Jim Collins at the 2009 Inc. 500 Conference – Part I

September 29th, 2009 by David Link

At the Inc. 500 Conference & Awards Ceremony I was again blessed to hear one of my favorite writers, Jim Collins, speak on the topics covered in his latest book, How the Mighty Fall: and Why Some Companies Never Give In. I took copious notes during this session (and others that I will share with you), but one of key takeaways from his presentation related to a key theme that “good is the enemy of great”. Why do some businesses become wildly successful while others fail?

Some of Jim’s insights:

Entrepreneurship is not taught, but is a life idea. As a professor, he observed that some students are destined to be entrepreneurs all along; and usually the ones who never really have any reverence for their professors make it as top entrepreneurs!

Approach life and work as a creative masterpiece of art. This is the opposite of getting a paint-by-number set where every inch of the canvas is laid out. If you stay in the lines, it will look as good as anyone else’s. But if you start with a blank canvas, which is terrifying, and adapt the artwork as you go, you may create a one-of-a-kind masterpiece. If you really love what you do and realize the painting is at most only ¼ of the way done, you won’t run out of energy or ideas.

Study the contrasts. What systematically separates the good from the great? It’s not luck or circumstances. Many companies have fallen but have still been able to come back as great companies. They often used the decline as a productive catalyst to come back even stronger. For the great, the turbulence of the decline exposes the strengths of the strong and amplifies them, while turbulence exposes the weaknesses of the meager.

Retain your disciplines during good times. If you aren’t disciplined, you should fear both the turbulent and good times. Decline is largely self-inflicted. Greatness is self-created.

Characteristics of Level 5 leaders at Great companies:

• Humility – if it is fundamentally about you, you can’t build an enduring great company
• Honor management – leads by example
• Honor leadership – exhibits a high level of integrity
• Passion for the cause, company and work – not for themselves

Why great companies have fallen. Over-reaching is one of the biggest things that brings the mighty down. You must have the discipline to leave growth on the table so you don’t over-extend.

Stage 1 of decline = Hubris born of success. The outrageous arrogance that afflicts upon the defenseless. That sense that starts creeping in…we’re just so good because we are so successful. I can tell you this right now that there is a lot of humility here at ScienceLogic, such that I can’t imagine a day where Stage 1 begins at this company!

As I mentioned in the blog post I wrote a year ago after hearing Jim Collins speak, breaking Packard’s Law is one of the biggest mistakes great companies make – you have to have enough of the right people in the right seats to implement growth. To be fully transparent, I have to closely inspect how ScienceLogic is doing in this area as it is easy to chase too many opportunities without the best resources to confidently capture the opportunity.

One of the most useful lessons was the Stockdale Paradox regarding the denial of risk and peril. You can’t confuse faith with discipline. You have to have faith to weather the storms, but coupled with the discipline to confront the cold, hard facts. It can be brutal to hold onto false hopes which are soon dashed by changing events.

Motivation – the best leaders do not spend a lot of time motivating people…if you have the right people, they are self-motivated and self-disciplined! We have to make sure that we don’t de-motivate these people by failing to see the facts that all our team members can see.

Entrepreneur or Company Builder? There is no law of nature that says you can’t be both – think about Bill Gates, Gordon Moore of Intel, Herb Kelleher of Southwest, or Henry Ford. They all rejected the idea that the creative person had to cede something to professional managers.

Most overnight successes are about 20 years in the making.

• 7 years into WalMart – he had two stores
• 13 years into Starbucks – 5 stores
• 8 years for Nike – less than $2 million in revenue

The key is to have the discipline to keep pushing the flywheel and not get distracted into other ventures and opportunities. Stay focused on what you can be passionate about. Stay on track and don’t lose track.

Final Thoughts:
Greatness is not a circumstance. Those who prevail in chaos – one lesson towers from our work – we are freed by our choices and disciplines. 

Said Peter Druker to Jim Collins: “You spend a lot of time worrying about surviving and being successful… you will be both. Perhaps it would be good to spend more time about how to be useful.”

Go out and make yourselves useful!

Jim’s single goal:  I want to be useful with my life.

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