Business Case Studies, Executive Interviews, Jim Collins on Level 5 Leadership

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Executive Interviews: Interview with Jim Collins on Level 5 Leadership
January 2008

Jim Collins
Founder of Management Laboratory in Boulder,

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  • What separates entrepreneurs who build great companies from those who do not?
    They make the transition from being a time teller to become a clock builder. Time tellers make everything depend on them, so that the organization is merely a reflection of their own personality, but a clock builder creates an organization that can deliver great results long beyond his or her personal influence. Keep in mind: Sam Walton started with a single dime store and eventually built WalMart. He did this because he made the shift from time telling to clock building.Put another way, entrepreneurs who lead as a genius with a thousand helpers generally fail to build

    enduring great companies; you need to build a great team, not act as the great individual genius.

  • Do you think it is riskier to try for greatness? What about the companies that tried for greatness and failed?
    I have two responses to this question. First, some climbers do indeed die while trying to climb Mount Everest, but only those who actually commit to climbing Mount Everest (whatever the INTERVIEW 5 risks) do in fact ever reach the summit. We cannot deny the possibility that some companies that try to become great have died along the way. But so what? We donot find mere survival to be a very interesting topic. We are interested in how companies might attain entrance to that special category of premier institutions, and we readily admit that it might require a risky path to get there. But and this is my second response I believe that it is no harder to build something great than to build something good. It might be statistically rare to reach greatness, but it does not require more suffering than perpetuating mediocrity.

  • How do you respond to the criticism that some of the companies you studied for Good to Great and Built to Last have struggled in recent years?
    The signature of a truly great entity is not the absence of difficulty, but the ability to come back from difficult times stronger than before. When we published Built to Last in 1994, IBM found itself in the middle of a desperate turnaround, and we endured derision for including IBM in the book. Ten years later, IBM had returned as one of the most significant companies in the world. Resiliency (not perfection) is the signature of greatness, be it in a person, an organization, or a nation. Yet even if a few of our companies fail to regain their prior greatness (which is certainly possible), that fact alone would not undermine the fundamental ideas we derived in our research. Think about it this way: If we studied healthy people in contrast to unhealthy people, and we derived principles of health such as sound sleep, balanced diet, and moderate exercise would it undermine these health principles if later some of our previously healthy subjects started sleeping badly, eating poorly, and not exercising? All that would say is that some members of the original study set had ceased to live the principles that had made them healthy in the first place. Sleep, diet and exercise would still hold as principles of health.

  • How do great companies deal with the need for change?
    Any great social enterprise whether it be a great company, a great university, a great religious institution, or a great nation exemplifies a duality of continuity and change. On the one hand, it is guided by a set of core values and fundamental purpose that change little over time, while on the other hand, it stimulates progress change, improvement, innovation, renewal in all that is not part of the core guiding philosophy. In a great company, core values remain fixed while operating practices, cultural norms, strategies, tactics, processes, structures, and methods continually change in response to changing realities. Lose your core values, and you lose your soul; refuse to change your practices, and the world will pass you by. Those who build the most iconic and enduring institutions know the difference between what is truly sacred and what is not, between what should never change and what should be always open for change, between what we stand for and how we do things.

  • Youve recently shifted your attention to nonprofits, with your monograph Good to Great and the Social Sectors. What stimulated your move in this direction?
    One day at lunch in Boston, Tom Tierney of Bridgespan put forth a challenge: if I had only a few years to work, what one piece of work should I do? I paused, and then Tom offered a suggestion: a piece on the nonprofits and the social sectors. Tom sent me a huge stack of information, highlighting the impending transfer of wealth into the social sectors and the need for rigorous thinking and tools to help the nonprofit leaders build great organizations. I eventually came to see that if we only have great companies, we will merely have a prosperous society, not a great one. And so I became a passionately curious student: how would the good to great concepts come to life in the context of nonprofit realities quite different than business?

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