YouSaid · the spoken record

Jim Collins

lines on the record: 165
first: 2019-10-01
most recent: 2019-10-01
sittings or episodes: 1
sources: podcast

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“You're very welcome. It's a great, great privilege. I look forward to learning more from all of the conversations you hold.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Which was not as much of a win, which is the presidency of the university. What does Heisen Tower's case show? It shows, number one, that two very different contexts, he could be enormously successful. He was successful in both military and presidential. But in a university setting, he was less successful. And I could go through multiple cases across scales of companies. I could look at people that have moved across sectors. I think the shift that Bill Gates has taken from running Microsoft to leading about world health in the foundation with his wife Melinda, those are really different in context. I mean, really different contexts, both enormously successful. So point A, you can be successful across different kinds of contexts and have to learn how to do it, but it may not be infinite, right? You might be a good president, but you might not be a good president of a university. And so as an individual, it's sort of figuring out where”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Sense of ourselves, knowing that we'll always act in a certain way because you actually don't know under certain pressures. So you should be very humble about that. So context matters a lot. That said, I think what the evidence very clearly shows me is that I can see leaders who learn how to be effective across various different kinds of contexts. And so, for example, let's take Eisenhower, phenomenal example. Your Supreme Commander of Allied Forces before that you were relatively undistinguished major. You were brought up by General Marshall and so forth. But being a five-star, which have only been five five-star generals, I believe in the history of the US military, but being a five-star general is a very different leadership context than being president in a political system. But what's also interesting is along the way, he also went to be a president of university and really struggled there. So what you have with Eisenhower is you've got two wins and one.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“So obviously, there's a contextual element to everything, and I think that's something you talked earlier about, about even decision making, was this idea that there isn't kind of an isolated, perfect universe. We don't live on a Euclidean grid, and there's context and there's certainly social context. We know from social psychology that almost everything is affected by social context. And you never know how you're going to behave or how you're going to react in any given situation until you're there. And that's why we should always be very humble about our own.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“And if you do that, then they won't let you fail. So I don't know if an outside entity, I certainly couldn't make somebody a leader, but I think people can learn it. And I think that's kind of some of the catalyst and the leavening of the bread based on what I've seen. And I'm really optimistic. I mean, I think that if I stand back and I look at the young leaders that are coming up, the ones I met at West Point, a lot of the ones that I've that are on my research team, young people that I meet in life, we live in an era when it's easy for people to feel pessimistic. I absolutely reject. I'm incredibly optimistic. And my reason I'm optimistic is because what I see in the leadership capabilities of the generations that are coming. And I think we'll be in very good hands.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“How can I be useful? How can I take care of my people? Take care of your people, not your career. And then General Austin ended up as a spectacular leader. And I think those two sorts of things, if you're sort of thinking about seatbeds of how we would help young people grow into the leaders that our world desperately needs in all walks of life, it's one. Be a bystander. See what has to be done. And someone's got to do something. And if you feel someone's got to do something, then you can exercise the art of getting people to want to do what you see must be done with you. The second is stop taking care of your career. Start taking care of your people.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“He was worried a little bit about promotions. Is he getting promoted fast enough? His career, right? And one day he just woke up and changed. And he said, I'm not going to take care of my career anymore. I'm going to take care of my people. And the moment I did that, everything changed because they wouldn't let me fail When young people come to me asking, I'd like some career advice, my first response is let's just stop asking that question. What have you done for someone else?”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Because it's so cool. We can sit here and think it's cool, or we can do something. And I think that's the seedbed of where the leading really begins. Second. One of the people, and I think I've actually asked him if I could write this, so I think I can share this story. One of the great four-star general officers, a fellow named General Austin, who really had a profound impact on me when I ventured off to West Point. And he held the chair two times after me. It was actually the most recent chairholder for the class of 51 chair. He was one of the only four-star generals to come out of his era, his class at West Point. He might be the only one, but certainly one of the only ones, ended up with a very storied career, spectacular leader. And he told me the story about partway through his career”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Of getting people to want to do what must be done. It's an art form and everybody is a different kind of an artist. Some are painters, some are sculptor, some are orders, some are good at just getting the right people together around the table. Some are good at admonition. Some are really good at asking a right question, right? There's different kinds of art, but it's an art. And you learn from others. You don't copy them. You get your own artistry of getting people to want to join you and not being a bystander about what's got to be done. Those people are coming over the hill. Someone's got to do something. Those kids didn't get their education. Someone's got to do something. This product has incredible potential. Someone's got to do something. And you infuse that in folks to be able to do that. That is, I think, where the real start of the leadership begins. Hey, we got this computer. We made it for ourselves. Somebody's got to do something to bring this to a whole bunch of other people.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“But here was the extra leadership step when you recognize something is just wrong, something's just got to be done. Somebody's got to step forward. I can't be a bystander, right? He looks at it and he says, we have to take responsibility for the kids before I was superintendent who didn't graduate. And we're going to go find them. And we're going to create a program to bring them back into the schools. And we're going to make sure that they get out with their high school degree. I'm going to take responsibility to make sure that happens for the kids who are here before I was even superintendent. And I'm going to walk down to a building in this town. And I'm going to say, we need space for this. You have an extra floor in your building. You need to help these kids because somebody's got to do something. Will you join me and give us space so we can bring them back and get them their degrees? So what is leadership? Eisenhower put it, his leadership is the art.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Embracing the idea of seeing what has to be done and then exercising the art of getting people to want to join you in getting it done. But it starts with clarity of something's got to be done and I am not going to be a bystander. So when I look at, for example, the school principals that I studied, I know this one superintendent. Let me just tell you this story, it sort of grew into a leader, takes over a school district, sees that that school district had kids from previous years before this person was in charge, what you're not really in charge, but was superintendent, where there'd been low graduation rates. A whole bunch of kids had not graduated from high school. And he takes one look at it and says, this is just wrong. Somebody's got to do something. So you would think, well, then great, that person is going to lead people to do what's necessary to increase graduation rate.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“We studied and superintendents. I look at what West Point does. I look at what's happened when I see some of my students from Stanford grow into real leadership. I don't know if someone else can make someone a leader. I don't know if you can teach leadership, but I'm pretty sure you can learn it. And I think that distinction is key. I think it's very arrogant to say that you or I or anyone else could take someone in. I'm going to teach you leadership. But I've watched people learn it. And I think a big part of what it takes to learn it. There's kind of two things that would, let me highlight one for the moment.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“And you would find often a teacher who became a school principal and had to go from teaching to leading. And they would grow into this leadership role. So you could see that they would go and they would become a leader of the school. And then as a leader of the school, they'd create the environment in which the performance for the kids would go up and you would have these spectacular results. turning the flywheel monograph, which we talked about earlier, I give an example of a flywheel, which is an individual elementary school on a military base in Kansas public school led by a woman named Deb Gustafsson, who created a flywheel that took kids from 33% reading rates to nearly 100% and stayed there. And she went from stepped into the leadership role and grew into that responsibility. So if I stand back and I look at these and I look at those great school principles.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“And what comes out the other side are leaders. It's what they do. And sure, maybe you've got this range of just like in any field of life. There's a distribution of capabilities as leaders when they come out at 22 years old. But that distribution has phase shifted far to the right of what you might get out of a random sample of a whole bunch of other 22-year-olds, which is the way you have to think about. So first, just as an empirical point, with conscious attention, It is entirely possible to build leaders and to do it systematically and to do it at a young age. Part of what happens for building leaders, and I saw this at West Point, and then later I saw it when I did a study on education where I was looking at schools that went through an inflection to produce better results for kids in the most adverse environments that you could find.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“General, happier than my Stanford MBA students that I taught. Was really interesting. I think it has to do with the fact that they're in an ethic of service that's immense, that it's a communal success. You never succeed alone and they know that and you succeed by helping each other. And the whole idea that failure, the opposite side of the coin of success is not failure. It's actually growth. And you will fail at West Point. It is designed. You will fail. And so you learn how to get through by helping each other and you learn how to get through by growing from your failures. And you learn that early. And you get tremendous responsibility by the time you're 22, 23, 24 years old when you're out. And the thing that there's so many things I learned going to the West Point experience, but one of the biggest things I learned is this institution has been in existence for over 200 years where it sees as its role in the world is to build leaders of character. You get young men and women who come in to West Point and there's like a factory.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“2012 and 2013, I had a real honor to serve as the class of 1951 chair for the study of leadership at the United States Military Academy at West Point. And I do not come from a military background originally, but I always believed that I owe something to my country. And I didn't serve when I was younger. When the opportunity came, they have this chair that rotates every two years. Sometimes they have like a former general officer in the chair. Sometimes they have somebody from the non-military world, such as myself, who hold it for two years. And you can do anything you really want with this chair, including interacting a lot with cadets and faculty at this story at a place called West Point. And I learned a huge amount in the West Point journey. For example, I came to the conclusion that my West Point cadets were in...”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“First of all, I've learned a great deal about how it is entirely possible to build leaders. And let me just go to the experience and experience I had that had a profound impact on my thinking about this.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Your bullet today is going to still be relatively small relative to what it could be in the future. And we have multiple cases in history where when the cannonball came, it's a big bet at that time, but it may not pay off for a while. It's probably going to pay off because it was calibrated. But if all you were trying to do was to maximize the returns in the next two years, then you would never fire a huge cannonball that's truly the flywheel extension cannibal. You have to think 20 years”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“And if you said we had to hit 20 more consecutive years of being the head of the game, you're going to make different decisions than if it's the next two years. If in fact it's shortening, then a potential contributor to that is the timeframe within which your people are making their decisions.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“I don't know the numbers. I don't know the numbers. I'd have to, before I could weigh in on that, I'd have to actually look at statistics to be able to say. What I can say is that The great CEOs that we ever studied managed for the quarter century. And if you are not making decisions to hit a 20-mile march for a quarter of a century, if you are not building a company, if you are just trying to build the flip or just make money during your tenure, if you're not thinking in terms of laying foundations so the company can still be ahead a decade, two decades, three decades down the road, you don't deserve to lead. If there is a shortening of the potential, I think it has to do with the shortening of the timeframe of decisions. And so if you ask the question, why do some companies get disrupted? Ask yourself a simple question. How did so many smart people get disrupted? Was can Olson at deck stupid? No. The question is, what's the timeframe in which you're making decisions?”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“But I mean, but in a really big context. But I think in the business for corporate world, if you can get a five-decade run of excellence, that's really, really good.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Apple, I don't think Apple was ever just about making money. And so I think that if I kind of stand back and I say, what did the built-to-last visionary companies have that not all of the good to great companies had? Is I think this sense of incredibly deep sense of responsibility to the world than what they were doing in their eyes that helped guide them over very long periods of time. I don't believe anything is ultimately permanent. I mean, look, in four and a half billion years, the Earth, you know, the sun turns into a red giant. None of this matters, right? So you have to have a big enough timeframe.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Put a premium on the importance of a purpose far beyond just making money. That notion, like what Bill Hewlett and David Packard found at HP later it grew too fast with its acquisitions and such. But part of what allowed them to have a nearly 50-year run was they understood HP existed to make a contribution, not just to make money. As you look at George Merck, medicine is for the patient and is not for the prophets. The profits will follow. R.W. Johnson and Johnson and Johnson and the original JHA Credo, which was written way back in the early 1920s, it was a visionary for its time. You have to understand it in the context of its time, the idea that Disney, Walt Disney was never about just, oh, I'm just trying to maximize profit. He was really trying to do something that would have a very special feel to it. And again, and then I would go to, we've talked about.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Porson I did back in the early 90s, and I were to look at the good to great companies and sort of did this great, these marvelous inflections from mediocrity to way past the market that lasted at least 15 years. But if you zoom way out and you ask which set of companies had greater endurance now Bill Telasso was about Bill to Last, but the Built Alas companies did and I have to ask myself why because we're looking through different lenses, so you're still just trying to build one overall framework. I think the principles are totally sound on all of them. But here's the thing that the Built to Last study had.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Not making predictions exactly. And also basically, if you can go back and look at one company's fall, if there's a divergence from the principles, then it actually, if anything, reinforces the principles rather than calls them into question. So that's always been for me more of a source of curiosity of something to learn from. I can actually go through each of our books and say, what would I criticize? If I would be the critic based on what other people have said and what just would go in my own mind In good to great, I think the fact that our only pattern that we selected on was stock returns, a pattern of stock returns relative to the market. And I still think that was the right way to do the research from a political standpoint. At the same time, I also believe that if I were to stand back and I were to look at the built-to-last companies, which came from Built Alaska,”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“So, um, I'm going to answer that at two sides of a coin. One, as I mentioned earlier, that say a company like Circuit City fell is not, in my mind, a counter argument. I can go back and always look and see. You're looking at dynastic eras of performance.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“A bullet the cannonball process on top of an existing flywheel becomes the biggest part of the company. Marriott started in restaurants, bullet the cannonball, hotels, right? Apple started in personal computers, bullet the cannonball smart handhelds. Intel started out in memory chips. Bullet to cannonballs, microprocessors and beyond. And so that's that notion of you've got the flywheel, your 20 mile marching, but then your bullet to cannibal and usually, not always, but usually theme parks to Disney, right, versus films. That second extension of the flywheel that came in the bullet cannonball becomes the really big momentum in the company, usually for decades.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Way you know that if it doesn't hit, it's just not going to work as opposed to maybe it would have worked if you would have done it well. So if it's a bullet, you still have to bring the kind of excellence to it to get a clean test. That's what they did. It was a really, the iPod was a really nice thing, even if it was a small thing. Then you get the calibration. Then there came this point of like, wow, this is validated. Then came the huge cannonball. And of course, that became what Apple was more known for today. Here's a really key point. Is it a different flywheel? No, it's the same underlying flywheel of kind of the architecture of these great products for the mind, where the bullet decanball becomes the extension of the flywheel so that you can still build the overall momentum, but with this bullet to cannibal extension. And what history shows is usually the second cannonball from”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“So there was this next organic step, right? And they took that, put it under the windows between boom, all of a sudden they found all these people in the world who weren't original Macintosh people wanted to use iTunes and it brought them to this thing called the iPod. And all of a sudden you have this calibration. Wow, it's not a theory. It's been a series of steps leading to an empirical validation. And there's one critical thing. If you're going to fire a bullet, you have to go at it the way the folks Steve Jobs did or the microprocessor was done at Intel. You have to fire it well, meaning if you're going to do a test, you can't find yourself afterwards saying if the If you're going to fire a bullet, do it excellent.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Merit the cannibal, so you've got to be firing enough of them to have some discovery. But the iPod starts to show some promise. It's kind of got its own little mini flywheel. It starts to build momentum. And people within Apple are really excited about it. And then there was this critical point where they said, well, but it only runs on Macintosh computers. Well, what would happen if we took the next logical step of putting our little iTunes software, which we had to do to really make use of the iPod and put it over on a Windows machine?”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“They describe, give the iPod like three sentences, a natural extension of our digital hub strategy or something. And they still saw it at that moment. It's like, Dad, McIntosh is the center of the world. We've got this extension thing of this iPod. And that's all they said about it. It's really fascinating. So first thing I want to say, really important to grasp, is that when you're firing bullets, you can't presume to know which bullets are going to really become your big cannibals for the future. If you go back into the history of Intel, you're firing some bullets and later you won't even hear about some of the things like the digital watches they tried and a whole bunch of other things because the bullets never merited big cannonballs. So it's very important when you're firing bullets to realize that some of the bullets will never amount to anything. It's not like every bullet we fire is going to become a cannibal. The whole point is the uncertainty. You don't know which bullets.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“The important thing about historical research. If you just look in retrospect, it would look like they knew that was the path to take. But they didn't know that was the path to take. What they were doing was they were firing bullets on a variety of things, but one of them was this thing that was the little iPod. And if you go back to, I think it was the 2002 or 2003 Apple 10K report and you read it at the time.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“On whom he could begin building the next phase of Apple. So 97 to 2002, 2003 is make sure that we pay attention to what we have, make sure that the flywheel, as we understand it, is actually turning. Don't deviate from that. We got to really make the most of the Macintosh computer, right? So they did that. While they did that, they were firing some bullets. And one of the bullets was around the MP3 player. They saw the rise of the MP3. They weren't really sure what to do with it. They were kind of late to the game. They fired a bullet on this thing that was kind of called the iPod. To illustrate, today, we look at the iPod and we say, wow, you know, that became the iPhone and the iPad and everything else, right? It's really the whole kind of ecosystem of Apple now. They must have known they were going to fire this big uncalibrated cannibal or this big cannibal to do it. But at the time, they didn't know that that's what it would be.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Sometimes I could sort of describe things through the lens of a specific case. Let's take the iPod that then went into the iPhone and so forth. This is a classic bullets decanballs move and I could go through lots of them through our research. The microprocessor was a bullet to cannibal at Intel. We could take the move to many mills of manufacturing steel at Newcore was a bullet to cannibal process. We could go through a variety of these cases just to illustrate how this works. You got Apple's got it's kind of original activities, which is in the Macintosh computer. Steve Jobs comes back in 1997. First thing he does is to basically try to reintroduce some discipline, get costs under control, stop the bleeding, get the Macintosh line back into really good shape, and then to pull out of the woodwork the people who still believed in the real dream that originally found at the company at Apple. And those, some of those people who are still there became the people.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Exactly right. And then you end up eventually, if your balance sheet runs out, which is the crossover point, you go from stage four to stage five, which is capitulation to irrelevance and death. So you'd ask a question earlier about the uncalibrated cannonballs and people wanting to play it safe. And I jumped ahead. And the reason I did is because the interesting thing is the more dominant pattern of how great companies fall is the undisciplined pursuit of more, not the hunkering down and just being too conservative.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“If you stay in that long enough, eventually it catches up with you and go to stage four. Stage four is when you fall and it's visible to everyone. And in stage four, it's not that you fell, that stage four is how you react. And if you react with grasping for salvation, right? And this is where you get into the doom loop that we talked about earlier. You start making lurching moves, panicky moves, disappointing results, reaction without understanding, and you're in that doom loop. And often people will fire more uncalibrated cannonballs as they're grasping for salvation. Because they never get back to rebuilding the flywheel, you get these little inflections up, followed by another dash downward, another up, and then dash downward.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Was it complacency or was it undisciplined pursuit of more? Then we go to stage three, which is the undisciplined pursuit of more leads to problems, risks that are latent, evidence that's growing that things are not all well in the kingdom, maybe underlying signs of things we ought to be worried about. Stage three is as the risks and the facts begin to mount. Stage three is denial. Denial of risk and peril. And when you're in denial of risk and peril, so you've got hubris born of success, leads to stage two, undisciplined pursuit of more, leads to stage three, denial of risk and peril.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Correct. There's a certain animus that happens we've been really successful, now we just need to have more and we need to be bigger and let's do a bigger acquisition. If we put two of us together, we'll just be that much more powerful. Whatever it happens to be. Or we can now start growing at 40% a year or we're going to gobble things up without any earnings or whatever it happens to be. Or we can move. I'm a new CEO and I need to show my metal by doing something really bold. That's the sort of thing that tends to happen. Again, if we go back to say the financial crisis”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Almost none of our companies we studied that were great companies that fell fell because of complacency. They fell because of overreaching. Stage two was undisciplined pursuit of more. They become too aggressive, too much growth, firing uncalibrated cannonballs, expanding into areas in which they have no business operating, big bets that have massive risk built into them, right? It's the undisciplined pursuit of more that is actually stage two. You would think it's, oh, they just become complacent. Sure, and if you do, you'll fall. But that's not the dominant pattern of history. Of the great ones go the other way.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Like cancer or something. And you're not visibly sick where nobody can deny it anymore until stage four out of five stages. And the fifth stage is the stage you never come back from, which is capitulation to irrelevance or death. So you can actually be in stages one, two, or three and be thinking you're just fine. And everybody thinks you're still great. And that's terrifying. Because if it was really obvious when you're in stage one, you could catch it early. So those stages Stage one is not success, but it's hubris born of success. It's when that success gets converted into arrogance. That then leads to stage two, and this links back to your previous question. You would think that companies fall because hubris leads them to be complacent. And that's kind of a type two pathology here. Here's what's really interesting.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“To be disordered on the table? Well, it's infinite almost, right? There's just so many possible variations. Well, that's like disintegration. That's like entropy. The natural state of things is towards disorder. So if there's a fairly narrow path to the ascent, there are lots of paths to decline. So coming up with a framework for decline turned out to be much harder than the framework for ascent. So we puzzled on this and a number of members of my research team and I, we took the same methodology, except we took companies that kept rising in contrast to others that at a given point had the negative inflection. They lost it. And we started asking, why what happens when you lose it? And we found this sort of five stages by which a company falls. First of all, here's what's really scary. You go through the first three of five stages where looking in from the outside, you still look healthy, but you're already sick.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“So we did build to last, then good to great. And then I did How the Mighty Fall. Because I started thinking, I need to understand how it unravels if it unravels. First of all, just as an aside, here's an interesting thing from an intellectual standpoint, which is harder to understand. The assent or the fall. Assent is much easier because it's like entropy, right? Think about a pool table with the pool balls. How many ways are there to rack them in the middle? There's only a small number of ways that they can be racked in a perfect triangle in a specific place on the table. That's like the path to building something great. It's a narrow path. There are things you have to do and you have to do them really well over a long period of time. That's racking the pool balls in the middle of the table. It's maybe difficult, but it's fairly clear what those are after we've done all the research. Now one thing about the inside. How many ways are there for all the pool balls?”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“And then they've lost it. In the end, you're trying to understand things. As you mentioned earlier, what do you love about what you're trying to do with these conversations is to over time have insights that are going to be durable, right? That there's some timeless quality to them, that you can rely on them. That's the quest. That's the desire. You share with me a desire for that, a quest for that, this need to get there if we can. And so for me, the fall of Lake Circuit City. Became a great opportunity to understand something. What is it that we need to understand about this? So we did a study that ended up in small book called How the Mighty”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“To that wasn't Omaya. Research is wrong. Our research was right. Because our research is never, oh, these are great companies forever, right? Our research is about studying eras and episodes in history from which we can derive principles that correlate with the best results. And if companies cease to live to those principles, they're going to fall, right? So there's no guarantee that people will maintain their discipline just as an athlete or a sports team if they lost their discipline, even if they once were a great champion, they can lose it later. So that didn't bother me at all that a company that was once great fell and that was in our research fell. But what it really became was a source of great curiosity because it wasn't that the companies that stumbled weren't great. What was really scary is that they were great.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Let me jump ahead and then come back. Let's jump ahead to the fourth stage of the framework, to the building at to last stage. And the opening part of that is productive paranoia, but that really means staying out of the five stages of decline. Productive paranoia doesn't mean not doing bold things. It's productive paranoia. It's worrying about the things that the world can really do to you and protecting yourself against those so that you stay alive. You're managing those downside risks, as we were talking about earlier. The only mistakes you can learn from are the ones you survive. We really tried to understand how does a great company fall? There's the first step in being built to last is don't die. In good to great, we had some of the good to great companies later really stumbled, one of them, for example, being circuit city.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“So, the reason I'm pausing here is because The pattern of Decline is actually firing the big uncalibrated cannonballs. And I'm puzzling in my mind as to why would the psychology be that, but I'm not a psychologist, so I can't necessarily, I'm just observing the empirical pattern. So let's just actually, you know what I'd love to do, because I think this really ties to the next stage of the framework, which is how great companies fall, because it's really interesting how this ties right into the stages by which companies actually bring about their own demise.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Comparison companies in contrast for either A, not fire enough bullets. B would fail to convert a bullet to a cannonball when it came time for the big bet, they wouldn't do it. Or C, and this is their biggest kind of constant mistake, is the firing of big uncalibrated cannibals, uncalibrated big bets. And that correlated with ending up heading down the path into the doom loop. When you stand back over history, then, the bulletin cannonballs becomes the way that you extend the flywheel.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“What we found, and this is one of Morton's real insights when we worked together on Great By Choice. And I want to give a lot of credit to Morton on this. What Morton said is, look, it's the ability to scale the right innovations that separate, not innovation per se. And the more we studied, the more we found that to be true. But then what are the right innovations? The right innovations are the ones that are the bullets that are calibrated, that are then followed by the big investments in the cannonballs. Again, in your podcast, a number of times people have talked about big bets. Well, big bets are either dangerous or really effective accelerants on the flywheel. And what we found is that if you calibrate with empirical validation by firing bullets first and then you get calibration, then you convert to the cannonball. That's what correlates with the best performers over time.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. And what we found is that as well as did Telus and Golder and their marvelous work well envisioned, there's very little evidence that the pioneering innovators win. And what we found instead is that it's not being innovative that matters. It's the ability to scale the right innovations. So let's just stand back for a moment and think about this. So imagine you have a ship bearing down on you and you have a certain amount of gunpowder. And you take all your gunpowder and you put it in a big cannonball and you fire at that ship. It sails out there and it misses. And here comes the ship and you're in trouble. You're out of gunpowder. But suppose instead what you did was you took a little bit of gunpowder, you put it in a bullet. You fire that bullet at the ship. It misses, but you've got enough time to recalibrate because you're 30 degrees off, fire another shot, you're 10 degrees off, recalibrate again. Ping, you hit the side of the ship, and now you take your gunpowder. Now you put it in a cannonball and you fire it on a calibrated line of sight.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“So, this is again sort of now back in the notion of the framework, right? Disciplined people, disciplined thought, disciplined action, and then building it to last. This is the last part of the disciplined action. We got the flywheel, we've got the 20-mile march, and the bulletin cannibals. So we had thought that there would be a very strong correlation between being more innovative than others and being the really big winners”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT