Biography

Jim COLLINS

2005 ranking: 6

Jim Collins was born in Boulder, Colorado. He studied business at Stanford and stayed on the faculty after graduating. Having taught at Stanford for seven years he returned to his home town to establish what he called business research laboratory. Here he has become “a self-employed professor who endowed his own chair and granted himself tenure.” His laboratory examines business issues and structures from a statistical standpoint. “Others like opinions” says Collins. “I prefer data.”

His research work has involved looking at vast numbers of companies to find out what makes some good, others great, and others still downright awful. This involves a probe of how each company is managed, and the role of its CEO. This has resulted in four books, including Good to Great (2001).

Good to Great emerged from a simple question: Can a good company become a great company? Collins and his researchers’ answer was yes - but it wasn’t easy. Collins started with a data set of over a thousand companies, but whittled this down to 11 that had consistently outperformed their rivals. These companies had things in common, but not what conventional B school wisdom said they should have. It was easier to see what they lacked: high profile CEOs, cutting-edge technology implementation, a business strategy or even change management. What Collins did find amongst the eleven was a common corporate culture that was big on the very outdated concept of discipline. This was not the discipline of the martinet, but the good type – self-discipline. The companies rewarded self-disciplined people who thought in a self-disciplined way.

But the difference between the good and the great was also down to different types of leadership. Collins says he was initially a leadership skeptic: it was too simple to pin great success or grim failure on the lapels of a leader. However this is what his data was telling him. On further investigation he identified two levels of leadership – level 5 (the great) and level 4 (the good).

None of this is cast in stone, and a level 4 leader can grade up. He cites Lou Gerstner as an example: a Level 4 manager at R.J. Reynolds who became a level 5 manager at IBM - though not immediately. Level 5 people have an almost heroic commitment to the company and its mission. The company gets all their emotions – there’s no room or energy for self promotion. This does not mean that Level 5 managers are shrinking violets. They simply put the company before, well, everything – family, friends, and probably their health. But they are never alone. They should have a good team around them. This is their responsibility. Part of the mettle of the level 5 manager is deciding who should be on the bus and where they should sit.

There are other qualities which set the great apart from the good. These include the performance of their companies. These can be measured by financial results. Collins is a keen believer in assessing success through the company’s stock price. This indicates a preference for publicly-quoted companies.

A Level 5 leader must also have the respect of other business and industry players, such as competitors. (Respect, of course, has nothing to do with liking).They should make an impact on their company, maybe their industry, that outlasts them.

His researches also looked at the identity of CEOs. Those companies who chose their chief executives from inside the organisation did better than those preferring outsiders. He suggested that outsiders are ignorant of the company they are entering at the top, with no gestation or apprenticeship period. He also suggested that outsiders lacked the capacity for commitment to a long-term relationship along with its necessary sacrifices.

A good CEO should be neither too humble nor too proud. They should not be too charismatic. They should ideally stay in the job for a minimum of seven years, as it was not possible to have any impact in a lesser time.

In his latest book Built to Last (2002) Collins (along with Jerry Porras) continue their analysis of visionary companies, looking at eighteen. These are united by widespread brand recognition, are world famous, but have been in business for more than fifty years.

Collins’ research stems from the corporate arena, but he reminds his readers that the lessons he puts forward are equally applicable in the non-corporate arena as well.

Essential Reading
(With William Lazier)
Beyond Entrepreneurship: Turning Your Business into an Enduring Great Company (1995)
Good to Great: Why Some Companies Make the Leap...and Others Don't (2001)
(With Jerry Porras)
Built to Last: Successful Habits of Visionary Companies (2004)

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