jim collins transcript - wordpress.com · 2009-12-21 · jim collins 11_7_09 page 1 bob buford:...

JIM COLLINS 11_7_09 PAGE 1

BOBBUFORD:Well,ofallofthat,IthinkwhatpleasedmemostistosaythatIwasoneof

PeterDrucker’sclosestfriends.I’mheretointroduceJimCollins,nottotalkaboutme.And,I

gotfromCollins’office‐‐he’saverymeticulousperson‐‐alistofallthesethingsthathe’s

accomplished.Buthegavemepermissionnottousethatlist.

So,whatI’mgoingtodoistellyouwhatI’velearnedabouthim,thelastcoupleofdays,just

flyingonanairplaneanddrivingaroundinacar,aroundClaremont.Hopingtointroduceyou

totherealJimCollins.He’llhavehissubjectmatter,I’msure,andwe’lllearnalot.

ThefirstthingI’dsayaboutJimCollinsishe’srelentless.Drivingoverherethismorning,he

saidthathebudgetshistime,50%forwriting,30%forteaching‐‐todayisateachingday‐‐

andthebalanceforstuff,everythingelse.He,likeRickWarrensaidlastnight,neitherCollins

norWarrenownatelevisionset.

Whenheisinbookmode,heworks16hoursaday.Butitdoesincludearock‐climbinthe

middleofthedayandanap.[laughter]Afterwhichhegoesbacktowork.Thepurposeofthe

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napistogethimbacktowork.HehasawonderfulrelationshipwithhiswifeJoanne,who

usedtoatleastbeabletooutrunhimupthemountain,andiskindofa‐‐she’spetite,but

she’sanAmazon.[laughter]And,Imean,shewontheIronmanTriathloninsomeplace.

Anyway‐‐strange.[laughter]

Idon’tthinkherestsany.Iaskedhimthismorningwhetherheeverrested,andhedoes‐‐He

restsontheclock,Imean,like,thenap.Buthesaidhewas49.some‐oddpercentonbudget

forwritingthisyear.Andthen,hecorrectedthatandsaid,“Actually,it's50%.”So,he’sthat

close.

Idon’tknowhowyoucelebratedyourbirthday.Jimcelebratedhisbirthday,his50th

birthday,byclimbingElCapitanstraightup,whichisthemostaboutstraightupanddown

thingyou’veeverseeninYosemite,andwhichhedescribesastheTourdeFranceofrock

climbing.Inaday,40hoursstraightup,youknow,nomeals,nonaps.[laughter]Nopauses,I

don’tbelieve.

ThesecondthingI’dsayabouthimisheisinfectiouslycurious.Youjustreallydon’twantto

bearoundhimmuchifyoudon’twanttogetquestioned.He’safriendlyinterrogator,buta

fairlyrelentlessfriendlyinterrogator.I’llgiveyouanexample.HeandIwerehavingdinnerin

Dallas.And,heaskedme,“DoyouthinkPeterDruckerwouldhavebeenmoreinfluentialif

hehadwrittenless?”Youknow,hedidwrite10,000‐bookpagesandlotsofmagazine

articlesandsoon.

And,ashetoldRickWarrenlastnight,firstIjustdeniedtoanswerthequestion.But,Ifinally

said,“No,Idon’tthinkso,becauseheestablishedtheplatformforalltherestofthepeople

towriteon,thatheconnectedthedots,sotospeak,inthewhole”‐‐Hereallycreatedan

industrywhichiscalledmanagement.

JIM COLLINS 11_7_09 PAGE 3

Ipersonallybelievethat,iftheNobelPeacePrize‐‐notEconomicsPrize‐‐committeehadhad

anygoodsenseorimaginationatall,thatPeterwouldhavegottenthePeacePrize.BecauseI

thinkmanagement’shadmoretodowiththestabilityofWesternculturethananyother

singlefact.Justgosomeplacewhereit’smismanaged,andyoureallywouldn’twanttobein

Darfuroroneofthosecrazyplaceslikethat.

Anyway,thatquestionjustcontinuedtobugmeallalong.And,ithas,inaway,resulted,not

throughanyeffortofmyown,inJoeMaciariellodoingaremarkablethinginthis

managementbook.Imean,youshouldget‐‐Thisbookisreally4011‐pagepamphletson

subjects.And,that’showhewroteless.Idon’tknowhowJoecameupwiththat.Idon’t

knowhowhegot60yearsintoonebookof4011‐pagepamphlets.

Butthe4011‐pagepamphletshavetransformedthemselvesintoDruckerUnpacked,which

usesmorethan,anythingelse,usesiconstotalkabouthowtodoplannedabandonment,or

howtomakedecisions,orthingslikethat,whichIneverwouldhavethoughtofthisuntil

RickWarrensaiditlastnight.Youknow,there’sstillagoodpartoftheworldthatis

languageless,Imeanthatarefunctionallyilliterate.So,wordsdon’tdomuchforthem.And,

theythinkintermsofimagesandpictures.

IfyouthinkofthewholeRenaissance,thewayChristianitydevelopedwaslookingatstained

glasswindows,pictures,notwordsandconceptsandthatkindofthing.And,thisDrucker

Unpackedisjust‐‐It’sjuststunning.And,itisadirectresultofmakingPeterwriteless.There

are15modulesofthingslikethethemeoftheoryorbusinessandthingslikethat.And,you

canactuallygetit.Imean,youcangetit,toptobottom.So,gobuythatthingand,you

know,useit.

Then,thenexttothelastthingIwanttosaytoembarrassmyfriendis,there’sawriter

namedAnnieDillard,whoIlikealot.And,AnnieDillardsays,“Thegreatestofallgiftsisthe

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gifttosee.”And,inmyopinion,thetwopeopleinthelasttwocenturieswhosawmost

clearly,sawthebrutalfacts,sotospeak,inthe19thcenturywereAlexisdeTocqueville,a

Frencharistocrat,whocameandhadfresheyestoseetheUnitedStates,andPeterDrucker,

whowaskindofarelentlesslookerhimself.

And,itcouldbe,atleastmyearliestcandidateforthe21stcenturymightbeJimCollins.He

spendsadayapageonwhathedoes.Imean,hegoesoveritandoveritandoverit.And,it

allowsustoseethroughhiseyes,whichisthegiftwe’regoingtogetthismorning.

LastthingIwouldsayisheisadependablefriend.Hesaid,inthecaronthewayoverhere,

thattherewerethreethingsyoucoulddoaboutacommitment,likethecommitmenttobe

herethismorning.Youknow,thereisanoldjokewhereyoucallsomeoneupandaskifthey

believeinfreespeech.And,iftheysayyes,yousay,“WellI’vegotadealforyou.Ihavean

opportunityforyoutogiveafreespeech.”[laughter]

And,giventhefactthathegetspaidabout$1,000aminutetodohisunfreespeeches,thisis

agift.Andhesaid,“Therearethreethingsyoucandoaboutacommitment.Youcaneither

getanunqualifiedreleasefromit,oryoucandoit,oryoucandie.”[laughter]Andso,he’s

goingtodoitthismorning.Hereheis.[applause]

JIMCOLLINS:IamhereandI’mverymuchalive.Iamreallyverypassionatetobeherewith

youandtobereallyamongfriends,friendslikeBobBuford,JohnBachmann,withRick

Wartzman,andIraJackson,andthewonderfulthingsthey'redoingwithschoolandthe

institute,whichIapplaud.And,Iexpectremarkablethingstocomewithfriends,fromthe

faculty,andalsotobeamongakindofarolemodelfriendfromafar,whichisDorisDrucker.

And,it’sinteresting.BecauseIwastalkingwithmywifeJoanneonthephonethismorning

aboutchattingbrieflylastnightwithDoris.And,wewerejusttalkingabouthowwealways

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lookedat‐‐I’vealwayslookedat,ofcourse,Peterasagreatrolemodel.But,Ialsoalways

haveadmiredtheirmarriage,theirrelationship,alsoasarolemodel.

And,weweresaying,yeah,youknow,ifyoulookatthatkindofarolemodel,we’vebeen

married,now,29years.And,wegotengagedfourdaysafterourfirstdate.And,wewere

saying,youknow,withthatrolemodelinmind,29yearsisreallynothingotherthanjusta

nicestart.

So,it’salsoreallyaprivilegetobehereintheenvironmentatClaremontintheDrucker

School.BecauseIactuallythinkthatitplaysaveryimportantroleintheworldofthinking

andofacademics.And,thisideaofitbeingaplaceforconversations,right,aplacefor

conversations,andaplaceforconversationsonimportanttopicsthatmatter.And,ofcourse,

weknowthatthat’sexactlyhowPeterDruckerinteracted,wasthroughthatconstantseries

ofconversationsandtheideaofhavingthatasanentireethosofaninstitution.And,Ithink

that’saveryimportantlegacyofbothPeterDruckerandoftheinstitution.

Andso,itisaprivilegetotrytocontributetothatinsomesmallwayheretoday.Ihavebeen

askedtohonorPeter,notbylookingbackandarticulatingallthewaysinwhichhewasa

greatman.And,ofcourse,hewasagreatman.But,bylookingahead,abit,atourchanging

world,andperhaps,throughthatlens,buildinguponsometimelessprinciples.

But,beforeIdothat,Iwouldliketosetacontextabit,andtoshinealightonPeterthrough

myownlens.BobBufordmentionedsomethinginhiscomments.And,I’vereflectedonthis

alot,andIbelieveitistrue,theideathatPeterDruckercontributedmoretothetriumphof

freedomandfreesocietyovertotalitarianism,asanyoneinthe20thcentury,including,

perhaps,WinstonChurchill.

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And,thatmaysoundlikeanaudaciousstatement.But,asIthinkaboutit,ithastobetrue,

right.Therearetwowaystochangetheworld,theswordandthepen.And,thosewhouse

thepenrewirethebrainsofthosewhowieldtheswords.Therearepeopleofideasand

peopleofaction.And,Peterchosethepen.

Andreally,forafreesocietytofunction,weabsolutelymusthavehighperformingandself‐

managedorganizationsspreadthroughoutsociety.And,it’sreally,actually,thereasonwhy

we’reabletohavethisgreatmeleecalleddemocracy‐‐whatwasitthatChurchillsaid?It’s

absolutelythemosthideous,awful,completelyirrational,inefficientformofgovernment

everdevised,exceptforalltheothers.[laughter]

AndhealsosaidaboutusAmericans,ofcourse,we’llalwaysdotherightthingafterwe’ve

triedeverythingelse.[laughter]But,ifyouthinkaboutit,thatthere’sanaturalinconsistency

inDemocraticsystems,andnothinggreathappensinthecontextofinconsistency,sowhat’s

thesolutiontothat?Thesolutiontothatisthat,spreadthroughout‐‐andpeoplelikecity

managers,andpeopleinnon‐profits,andpeopleinbusinesscorporations,andpeoplein

organizations,theyaretheoneswholeadandmanageinawaythatproducetheconsistency

thatproducerealresults.

And,itisonlytherelationshipbetweenthosetwo,betweentheconsistent,well‐managed,

individualorganizationsthatmightnowbecreatingmovementswiththekindofinherent

inconsistencyofdemocracy,whichallowsustohavefreedom,thatwegetaworkable

combination.And,ofcourse,Druckergaveusthelanguage,themetaphor,thelens,the

understandingoftheroleofmanagementasthecriticalfunction.

Ithasbecomefashionableinrecentyearstoreveretheideaofleadership,whichIthinkis

great,buttokindofimplicitlydenigratetheideaofmanagement.Andtheideabehind‐‐

you’llhavepeoplewhokindofthinkofitastheleadersaretheoneswhoarecool,right.The

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leadersaretheoneswho‐‐Weallwanttobetheleaders.Wewanttohavetheblackleather

jacketandthecoolsunglasses.And,wewanttolead.And,wewanttobecharismatic,and

wewanttobeallthesethings,andkindofthemanager,youknow,“Well,that’sjust

management.”

And,managementissortofmoremundaneandpedestrian.And,nothingcouldbefurther

fromthetruth.Leadershipwithouteffectivemanagement,andespecially,asRickWarren

mentionedlastnight,charismaticleadershipwithouteffectivemanagement,isnotonly

ineffective,itisdangerous.But,ofcourse,Druckerknewthisandpointeditoutmorethan

60yearsago.

And,ifwethinkthattheworldispermanentlyandirrevocablybeyondthereachof

totalitariandictators,thatfreedomwillalwaystriumph,andneverwillitstepbackward,I

wouldsimplyremindusofourhistory.Itisnotonourside.Mostoftheworld’smost

dangerousandpowerfultotalitarianstatescamelongafter500BCEGreece,whichwasthe

birthplaceofthenotionoftherepublicandthedemocracy.And,lookwhathappenedin

between.

Thereisnolawthatsaysitisaninevitablemarchtofreesociety.And,Ibelievethatfreedom

wins,asDruckertaughtus,indirectproportiontoourabilitytoself‐manage,ifwedeliver

organizationsthatdeliverresultsthroughoutsociety.And,myownfirstencounterwith

Drucker’scontributionreallycamethrougharesearchlens.Andmycolleague,GerryPorus(?)

andIwereengagedinaresearchprojectatStanford,whereweweretryingtounderstand

whatseparatedtrulyenduringgreatcompaniesfromothersoverlongperiodsoftime.

And,weweregoingbackintohistoricalarchives,so,forexample,ofcompanieslikeHewlett

PackardandMerckandMotorolaandJohnson&JohnsonandGeneralElectric.And,wewere

studyingthesecompaniesoverthelongcourseoftheirevolution.Andso,you’dbegoing

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throughboxesofarchivematerialatplaceslikeHP,andyouactuallyhaveDavidPackard’s

originaltypewrittennotesfromthevery,veryfirstmeetingonAugust23rd,1937attwop.m.

intheafternoonwhenheandBillHewlettgottogethertoformHewlettPackard.

Bytheway,there’saveryinterestinglittlesidenoteonthat.It’sveryfun.Theydidn’tknow

whattheyweregoingtomake,whichI’vealwaysjustloved.Theygettogetherandsay,“We

decidedtoformacompanyintheradioandelectronicsandelectricalengineeringfield,”very

broadlydefined.Andthen,itgoesontosay,“Thequestionofwhatwewilldesign,

manufactureandsell,however,waspostponed.”[laughter]And,thisisthefoundingofthe

company.

But,ifyouthinkofit,itwasaveryDrucker‐likeapproach.Because,whattheyessentially

weresaying,is,“Ourultimatecontribution,ourultimateproductisnotgoingtobea

calculatororanoscillator.It’sgoingtobeanorganizationthathasvalues.And,ifwebuild

therightorganizationwithvalues,itwilldoremarkablethings.Butthatisourcreation,nota

product.Allthatstuffchanges.”

And,aswestartedlookinginsidetheseorganizations,andwewerestudyingthem‐‐And,I

wasnotparticularlyfamiliarwithDrucker’sworkindepth‐‐keptcomingacrossthesenotes.

And,Ikeptpicturing,like,DavidPackardstandingupintheearlyformativedaysofHP,

wavingthepracticeofmanagement,andgivingasermontoallofthepeopleaboutwhat

you'regoingtodo.

IfyougobackandyoulookattheoriginalstatementofHewlettPackardobjectives,written

byDavidPackardin1957,beforetheywentpublic‐‐Becausehesaid,“We’regoingtohave

pressuresofthemarketsifwegopublic.So,whatwehavetodois,wehavetobeveryclear

whatwearebeforewehitthatpressure.”Writesdownwhatlaterbecamethebasisofthe

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HPway,butwasreallywhathecalledthesetenobjectives,objectives.Where’stheword

“objectives”comefrom?RightfromDrucker,right?

Hewritesthemdown.And,ifyoureadthosetenpoints,theyarestraightoutofThePractice

ofManagement.ItshouldnothavebeentheHewlettPackardCompany.Itshouldhavebeen

theHewlettPackardDruckerCompany,HPD.[laughter]Andthiswastrueacrossmanyofthe

companiesthatwestudied.

And,Irealizedtherewastheseintellectualfingerprints,atpivotalstagesofthese

enterprises.And,aswewerestrugglingwithwhattonamethebookthatcameoutofthis,

wetossedaside125titlesinfrustration.Ourpublisherwasgoingnuts,becausewejustkept

vetoingallofourtitles.Finally,Ijustblurtedout,oneday,“Whydon’twejustnameit

DruckerWasRightandwe’redone?”[laughter]AndweendedupcallingitBuiltToLast,

which,ofcourse,hewas.

Theinterestingthing‐‐wetalkaboutthisquestionofDruckernow,morethanever.Idon’t

believethatthatisjustaslogan,inanyway.Itisanempiricalfact,fromourresearch.Thisis

notaperspective.It’snotaphilosophy.Itisanempiricalfactthat,ifyoulook,systematically,

atthosethatbecamegreatincontrasttothosethatdonot,andyoulookatthosethatwere

greatthatlostit,thatfell,andyouaskthequestion‐‐twochoices:Thosethatfall,fall(a)

becausetheyfailedtolearnthenewstuffasitcomesalong;or(b)becausetheyfailedto

implement,withexcellence,thetimelessprincipleswealreadyknowtobetrue.Theanswer

isveryclearly(b).

Itisveryhardtoarguethatthefinancialcrisiswewentthroughisbecauseallofthefinancial

institutionsweren'tadheringtofundamental,sound,disciplinedmanagement.[laughter]I

believethatPeter’simpact‐‐andothersmayhavedifferentviews.Thisisjustmypeculiar

lens‐‐derivesnotjustfromthespecificideas,butfromhisapproachtoideas,anapproach

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thathashadahugeinfluenceonthewayIliketothinkaboutideas,andothershavehadto

thinkaboutideas.

And,Ithinkthisapproach,atleastthepartthatkindofjumpedoutatme,hasfourpartsto

it.Thefirstis,(a),numberone,hewasdeeplyempirical.And,whatImeanby“empirical”is

notnecessarilyquantitativedata.WhatImeanis,yougooutandyoulook‐‐ashealways

talkedabout‐‐lookoutthewindow,seewhat’sactuallyoutthere.Don’ttrytothinkwhat

theworldshouldbe.Lookatwhattheworldactuallyis.And,baseduponthatempirical

observation,thentoderiveinsights,youlookoutthere.Thenyouderivetheoryratherthan

derivingtheoryandlookingoutandtryingtomaketheworldfityourtheory.

Ithinkthisiswhyhealwayslovedtointeractwithpeople.Bobtoldthestorylastnightabout

meetingwiththeearlymegachurchleaders.Theyweren'tcalledthatatthattime.And,it’s

because,Ithink,that’swherehewasgettingempiricalevidence.And,whenIaskedhim,I

said,“Whydoyouconsult?Whydoyouworkwithcompanies?”Hesaid,“That’smy

laboratory,right.”That’sempirical,hands‐on.

Oh,andbytheway,ontheempirical,ifyoulookattheothergreatthinkers,likeDarwin,

theywerealsoempirical.Imean,youreadpagesandpagesandpagesaboutpigeons,but

fromwhichcomesasingleelegantidea.ThatwasDrucker’sapproachaswell.

Numbertwo,westartedfirst,andalways,withresults,askingasimplequestion,“What

actuallyworks?”Andthen,askingthequestion,“Whydoesitwork?”IrecallaconversationI

hadwithafacultymemberwhenIwasteachingatStanford.And,wewerediscussingpeople

thathadinfluencedourthinking.AndIsaid,“Well,IreallyadmirePeterDrucker.”And,this

facultymemberhadanabsolutelyremarkableresponse,whichwas,hekindofwrinkledhis

noseinthiskindofdisdainfulresponse,andsaid,“Drucker?Oh,buthe’ssopractical.”

[laughter]IthinkPeterDruckerwouldhavelovedthat.[laughter]“He’ssopractical.”

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But,itwasneverjustkindofthedetailsofthemoment.IfyoupickupacopyofConceptof

theCorporation,youdon’tgointoitandsay,“Thisisahow‐tobookonhowtobuilda

corporation.”Itwasbygoingintotherealempiricalandtherealpracticalaspectsofthings,

butthenzoomingwayout,andaskingthebigquestion,“Whatistheroleofthecorporation

andtheevolutionofsocietyatthisstageofhumanhistory?”Soyougetthiswonderfulblend

ofpracticalandverybigquestions,whichbringsmetothethirdaspectofhisapproach.

Hehadthecouragetoasktheaudaciousquestions.IrememberaconversationIhadwith

anotherrolemodelandpersonIadmiredgreatly,JohnGardner,whowroteSelfRenewaland

onleadershipandSecretaryofHealthEducationandWelfareintheJohnsonadministration.

AndJohnGardner,whenIwastalkingwithhimaboutdoIwanttodoafulltraditional

academiccareerandendupdoingatypeofresearchthatwouldleadmeintothatkindof

normalpath,hesaid,“Thatwouldbefine.It’dbeagooduseofyourbrain.But,beawareof

whathastendedtohappen.Bewareofthetendencytoanswerquestionsofincreasing

irrelevancewithincreasingprecision.”[laughter]

And,IbelievethatwhatDruckerhadthecouragetodowastosay,“Youknow,notall

importantquestionscanbeansweredwithincreasingprecision.Butitdoesn’tpreventyou

from,intheend,beingright.”And,hisapproachwastoaskincreasedquestionsofincreasing

significancewithincreasingempiricalrigor.AndIbelievethat‐‐myviewistherewasone

overridingquestion,whichis,howdowemakesocietynotonlymoreproductive,butmore

productiveandmorehumane?

Andthen,finally,thegreatsignatureofitall‐‐andI’llreturntothisattheend,becauseI’m

goingtogotothequestionsaspecthere‐‐isthateverythingwasinfusedwithatremendous

compassionanddeepconcernforthewellbeingoftheindividual.Youknow,ifyoubuilt

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companiesthatdestroyedpeople,ifyoubuiltwell‐managedorganizationsanddestroyed

humanbeingsintheprocess,thiswouldbeafailure.

And,I’mgoingtoreturntotheindividualaspect,here,maybetowardstheend.Showing

hands,howmanyyoungpeopledowehavehere?IhavetobecarefulhowIdefine“young.”

IkeepchangingthatasIgoalong.Okay,I’mnotgoingtosayyoungorold,buthowmanyare

undertheageof30inthisroom?Wonderful.Attheend,youandIaregoingtohavealittle

chat,atleastforabit.IhavesomethoughtsforyouI’vebrought.

Okay.So,whatIwouldliketodoistospendafewminutesinthisnotionoflookingforward,

teeingupsomequestions.Idon’tknowifIhaverealgoodanswersforthesequestions.But,

whatmightbequestionsthat‐‐Idon’tknowifPeterwouldaskthemtodayornot,but

they'requestionsthatoccurredtomeaswelookforward.I’mgoingtosuggestthreeorfour

ofthem,dependingonmytime.And,I’vebroughtaboutten,butwe’llhaveenoughtimefor

threeorfour.

Thefirstquestionthatoccurstomeis,howdowebuildlegionsoflevelfiveleaders?And,as

wehaveengagedinourresearch,whatwedoiswe’realwayscomparingthosethatdid

somethingexceptionalandbuiltagreatcompany,incontrasttoothersthatdidnot.And,I

hadalways,attheverybeginningofthatprocess,discountedtheroleoftheindividual

leader.Thathadalwaysstruckmeasagreatpluckfigure,right.Itbasicallysaid‐‐Whenwe

saidit’sallleadership,webasicallyweresayingwe’reignorant.

Because,whatwesayis,“Well,webelievetheanswerisleadership.Ifsomethingwas

successful,itmusthavebeengreatleadership.”Wewentinacircle.Whatdidwelearn?And

so,Isaid,tothegood‐to‐greatresearchteam,aswewereembarkingontheresearch,“We

willnothavealeadershipansweringood‐to‐great,”whichis,ofcourse,highlyconduciveto

theirfreedomofthought.And,Ihavethisstrangegeneticneedtosurroundmyselfwith

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youngpeoplewhoreallydon’tcarewhatIthink.And,asthegreatprofessorHalLeavitt(?)

usedtoliketosay,thebeststudentsarethosewhoneverquitebelievetheirprofessors.

So,onedayIwalkedintotheresearchteammeeting,thewholeteamhadjoinedhands.And

Ithought,“Well,that’salittledifferent.What’sup?”Andtheysaid,“Today,Jim,istheday

we’vedecidedtotellyouthatyouarewrong.”“Whatabout?”“Aboutthisanti‐leadership

biasthatyouhave.See,ifwelookatthecompaniesthatreallymadethesegood‐to‐great

leaps,youcan'ttaketheleadersoutoftheequation.Imean,toremoveCorkWalgreenfrom

theWalgreen’sstory,orColemanMachler(?)fromtheGillettestory,orDickCooleyfromthe

WellsFargostory,istoignorethedatayoutellustopayattentionto,nottoyou,weinvoke

thatheretoday.Youarewrong.”

And,Ipushedback,andIsaid,“Yes,butwhataboutthecomparisoncompanies,the

companiesthatdidn’tmakeit?Theyalsohadleaders.Theyalsohadleadership.Would

anyoneontheteamliketoarguethatLeeIacoccawasnotaleader?”Chrysler’sa

comparisoncompany.AnybodywanttoarguethatJackEckertofEckertwasnotaleader?

ButEckertwasacomparisoncompany.Youcannotsaythatthedifferentialwasleadership.

Theybothhadleadership.It’slikeanequation,numerator,denominator,crossesout,goes

away,wroteitonthewhiteboard,satdown,andsaid,“Let’sgodosomethinguseful.”

[laughter]

Andtheteam,theirhandstightened.Andtheysaid,“Wethoughtyouwouldsaythat,and

wedidourhomework.”And,thisiswhentheresearchteamhadareallyremarkable

empiricalobservationthatledtoaninsight.Yes,bothsetsofcompanieshadleaders.Butthe

good‐to‐greatleadersweredifferentthanthecomparisons.Theyhaddifferentcloth.And,

thisiswherewehadthisinsightofthelevelfiveleader,thatleadershipishierarchyof

capabilities.Andleveloneisaboutindividualcapabilities.Leveltwoisaboutyourabilityto

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playwellwithothers,right,teamcapabilities.Levelthreeisgood,competent,effective

management.Levelfouris,then,toblendoutwiththeabilitytosetdirectionandtolead.

But,thereisalevelthattiesthemalltogether.Andthefive,thesignatureofthefivewas

theirhumility.Imean,thiswasanempiricalobservationthat,whatseparatedthetruly

exceptional,thetruegreatwinnerswhodidthis,wasnottheirgreat...(inaudible),itwas

theirhumility,defined,really,asanabilitytochanneltheirambitionintosomethingbigger

thanthemselves.Anditwasn’taboutthem.

So,itwasreallyinterestingtalkingtoRickWarrenlastnight.Imean,thefirstlineofhisbook,

right,It’sNotAboutYou,wellthat’sareligiousbook.We’redoinganempiricalstudy,

drawinguponthousandsofyearsofcombinedhistoricalandstatistical,andwe’reselecting

basedonstockreturns.Wefindthesamesentence.Theyunderstood.It’snotaboutyou.

WhenIlookatsomeofthepeoplewhohavebeenassociatedwiththisevent,peoplelike

BobBufordandJohnBachmannandFrancesHesselbeinandRickWarrenandIto’sToyota,

whatdotheyallshareincommon?Theyareexemplarsofthefactthattheyareincredibly

ambitiousbutnotforthemselves.And,thisisthefive.

Iworry‐‐Andmyquestionis,whichwayarewegoingasasociety?Arewegoingdownto

where,increasingly,it’sgoingtobethosewhoareambitiously,primarily,forthemselves,

whowillbethedominantstrain?Or,willitbethelevelfiveswhowillbethedominant

strain?Ifit’stheformer,wegothewayofRome.Sowedon’thaveachoice.

And,whenyoulookinside,aswe’vehadtheprivilegetodo,atevendifficultthingslike

education,wherewehadtheprivilegetostudywhatseparatedschools‐‐TheCenterforthe

FutureofArizonadidthis.Ijusthappenedtobesortofthethesisadvisor,lookingatschools

inpoorLatinoneighborhoods,publicschools,withalloftheconstraintsofpublicschools.

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Andyet,somemanagedtobeattheodds,andtoover‐perform,andtodeliveroutstanding

educationalresultsforthosekids.And,youcomparethemtootherschoolsthatareinthe

exactsamecircumstances,withtheexactsameconstraints,andtheexactsameteachers’

unions,andtheexactsamelimitedbudgets,andthesamekindsofcommunities,whodon’t

over‐perform,theanswercannotbetheircircumstances.And,whatwasreallydifferentwas

that,ineveryoneoftheirschools,therewasalevelfiveleaderlikeJulieTatePeach,who

tookresponsibilitytomakeherschoolinYuma,Arizona,apocketofgreatnessthatwould

deliveroutstandingresults.

And,IgotintoanargumentwiththeSenatoroftheUnitedStatesofAmericaatasessionI

hadaprivilegetodowithagroupofSenatorsabouteducation.And,itwasanargument

backandforth.And,thisSenatorwasarguing,“Themostimportantthingistoincreasethe

budget.”Andmyresponseis,“Ifyouincreasethebudgetthreefold,butyoudon’thavean

armyofJulieTatePeaches,itdoesn’tmatter.”

HowdowehaveaWestPointforeducation?Howdowehavelevelfiveleadersdeployed

intothoseprincipals?That’showwemakeitwork.And,howdowebuildarmies?And,of

course,that’swhatClaremontisallabout.Now,letmegiveyouahopefulsidebecauseI

thinkthere’salotofdarksidetothat.It’sprettyhardtoarguethat,whatwe’vewatchedin

thelastyear,isprincipallyplayedoutbecauseofpeoplewhoweren'tambitiousfor

themselves.[laughter]

I’mdeeply‐‐Ihavegreatfaithinourself‐correctiveability.And,perhaps,wedon’tevenjust

havelevelfiveleaders,butthisyounggenerationcomingup,astheChiefofStaffofthe

ArmysaidtomeatasessionatWestPoint,“Thisisthemostinspiredandinspiring

generationtocomethroughWestPointsince1945.Ishouldgetoutoftheway,letthem

lead.”

JIM COLLINS 11_7_09

PAGE 16

Maybewehavealevelfivegenerationinthemaking.And,thesoonerwecangetthatlevel

fivegenerationintopositionsofresponsibilityandpower,thebetteroffIbelievewewillbe.

So,myfriendswhoareunder30,we’llgetoutofyourway.But,thereisachallenge,an

issue.

And,whatIworryaboutforthisupandcominggeneration,whatIworryaboutforthis

wonderfullyidealistic,collaborative,inspiredgeneration,isthattheygrewupinahistorical

anomaly.Howmanytimesinhumanhistorydowehavethecombinationofglobalstability,

whichwasprovidedbyhavingtwosuperpowersandthenone,andalmostunbroken

prosperityatthesametime?Thisisnotthenormalmodeofhistory.200A.D.Rome,500

B.C.E.Greece,2000B.C.E.Egypt‐‐Icangothroughafewinhistory.Butit’snotthenorm.The

normisusuallyinstability.Anunbrokenprosperityisnotalsothenorm.

So,theygrewupinkindofanartificialtime.Andso,mynextquestionis,howdoweprepare

ourselves?And,howdoestheyounggenerationprepareitselfforthecoming,theferocious

instabilitythatisabouttodescenduponus?I’dlikeyoutopicturewakingupatbelow

MountEverest,abasecamp.And,abigstormcomesblastingthroughthevalley.And,you

canhunkerdowninyourtent.And,whenthestormclears,youcanemergeandyoucango

climbingagain.

But,whathappensif,insteadofbeinginthesafetyandsecurity,thestabilityandprosperity

ofbasecamp,youwakeupasavulnerablelittlespeckat27,000feetonthesideofthe

mountain,wherethestormsarebiggerandfaster,everythingmoreuncertain,everything

moreoutofcontrol?There,youarenotprepared.There,youarenotpsychologically

prepared.Youarenotphysicallyprepared.Thereyoumightbeinrealtrouble.

JIM COLLINS 11_7_09

PAGE 17

And,whatwehavejustbeengoingthroughmightbemoreofawakeupcallthatwe’reat

27,000feet.And,we’reveryunlikelytobeabletogobacktothenice,safestabilityofbase

camp.We’reuponthemountain.And,if,infact,thelast30yearsweretheanomaly,then

we’regoingtobeonthatmountain.Now,I’mconfidentprosperitywillreturn.It’swhatwe

knowhowtodo.I’mnotatallconfidentthatstabilityisgoingtoreturn.

And,speakingasanAmerican‐‐andIknownoteveryoneinthisroomisAmerican‐‐thisis

whereIthinkweareparticularlyexposedtothecompetitorsfromoutsidetheUnitedStates.

WhenImeetwithmyfriendsfrom,say,Russia‐‐Hadagroupcometomylaboratoryfrom

Russia.They'reintheirlate30s/early40srunningthisgiantcompanyinRussia.

And,yourealizethat,intheirlateteensor20s,theywokeuponemorning,andtheirentire

worldhadevaporated.Thetenetsthattheyhadgrownupwith,gone.Theeconomydoesn’t

work.TheentireSocialsystemoverturned.Now,they’vegottolearnhowtooperateinthis

othermode.And,whatyourealize,whenweweretalkingabouttheeconomiccrisis,they

said,“Oh,wedon’tworrythatmuchabouttheeconomiccrisis.Wehaveadifferentterm.

Wejustcallitneweconomicconditions.”[laughter]

And,ItalktomyfriendsfromBrazil,whogrewupwiththingslike30%amonthinflationat

times,whereyoualwaysmakesurethatyoutakeacabnotabus.Because,yousee,youpay

forthecabrightattheend.Andinflationhelpsyouoverthecourseoftheride.[laughter]Or

myfriendsfromArgentina,whosayinArgentina,eventhepastisunpredictable.[laughter]

Here’smypoint.PeopleinIndia,Brazil,Russia,emergingAfrica,they’vealreadybeen

climbingat27,000feetandtheyknowhowtodoit.Andwearegoingtohavetolearnhow

todoit.

JIM COLLINS 11_7_09

PAGE 18

Now,inspeakingtoouryoungfolksonthis,Iwouldliketogiveyouawayofthinkingthat

hasbeenenormouslyhelpfultome,thatcamefromthegood‐to‐greatresearchfordealing

withgreatdifficulty.Anditwas,whatwecametocalltheStockdaleParadox.Andthe

StockdaleParadoxwastaughttousby‐‐Whenweweredoingthegood‐to‐greatresearch,or

triedtomakesenseoftheCEOs.

And,indoingthat,Ijust,bychance,happenedtogettoknowAdmiralJimStockdale,who

wasthehighestrankingmilitaryofficerintheHanoiHilton,shotdownin1967,wasthere

until1974.Theycouldpullhimoutatanytimeandtorturehim,andtheydid.Hewas

torturedover20times.

And,IhadtheprivilegetogettoknowAdmiralStockdale.And,weweregoingtothefaculty

cluboneday.And,Ihadreadhisbook,InLoveAndWar,whichwaswritten,inalternating

chapters,byhimselfandhiswifeabouttheiryearswhenhewasinthecamp.And,Igot

depressedreadingthebook,becauseitseemedsobleak.Itseemedsodifficult.Itseemed‐‐

Youknow,it’slikewecanallendureanythingifweknowit’sgoingtocometoanendandwe

knowwhen.

But,whatifyoudon’tknowifit’severgoingtocometoanend?Andyoucertainlydon’t

knowwhen.So,IaskedAdmiralStockdalehowhedealtwiththat.Andhesaid,“Youhaveto

realize,InevergotdepressedbecauseInever,everwaveredinmyfaiththat,notonlyI

wouldgetout,butIwouldturnbeinginthecampintothedefiningeventofmylife.That,in

retrospect,Iwouldnottrade.”

Later,whenwewereupthehill,Iaskedhim‐‐Isaid,“AdmiralStockdale,whodidn’tmakeit

outasstrongasyou?”Andhesaid,“Easy.Itwastheoptimists.”Isaid,“Theoptimists?You

soundedoptimistic.”Hesaid,“No,Iwasnotoptimistic.IneverwaveredinmyfaiththatI

wouldprevailintheend,butIwasnotoptimistic.”Isaid,“What’sthedifference?”“Well,the

JIM COLLINS 11_7_09

PAGE 19

optimistsalwaysthoughtwe’dbeoutbyChristmas.And,ofcourse,Christmaswouldcome

anditwouldgo.Andthen,weweregoingtobeoutbyEasterandThanksgiving.Andthen,

Christmaswouldcomeagain.Andtheydiedofabrokenheart.”

Andthat’swhenAdmiralStockdalegrabbedmebytheshouldersandsaid,“ThisiswhatI

learned.Whenyou'refacing‐‐you'reimprisonedbygreatcalamity,bygreatdifficulty,by

greatuncertainty,youhaveto,ontheonehand,neverconfusetheneedforunwavered

faith,thatyouwillfindawaytoprevailintheend,with,ontheotherhand,thedisciplineto

confrontthemostbrutalfactsweactuallyface.Andwe’renotgettingoutofhereby

Christmas.”

AsIspeaktothiswonderful,upandcominglevelfivegeneration,andIwashavinga

conversationwithafriendofminewho’sgoingtoberunningfortheU.S.Senate,andIasked

himwhy.Hesaid,“Nationally,asweencountergreatchallenge,wemusthavetheStockdale

Paradox.”And,asyougethitbythethingswemightgethitby,neverlosefaith,andnever

denythosebrutalfacts.That’sthestartingpointforourpreparation.

Tworelatedthoughtsonthatparticularquestion.AnditreallytiestotheDruckerSchool.It

tiestotheDruckerInstitute.IttiestoClaremontandittiestoPeter.Imentioned,earlier,the

workBuilttoLast.Anditwasveryinteresting.Wewerestudyingenduringgreatcompanies,

incontrasttoothers.

Wentbackrecentlyandrealizedweselectedthestudysetforthatstudyin1989,two

decadesago.All18oftheBuilttoLastcompaniesarestillstand‐alone,independent,and

almostallofthemverysuccessfulcompaniestoday.Ifyoutookarandomsampleoflarge

publiclytradedcompanies20yearsago,whataretheprobabilitiesthatall18inyourrandom

samplewouldbestand‐alone,independent,andlargelysuccessfultoday?Thenumberis

less‐‐Thepercentageisabout0.2%probability.

JIM COLLINS 11_7_09

PAGE 20

Notonlythat,15ofthe18BuilttoLastcompanieslivedthroughthe1930sDepression.What

dotheyteachus?Whathasenabledthemtohavethat?Whatdidwefindthatseparated

them?Whatwefoundisthatwhatreallyseparatedthemwasnotnecessarilythattheyhad

smarterstrategies,althoughtheyoftendid,orthattheyweresortofmorefinanciallysavvy,

althoughtheyoftenwere.

Itwasbecausetheywerefounded,firstandforemost,andbuiltalwaysonarock‐solidsetof

corevaluesthatarenotopenfornegotiation.And,ifyoulookatwhatgavethemthereason

tostruggle,thereasontofight,thereasontoendure,itwasn’tstrategic,itwasvalues.And

thatiswhatthisschoolteaches.Thegreatironyis,peoplethinkthatvaluesaresoft.I’ve

neverunderstoodthatidea.

Thesecondpointiswehavenowdonetwodecadesofresearch,studyingthosethatdowell

incontrasttothosethatdonot,acrosssixdifferentstudies,twointhesocialsectors,fourin

business,7,000yearsofcombinedcorporatedata,andalldifferentkindsoflensesand

industriesandsoforth.Iwouldliketosuggest,maybeevenassertasanempiricalfact,

somethingthatstandsout.

And,aswefacethisdifficultworldthatwe’reheadinginto‐‐notthatwe’releaving,we’re

headinginto‐‐theevidenceisoverwhelming.Whetheryouprevailorfail,endureordie,

whetheryou’vebuiltsomethinggreat,whetheryoubuiltgreatnessoutofcalamityorfrom

scratch,dependslargelyonwhatyoudotoyourselves,notonwhattheworlddoestoyou.

And,somethingthatPeterhadalwayssaid,butnowwehaveseenempiricallyinour

research,thereisnoquestionthat,nomatterwhattheworldthrowsatus,ourdestiny,our

fate‐‐andthisisanempiricalfact‐‐lieslargely‐‐maybenotentirely,butpredominantlyin

ourownhandsfromourowndisciplinesandourownchoices.

JIM COLLINS 11_7_09

PAGE 21

Mythirdandprobablylastquestion,soIhavetimetospeaktoouryoungpeopleherealittle

bit‐‐butitleadsintothat‐‐Howdoweincreasethepercentageofpeopleontheplanetwho

findandlivethethreecirclesoftheirpersonalhedgehogconcept.Okay,sowe’lljustkindof

gointotheideaofmanagingyourself,butthenscalingitupthroughorganizations.

Ifyouthinkabout,sortof,howpeopleapplythemselves,whenwegobackandwelookat

thegood‐to‐greatdataandsomeoftheotherdata,wefindthatthere’sthesethreecircles.

And,youputyourenergiesinthemiddleofthreecircles.Andthefirstcircleiswhatyou're

passionateaboutandwhatyoulovetodo,andwhatyoustandfor.Andthesecondcircleis

whatyoucanbethebestat.Andthethirdcircleiswhatdrivesyoureconomicengine.And

youfocusyourenergiesthere.

But,let’sdropthatdownalevel,totheindividual.Howmanyofthefolksunderage30in

herehavehadcrossyourmindthethought,“IwonderwhatI’mgoingtodowithmyself.”

[laughter]Okay.I’dlikeyoutothink,then,aboutfindingyourownthreecirclesatan

individuallevel,whichisthinkaboutitthisway.Imaginethatyoucouldengageyourenergies

andyourtimedirectlyinthemiddleofthreetests.

Firstissomethingforwhichyouhavegreatpassion,thatyoulovetodo,andthatabsolutely

reflectsyourvalues.And,whenyouwakeupinthemorning,thereisthissenseof,“My

goodness.EvenifI’mgettingpaidforthis,IwouldwanttodoitevenifIwasn’tgettingpaid

forit.”Now,imagineif,inadditiontothat,youcouldmarryittoasecondcircle,whichis

findingwhatyou'regeneticallyencodedfor.Andthere’sabigdifferenceinwhatyou'regood

atandwhatyou'regeneticallyencodedfor.

Idiscoveredthisasayoungperson.Iwentofftocollege.IthoughtIwouldbea

mathematician.Ihaddonewellonmathtests.But,whenIenteredcourseslikerealanalysis,

JIM COLLINS 11_7_09

PAGE 22

Imetthosewhoweregeneticallyencodedformath.[laughter]Notbeingoneofthem,I

neededtofindanotherversionofmythreecircles.[laughter]

Andnow,imaginethethirdcircle.Asyou'reengagedinsomethingthatmakes‐‐thatisof

greatvalue,it’sofeithersocialoreconomicorbothofvalue.Itmakesacontribution.You

areuseful.Now,imagineyouhaveallthree.“Man,I’mpassionateaboutthis.Ilovetodoit.

Itexpressesmyvalues.I’mgeneticallyencodedtodoit.WhenIdoit,Ifeellikeafishin

water.Andthen,finally,third,I’museful.”

Now,whatpercentageoftheworlddoyouthinkhasthat?Fivepercent?Maybenoteven.

Whatwouldhappentotheworldif‐‐Let’ssayit'sthreepercent‐‐ifwethenmadeit20%of

peoplewhoaredoingwhatthey'repassionateabout,geneticallyencodedfor,andare

useful,areinpositionsofrealcontributionandvalue?

Now,Idon’tknowtheanswerofhowwemakethatpercentagegoup.But,linkingbackto

theideaofMazlo(?),howdidhedescribeselfactualization?Itwasn’thangingoutonthe

beach.[laughter]Hedefinedselfactualizationasdiscoveringwhatyouweremeanttodo

andcommittingtotheardorofpursuingitwithexcellence.Thepurposeoffreesociety,I

wouldsuggest,istosystematicallyincreasethepercentageofpeoplewhodoexactlythat.

Andthen,theycandoitforverylongperiodsoftime.

Wewereoverattheinstituteyesterday,andthere’sthisbookshelfwithallofPeter

Drucker’sbooks.AndIaskedthequestion‐‐Bobmentionedthislastnight‐‐“Whichbook”‐‐

becausetheywerelaidoutchronologically‐‐“didhewritewhenhewas65?”Management.

And,ifyoulookontheshelf,wheredoesitfall?Onethirdofthewaythrough.Nottwo

thirds,onethird.Twothirdscomeaftertheageof65.Isn'tthatjustwonderfuland

intimidating?[laughter]

JIM COLLINS 11_7_09

PAGE 23

Asalastquestion‐‐andIdon’tneedtospendalotoftimewithit‐‐Aswelookatpeoplewho

aregettingolderandolderandwereyoungat60and70and80,howdowereversethis

tendencytothinkthat,at65,ourworkisbehindus?Ifwelookatthatbookshelf,actuallywe

shouldlookatitas,whenwehit65,everythinghasbeenapreparation.Andonlyonethird

ofourbestworkisdone.

WhenIaskedPeterDrucker,whenhewas86,whichofhis26books,atthatpoint,hewas

mostproudof,hesaid,“I’mstillworkingonit.Thenextone.”[laughter]Now,withinthat,I

willleaveonequestionforthosewhohavemovedin,whatBoblikestothinkof,ashalftime.

Ithinkthereisaquestionthatdoesdeserveananswer.ItmightbeonethatIchannelsome

ofmyenergiesinto.Forthosewhoarethinkingaboutbeingusefulafterthey’vebeen

successful.Iwasatagroupgatheringofphilanthropists,whoweresuccessfulbusiness

peoplethathavemovedintophilanthropy.AndIbroughtaquestion.Whatsystematically

separatessuccessfulbusinesspeoplewhobecomegreatandeffectivephilanthropistsfrom

successfulbusinesspeoplewhobecomemediocrephilanthropists?Theyhadneverthought

aboutthequestion.

Theythoughtitwassimplygoodenoughtobecomeaphilanthropist.Iwouldsuggestitis

not.Andyet,theinterestingthingis,wedon’treallyknowwhatseparates.Withonething

thatcameoutoftheconversation,thosewhoarethegreatandeffectivefocusedonresults

andnotoncredit.

Andso,aswebringmytimetoaclose,Iwouldliketonowspeaktoouryoungpeopleand

giveyouten“to‐dos”toconsider.Thoseofyouwhoare40yearsyoung,50yearsyoung,60

yearsyoung,youcanalsoconsiderthese.But,Ispecificallywanttospeaktoouremerging

levelfivegeneration.And,theseareforyourconsideration.Thebeststudentsarethosewho

neverquitebelievetheirprofessors.

JIM COLLINS 11_7_09

PAGE 24

Numberone.Buildapersonalboardofdirectors,peopleselectednotfortheir

accomplishmentbutfortheircharacter.Thepeopleyouwouldbeembarrassedtocometoif

you’rethinking,“Isthisreallytherightthingtodo?”thatyourealizethat,evenaskingthem

wouldbeembarrassing.Irememberwhenthepersonalboardideaoccurredtome.Iwas25

yearsold.IdidnothaveafatherwhoIlearnedanythingfromexceptbadhabits.And,I

alwaysresentedthefactthatmyclassmatesincollegecouldcalltheirdadandaskforadvice.

AndIthought,“Wow,thatisjustodd.”Andthen,Ibegantoresentit.

Andthen,Ifinallyrealized,well,ifIdidn’thaveafather,I’llmakeone.I’llcreateone.So,I

startedreadingbiographies.IfiguredifIdidn’tgetadad,I’lljustinventone.And,asreading

thosebiographies,IwasdrivingdownElmStreetinPaloAltooneday.And,Iwaslisteningto

theseinterviewswiththegreatPresidentHarryTruman,donebyMerleMiller.

And,therewasthiswonderfullinewhereHarryTrumansays,“Ifyoudon’tknowthe

differencebetweenrightandwrongbythetimeyou're30youneverwill.”And,Ipulledoff

thesideoftheroad.I’mpanting,“I’m25yearsold.I’vegotfiveyearstofigurethisout.”

[laughter]Andhencewasborntheideaofthepersonalboardofdirectors.

Yourpersonalboarddoesnotalwaysneedtoknowthey'reonyourpersonalboard.Peter

Druckerwasonmypersonalboardandneverknewit.Andhewasnotselectedforthat

because,inmymind,hewasthegreatestmanagementthinker,butsimplybecausehewas

oneofthegreatestpeople.

Numbertwo.Pleaseturnoffyourelectronicgadgets.Notforothers,butforyourself.

Effectivepeopletaketimetothink.Beginthedisciplineofputtingwhitespaceonyour

calendar,wherethereisnophone,noemail.Iwasgoingtosaynofax,buttheydon’teven

havethatanymore.NoTwitter,noemails,noconnections,andengageinthisglorious

JIM COLLINS 11_7_09

PAGE 25

pocketsofquietude.DoyouknowthatRickWarrenreadsabookeverysingleday?Abooka

day.Abookaday,365daysayear.Heread1,000booksinthreeyears.

Numberthree.Thiswouldbeagreattimeinlifetoworkonyourthreecircles,andperhaps

considertheideaofyoustudyingyourselflikeabug,right,andofmakingempirical

observationstosay,“Whatdoesthisbugdo?Whatisthisbugpassionateabout?And,what

isthisbugencodedfor?”Andwithnojudgment.Don’tjudgeandsay,“Thisbugshouldbe

betteratmath.”Nonjudgmental,empiricalobservationofwhatyoureallyarepassionate

aboutgeneticallyencodedfor,andwhereyoucanbeuseful.And,getinputfromthosewho

loveyou,whoknowyouasempiricaldataonyou.

Numberfour.Whatisyourquestions‐to‐statementsratio?And,canyoudoubleit?John

Gardner,anothermemberofmypersonalboard,broughtmeintohisofficeonedayand

said,“Itoccurstome,Jim,youspendwaytoomuchofyourtimetryingtobeinteresting.”

[laughter]“Whydon’tyouchannelyourtimearoundbeinginterested?”Thattenseconds

changedmylife.

Imaginegoingintoeverysituation,notwithhowtobeinterestingbuthowtobeinterested,

howtoaskquestions,howtolearnfromeverybodyyoumeet.Whatisyourquestions‐to‐

statementsratio?And,canyoudoubleit?

And,numberfive.Forthosewhohavedealtwithhealth,thisonealso,then,reallyjumps

out.And,atsomepoint,allofuswill.Addthequestion,aspecificquestion,toliveby.Ifyou

wokeuptomorrowmorninganddiscoveredthatyouhadinherited$20milliondollars,and

youalsodiscoveredyouhadaterminaldiseaseandyouonlyhad10yearstolive,what

wouldgoonyourstop‐doinglist?

JIM COLLINS 11_7_09

PAGE 26

Numbersix.Startyourstop‐doinglist.Howmanyherehaveato‐dolist?Howmanyhavea

stop‐doinglist?Whenweweretalkinglastnight,RickWarrenandI,andPeterDruckerhad

askedthesamequestion,always,ofhim,everytimehecame,not“Whathaveyoudone?”

but,“Whathaveyoustoppeddoing?”BecausesomeonelikeRickWarrendoesn’texactly

haveashortageofenergytodostuff.Andtherealtaskistoalwaysbeclearaboutwhatto

notdo,whattostopdoing.

Numberseven.Unplugtheopportunitiesthatdistractyou.Justbecausesomethingisaonce‐

in‐a‐lifetimeopportunityisafactbutnotareason.Ifitdoesn’tfityourthreecircles,

remembertherewillalwaysbemanyonce‐in‐a‐lifetimeopportunities.

Numbereight.Howdowebuildthatlegionoflevelfiveleaders?Findsomethingforwhich

youhavesomuchpassionthatyouarewillingtoendurethepain.

Numbernine.Greattimeoflifetoarticulatethevaluesthatyouwillnotcompromise.Asa

guidingconsolation,rememberthisthingaboutthe18andthe15companiesandwhatheld

them?Well,thesameappliesinindividuallevel.Ifwe’regoingtogothroughwhateverwe’re

goingtogothrough,what’stheguidingconstellation?Itstartsnotfirstwithourstrategies

butwithourvalues.

Andnumberten.Preparetolivealifewhere,atage65,you'reonethirdofthewaythrough

yourwork.

So,Iwouldliketoclose,inthelastfiveminutes,backwithPeter.Imentionedearlierhis

concernandcompassionfortheindividual.Iwasaveryafraidindividualin1994.Iwas

completelyunknown.AllIknewisthatIdidn’twanttofollowatraditionalpath.Iwantedto

carvemyownpath.And,Iwasleavingtheacademicworld,andIwasreallynervousabout

whetherthiscouldwork.

JIM COLLINS 11_7_09

PAGE 27

And,IhadmetagoodfriendofminewhoknewPeterDrucker.And,hesaid,“Whodoyou

admire?”ImentionedPeter.Hesaid,“Well,maybePeterwouldliketotalkwithyou.”I

thought,“Peterwouldn’twanttotalkwithme.Whywouldhewanttotalkwithme?”And

then,onedayIgetthismessageonmymessagemachine,“ThisisPeterDrucker.Callme.”

AndIcallhim.AndI’mcallingfromtheSeattleAirport.AndI’mtalkingintothephone

becausethere’speoplearound.And,Ihearhimyellthroughthephone,“Speakup!I’mnot

younganymore!”SoI’myellingintothephone.[laughter]

Scheduledthisdaytocomedown.Iwillneverforgetthemomentwhenhecametohisdoor.

Hecomestothedoor.Andhereachesoutandgrabsmyhandwithtwoofhis.Andhebrings

meacross,andhesays,“Mr.Collins,Iamsoverypleasedtomeetyou.”HesaysthatbeforeI

haveachancetosay,“Itisanhonortomeetyou.”

Andwesit,asmanyinthisroomhavesat,withhiminthewickerchair.And,youkeep

wantingtoaskPeterDruckerquestions.Butyoudon’tgetachance,becauseheisaskingyou

questions.AndIrememberhowhisbrainworked.Wewenttolunch,andhehadadouble

espressoandaglassofmerlot,preservethecore,stimulateprogress.[laughter]

Andhegavemegreatsolaceofrealizingthat,youknow,hestumbledaswell.Iremember

describingthegreatfrustrationofwriting,andthenhavingtowriteawholechapter,and

thinkingitwasn’tanygood,andthrowingitinawastebasket.Andhelookedatmeandsaid,

“Thatisimmenseprogress.”Irememberthateverytime,now,Ithrowawholechapterin

thewastebasket.Progress.

And,hetaughtmetheidea,thatday,thatentrepreneurshipisnotabusinessidea,it’salife

idea,thatyoucandoapaint‐by‐numberskittolife,oryoucantrytopaintamasterpieceon

ablankcanvas.Attheendofthatday,whichwasoneofthose‐‐Istillhaveallthenotes,of

JIM COLLINS 11_7_09

PAGE 28

course.Buthesaidsomethingthathascomebacktomeoverandoverandoverandover

andoveragain.

Heturnedtomeinthatwonderfullychallengingandlovingway.Andhesaid,“Icanseethat

youareveryworriedaboutyoursurvival.You’llprobablysurvive.”[laughter]“Andyouworry

alot,atyourage,abouthowtobesuccessful.That’sallfineandgood.You’llprobablyfigure

thatout.But,ifyoureallywanttomakegoodonthisdayandthistime,whydon’tyoureally

thinkabouthowtobeuseful?”Andthat’sthelevelfivequestion.Idon’tseemyself‐‐Iseeit

asajourney.Butthat’sthelevelfivequestion.Howdowebeuseful?

Andso,asIsaidearlier,Ibelievetherearetwowaystochangetheworld,thesword

meaningaction,andofthepen.And,whichiswhythisideaofhaving...(inaudible)and

Druckeronthesamebuildingasactionandpen.And,whenyoungpeopleask,“WhatcanI

dotomakeadifference,”Imightsuggest,“Getyourhandsonanorganization.Ifyoucan't

findone,startone.BelikeWendyCopp.Andemploythedisciplines,thedisciplinesof

management,whichwillamplifyyourleadership,applyingeverythingyoucanlearnfrom

Drucker,toleaditwithdisciplinedimpact,tomultiplyyourownpersonalimpact,bya

thousand‐fold,and,therefore,tobeusefultimesathousand‐fold.”

And,ifthereisanybetterwaytohonorthelegacyofPeterDrucker,Icannotthinkofit.And,

hewouldsmile,notbysayinghewasagreatman‐‐whichhewas‐‐butbygoingoutand

makingourselvesuseful.Andso,Ileaveyouwiththat.Pleasegooutandmakeyourselves

useful.Thankyou.

[applause]

IRAJACKSON:Thankyou,Jim,formakingyourselfsousefultousonthisveryspecialday.

Andthankyouforbelievinginfreespeech.[laughter][applause]WhenIcalledJimandasked

JIM COLLINS 11_7_09

PAGE 29

himtobethekeynotespeakerfortheDruckerCentennial,hesaid,“Whyme,Ira?”AndI

said,“Becauseyou'rethelivingDrucker,Jim.”Andhesaid,“NoI’mnot.”SoIsaid,“Well,let

metryamorecompellingargument.Peterwouldwantyoutobethekeynotespeakerathis

Centennial.”

I’mgoingtoembarrasshimalittlebit,now.AndIdon’tmeantobeungrateful,butit’s

genuine.WehavethishugedilemmaatClaremontGraduateUniversityandatthePeterF.

DruckerandMasatoshiItoGraduateSchoolofManagement.Thankstothegenerosityof

somespectaculardonors,wehavethePeterF.Druckerchairinmanagementasaliberalart.

Andithasnotyetbeenfilled.SoJim,Iwanttoremindyouthat,whenyou'repreparedto

comedownfromthemountain,andfromBoulder,wewouldbedeeplyhonored,aswould

Peter,tohaveyouasourveryfirstPeterF.Druckerchairinmanagementasaliberalart.

[applause]

Imentionedthatwe’reasmallorganization.AndIdon’thavethegiftthatIknowwe’ve

preparedforyou,Jim.ButIdowantyoutoknowthatthiswasn’tentirelyafreespeech.In

additiontosomememorabiliaoftheschool,wehaveaplaquewhichsays,onbehalfofallof

us‐‐andIgettosignit‐‐we’remakinga$1,000dollarcontribution,inyourname,toanon‐

profitofyourchoiceasagestureofthanksandappreciationforyourbeingsousefultous

today.

[applause]

END