A & P And Kroger: Chapter Analysis

This chapter begins with talking about two great companies, the Great Atlantic and Pacific Tea Company and Kroger. These companies were and excellent choice because their example perfectly models the exact point that the chapter is trying to get a cross. This chapter has several very important points that can help lead a company from good to great. We will discuss these points in detail and explain how they are useful and why. We will also relate these points to both A&P and Kroger to show which company used these points effectively and which did not. The chapter dives right into the concept of confronting the brutal facts within your company. This is hard for some people because the facts are not always something you want to hear, but they
are vital to turning your good company into a great one. The first point to be made in regards to confronting the brutal facts is that decisions need to be based on facts. As is says in the title you are confronting the brutal FACTS, so that means you have to actually have facts. In order to have facts a company must do research. Facts don’t just fall out of thin air they are found. There are a number of different ways to find your facts such as customer surveys, focus groups, trial applications in small select segments of a market. After conducting the studies you must take the information and analyze it. Your analysis will lead you to the brutal facts you are searching for. If you don’t have these facts to base decisions on then you are just making blind decisions based on intuition. The chapter discusses how intuition alone will not lead to great decisions. No matter how much experience you have you intuition will only lead you so far, facts will lead you to the top. Now what do you do after you have your facts? Once you have found the facts you need to act on them. The brutal facts are only helpful if you actually use them or otherwise you have just wasted your time. What this means is when the facts tell you what is going wrong in your company you need to change it. Just knowing it is wrong is not going to help anything. You must implement new strategies that will be more effective, or you may need to clean house and move people around so that you have the right people on your bus. Acting on your facts is what is really going to create a great company because it shows their ability to change and adapt. In today’s ever advancing and changing environment it is essential for a company to be able to adapt. How these ideas apply to Kroger and A&P? Kroger and A&P both found themselves in a situation to confront the brutal facts. Through study and research they both found that their traditional mom and pop grocery stores were becoming obsolete. Kroger confronted the facts and used them to create what the public wanted, giant superstores with anything a person would need and tons of checkout lines. A&P on the other hand tried to use their intuition and experience to say that lowering prices was all they needed to do. Using their intuition eventually led to them going out of business, while Kroger confronted the facts and became one of the largest grocers in the U.S. If A&P had confronted the brutal facts and acted on them they may very well still be a dominate force but they didn’t and their competition did. Now the chapter leads us into the concept of facts are better than dreams. Collins starts out the Facts are Better than Dreams section of Chapter 4 out by saying that one of the dominant themes throughout his research was that breakthrough results come about by a series of good decisions executed one after another. You may think to yourself that some of these great companies got lucky to get where they are today, but Collins says that great companies display two distinctive forms of disciplined thought. First the great companies infused the entire process with the brutal facts of reality. The second form which was discussed in the following chapter is the companies developed a simple, yet deeply insightful, frame of reference for all decisions. In this section of the chapter, Collins compares the two companies Pitney Bowes (PB) and Addressograph (AG).
Roy Ash was the CEO of AG and he is one leader that did not face the process with the brutal facts of reality. AG was a little company with only about 670 employees, but Ash had a vision to try and dominant the likes of IBM, Xerox, and Kodak in the emerging field of office automation. This plan was definitely not thought through because AG had only previously dominated the envelope-address-duplication business. According to Business Week, Ash refused to face the evidence that his plan was doomed to fail and might take down the rest of the company. But, he continued to milk down AG’s assets and they later filed for bankruptcy and fired
Ash. PB and AG were very similar companies up until 1973, similar revenue, profits, numbers of employees, and stock charts. Both companies also had near monopoly market with virtually the same customer base. They also both nearly lost it all, but Collins explains why PB was able to turn it around. By the year 2000 PB had grown to nearly 30,000 employees and revenues that were exceeding $4 billion. PB actually outperformed AG 3,581 to 1 in shares. How did PB do it? One executive from PB said, “we have an itch that what we just accomplished, no matter how great, is never going to be good enough to sustain us.” This right here shows me that they take great pride in their work if they accomplish great things, but as soon as that idea or process is implemented into their company they are automatically thinking of how we could now make this product better, faster, more cost effective, etc. Collins also talks about PB’s unique sales meetings. They were quite different from many other companies as the entire management team would lay itself open in front of the whole company for questions or concerns anyone may have. The company created a long standing forum where people could stand up and tell their senior executives what the company was doing wrong and someone would actually listen. Always consider all the facts before implementing a process or coming up with a new idea. One wrong move is all it takes sometimes to ruin a whole company. I’m not saying great companies have a perfect track record when it comes to making good decisions, but altogether they made many more good decisions than bad ones.

The chapter wraps up with discussing the Stockdale Paradox. The Stockdale paradox refers to Admiral Jim Stockdale, who was a prisoner-of-war camp survivor during the height of the Vietnam War. Tortured over twenty times during his eight-year imprisonment from 1965 to 1973, Stockdale lived out the war without any prisoner’s right, no set release date, and no certainty as to whether he would even survive to see his family again. “This is a very important lesson. You must never confuse faith you will prevail in the end -- which you can never afford to lose -- with the discipline to confront the most brutal facts of your current reality, whatever they may be.” – Jim Stockdale
The Stockdale paradox is a key psychology for learning from good to great, it says:
Retain absolute faith that you can and will prevail in the end, regardless of the difficulties, AND at the same time confront the most brutal facts of your current reality, whatever they might be.
The book gave the example of Kroger vs.
A&P. A&P opened a store called “The Golden Key” to experiment with new methods and models with innovative new departments and ideas. The store began to evolve into a modern superstore which customers liked. The top management at A&P did not confront the brutal facts that they needed to update their business model and decided to close “The Golden Key” because they didn’t like the fact that the customers like the new store better than their old stores. Kroger also experimented during the 60’s with the superstore concept. By the 70’s Kroger’s top management confronted the brutal fact that the old-model grocery store was extent. Kroger decided to eliminate, change, or replace every single store. By the 90’s they rebuilt their entire system and was on its way to becoming the #1 grocery store in America. Kroger was like Stockdale, and A&P was like the optimist who always thought they’d be out by Christmas. All the Good to Great companies maintained unwavering faith that they would not just survive, but prevail as a great company. Also, they became relentlessly disciplined at confronting the most brutal facts of their current reality. The Good to Great leaders are able to strip away noise and clutter and just focus on the few things that would have the greatest impact. They operated on both sides of the Stockdale Paradox, never letting one side over shadow the
other.