19881973-1988

WalgreensWalgreens 7.34 times the market7.34 times the market 1975-19901975-1990

Wells FargoWells Fargo 3.99 times the market3.99 times the market 1983-19981983-1998

THE THREE CIRCLESof the Hedgehog Concept

PassionateAbout

Economic Denominator

Can Be Best In The World

© Copyright Jim Collins, All Rights Reserved

THE GOOD-TO-GREAT COMPANIES AND THE “BEST IN THE THE GOOD-TO-GREAT COMPANIES AND THE “BEST IN THE WORLD” CIRCLE OF THE HEDGEHOG CONCEPTWORLD” CIRCLE OF THE HEDGEHOG CONCEPT

CompanyCompany Could become the best in the world at…Could become the best in the world at…

AbbottAbbott Creating a product portfolio that lowers the cost of healthcare.Creating a product portfolio that lowers the cost of healthcare.

Circuit CityCircuit City Implementing the "4-S" model (service, selection, savings, satisfaction) Implementing the "4-S" model (service, selection, savings, satisfaction) applied to big-ticket consumer sales.applied to big-ticket consumer sales.

Fannie MaeFannie Mae Being a capital markets player in anything that pertains to mortgages.Being a capital markets player in anything that pertains to mortgages.

GilletteGillette Building premier global brands of daily necessities that require Building premier global brands of daily necessities that require sophisticated manufacturing technology.sophisticated manufacturing technology.

Kimberly-ClarkKimberly-Clark Paper-based consumer products.Paper-based consumer products.

KrogerKroger Innovative super-combo stores.Innovative super-combo stores.

NucorNucor Harnessing culture and technology to produce low-cost steel.Harnessing culture and technology to produce low-cost steel.

Philip MorrisPhilip Morris Building brand loyalty in cigarettes and, later, other consumables.Building brand loyalty in cigarettes and, later, other consumables.

Pitney BowesPitney Bowes Messaging that requires sophisticated back-office equipment.Messaging that requires sophisticated back-office equipment.

WalgreensWalgreens Convenient drug-stores.Convenient drug-stores.

Wells FargoWells Fargo Running a bank like a business, focusing on the western U.S.Running a bank like a business, focusing on the western U.S.

ECONOMIC DENOMINATORECONOMIC DENOMINATOR

CompanyCompany Profit…Profit…

AbbottAbbott per employeeper employee

Circuit CityCircuit City per geographic regionper geographic region

Fannie MaeFannie Mae per mortgage risk levelper mortgage risk level

GilletteGillette per customerper customer

Kimberly-ClarkKimberly-Clark per consumer brandper consumer brand

KrogerKroger per local populationper local population

NucorNucor per ton of finished steelper ton of finished steel

Philip MorrisPhilip Morris per global brand categoryper global brand category

Pitney BowesPitney Bowes per customerper customer

WalgreensWalgreens per customer visitper customer visit

Wells FargoWells Fargo per employeeper employee

LEVEL 5 LEADERSHIP

Level 5 Executive

Effective Leader

Competent Manager

Contributing Team-Member

Highly Capable Individual

Level 5:

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© Copyright Jim Collins, All Rights Reserved