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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“So the great irony is that the short term focus of we can't miss today, but we can't miss any for the next 20 cycles, 20 years, 30 years, 40 years, means that you have to be constantly investing for down the road, else you're going to miss somewhere down the road. And that is what the power, so for me, the power of the march isn't about just this year. It's the commitment to the consecutive performance that will force you to innovate ahead of disruptions.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“For 40 consecutive years without a miss. Now, how would that change your decision making? See, this is the key to the money. We're talking earlier about decision making. Suppose your decision is that you have to hit something for 20 or 30 or 40 consecutive years without a miss. Well, that means that if you start making, don't make your investments or think about new things you have to be doing in the future today. You might maximize your short term results today. But you're going to miss at 7 or 12 cycles down the road. And the very commitment to say that we're not going to miss ever forces you to be doing all sorts of things today that change your time frame and put you ahead of those disruptions.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“That's definitely part of it. But wait a minute, if you're really focused on your march, doesn't that become really dangerous? Because then if the world changes and you're over here focused on the march, can't you get killed? So I started thinking about how does the march, so highly disruptive, highly turbulent, highly technology driven industries often, somehow those marchers win. But on the surface, you would say, well, wait a minute, though, the 20 mile marchers are the ones that get clobbered by changes. How does that work? Don't they just get disrupted into oblivion? So now let's step back for a moment. The key to the 20 mile march is the word consecutive. Now let's think about this for a moment. Let's suppose Your southwest airlines. And you say, we have a march for we want to be profitable every single year.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“So the marches can take different forms. I have a 20 mile march. There's different kinds of marches. Here's a puzzle. Why do the 20 mile marchers win? We know that they do, but why? And so let me just pause there for a moment. Your listeners might be thinking about it. What would pop into mind for you? This isn't like a test, like right or wrong, but what would pop into your mind”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“I don't think I understood when we published Great By Choice why the 20 mile march works. So let's just puzzle on that for a bit. And anybody that's listening to this, why do 20 mile marchers win? And it doesn't have to be growth rates. So don't get trapped up on the idea, well, it's just compounding growth. It could be I'll be profitable every year no matter what as Southwest Airlines. It could be Moore's Law and Technology. Earnings were all over the map at Intel, but double components at affordable cost 18 to 24 months like clockwork no matter what, no matter what, no matter what, no matter what. That's our march. We will not deviate from that march until we hit quantum mechanics, the limits of quantum.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Company A was the 20 mile marcher. And what we found is that the more turbulent the environment, the greater the results accrue to those that have a 20-mile march and stay consecutively with consistency on their 20-mile march. Now it could be exactly the more turbulent the environment, the greater the value of being the 20-mile marcher. Now let's puzzle on this for a minute, Chain, about why that would be. Because here's one thing that's interesting that happens for me. When I first see an idea, or in this case it was”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“That's a company that had a 20-mile march. And its 20-mile march was 20% net income growth consecutive every year. Now, I want to be really clear, the 20-mile march is not about necessarily a growth rate. That just happened to be that one. There's a company called Stryker under John Brown, who went public in the 1970s, said this March. And the idea being to be a consecutive every single year. Now, if you think about it, think of it as like walking across the United States and you got two approaches. One is every day I'm going to get up and do 20 miles no matter what. Good conditions, bad conditions, wind in my face, hot, cold, whatever. I'm kind of on my 20-mile march. And the other is, well, depending upon the conditions, I'll either do big days or hide in my tent and wait for conditions to improve. I'm not on a 20-mile march. I'm erratic based upon the conditions around me. Company B was the non-20 mile march.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“You go with the 25, right? Of course, you run the numbers, and everybody who listens to your podcast knows their numbers and so forth. So they do that really well. But the amazing thing is that it is not even close. It's like 290 to 1. I mean, it's in chapter three of Great By Choice. Here's the point.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Company A is going to have plus or minus 15 points on the standard deviation. So it's 25 plus or minus 15. Company B is going to be 115 points. So it's 45 plus or minus 115. Now, company A is over that two-year period is almost never going to be above 30%. We'll never once miss 20%. Company B, again, these are the same industries, same kinds of companies, same technologies, is going to be above 30% in two-thirds of those years. But it's going to have a range of plus 300 to minus 200. Now, if you had to place your bet, would you go the 25%? Or the 4”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Most people with, yeah, most people, I would take the 45 given no further information, right? Just go in with the opts, right? But let me just add a little bit of extra information. I'm going to give you the standard deviation of that growth rate.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Now, I'm going to tell you over a two-decade period something about the performance of those two companies. They're small, they're technology driven, they have massive growth in front of them. A company A is going to achieve an average annual net income growth of 25% a year. For two decades. So rapid growth. Average annual net income growth of 25% a year for two decades. Company B coming off of the same base or the same kinds of products, same kinds of technology, same kinds of customers, same potential in its future is going to grow as average annual net income growth at 45% a year over the same two decades. Now if you pause here for a moment and you just simply say if I just were to say hey you know given Shane, just given no further information if you had to place it back where would you put it A at 25% or B at 45%?”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Okay, I'd like to lead into this one if we could with just a simple little investing quiz. Let's just take two companies from our research. We'll call them company A and Company B for the moment. These are real companies. Let's imagine that you could have to make a big bet investment on one of these two companies. And of course, keep in mind the most effective investing strategy is a highly undiversified portfolio where you are right. So obviously that's a bit facetious because that's almost impossible to do. Let's just suppose for a moment you're going to place a huge concentrated bet on company A or company B.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Has to do with standards and so forth, and really building that out and really doubling down on it and sticking with it consistently. And early on, the early versions of Windows, early turns on that flywheel, were not, some people even laughed at them, but they stayed on it. And they kept building and they kept building and they kept building. And then Windows 95, you just keep building and keep building and eventually harnessed the internet to it and keep building and keep building. And massive flywheel effect. So the way that you get the return on the luck is you have to translate the luck event into a flywheel at some point as opposed to viewing it as a windfall.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“The first thing is we'll go back to the flywheel principle. Again, let's take the building of Microsoft as a really good example of this. There was a luck of it. No question, right? And then they got a really high return. The other company could have had that luck event too. Didn't grab it. But then what was the capitalizing? Once you grab that luck event, you get building it. It wasn't like, oh, great, touchdown, we won. We're successful. What happens over the next 20 years is recognizing that there's a flywheel effect.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“And you make sure that the asymmetric negative bad luck never knocks you out of the game, never kills you. That's really important for return on luck. And people think that luck management is a lot to do with the upside, but it is even more imperative on protecting on the downside.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“We cannot make the case of luck as the cause of a great company in any of our research. It's more the flywheel effect over time and return on luck and capitalizing on things and cumulative, right? So good luck cannot cause a great company. But bad luck can be the cause of the death of a company. So luck is asymmetric to the negative. Bad luck can kill you, but good luck cannot make you great. Howard Marks talks about this in his interview, right? One of the things he does all the time is he's throughout his entire career is the way I heard it in your podcast. It was a wonderful interview because he's talking about you have to always be prepared for when the bad luck goes against you, you're in the game. And then you're able to capitalize on that everybody's suffering, but you stay alive”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Goes all over it once they come back from Pacific Grove and looks at it and says, Well, we don't have an operating system, but maybe we can get one and gets this QDOS thing and a variety of other things. And then it's the return on luck. And then building upon that, right? The flywheel effect of Windows, right? It wasn't just a single moment. Once they got that flywheel going, then it was like, you know, step after step after step, building upon that luck event. So there's a lot in there. So you wouldn't say that wasn't a huge luck event. It was. But the point is two companies had.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“One of them in Pacific Grove, California is digital research. The other is a small company in Seattle called Microsoft that makes computer languages. IBM is looking for an operating system for the IBM PC. They go to both companies and their initial instinct, if anything, was they wanted to work with digital research because they had actually an operating system for personal computers. I think it was called GEM or something. I forget exactly. But they actually had a product. Microsoft at that point didn't have an operating system. They get the same luck event in response to that luck event. Gates recognizes its value.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“You find what we found is that if anything, the comparisons were luckier. But it wasn't strong enough to make that case. So we'll call it a wash. Essentially, if you wanted to argue that the ones who beat their comparisons were luckier that they had more luck on their side, you cannot make that claim with the data. You can't. So then, though, we stood back and we said, so then what does that mean? And what we really came to see is there's two critical aspects of Lockware the Multiplier comes in. You get comparable Luck events, but the return on luck Is a huge variable. Take a classic historical story. Early days of the personal computer industry. Two small companies get the exact same. Massive luck ev IBM is looking for an operating system.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“That would happen or when it would happen, or what form it would take. So, any event that meets those three tests, you didn't cause it. It has a potentially significant consequence, good or bad. And it came in some sense as a surprise, is a luck event. And once you understand that, then you can go back through the history of the companies and you can take all the information and you can begin to identify what are luck events that meet those three tests very clinical. Does it meet all three tests? And if it does, it goes in the luck event bucket. And then once you have the two luck event buckets, you have the buckets looking at the companies, you can take the companies and you can say, okay, now let's look. Did the 10x winners end up with a better bucket of luck events? Did they get more good luck events, less bad luck events, bigger spikes of luck events, or better timing? Because it could be path contingency. And then look at all that data and what”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“You can study it. And this is where Morton and I spent two years trying to figure out how to do it. And Morton had the following insight. Luck is an event. So the moment you can look at things as events, you can then begin to do event analyses, which allows you to do certain kinds of quantitative analyses. So then my job was to go back and look at it and say, okay, that's a great insight. What is a Luck event? And so we defined a Luck event. And I think it's a good definition of luck. A luck event is any event that meets three tests. One, you didn't cause it. Two, it has a potentially significant consequence good or bad. So bad luck is the one that's potentially bad a consequence. Good luck is the good consequence because you have to look at both. And three, it came as a surprise in some form, either the timing of it, the form of it that had happened at all. There could be any number of different permutations of the surprise. You couldn't have known for certain.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“My wife was born in Canada. But, I mean, to be born in an advanced industrialized economy in the 20th century clearly is one of the great starting points that any of us could have. That's true. So we'll acknowledge also that there are other ways in which you're kind of starting line could be affected based on the neighborhood you were born in, parents, a variety of other things. Okay, so let's set those to the side for the moment. Then the only thing I could really look at in our research was a very simple question, which is to say, okay, but now we got this kind of starting points are the same, fairly high level of starting points, but starting points are the same, and then really vastly divergent outcomes. How much of that is luck? So, the first thing you got to do is you got to ask a question of how would you define luck?”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Now, you can tell me why I'm wrong. No, no, I think that's a pretty good inclination. First of all, I think you're right. So there's a limitation in our analysis, which is that we're already starting with a group of folks that the comparative analysis is on a relatively high plane when you're comparing.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“And if you didn't address that question, you were going to leave a massive intellectual hole in the framework, in my view. And I've been aware of luck in my life. So I said, we need to study it. Let's figure out how to study it. So, first, just let me pause and ask you if you are on the research team, before we knew the answer. And you had to put down a bid hypothesis. Were those 10X winners? More than 10x, 10x was the minimum. 10x winners relative to their comparisons when you slice it over time, luckier than their comparison. They get more good luck, less bad luck, bigger spikes of luck, better timing of luck if you had to hypothesize A is I'm going to bet they were luckier Or B, I'm going to bat. I'm going to put my hypothesis on that they weren't luckier. Would you hypothes”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“In the most turbulent industries we could find semiconductors, biotechnology, airlines, medical devices. We could go through the software, computers, et cetera. And in contrast to other companies that sort of started in the same Cambrian explosion and didn't become as successful in those eras. And we were comparing them and asking why. What was different? What did we learn? The very nature of that because of one, the outsized level of success. And two, the fact that they were highly turbulent industries full of big fast moving forces and activities and changes that were outside of their control provided a perfect vehicle to study the question of luck, which I felt always needed an answer because it could be that all those other variables I described, right, the disciplined people, the disciplined thought, the disciplined action, the building greatness to last, and all the subprinciples, maybe that's like a giant equation where at the end is a giant variable called plus L luck. And maybe plus L is 80 of 100 points.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“At the end, and I came to see it as a multiplier. This big amplification variable that amplifies everything else. And it's called return on luck. Now, before we get into that, let's just talk about this back and forth a little bit. You may have read the chapter, but if you hadn't, let me just ask, suppose you were on the research team. And I were to say to you, look, we've got these companies. This came from the Great By Choice Research with another great friend of mine, Morton Hansen, a brilliant methodologist. And we realized in Great By Choice that we were studying companies that ended up going from startup to IPO to 10 times better than their industries.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Be happy to circle back from the 20 mile march, which I think is how you defeat disruption and the bulls and cannonballs, which is how you extend flywheels in a disciplined way over time. Then you go to the building greatness to last, and there's three components in that. There is productive paranoia and how to stay out of the five stages of decline. And I personally think that understanding how companies fall is just as important as understanding how they become great. I find it fascinating. The becoming second point in that, becoming a clock builder, not just a time teller. So to build a last means at some point you have to stop being the time telling entrepreneur and become the one who can build the clock that doesn't depend on you anymore. That's what Steve Jobs did. And then finally, the principal deep, deep, deep principle preserve the core and stimulate progress, which is kind of the secret to long-term renewal of an institution. So those are the main principles in the whole framework that lead to the outputs of a great company. But then there's this multiplier.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“I would love to. And because most people don't ever really want to talk about it. But I've noticed in your interviews that the concept of luck has come up multiple times. And I'm also struck by the number of people that I've heard reference it or you've referenced it in your podcast. So I thought this would be a great topic for us to spend a little time on because we've actually done some systematic analysis of the question. So first of all, let's just complete the framework because it leads up to the return on luck question. So you have the inputs and the outputs and you have the disciplined people, level five leaders, first two right people on the bus, discipline thought, genius of the end, confront the brutal facts, hedgehog concept, disciplined action, flywheel. We spent a lot of good time on the flywheel, real disciplined understanding into disciplined action, turned the flywheel, and the discipline to stay with the flywheel for long enough to get its compounding effect. And when the world thinks you're crazy, you still understand your flywheel. Then there's these other two parts we may or may not.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think it felt to each of us like. There's an anchor point Somehow, just instinctively, I think we could each know. We could commit to each other and to a marriage in a way that you could always count on the other person in a world where it's really hard to count on things. 39 years, I think we're still the same.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“We just went all in. We just both looked at each other and said, we are in this together and this is going to be life together. We both mentioned earlier that I had had challenges growing up. Joanne had some challenges growing up and we both had this incredible instinct. I don't know where it came from. We both had this incredible instinct that The other person. Could go all in. With this, I don't know how you process it, but it was just this leap of faith that the other person is going to be able to commit to this the way I'm committing to it. and will never blink. Never”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“It turned out to be. So I go over and I meet her. She looks at me and I'm kind of in my dorky. I have like this rugby shirt thing on and kind of climbers like shorts. And I do not look like a runner. And she says, do you need to change? I'm like, no, I'm good to go. She goes, okay. So she takes me out on an eight mile run. And the first three miles were uphill. We were running up Pageville Road and over to the industrial park. And we ended up walking five of the eight miles. And that was Sunday. And Thursday, we were engaged. That was May. It was basically almost exactly 39 years ago. It was a May of 1980.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Another greater than zero would be an increase. And she said, would you like to go for a run? And I said, sure. And so she said, why don't you come by my dorm room on Sunday morning about eight o'clock? So I'm not really a runner. Like I'm not a runner at all, but I figure, okay, I'll go do this. So I put out my heart.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“All in so Joanne and I were in college separated by one year from each other. She was a year behind me and we both graduated high school in Boulder, Colorado and we had a friend who was my climbing partner, a fellow named Roger Brakes, another great stroke of Good Hulak in my life. And he was also her high school cross-country coach and physics teacher. And he kept encouraging us. Joanne calls me. And in that conversation where she kind of kept me on the phone for a little while, I said, are you still running? And she said, yes. And I said, well, I'm thinking of upping my mileage. And of course, that was true because zero plus any number.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“It is four days, right? So I don't know how this is how you put this in our decision making frameworks because there was no, well, I suppose there was an implicit decision tree.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“These checks, right? They're just going out of our account. Remember, Joanne just looking at me one day and saying. I sure hope you find something. Please, please, exactly. But that was the process, right? That if you had a successful one, then you would channel the resources into more curiosity and questions and research.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Had bat my entire career built to last with Jerry. And I left Stanford to see if I could do this path as a kind of self-employed professor, kind of endowed my own chair and grant myself tenure, built to last. I have really good fortune that it was successful. I turned to Joanne. We've been married for 39 years now. And I said, okay, I'm going to take all the money that we're making from this. throwing it into another big question. And it was what became good to great. I took all the resources. So it was the investment, the reinvestment at the end of the flywheel was to take the resources that came from the successive bill to last, double down, and put it into the research project that became good to great. And I remember writing these checks for like researchers and data and all this money is going out. Like the Woo may have only had one successful product, but all this money is going out. I'm writing these.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Be through some interactions, and over time I've reached a point now where I don't need to generate an income so I can kind of have a self-endowed chair. But that generates the resources, which then allows you to put it right back into the next big questions you're really curious about. So to put that in a very concrete form after Built to Last.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Because I don't feel I can just go straight to wisdom. I need a method. And if I do good rigorous research with my research team, then I can't help but at some point have some real chaos to concept insight because the method will lead to that. Inevitably, if you do the method right. And then if you actually get some really good insights, like level five or the flywheel or the hedgehog concept or whatever, or the whole framework, whatever the insights are, and they're put together in a way that is deeply satisfying and true to the data, well, then you can't help but want to write and teach, which is what we're doing right now. I love sharing the ideas. This is what I love to do. I want you to understand this. Let me write it. Let me share it. Let me teach it. Let me put it together way that people can digest it. And then if you do that, you're going to be able to have that have impact on the world, whether it be through book sales or whether it's...”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“I do have a personal flywheel. And it's interesting because we put out this recent monograph on the flywheel to kind of extend good to great so people didn't have to buy a whole other book if I made it just a chapter in the back. I'd put it out as this monograph and on the flywheel principle. And then as I started thinking about it and sort of showing a lot of examples of different types of flywheels in it, I began to think, you know, what's my own flywheel? And here's the essence of it. It starts with curiosity. I'm just interested in really interesting and big questions. I'm voraciously curious. And if I have a really great big question, then I can't help but then want to translate that into rigorous research.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Exactly right, exactly right. And so the challenge is to understand it and then make sure that you execute on each part as you go round and around. Now there are key questions in the flywheel, but that's the essence of it. Now let's go back again. Suppose you were sitting there and you were thinking how far could a flywheel go? Well, in 2003, how far could that flywheel go? A really long way. People underestimate how far a really great flywheel can go.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Happens because of the linkages and interdependence of the entire flywheel, the entire flywheel stops. Five sixths execution is zero momentum.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“That was their genius, right? That they did that. That caught my eye and I started challenging other organizations to do exactly that. So I've been teaching the flywheel principle, but you should do for yourself what Amazon did for itself. And then that's how people can really begin to harness it. But here's a really key thing. The thing that will stop a flywheel is if you fail on any component, because on the one hand, while it is a compounding machine, each piece driving the next piece round and round and round. The other side of the coin though is that if you fail at any one piece, the entire flywheel slows or stops. So if you give yourself scores on a point of the flywheel, right, you'd say one to 10 execution scores on each component. And those scores on the five or six components were like 9, 8, 9, 10, 3, 9, 10.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“A flywheel is an understanding of the inexorable underlying logic that drives that momentum machine. You have to be able to say for each part of the flywheel, why will it drive the next part almost inevitably? If you lower prices on more offerings, it's almost inevitable that you're going to get more customer visits. And if you get more customer visits, it's almost inevitable that you are going to get more third party sellers. And if you get right, see, you can see that it's got an inexorable underlying logic to it that drives it around. So it's not the static thing. It's a dynamic thing that captures what actually drives momentum in your specific situation. So what Amazon did was they took the flywheel principle and then made it their own.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“It starts at the top with lower prices on more offerings. So that's the top of the flywheel. Now, if we do that, that's going to increase customer visits. And if we increase customer visits, then that's going to attract third-party sellers that can then, as the next, expand the store and extend our distribution. And if we do that, we're going to grow revenues for fixed costs. And if we grow revenues per fixed cost, boom, that's going to bring us right back to the top of the flywheel. We can lower prices on more offerings, which then increases customer visits, which then attracts third-party sellers. But here's the key. A flywheel is not A set of aspirations or action steps simply drawn as a circle so that you can say you have a flywheel.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Difficult time by understanding and doubling down on building a flywheel, panic. And to their great credit, and really, it's their full credit. They took the principle of the flywheel, the way I described it to you here, that cumulative compounding idea, and then they said, let's do the flywheel for ourselves and ask, what is our flywheel? And this was the crucial thing that they did that I learned from. So I came across the flywheel principle of the research, taught it. They then took it a step further and changed the way I look at it. So here's what they did. Now, I want to share with you. What they did was they said, if you really want to harness the flywheel, you need to crystallize how your specific flywheel turtles hurt. And let's spend a moment on this one because it really illustrates the power of a flywheel, what a flywheel is. So here's a sketch of what it was. So picture going around in a circle.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Our conversation up to the flywheel part. So after Good the Great came out, I was invited up to Amazon. I don't even remember who it was specifically that asked me to go up there, but I went up and I met with the executive team and I believe the board and stuff like that. But all I did was teach, didn't tell them what to do, didn't give them direction, didn't consult with them. These people are really smart. They're a lot smarter than I am. And they could just take ideas if I just taught them well. But one of the things I emphasized, because 2001 was a dark time. It was fall of 2001. So the world felt dark, number one. Number two was post.com bust. And people had questions and what was going to happen with all kinds of companies, but Amazon as well. And I taught the flywheel principle as well as level five and first two, brutal facts, hedgehog, flywheel, the whole deal. And challenged with the idea that you respond to this.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so what happened is, and I want to be really clear as I started as I can take virtually zero credit for anything that Amazon has done spectacularly well, and I don't want to imply that I can. I'm a teacher at heart who likes to understand things and to share them so that people come away with their minds changed in a way that's permanent and durable with ideas. And the broad sort of scope of those ideas have been around this question of what makes great companies tick. So Dunbilast with Jerry and where we looked at companies that had sort of gone from startup to these sort of visionary iconic enduring status in contrast others that could have and didn't. And then we did the good to great study, which is takes companies that are average performers, and then one breaks through and makes a good to great leap, and the comparison company doesn't. And we ask what was different from those we derived the ideas, some of the ones I've already led up partway through the framework earlier.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“This is not investing in advice. I want to be really clear because I would be incompetent at that. But I don't think you want to find a flywheel at only 10 turns. If it's a great flywheel. So maybe we'll talk in a minute about the Amazon flywheel because that's what stimulated me further thinking about Amazon. Would it be so bad to pick up a flywheel when it's already at a million turns, but you can understand it if it's on its way to 10 billion turns? You don't necessarily have to have found it before the flywheel is really turning or even early. You might just be able to find it when it's far enough along that you can really understand it and say that's a flywheel. I understand how that one works and most important those who are building the flywheel understand how it works. And then so what if you miss the one to a million turns? If you pick up the million to 10 billion turns that seems to me to be a better game than trying to predict free.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“Probably my other path. But I was lucky enough to find what I'm really hedgehog about, which is what I've done so far. And so I'm more interested in how you understand what makes a great company tick from 61 to 90. I'm moving on to new questions. But for 30 years, that question occupied my mind. And all along there was this question of, should I do a fund? Should I do a good to great fund? Maybe I should learn how to plan. And the reality is it's just not my hedgehog. I'm not passionate about that at all. I'm not sure I would be as encoded for it the way, say, Howard Marks or a Warren Buffett or somebody who's just, they're just like, they're so stoic when it comes. They're able to ride through things with a certain equanimity that's quite extraordinary. I'm not sure that's in my encoding. Now that said, here's the one thing.”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT
“For me, I think if I hadn't gone the path I'm on, I would have taken a financial path. I have a mathematics undergraduate. I studied mathematical sciences as an undergraduate, which is computer science. You study computer this while I saw computer science, mathematics, statistics, operations research. I love if I can quantify things or simplify things with numbers, I love doing that. And I love thinking about markets and things like that. That would have been kind of my”
2019-10-01 · The Knowledge Project with Shane Parrish · #67 Jim Collins: Keeping the Flywheel in Motion · IDENTIFIED FROM THE TRANSCRIPT