Jim Collins: "My ideas are beyond business"

Jim Collins is a world known author, but mainly he is a student and a teacher of leadership and what makes great companies tick.

Having invested a quarter century of research into the topic, he has authored or co-authored six books that have sold in total more than ten million copies worldwide. They include: GOOD TO GREAT, the #1 bestseller, which examines why some companies and leaders make the leap to superior results, along with its companion work GOOD TO GREAT AND THE SOCIAL SECTORS; the enduring classic 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 most recently, GREAT BY CHOICE, which is about thriving in chaos – why some do, and others don’t – and the leadership behaviors needed in a world beset by turbulence, disruption, uncertainty, and dramatic change.

Driven by a relentless curiosity, Jim began his research and teaching career on the faculty at Stanford Graduate School of Business, where he received the Distinguished Teaching Award in 1992. In 1995, he founded a management laboratory in Boulder, Colorado, where he conducts research and engages in Socratic dialogue with CEOs and senior leadership teams. In addition to his work in the business sector, Jim has passion for learning and teaching in the social sectors, including education, healthcare, government, faith-based organizations, social ventures, and cause-driven non-profits. In 2012 and 2013, he had the honor to serve a two-year appointment as the Class of 1951 Chair for the Study of Leadership at the United States Military Academy at West Point.

Jim holds a bachelor’s degree in mathematical sciences and an MBA from Stanford University, and honorary doctoral degrees from the University of Colorado and the Peter F. Drucker Graduate School of Management at Claremont Graduate University.

He is an avid rock climber, with one-day ascents of the north face of the Half Dome and the 3,000 foot south face of the El Capitan in Yosemite Valley.

Does the concept of «going from good to great» change nowadays or you suppose it will fit any generation?

So, the way I like to think of this, is that there are some fundamental principles that should remain pretty timeless and should also apply across a range of industries, environments and types of organizations. However, the way you apply those principles, would vary from situation to situation, from country to country or from era to era. For example, some of the key principles of Good to Great may be even more relevant today, but they certainly have relevance in any era. One example is the idea that making your enterprise really work its best begins first with making sure that you have the right people in the key seats. This is actually more important than knowing where you are going. That’s a principle that will always apply. Where you are going might change. You’ve grown up in a world that has changed dramatically, so often that it’s hard to tell what exactly it is you need to be doing, or you may have a strategy right for a given moment in time, but it also would eventually need to change. What we really have to do, is to say that we need the kind of people who will allow us to adapt to whatever changes come, and make sure that we always focus on getting those right people.

Here’s a little analogy. Imagine you’re going to climb a really big mountain in Himalayas. You don’t know what this mountain is going to throw at you. You don’t know if it’s going to be icy, if it’s going to be rock climbing, or snow climbing. You don’t know what particular difficulties there are going to be.  You don’t know how the weather might change. Your goal is still to climb the mountain and to get down safely.  The conditions are going to throw a lot of different twists and turns at you as you go and so, the most important decision you make is who you have on your climbing team, who you have with you on the other end of the rope. And if you have the strongest and the best and most adaptable climbers, then you can more easily navigate the unexpected things that the mountain throws at you. I think the principle of “First Who” and “Then What” will never go away; it will always remain intact. How you do it might change but the principle stays.

I think about the example of good friend of mine, Jorge Paulo Lemann, who has built great companies coming out of Brazil. Brazil is an environment full of tremendous turmoil over its history. There are times of stability and times of turmoil. And although Brazil is in a very different cultural world than the United States, Jorge Paulo’s overall approach has been — if I get the right people, we will find a way to produce great results. So I think that this example shows that these principles have stayed.

Another principle that I think is very durable and will remain intact is the idea of focusing on what I write about in Good to Great – the Hedgehog concept. This is about being able to nail down where you put your energy. 

The idea of this concept is that we can’t do everything, we have too many priorities and we’re limited on resources. We can only do so many things, we only have so many great people, we only have so much financial capital, there’s a limited bandwidth that we can apply. So that means you have to be very choosy about where you really place your bets and the notion of the hedgehog is basically saying — we should really stay focused on doing things that meet three tasks.

The first is what we’re really passionate about, what really excites us.  Secondly, what we can really be the best at. We have to stick to the things that we could be the best at because if we can’t be the best, it’s going to be very hard to build a successful and great business. And then the third is to make an economic plan that really drives the economic engine. If you limit yourself by basically saying we’re going to focus on what we’re passionate about, what we might not yet be the best but we could be the best at it and it really does have a really good economic engine we should simply not complain if it fails. As our world becomes more turbulent and more changeable the greater the importance is for meaning focused on the intersection of those circles.

And then one last thing that I would highlight is that one of the key things that people do when they’re trying to build a good business into a great company is asking what are the brutal facts.  We’re going to start with what the really difficult facts are because if we don’t confront those facts, they will confront us no matter what’s happening with technology, no matter what’s happening with economic changes, no matter what’s happening with your central bank policy, no matter what’s happening with the global economy, the rise and challenges of different countries, or what’s happening with energy prices. However, those who are better able to say that our first step is to get a rigorous calibration of what the brutal facts actually are, as our starting point, are the ones who tend to navigate all of that turmoil better than people who operate just in the room of their opinions.  So, these are three things that I would highlight as examples of the principals that are holding very much today.

Can we go deeper through the discipline? In our country people are used to it so it is a part of our culture. How can it help our businessmen?

Across all of our research, not just Good to Great but also Built to Last and in particular later works — How the Mighty Fall, which looks at companies that were great and fell and then Great by Choice which was really about small and mid-sized companies becoming great companies in really chaotic and turbulent environments, the notion of being disciplined has been a consistent finding anthem. And in fact, the more out of control your world, the more you need to have the discipline to exert self-control. The interesting thing about a cultural discipline is that it actually allows you to increase your creative freedom at the same time which allows you to adapt. Think of it like a culture of discipline is like a framework. It’s like rules of the road. It’s a real intensity around replicable processes or ways of doing things like writing. So you’re a writer, then you have that discipline as the writer. You need to have that discipline to think through — what’s the structure of my writings, my sentences. What’s the logic of what I’m going to be doing? How do I really discipline myself to have the right words to communicate? That’s all about discipline. But the other side of the coin is – writing is an inherently creative act to go from blind page to real text. And whether it’s fiction or non-fiction within the framework of words, language, ideas and structures and all the things we have to work within communicative language, we have to do it in a very disciplined way to write really good sentences. This actually enhances our creativity because by mastering those disciplines we then are better able to be more creative in the actual ideas that we might write with, in the insights we might have and the characters we might create.

Well, think of that in the same way you would with a company like Toyota, which is best known for having a culture of discipline around its quality processes for many years, but it has also come out with cars like the Prius. So, the great task is to get people creative and disciplined at the same time and let your discipline be an amplifier of your creativity. We have seen that very much in our work.

In essence, when I look at companies, I think, what really is discipline? Discipline, is the consistency of action. If you have certain values, you act consistently with those. If you say you have a goal, you act in the ways that are consistent with achieving that goal. If you have quality processes, you act consistent with those processes. You have the discipline to really not have chronic inconsistency; instead you need consistency of action and persistence over time. One of the things we found in a later work – Great by Choice — was the concept we call “the 20 mile march.”  These identified companies turned the idea of the flywheel into a concrete march forward. It’s like getting up every day and walking across a big continent and saying I’m going to do twenty miles a day no matter what I want.  The key is to commit to that march and pursue it with great consistency.  It could be a march comparable to Pixar films who stated that they were going to produce three films every two years. This is a march.  It’s consistent, it’s a rhythm, and it’s a heartbeat. It could be a technology march like Intel Moore’s Law.  The law stated that Intel was to double chip power every eighteen months at affordable cost.  That’s a march.  Southwest Airlines said we’re going to be profitable every year. This was a 20 mile march. The idea is to set a goal that you’re going to hit with consistency.

What are the main challenges CEOs meet nowadays?

The biggest one I would point to is how to navigate environments of change and uncertainty. Companies always face the issue of capital, how you choose markets, and get your people organized into a culture that has a consistency of values. All those challenges are there, today in particular, in almost every part of the world we have this question of how to operate within change and uncertainty. Change with certainty is easy to navigate because you know what’s coming, but when you have change and uncertainty, it becomes a difficult thing to navigate. It becomes difficult to stay alive and succeed.

There are a couple of things that have really jumped out to me since writing Good to Great about how you navigate when the world around you is changing. What we found is this idea that you always have to be firing bullets and then firing cannonballs, and we’re really learning how to do that in the right sequence. So, here’s the way it works. Imagine you’re out on the ocean and all of a sudden you’ve got a ship bearing down on you.  You only have a certain amount of a gunpowder. Well, if you take all your gunpowder, you fire a big cannonball, and it misses. Then you’re out of a gunpowder and you’re in real trouble.  Instead of that, we can first fire calibration shots, fire bullets. So, you take a little bit of gunpowder and you fire and it misses, so you calibrate and re-fire.  You do this again and again until at some point you hear the “ping” on the side of the oncoming ship. That’s when you put all your gunpowder in the cannonball and fire the cannonball on a calibrated line of sight that you know will hit.  In this world of uncertainty and change, you have to be firing bullets to find the things that will work and also as a hedge against uncertainties because you don’t know necessarily what’s coming.  You also have to have the discipline to not fire the cannonball until you know that it’s calibrated.  Without this discipline, you’re just lurching around and squandering your resources and leaving yourself very exposed. So, one of the main skills for people in a tumultuous world of change and uncertainty is to really have that discipline to place your bets upon empirical validation, to fire the bullets and then the cannonballs.

I think another challenge in something that we studied is what we came to call “getting a high return on luck.”  That may feel like a strange idea, but if you think about it, life is full of a lot of luck, right? There is good luck and there is bad.  Something unexpected happens such as oil prices collapse, or something really good walks in the door. Stuff happens all the time and the more uncertain and tumultuous the world is, the more luck events there are going to be. Things that you didn’t cause will happen, that have a consequence for you, potentially good or bad.  That was our luck event. And one of the things that we studied, was the question of whether the big successes are just luckier. Did they just get more good luck, and less bad luck? We found to our surprise, that they weren’t luckier; they didn’t get more good luck and they didn’t get less bad luck, yet there was a lot of luck. So, how did we explain this? Well, we explained it by basically saying that what they really got was a very high return on luck. So, if something good happened, they made more of it. If something bad happened, they were able to survive it and then still try to do something good with it.  For example, take a look at when Steve Jobs had the bad luck of being fired from Apple in the 1980’s. Following this event, there were a series of luck events that led to the opportunity for him to return to Apple.  And without the luck event of Apple needing a new operating system, Steve Jobs couldn’t have come back to Apple. He had to have the luck for that to happen. The real story here, however, is what he did with it. It wasn’t just that he was lucky and got the comeback. It’s that he got a really high return on that luck; he made a lot out of the luck.  In accordance, I think one of the big takeaways for me in today’s world is that about fifty percent of great leadership is what you do with the unexpected.  Being brilliant in the face of the unexpected is something that people need to embrace.

Do you see new Level 5 Leaders in the business environment of today, and how did they evolve?

I think there are Level 5 Leaders all throughout history. Sometimes they are historical figures, business figures, or military figures; they come from all walks of life. In the business world, we have Level 5s that show up in many different kinds of companies and enterprises. I’ve also been meeting with young leaders today, who are clearly going to be the next generation of Level 5 Leaders. Learning from young leaders is one of several points I would highlight in regards to Level 5 Leadership.  On our website, there is a new video series called “Learning from Young Leaders.”  It includes lessons from a presentation I gave based on what I’ve been learning from them. It discusses young leaders becoming Level 5s and what they can teach us. I’m 58, so I really look at it as not what can I teach these young leaders, but rather, what can I learn from these young leaders. These videos take an in-depth look into that. One of the things that I have really come to see with this is that the essence of how people evolve to become Level 5s is by asking oneself, “What cause do I serve?”  This is captured in the first of the seven questions in the videos of “Learning from Young Leaders.”

The essence of Level 5 in the end isn’t about your personality. There are lots of different kinds of personalities, that can be Level 5s. Some are kind of boring personalities, some are really flamboyant personalities, some are strange personalities, some are harsh, some are really friendly, some are introverts, and some are extroverts. There’s no personality type that makes a Level 5. They come in lots of packages. What makes a Level 5 in the end is that they are committing to serving a cause of some kind, and their ambition is for that cause. They’re engaged in trying to make that cause happen, whether it be about education, about their business, or about the culture that they’re building. It’s not about maximizing their own income, it’s not about making themselves famous, it’s not about gaining more power for themselves. It’s not about any of that. It’s about how to do something really useful in the world and dedicate themselves to that. 

People are surprised by this, but I have always seen Steve Jobs as a Level 5. Why? Because he was utterly dedicated to Apple and he was committed to building the very best product that would change our lives.  It was never about Steve; it was about that cause. I look at someone like Wendy Kopp, the founder of “Teach for America”. This outreach is not about Wendy. It’s about the kids. It’s about serving and making sure that as many kids as possible get a great education. And if she could do that, without anybody really crediting her for this work, she’d be fine with that.  Another great example would be Anne Mulcahy, when she saved Xerox in early 2000s. When Anne Mulcahy took the job, she was an insider. Part of the reason she was able to do the turnaround and save the company is that everybody believed and knew that Anne’s cause was serving. They knew her cause was to save Xerox, its culture, to take care of as many people as possible, and ultimately to take care of its customers. She didn’t even want the job, but she felt that she had to do the job because she was the best person for it. And that sense of, “I don’t even want the job, right? But I’m the best person for it,” is sort of ultimate Level 5. It’s almost like understanding that leadership is nearly something to dread. Leadership is something that you have to do more than it is something to seek because you think it’ll make you happy. It won’t necessarily make you happy if you’re doing it well.

I was just reading a biography of a great Level 5, a founding President of the United States: George Washington (Ron Chernow writes this great biography of Washington). In this book, Washington didn’t really want to be President, but he knew that there was no one else at that time who could take on the burden of that role. Chernow describes Washington going off to the first inauguration almost like he was a man going to the gallows. He didn’t want to do it, but he knew the country needed him to do it. He knew that he was the only and best person on the planet to serve in that capacity. And that’s what Level 5 is about. You’re called to serve something. You have to be willing to serve that cause more than to serve yourself. I see that in every generation. I see the young kids coming up and they’ve got that. It just shows up in a lot of different ways. For a business leader, your cause is your company and its purpose.

Do you think of trying to make your great researches using the experience of companies from Europe and Asia?

It’s a nice question and I have yet to do any research that is specifically focused on Europe, Asia, or Latin America. First and foremost, I don’t have the research base to say I can provide a research answer. I don’t yet have that. And I may not do that; I’m not sure. I will say that what’s interesting, is that I have had leaders from all over the world come to my lab in Boulder for working sessions and meetings we call the “Good to Great Dialogues.” Application of our research findings take place at these sessions and dialogues.  These global leaders come from countries big and small, from every continent except Antarctica. In the last year alone, I’ve had folks from Europe, Latin America, Australia, the Middle East, South Africa and parts of Asia and… pretty much everywhere. These leaders are from very different cultures. They have engaged in how to apply our researching findings to their world; they wrestle with these ideas and take them back to their companies and causes. We engage with the same principles: “First Who, Then What”, “Level 5”, “Confront the Brutal Facts”, “The 20 Mile March”, “Culture of Discipline”, “Preserve the Core/Stimulate Progress”, and making sure they understand their “Flywheel”.  We deal with all of these, but we do it within the context of a company or an enterprise that is based in a very different world. Essentially, I’m challenging these leaders to think about how to apply these ideas in their culture.  So, while I don’t have a research answer, I have what I would describe as a laboratory answer. What we’ve seen is that the ideas carry across different cultures quite well, but people have to think very hard about how they would do it within the specifics of their own culture. It’s been a marvelous laboratory journey to do that.

What about Kazakhstan? I think, you know, that your book Good to Great was translated into Kazakh language two years ago. Have you ever been to Kazakhstan?

I have yet to travel in your part of the world. My international travel is kept limited for a variety of reasons that have to do with maintaining focus on my research.  For me personally, it is just so exciting to know that our work has been translated there and in other countries. It’s exciting to know that the ideas are having an impact on leaders in your country and creating inflections for the economic engine companies.  I would also love and hope to see a spillover effect into the entire country because the ideas are not just business ideas. They’re larger than that. And it gives me great joy to know that people are reading it. I can’t read the language, so I don’t know how the translation came through, but I hope the ideas translated well.

Yes, the ideas are explained very well. It was very useful, and the Head of the Sberbank of Russia presented your books to each library in our country. It is very useful and necessary not only for businessmen, but also for leaders.

As you know, you work with words as a journalist. Words and ideas are enormously powerful. For me, it is rewarding that the ideas that we developed through our research are being translated and used by leaders in your country to make the country and the economy better.  These ideas are doing work there. Ideas will do work there even if I disappear tomorrow.  The words are down.  The text is there. It can be useful and helpful to people. It’s a really marvelous feeling.

The main problem our businessmen are struggling with is corruption. Have you conducted any research about corruption?

I don’t know much about it. A long time ago I learned from a great teacher that I should not speak of what I do not know. So, I have no expertise or research background to be able to shed light on that. I would say that a number of the companies that have come to my laboratory in Boulder have operated in or come from countries where there have been some similar problems. They made a decision. A number of them basically said, “Our first task is to decide what our core values are as a company.”  What it means is that they had to be very disciplined and find creative ways, to stay consistent with our values. It meant that they had to set a high bar for themselves on how to stay true to their values. The one thing I’m absolutely confident of is that it’s not my job to tell people what their values should be. People have to select their own core values. The one thing I do know for certain is that you have to have a rigorous conversation with yourself and ask, “What are our core values?  And if we are really going to be great, we have to find the way to operate consistently within our values.”  I don’t know what the answer exactly is in any situation for how to do that, but it starts with your own self-conception of saying: “Okay, we’re going to know what our values are!”

Have any Kazakhstani companies ever asked for your support?

Over the years, we have had some correspondence with Kazakhstan companies. We’re basically getting input for my research. I think I’ve been invited, but my travel schedule hasn’t permitted it. However, we’ve heard from readers, people who’ve read the translation and they write to thank us.  They just say, “Thank you for providing the ideas that are helping my company!”

What new masterpieces from you the world will see in future?

You know, my role model in many ways, the person who I really looked up to and preceded me as a mentor was Peter Drucker. When Drucker was my age (I’m 58), he still had more than 70% of his life’s creative work ahead of him. I’ve always been really inspired by the idea that you reach 60 and you have a lot of your best work, maybe most of your best work, yet to go. So first, I guess, my dream would be to try to have that kind of creative capacity with work when I’m  60 to 90 years old, the way Peter did.  I’m hoping, that there will be (laughs) good work to come because that inspires me greatly.  What I really hope is that when I’m 90 years old and look back (if I’m fortunate enough), I would say, “You know, at 60 I was just getting started.”  I think that that’s just a really powerful way to try to look at the world.

With that in mind, what’s starting to happen for me is that I used to do one project at a time. You know, first write Built to Last, then complete Good to Great and then do How the Mighty Fall … I’m now doing three projects at once, which might be crazy. Maybe I’m being less hedgehog, I don’t know. But I’ve got three projects going on at the moment. One is on education. It’s going to be a project looking at leadership in schools (leadership in elementary and high schools — for kids before they reach 18). It’s focused on the United States at the moment, but it’s really focused on the question of what we can learn about leaders, who find the way to create great schools for their kids to enable these kids get a great education regardless of the neighborhood that they happen grow up in.  You’re in New York, right?  The way it should be is that no matter what neighborhood you’re born into in New York, whether it’s the Upper East Side or the Bronx, you should have a really solid education by the time you’re 18 years old.  This goes for other places in the United States as well.  You could be born in Alabama, South Texas, or California.  Regardless of where you are born, you should receive a great education. I’m really passionate about this question. I think it’s a leadership question. What do the leaders do to help make these kinds of schools really happened, so that we can have more of those leaders? That’s one project that I’m just initiating research on. What’s interesting about it is that it started out as a project on education and it will remain that except that the leaders are so extraordinary, that there’s going to be a lot to teach people about leadership. This is going to be fun to share.

My second project is on entrepreneurs and small business leaders.  As you know, a lot of my work has been dedicated to companies that were small and mid-sized, but became really big companies. I’ve always had a passion for the entrepreneur and particularly the small business leader who wants to take a small business and make it into a great company.  As a result, I’m revising and totally rewriting a very, very early piece of work that I did many years ago to bring it up-to-date for entrepreneurs and small business leaders.

The third thing I’m working on, which is still early in the research, is the question of sustained creative renewal. It’s the first piece of research that I am doing that looks at the person as an individual unit and presents the question of how to sustain the creative renewal of that person. Why are some able to do that? We were talking about Peter Drucker earlier. He had sustained creative renewal. I’m really fascinated by how that happened.

Can I ask one more question about rock climbing? You’ve mentioned, that corporate leadership is like a climb to the top. Do you apply your principle outside of the corporate world? Like in the process of making decisions, assessing risks, choosing a right path?

Yes, I have found that the ideas, are very useful outside of the corporate world. Obviously they can apply to non-business organizations such as social sectors. I do a lot of my work outside of business now and love to bring the ideas there and at a personal level as well. As you may know, I’ve been a rock climber. I’m not a great rock climber, but I’ve been a rock climber for most of my life, and I find that the ideas have been enormously helpful for thinking about things right.  When beginning a climb, the Good to Great approach would be to say, “first pick the right partners.” First pick who you want to go climbing with, and then figure out what climb to do. I found that very useful. With that, the idea of really “Confronting the brutal facts,” has become very important to me during a climb.  For example, gravity never rests. That’s a brutal fact. It never takes a day off; it’s not going to be easier on one day than another. It’s a constant brutal fact and to ignore that brutal fact can be very dangerous.  I also use the notion of setting “BHAGs” (Big hairy audacious goals). In climbing, choosing your BHAG is about choosing a route that is challenging enough and is really going to make you grow; however, it’s not so extreme that it’s either going to kill you or be so impossible that it’s just folly.  Then how you achieve that BHAG is much more like the “Flywheel.”  To get to the top of the mountain you actually have to lay a foundation down and with discipline, you begin to layer on capabilities and get better and better, step by step, until you can finally do the climb. That idea very directly applies. And then, of course, the risk management that we write so much about in Great by Choice applies, as it is important to maintain a margin of safety as best you can.  The only mistakes you can learn from are the ones you survive. That means that you always have to have that margin of safety in there to make sure that if it goes bad, you are not so close to the edge that it’s going to knock you entirely out of the game and you can’t ever come back from it. That is a lesson that I’ve learned from our research and certainly applied to rock climbing.

Thank you very much for your answers. Maybe you’d like to add something?

I would like to thank you for passing along the good words about our work being used by leaders in your country. It really is very meaningful to me to know that. You always try to go through life hoping that what you do is useful, right? That it’s actually helpful to people, makes a difference, and that you can really feel good about it. And I believe deeply in the ideas. I know how they came out of the research, so I believe in them. I trust the ideas. I try to apply them myself, imperfectly, but I try. So, they’re not just ideas, they are actually ways of living that I’ve come to see as being pretty valid. What really gives me joy is when they help other people. 

Raushan Naizabayeva