A Quick Guide to Jim Collins “isms”

When thinking about building an enduring company that lasts, there is no better reference library than works authored by former Stanford GSB lecturer (and my teacher) Jim Collins. There are still lessons that have stuck with me.

https://www.yosuccess.com/success-stories/james-c-collins-author/

When I work with CEOs to create growth marketing plans, it is often with the added layer of insight around what is going to make the company great — take the company to the next level — with the team discipline, processes and strategic understanding that will create a “flywheel” of success. Re-reading these books helps keep these core business strategies front and center for me!

The concept of building a great and enduring company that beats the odds was introduced with Built to Last, but explained in greater detail in the later books. If you are having trouble pulling together all of these ideas into an actionable plan of analysis and execution for your company, here what I suggest:

1. Watch the roadmap animated summary, included in the revised BE 2.0. It pulls together all of the concepts introduced in Collins’ books into a roadmap for success — creating the inputs that will lead to the outputs of every truly great company — superior results, distinctive impact and lasting endurance.
2. Then review the twelve questions every company needs to ask themselves, which will help you apply principles from across his books into an actionable plan of analysis and execution for any company.

If like me, you struggle to keep track of all of the concepts and what they mean, read on (books listed in chronological order of the date they were published). If you have not read the books and are interested in the concepts below, I highly recommend that these books make it to your reading list. The examples and empirical evidence that backs each concept will help you turn each into an action plan for your own company.

Introduced in Built to Last (1994)

Clock Building & Time Telling — Put the people and processes in place that will build an enduring organization using many of the principles explained in later books. As opposed to trendy shortcuts (betting on the next big idea) or “optics” (charismatic leadership, fancy dashboards) that may seem like they’re the ingredients of greatness but don’t carry the company through tough and uncertain times.

Tyranny of the “Or”, Genius of “And” — this concept expresses that companies who can overcome paradox that throws up seemingly insurmountable barriers (tyranny of the “Or”) often win in the end. Seemingly opposites like being both purpose and profit driven, or having a disciplined culture that embraces creativity, or pioneering technological applications while finding ways to mitigate adoption risk. It’s not just about finding balance, its about finding a way to embrace both “opposites” equally. The Stockdale Paradox represents the genius of “And”.

Preserve the Core & Stimulate Progress — Know what makes your company successful — that’s the core. But always find ways to stimulate progress and “stay current”.

BHAG — Big Hairy Audacious Goals. If you set your BHAG within the intersection of the Hedgehog concept (introduced later in Good to Great), you will be creating relevant goals for your company, not wild guesses that are not attainable (or desirable for long term success).

Good Enough Never Is — the goal of this statement is to send a clear message that continuous improvement is necessary to stay great — or risk being eclipsed by competition and “heel nippers”.

Home-Grown Management — Investing in your people is the way to ensure that you’ll have the talent you need as the company grows.

Cult-Like Culture — reinforce cultural values in visible, repeatable ways (so everyone understands and remembers them).

Try Lots of Stuff & Keep What Works — today there are catchier terms that are used to express this idea, like “Fail Fast”, but at the time this idea was being introduced in business school classrooms, it was the stuff of Silicon Valley startups, not readily embraced by the Fortune 500.

Introduced in Good to Great (2001)

Good is the Enemy of Great — Companies that are good enough can sometimes prevent the company from reaching the status of great because of risk-aversion or lack of imagination, to the inability to understand what they need to “not” do or stop doing.

Level 5 Leadership — focuses on the need to build greatness for the company, not themselves. There are 5 levels and Level 5 leaders embody all 5: they are highly capable, the are a contributing team member as well as a competent manager, they are effective leaders with a clear and compelling vision, and they are executives that display both humility and ambition.

First Who Then What — Get the right people on the bus (and the wrong people off the bus), in the right seats, before you start driving. You could get great directions, but without the right people you will struggle.

Stockdale Paradox — to prevail, you must have the discipline to “confront the brutal facts” and firmly believe that you will win the day no matter the odds (“never lose faith”).

Hedgehog Concept — a company’s core value is expressed by the intersection of 3 circles — what does the company care deeply about, what is the company best at (in the world) and what drives the company’s economic engine. Without this understanding, it is difficult to create a good-to-great strategy for the company that can be followed consistently.

Culture of Discipline — companies that focus on their Hedgehog Concept, and have the discipline to say no to things that do not fit, while also giving teams freedom and responsibility to operate within the framework. Including Rinsing the Cottage Cheese — The discipline to do a little bit more to ensure superior results — and Technology carefully selected as Accelerators of momentum, not following trends or considered creators of momentum.

Flywheel & Doomloop — creating a “flywheel” requires figuring out what is needed to create consistent, iteratively better results, then following the pattern consistently. Companies that fail to establish a scalable flywheel, mistakenly thinking that merely leader-led inspiration or a corporate strategy session will create the momentum needed to succeed, may be headed toward a “doomloop” where momentum is lost after the fanfare loses luster and the troops lose faith in the initiative completely. A BHAG that is declared without a deep understanding of the company’s core Hedgehog Concept can lead to a “doomloop” of dramatic proportions.

Introduced in How the Mighty Fall (2009)

Collins describes the 5 stages of decline along with the situations that lead companies to fall into these stages. These “markers” as he calls them are the early warning signs that your company may be headed for trouble. Recognizing them in time can help you pivot away from the timeline of decline and get your company on track. Here is the full outline of “markers” by stage:

Stage 1: Hubris born of success

• Success, entitlement, arrogance
• Neglect of a primary flywheel
• What replaces why
• Decline in learning orientation
• Discounting the role of luck

Stage 2: Undisciplined pursuit of more

• Unsustainable quest for growth; Confusing big with great.
• Undisciplined discontinuous leaps
• Declining proportion of right people in key seats
• Easy cash erodes cost discipline
• Bureaucracy subverts discipline
• Problematic succession of power
• Personal interests placed above organizational interests

Stage 3: Denial of risk and peril

• Amplify the positive, discount the negative
• Big bets and bold goals without empirical validation
• Incurring huge downside risk based on ambiguous data
• Erosion of healthy team dynamics
• Externalizing blame
• Obsessive Reorganizations
• Imperious detachment

Stage 4: Grasping for salvation

• Series of silver bullets
• Grasping for a leader-as-savior
• Panic and haste
• Radical change and “revolution” with fanfare
• Hype precedes results
• Initial upswing followed by disappointments
• Confusion and cynicism
• Chronic restructuring and erosion of financial strength

Stage 5: Capitulation to irrelevance or death

Finally, quoting Winston Churchill and providing examples of IBM, Nordstrom, Xerox and HP, Collins ends the book with this thought: if you catch your company in stages of decline and can reverse course, it is possible to avoid Stage 5 and enter a period of Recovery and Renewal.

Introduced in Great by Choice (2011)

10X leadership — Named for the companies that beat industry averages by at least 10x. Starts with Level 5 ambition (see description of Level 5 Leadership Good to Great) that provides the core motivation toward success then layers on the following principles that guide the organization through unpredictable and chaotic situations they are bound to encounter but cannot control (think Pandemic, Financial crisis, etc)

Fanatic Discipline — consistency of action and evaluation against company goals.

• 20 Mile March — Set clear milestones along the way and develop the discipline to consistently hit them no matter what.

Empirical Creativity — gather the data (science) but be ready to make decisions that creatively combine the data into a plan that may not be completely driven by the data alone (art).

• Fire Bullets then Cannonballs — test what works first then scale it up. If you don’t there is a chance that an initial effort could miss in a big way after investing years and dollars and costing the company time and money and strategic positioning.

Productive Paranoia — keep a healthy amount of skepticism (“zoom out then zoom in”), about what will happen next and channel that fear of the future into preparation (“extra oxygen canisters”) and creative action, to bound potential future risks*.

*There are 3 categories of risks. Death Line risks are those that could potentially kill the enterprise, Asymmetric risks carry larger potential downside than upside, and Uncontrollable risk presents challenges the organization cannot control.

SMaC Recipe — stands for Specific, Methodical and Consistent. Create your own operating manual for success, identifying the key principles that can and should be applied to new projects, processes and growth initiatives. Productive Paranoia and Empirical Creativity can help refine a SMaC Recipe over time.

Return on Luck (ROL) — Always be aware of whether great results came from luck vs skill. If skills are present, sometimes success requires a little bit of luck. But as Thomas Jefferson says, you can increase your chances of luck with hard work. And don’t squander good luck by not following the Level 5 leadership principles of a 10x company.

“I’m a great believer in luck, and I find the harder I work, the more I have of it.“

– Thomas Jefferson

Introduced in Beyond Entrepreneurship 2.0 (2020)

Beyond Entrpreneurship was first published in 1992, covering five key elements involved in guiding a company to lasting success — leadership, vision, strategy, innovation and tactical excellence. 2.0 is a rerelease that includes new sections that provide additional insights and validation of these core concepts, with a framework called The Map that pulls together the concepts from all of Jim Collins’ other books into a roadmap for success.

7 Elements of Leadership Style

1. Authenticity (convictions, role model, words+action)
2. Decisiveness (follow your gut, bad decision better than no decision, not bullheaded, accept responsibility and share credit)
3. Focus (one shot at a time, manage time not work, hard choices)
4. Personal Touch (build relationships, quick informal communication, accessible and approachable, symbolic details to reinforce values, personal touch vs micromanagement)
5. Hard/Soft People Skills (feedback is important, lead thru mentoring, high standards, window vs mirror mentality)
6. Communication (vision and strategy, analogies and images, call a duck a duck, don’t hide)
7. Ever Forward (Hard work, ongoing improvement, energy, optimism, tenacity, touch people’s spirit)

Vision (Collins-Porras Vision Framework)

• Core values & beliefs
• Purpose (5 whys)
• Mission/BHAG (compelling and passionate, incorporate risk and discomfort). 4 types: targeting, common enemy, role model, internal transformation.

Strategy

• Internal assessment (SWOT)
• External assessment (SWOT)
• Where to place big bets
• How to protect flanks
• How to extend victories
• Common issues
• How fast to grow
• Focus vs diversification
• Whether to go public
• Lead a market or follow

Corporate Innovation Elements

• Receptivity to ideas from everywhere (idea push or market pull)
• Being the customer (meet own needs, woodwork factor)
• Experimentation and mistakes (popcorn image)
• People being creative (develop capabilities, unusual resumes, diverse talents — but not diverse values, naive talent, hire designers)
• Autonomy and decentralization (OPUR — One Person Ultimately Responsible)
• Rewards (show value for creative contributions products and processes)

Management techniques for creativity

1. Encourage, don’t nitpick
2. Do not judge
3. Help shy people
4. Stimulate Curiosity
5. Create necessity
6. Allow time away
7. Group problem solving
8. Require fun

Achieve tactical excellence (6 part process)

1. Hiring
2. Inculturating
3. Training
4. Goal setting
5. Measuring
6. Appreciating (reinforce inculturating)

These books are a must-read for anyone who is passionate about building businesses that succeed against internal as well as external measures of success. These are the businesses we all want to work for.

Don’t expect a one-size-fits-all recipe for success. Rather, think of these books as a collection of case studies with applicable lessons to help your organization succeed.