Jim Collins - Author of “Good to Great” and “How the Mighty Fall”
Anyone can fail. His wife had cancer. This made him think: maybe organizations can look healthy and strong on the outside, but are unhealthy on the inside.
He found five stages of decline. The stages are mostly self-inflicted – more about what you do to yourselves than what happens to yourself. Note that you look healthy until stage 4.
Stage 1: Hubris born of Success.
We begin to neglect our flywheel (what are our core values). Believing that because of our good intentions, our decisions must be good. Antithesis is: (one of the most important findings). Three business types. Darwin Smith: took Kimberly Clark from Good to Great. Had a farm, he was a social introvert. He sold the mill and saved the company. Leader Two: Ann Mulcahy Xerox CEO Magnetic. She was an accidental CEO. She had a sacrificial goal to make the company a success; Leader 3: Herb Calaher, Southwest Airlines. 2 standard deviations from the mean. Solves the union dispute with an arm wrestling match. What do all 3 leaders have in common: It's not about them and they never ever give up. They are level 5 leaders (as in the “Good to Great” study). Humility is what separated level 4 leaders from a level 5 leaders. This came from data. It is also an undying ambition to do whatever it takes to make it work. Without a level 5 leader, an organization is in danger.
Stage 2: Undisciplined Pursuit of More.
Companies become complacent. They don't want to change or improve. That isn't how the mighty fall. Over-reaching, too much expansion, over-committing is what brings the mighty down. They break Packard's law: Allowing growth to exceed the amount of fantastic people. If you don't have all the key seats filled with the right people, we must not grow until we have those right people “on the bus” and “the right people in the key seats” and then figure out where to drive the bus.
Stage 3: Denial of Risk and Peril
There are warning signs that things are not well in the world. We're getting bad feedback, or that numbers are going down. But, the critical part is if we deny it. The Stockdale Paradox: Admiral Stockdale was the highest ranking official in the “Hanoi Hilton.” He was there from 1967 to 1974 and was tortured several times. He didn't know if he would ever make it out. He asked how he didn't get utterly crushed when he didn't know the end of the story. Stockdale answered that he had faith that this was the defining point in his life. He said that the ones that didn't make it out where the optimists: they would say “we'll be out by Christmas” and it would come and go and they would die of a broken heart. You must never confuse faith and facts. You must never give up and never stop believing that you will prevail in the end. You, as a leader, must be able to put the faith and facts together.
Stage 4: Grasping for Salvation
Thinking that some mega-merger, new revolutionary breakthrough, a new charismatic leader, or some new innovation. By far, the companies with level 5 leaders got them from within, not outside the organization.
Greatness is a cumulative process, called the flywheel effect in the “Good to Great” book. It is slowly working at moving the flywheel, pushing in one direction, disciplined people, disciplined thought. If we do as Bill Hybels said and we get 10% better leaders each year, we will be 6 times better in 20 years!
Stage 5: Capitulation to Irrelevance or Death
you've squandered your financial and reputational capital. Antithesis: We selected 18 companies (in 1989) for the “Built to Last” book. Those companies are still standing. If you selected 18 companies 20 years ago, the chances of selecting great companies that are still standing is 5 deviations from the mean.
They endured because they had a reason to endure: success or money was not enough. If you measure by money you will always loose. We must exist for a purpose beyond money and success. The purpose must be rooted in core values that will not be compromised. We will not give up what we stand for, because if we loose our values we loose our soul. You still need to be able to change, but with consistency. The key to any great organization over history is holding two things consistent: “Preserve the core” and “stimulate progress.”
Jim challenged us with 10 specific “to do's”
1.Do your diagnostics. Everything is free at jimcollins.com – Use the “Good to Great” Diagnostic tool. Download it and use with your team
2.Count your blessings – literally! in a spreadsheet. Don't stop until you have 100. Why? Because when we begin to account for all the good things that happened to us that we didn't cause, all the success that we didn't cause, it is humbling
3.What is your questions to statements ratio. Can you double it in one year. Great leaders as the right questions. John Gardner wrote a book and was his mentor. He said “Jim, you spend way too much time in trying to be interesting, why don't you spend more time in trying to be interested?”
4.Answer the questions: how many key seats on your bus? How many are filled with right people? How will you get the right people in the right seats
5.Do the team diagnostic for teams on way up and way down (in notebook)
6.At the next team meeting, list the brutal facts. Why can't we stay here.
7.Create a “Stop Doing List” - this takes discipline
8.Define results and show clicks (or milestones) on the flywheel. Concrete and demonstrable.
9.Double your reach to young people by changing your practices without changing your core values
10.Set a Big Hairy Audacious Goal (BHAG). Peter Drucker, when asked what would be his best book, told Jim “the next one!” When the archivist of all Drucker's books was asked where age 65 was, it was 1/3 through the books.
Truly set out to be useful, never ever give in, the path out of darkness begins with those who are constitutionally incapable of capitulation. This happens to companies, organizations and persons. Be willing to change tactics, but don't give up on core values. Be ready to give up on ways you've been in, but don't give up on creating a great church. Be willing to form alliances with past enemies, but never give up on core values.