Jim Collins: How to Build an Enduring Great Company (12 Questions for Leaders)

Jim Collins delivered the Keynote at this year’s Vistage ChairWorld meeting to over 800 participants.

About Jim Collins

Jim Collins is a student and teacher of what makes great companies tick, and a Socratic advisor to leaders in the business and social sectors. He has authored 6 books that have sold more than 10 million copies worldwide. His books include:

Good to Great which examines why some companies make the leap to superior results,
Built to Last, which explores how some leaders build companies that remain visionary for generations;
How the Mighty Fall, which delves into how once-great companies can self-destruct; and
Great by Choice, which is about thriving in chaos—why some do, and others don’t.

Conor’s Video Summary of Jim Collins 12 Questions

Jim Collins shared 12 questions that come out of his work over the last 25 years.

These are my notes and reflections from his Keynote address.

The 4 part video series below gives a short overview of each of the 12 questions.

Video: Summary of Jim Collins’ 12 Questions

#1 strive for excellence

The first step is a conscious decision on the part of leadership to decide for excellence, to decide to build an enduring great company. Often leaders are enduring great individuals, but that doesn’t make for an enduring great company. Leaders must put excellence in the company over “success” in their own individual life. (This doesn’t mean that they give up a good life, but that they are willing to pay the price of leading an Enduring Great Company.)

Differences between level 5 and level 4 leader?

Humility. This is key to level 5. Deep genuine personal humility combined with a brutal will, a fierce resolve directed at something that is not about them
Leadership: People follow when they have the choice to not follow… otherwise it is just power.
Charisma – not necessary for Level 5 leadership (“never confuse personality with leadership”)

The author of this blog with Jim Collins, best selling author of Good to Great and Built to Last, at Vistage ChairWorld, January 2019

#2 First who, then what.

Right people, then trust them to figure out where the bus is going. Great vision without great people is irrelevant. Single most important talent: select great people for the key seats. Nothing is more important that key seats filled with great people.

#3 confront the brutal facts

What brutal facts must we confront? No opinions.

#4 Hedgehog concept

Fox knows many things, hedgehog knows 1 Fox loves complexity, hedgehog loves simple Intersection of Passion, best in world, drives economic engine Big is not equal to great (think restaurants- if it were to disappear it would leave an unfillable hole)

#5 20 mile march

Driving the flywheel “Which push made the difference?” None… Cumulative effort consistently over long time Flywheel- causal links between, inevitability “I admire Nike” “what do Nike do? Products so great that pros wear them” great products + social proof Execution 1-10… flywheel accelerator at quality of execution of lowest quality of execution Best investment strategy “a highly undiversified investment where you are right” “We can make it up on a good day” fallacy. Be super careful of overextension leading to missing your March Cycle across USA… booked the hotels ahead of time: have to make it, and prepare for tomorrow and the next day
“Part of the task of helping others is to be really hard on them… with love”

#6 bullets, then cannonballs

Innovation small, then massive support of small wins. Scale the right innovation. Scaling innovation is more important than innovation. Fail: Not enough bullets Bullets but no guts to fire cannonball Untargeted cannonballs

#7 don’t die

The first step of moving from good to great to built to last is “don’t die” I am terrified by good times. Complacency! Be properly terrified all the time. Fortune 500 85% carnage rate.

Jim Collins’ shares the 5 Stages of Decline of a Business

Productive paranoia:Prepare for the storms (cash to assets ratio 3-10 times greater)

The only mistakes you can learn from are the ones you survive

#8 clock building or time telling?

Idea-> biz-> great company = enduring success

“The genius with a thousand helpers model is not building a great company”
Jim Collins

Shift from time telling (individual level) to clock building (at a company level). Every leader can grow to be the leader of a bigger, greater company. Don’t answer questions with answers… help people find their own answers, their own resourcefulness.

Steve Jobs 2.0 – had a yoda who helped him create a culture of geniuses. What’s your leadership 2.0?

#9 preserve the core, stimulate progress

Yin & yang Core set of unchanging values and purpose, constant progress towards your north star

#10 What’s our BHAG?

Time frame 10-25 years… anything less is just base camp

“The best people want to do the hard things”
Jim Collins

A Good BHAG frightens mediocrity away. Test of BHAG – does it repel some people?

#11 return on Luck

Luck event:

You didn’t cause
Consequences
Can’t control

Get good at making the most of when luck happens. How do you handle the unexpected? Use both good luck & bad luck (crisis allows change) to improve.

#12 Stop Doing list

Only doing is not discipline. True discipline is about what not to do first. What should you not be doing?

Peter Drucker – age 65 had written only 1/3 of his books. Age 86 wrote 10 more books.

“You will survive, you will probably succeed… The question Mr Collins is how to be useful”
Peter Drucker (to young Jim Collins)

The World’s Most Productive People

The 3 most Productive per Hour countries are:

Luxembourg
Switzerland
Norway

The graph below gives one particular view of the level of productivity per hour for the world’s countries. Mexico works lots of hours with little output, whilst Luxembourg work little hours with very high productivity.

The horizontal axis represents annual hours worked and the vertical axis represents annual GDP per capita in U.S. dollars.

Shades of blue represented relatively high worker productivity while shades of red represent relatively lower worker productivity. Worker productivity is calculated by dividing annual GDP per capita by annual hours worked, which yields productivity per hour worked.

My first comment would be that there is a bit of a flaw in how this graph is put together. Productivity is divided by hours worked, so there is going to be a mathematical effect that showing higher productivity where cultures encourage people to get out of the office quickly. The graph is still interesting 😉

The data were collected by Expert Market from the International Monetary Fund and the Organisation for Economic Co-operation and Development.

Engagement – Is it really the employer’s responsibility?

I have sat through many presentations over the last 3 years listening to experts telling company leaders how they can make their company an engaging workplace; how they can increase employee engagement.

Is it really the employer’s responsibility?

Engagement is a Choice

Surely a basic requirement when you accept a job is that you engage and commit to doing it well?

Apathy is a practiced habit. You don’t start life as a child expert in curiosity-less disengagement. You practiced.

Your Apathy is Nobody Else’s Fault

Why should the fault be directed to your manager or to company HR?

It is not their fault.

It is not anyone’s fault that you are not engaged.

It is you.

It is you who is apathetic.

It is you who has to commit.

It is you who has to engage.

It is you who has to become responsible for your life as an adult.

Practice Apathy at Work, Become Apathetic in Everything

Show me someone who is apathetic and disengaged at work, and I will show you that he is apathetic and disengaged at home, with friends and a superb cynic of anyone who makes an effort. When we practice apathy, we get better at it in all areas of our life: work, family, hobbies, friends, studies, spirituality, community.

Here’s a short guide to putting the practice of engagement and responsibility into your life:

Engaged Life 101: How to be actively engaged in life.

Intention: Start every day by stating your intention for the day. As soon as you wake, write down the sentence “Today, my day is about _________” (today, I wrote self-compassion… yesterday I wrote listening better)
Read: Next, read something inspiring. (ie, not the newspaper, not your email) Here’s my list of great books: Personal Leadership Library
Think & Write: Decide on your Most Important Action for today. Write it down. Do 10 minutes action to move this Most Important Action forward. At the end of exactly 10 minutes of focussed attention, stop and go have your breakfast.
Now, you can let the day happen… but you have already taken personal ownership and responsibility for your day… good practice for the rest of the day.

The Dean of EO Leadership Academy, and highly successful businessman and person, Warren Rustand first taught me this process. He calls it the 1-10-10-10 start to the day. 1 minute intention, 10 minute read, 10 minute write then 10 minute think. Ideally followed by 29 minutes of physical exercise and then you’ve given yourself the best possible first 60 minutes of the day.

Culture: by Design, or by Default?

“Only 3 things happen naturally in organisations: friction, confusion and underperformance. Everything else requires leadership” Peter Drucker

Mediocrity is effortless.

Excellence requires effort. Excellence requires a culture of excellence. In the absence of cultures of excellence I will find an excuse to let myself slip from my best.

Do you surround yourself with cultures of excellence?

“Great leaders create culture by design, while average leaders allow culture to evolve by default.” Mike Myatt

Personal Culture

Are you clear on your values and purpose? If not, you are bouncing from one opportunity to the next. You take today’s good opportunity to lay bricks rather than building the great cathedral of your life. The clue to the existence of a clear personal culture is that you say “No” to most things. You are not bouncing from one interesting distraction to another interesting interruption.

The ability to start things is a good step towards a positive personal culture. The ability to finish things is the goal. Are you better at starting things than you are at finishing things? (I am. It takes real effort for me to declare a project finished.)

I have my own explicit written personal culture. I first wrote it down 7 years ago as I emerged from a very difficult time in my life:

17 Daily Personal Habits for a Fulfilling Life
I have a much updated version that I keep with me today. I don’t share it publicly, but have often shown it to those who have shared their own personal mission, vision and values with me. You can find my email if it is important to you.

Family Culture

“A family culture happens whether you’re consciously creating it or not. It’s up to you and your wife to determine whether that culture is of your choosing. If you want a positive family culture, you must commit yourself to years of constant planning and teaching. A culture isn’t something that’s created overnight; it requires daily investment.” Brett McKay

The family culture is the first culture we experience. Your earliest experience of co-existing with others was in your childhood family. If your parents were clear about their values; the behaviours that express those values, the non-acceptable behaviours; and the rituals that keep these values visible: then you had a great start. If your parents did not work to jointly define and live this family culture, you still had a culture… but with unclear and unsatisfying results.

There are 3 pillars of group culture: Values, Norms and Rituals.

Values – Each family’s set of values will be different and shaped by different education, religion and country values. Some families see competition as positive, some see it as negative. Some see position as giving rights (“You’ll do it because I am your father!”), some see dignity and agreements giving rights (“You’ll do it because we value kindness.”)

Norms – explicit and implicit rules of engagement. For example, how do we resolve conflicts? Shouting and passive-agressive stand-offs? Calm discussion and seeking to understand the other? How do we share chores? Does one person work while others sit watching? or does everybody find a way to help when clearing the table after a meal?

Rituals – routines, sanctions and celebrations. Family meals – are they in front of TV when each individual is hungry, or does everyone gather and share? Weekends, mornings, nights… what are the regular routines? Rites of Passage – what way do you celebrate the passing of the seasons, the reaching of an individual goal, the birthdays, the local and religious festivals? There are 3 levels of ritual: Daily, Weekly and Life Changing.

These elements exist whether you chose them consciously or not. There are no accidental cultures of excellence and meaningful community.

Resource: The Art of Manliness blog on Creating Family Culture:

Business Culture

“If I were running a company today, I would have one priority above all others: to acquire as many of the best people as I could.” Jim Collins

Business differ from families in 2 ways:

they can remove individuals and
they can hire pre-prepared individuals.

Jim Collins in Good to Great (my favourite business book of all time) tells us that it is all about people.

Last week in Washington I heard Dr. Evian Gordon ask “How many people does it take to ruin a team?” Answer? You already know…

One.

Verne Harnish told me that the important people question is “would I enthusiastically re-hire this person tomorrow?” If there is doubt, then you must act. Ken Blanchard told us how in 3 steps:

Establish explicit goals together
Publicly praise immediately when you see good behaviour
Individually reprimand immediately when you see poor behaviour (“you are great, this report is not worthy of you.”)

A summary of Jim Collin’s book Good to Great is available on his website.

Community Culture

The country in which you live will have a major impact upon your implicit sense of what is right and what is wrong, the right way to behave and the right way to treat others. Geert Hofstede told us that there are 6 major areas of difference between national cultures: it is worth knowing these 6 and where your own country is on each of these 6 in order to appreciate yourself and those who come from other national cultures.

Resource: Geert Hofstede’s 6 Dimensions of National Culture

Rome (and Cultures): Not Built in a Day

Rome wasn’t built in a day.

Your personal, family and business cultures were not built in a day, and cannot be changed in a day.

Changing for the better is not a project. It is what life is about.

The first step is to describe your personal culture. The next step is to create, jointly with your family members, a description of what family means to them.

Mediocrity is the easy path.

The smarter you are, the better your reasons for being mediocre.

An inspiring life requires hard thinking, hard discipline and hard patience. Do you have the patience? Do you have the discipline? Do you have the desire?

Better the poor man with dreams and desire, than the great man with no dreams and no desire.

“The significance of man is not in what he attains, but rather in what he longs to attain” Khalil Gibran, Sand and Foam

When You Lead There Is No Such Thing As A Trivial Act

The title of this post came from a summary of a talk by Pat Murray.

As a leader, people watch every single act. If you are in a bad mood and act out of that bad mood, people think that is who you are. Words are generally ignored, we watch what you allow to happen.

As parents this is even more difficult. If you say “do this and you will not get dessert” and then give them dessert anyway (because you are tired and do not want the fight) you have taught the children a lesson: Your rules are flexible and negotiable. It is hard to trust someone whose rules are flexible and negotiable.

You Stand For What You Tolerate

“The worst use of power is no use of power”

What do you know that is “wrong” but tolerate? What behaviours annoy you, but you don’t address them? If somebody arrives 4 minutes late to a meeting, are they allowed to attend? If somebody sends the report an hour later than agreed, are they sanctioned?

If you allow bad behaviour this is who you are. Words are cheap. What you allow is real.

What are your intolerables? What are the behaviours that you absolutely will not sanction? If you are not clear on this list, then you will allow bad behaviours to creep in to your culture. I learnt one clear lesson during the Organisation Behaviour module of my own MBA: “The worst use of power is no use of power”.

It is really painful to confront another person on their behaviour. It is a lot more painful to be the passive creator of a slowly sickening culture of performance.

The 8 Universal Human Laws

Mythology and The Human Experience

As part of the Greek and Roman Mythology course that I have been following for the last 10 weeks, our teacher Dr. Peter Struck has been drawing out a number of “universal human laws” from the myths.

We read of Odysseus, of Aeneas, of gods, of monsters. We read material from 7,000 years ago up to 2000 years ago, the poet Ovid in 40AD. What is it that is held in these stories? What are the authors communicating to us?

As we explored the stories using various “toolboxes”: Psychoanalysis, Myth and Ritual, Functionalism, and Structuralism. Each of the “toolboxes” is a different way of interpreting the meaning behind a myth.

Functionalism explains human society as a whole in terms of the function of its constituent elements; namely norms, customs, traditions, and institutions. A functionalist reading of myths might extract the universal human laws.

Here is the list of the Universal Human Laws:

The Universal Human Laws

Parthenon, East Frieze, Slab 4 (Gods), credit: profzucker

Nostalgia is the most powerful force in the universe.
If you want to persuade people you should know your audience.
It’s not good to be food.
A leadership decision means choosing between two bad options.
When you tell a lie, you should keep close to the truth.
Secrecy creates intimacy.
A deep connection with the land is a common human expression.
People at the top of the power structure and people at the bottom of the power structure tend to embrace the idea of teleology (destiny, universe is moving towards a natural order of things).

What do you think of these 8 universal laws? What strikes you about these 8? What seems to be missing?

Tag: culture