Jim Collins on Creating Enduring Greatness

UPDATED: March 1, 2010
PUBLISHED: March 1, 2010

Jim Collins, who wrote such best-sellers as Built to Last, Good to Great and How
the Mighty Fall
, says his own company is not built to endure.

Collins, 52, has devoted years to studying enduring great companies, discerning why some succeed wildly
while competitors with even better products or ideas plod along or flame out.

One of his many mentors, business-management guru Peter Drucker, advised Collins early on that he would
have to make a choice: building an organization that lasts, or ideas. Collins chose ideas.

“There’ve been lots of opportunities to build a big organization, institute, consulting firm, and all those
things are fine and good. But Peter said, ‘You have to choose,’ ” Collins tells SUCCESS. “And
that’s why I
decided, basically, to keep everything small and focus on the research, which has been a very good decision.”

During a distinguished teaching career at Stanford Graduate School of Business, Collins was struck by a
concept taught by one of his mentors—that life could be a work of art. The notion that entrepreneurship could
be not only a business idea, but a life idea, intrigued him.

“You can either follow a paint-by-numbers-kit approach to life and do what everybody thinks you should do
and stay within the accepted lines,” says Collins, “or you can decide you want to create a masterpiece and start
with a blank canvas. It might not ever turn into a masterpiece, but the only way you can hope for a masterpiece
is starting with a blank canvas.”

So, in 1995, Collins founded his ChimpWorks management laboratory
in Boulder, Colo. Since then, his research has helped many
companies, entrepreneurs, nonprofits and individuals in their quests
for greatness.

He’s also helped companies identify their own failings. Collins’s
work was quoted by none other than Toyota President Akio Toyoda,
who apologized last October for his company’s recent losses and said
Toyota was in the fourth of five stages of corporate decline, “grasping
for salvation,” as outlined in Collins’s latest book, How the Mighty
Fall: And Why Some Companies Never Give In

Blindsided by Success
It was Collins’s 2001 best-seller, Good to Great: Why Some
Companies Make the Leap… and Others Don’t
, that catapulted him into
the success stratosphere. The product of a five-year research project,
the book has sold some 3 million hardcover copies. Collins writes
that the research shows “greatness is not a function of circumstance.
Greatness, it turns out, is largely a matter of conscious choice.”

Far from being blinded by Good to Great’s success, Collins says it
was more like he was “blindsided” by it. “I did not expect it at the
level that it came, and I found it enormously difficult to manage,” he
says. “Always be careful with what you wish for, by the way.”

it turns out, is largely a matter of conscious choice.”

Although he taught entrepreneurship and was prepared for pretty
much every possible scenario for failure in business, he faced other
adjustments, too. Collins and wife Joanne Ernst (his “strategic
brain,” while he is the “creative” of their enterprise) had trouble
sitting down to dinner without discussing work. “To learn how to
say, ‘We’re going to talk about what we think about the plot in that
movie last night,’ rather than the strategic question was a necessary
skill to learn. And we did learn it.”

Their solution was to form a small council that included a third
person. Since the third council member wasn’t at dinner every night,
business questions were tabled for discussion when all three could
get together, usually once a week.

Fifteen years after starting ChimpWorks, Collins says he doesn’t
feel successful. Just lucky. In fact, he advocates being wary of success,
especially when it comes early.

The businesses that have endured often didn’t have glorious
startups, he writes. Think of Sony and its inauspicious beginning—
operating out of a bombed-out Tokyo department store in 1946
trying to sell rice cookers made of primitive wooden pails with
aluminum electrodes that either over- or undercooked rice. And the
Japanese are particular about their rice.

“If you struggled early, you’re humbled from
the beginning because you didn’t have enormous
success,” he says. “If you were successful
at the beginning, maybe you were just lucky. The great
danger if you’re successful early is you might attribute success to your
own supreme qualities: ‘We’re really good. We’re really smart.’ And,
when your luck runs out, I’m sorry, you’re really in trouble.”

Slow Climb to Greatness

While Collins’s books focus primarily on Fortune 500 companies,
the research findings are applicable to any-size company. His first
major book, Built to Last: Successful Habits of Visionary Companies,
was originally written with the entrepreneur in mind, Collins says.

In the six-year research project that resulted in the book, Collins
and co-author Jerry I. Porras went back in time to the “big bang”
of former startups and trace their evolutions to becoming titans.
Marriott hotels started out with a single A&W root beer stand.
George Merck had a family apothecary before Merck & Co. became
a pharmaceutical giant. Starbucks had five stores for 13 years, and
Nike took years before it broke $1 million in revenue. The only thing
overnight about Walmart’s success was the public’s awareness. For
the first seven years, Sam Walton had two stores. “Of course, Walmart
today is the largest business in human history,” Collins says.

He likens these companies to missiles shot from under water.
People above water are only aware of them once they pierce the
surface, but they had been climbing for some time.

Collins’s work proves there are no single breakthrough events
that lead to superior performance and greatness. And he adamantly
rejects most trendy prescriptions for large-scale corporate change as
being no more than myths.

“The good-to-great companies had no name, tag line, launch event
or program to signify their transformations. Indeed, some reported
being unaware of the magnitude of the transformation at the time,”
Collins writes in Good to Great. “Yes, they produced a truly revolutionary
leap in results, but not by a revolutionary process.”

In Good to Great, his research teams studied the performance of
more than 1,400 companies over 40 years and whittled that field
down to 11 great companies. Then, they found comparison companies
that failed to make the leap, despite starting out with equal or
even greater advantages.

Early on in the Good to Great research, Collins insisted his
research team downplay the role of top executives to avoid attributing
all credit or blame to the leader. But in identifying the common
traits of great companies, researchers kept coming back to great
leadership, particularly a type they described as Level 5 that defied
conventional wisdom.

A Surprising Discovery

“We were surprised, shocked really, to discover the type of leadership
required for turning a good company into a great one,” Collins
writes. “Compared to high-profile leaders with big personalities who
make headlines and become celebrities, the good-to-great leaders
seem to have come from Mars. Self-effacing, quiet, reserved, even
shy—these leaders are a paradoxical blend of personal humility and
professional will. They are more like Lincoln and Socrates than Patton
or Caesar.”

At first glance, the Level 5 traits seem contrary to those possessed
by the typical entrepreneur, who has the ego, confidence and audacity
to strike out on his own. For those entrepreneurs who worry they can’t
even fake personal humility, Collins says they can still build a great
company. He offers Walt Disney as an example.

“Walt Disney was an enormously egotistical person. He was a
typical controlling, creative, ego type. But in the end, Disney is still
here today. Walt Disney eventually said, I’m building something that is
channeling into the imagination, channeling into the idea of making kids
happy and channeling into the idea of sheer perfection in how we execute the
idea for its own sake.
So, yes, he had all those typical entrepreneurial,
crazy, idiosyncratic, personal-controlling tendencies, but Disney the
company had a larger role, and he built around that,” Collins says.

Another very different Level 5 leader was Lincoln, whose example
is instructive for others enduring tough times today. “He was wrestling
with the greatest tumult in our history, and he’s making decisions that
were essentially re-founding our country in many ways. He’s making
decisions that are going to lead to 625,000 American dead in the end,”
Collins says.

“And yet, even though Lincoln was an enormously ambitious
person, what gave him the fortitude to do it all was, in the end, it
wasn’t about him. He really believed that the role of America was the
last best hope on earth. And it had to stay intact, no matter what.”

Making It Through the Storm

Leadership calls for suffering and struggle, Collins says, and even
the great companies are vulnerable to decline. The idea for his latest
book, How the Mighty Fall, came about because Collins was curious
how once-great companies had fallen, including some enterprises
profiled in his previous books. He wanted to help leaders see the
warning signs of decline so they could avoid a tragic fate and reverse
course. In the four-year research project, he and his team concluded
decline is mostly self-inflicted and recovery is largely within the
company’s control.

Collins’s next project is about turbulence and how to endure
and prevail when the rest of the world is spinning out of control.
Meantime, he has some survival advice for those struggling now.
An avid climber, Collins uses the example of a friend who nearly
died in a storm on top of a mountain. Like that friend, he says,
businesses need a plan to live. If you don’t make it through the
storm, the rest doesn’t matter.

“No. 1: Luck favors the persistent, so you have to stay alive to
be able to get lucky again. I’d make a plan to live. I really mean
it. Sit down, right now, and say, ‘We’re going to make a plan to
live, plan to survive. What are the things we need to do to make
sure we come through this alive?’ ” he says.

Secondly, figure out what you should stop doing. Before the
crisis, when companies were flush, they got distracted into
ventures they shouldn’t be in. Now is the time to narrow the
focus to those things that make your business distinctive, the
core of your company’s success.

Finally, once the question of survival is settled, seize the
opportunity to improve the caliber of your team members so
your business is stronger in the future. In a small business, every
hire is critical, he says. If you can only have five employees,
you want all them to be top-notch so they can operate as an
elite squad.

And once you achieve a measure of success, says Collins,
“always worry that it will go away tomorrow. Always worry you
were just lucky. Always worry that you didn’t deserve it and you
weren’t that good. And, you better get to work right away. You’re
never, ever comfortable you deserved it. And you’re going to have
to work hard to deserve the success you’ve already obtained.”

‘What Have You Contributed?’

At 52, Collins has outlived both his father and grandfather.
His father died of cancer at 48, and his grandfather, a test pilot,
died at 30 in a crash. And Collins hopes his best work is still
ahead of him.

The night before he gave the keynote address for the [Peter F.]
Drucker Centennial at Claremont Graduate University, he
went over to his mentor’s archives. The bookshelf held all 39 of
Drucker’s books in chronological order. At age 65, Drucker had
only written one-third of his total books.

“I loved the image that at age 65, you still have two-thirds of
your best work ahead of you,” Collins says.

With a grandmother who lived to 99, he believes there’s a
good chance he’ll live a long life as well. “But you never know,”
he says.

“The way I look at it is that, with everything you do, it could
all end tomorrow. What have you contributed? You can’t think
about your own success if you don’t exist anymore.”