“…keeping you great”

HEADLINES: (Growth Summit Highlights Day 1, 2 minute interviews)

Best News from Jim Collins — THE question that got the attention of a lot of entrepreneurs and their teams in the room last week was when Jim was asked whether founders were able to actually build a company beyond start-up i.e. would they be able to go from telling time to being clock-builders. And the answer is yes!! In the great companies it was NOT the case that the entrepreneur had to be replaced with professional management. Whew! This was reinforced with Hermann Simon’s research that the tenure of the founder/CEO in Hidden Champions was over 20 years.

Jim Collins’ Top Ten Books — Jim spoke for over 3.5 hours, so difficult to summarize everything, however, here’s a link to a short 2 minute interview I conducted asking him about the specific disciplines necessary to build a great company. There is also a lengthier interview available as well — both in the right hand column at www.gazelles.tv. And below are listed Jim Collins top ten recommended books and top ten courses.

Aubrey Daniels takes on Dan Pink — Aubrey carefully corrected Pink’s assertion that traditional rewards can’t drive creative thinking — here’s the link to a short 2 minute interview where I asked Aubrey to elaborate on his Dan Pink comments (www.gazelles.tv — in the right hand column). More to Aubrey’s point, most reward/compensation schemes are useless in driving performance since they are not reinforcing to the performer, whether it’s highly creative problem solving work or routine process activities. What does work all the time are PICs — Positive, Immediate, and Certain reinforcers. The best example? A scoreboard!! That’s why the BHAG video scoreboard, posted where everyone can see it at Australia-based Red Balloon, is such a powerful tool. Go to right hand column of www.gazelles.tv and look for the “BHAG — Red Balloon” video to see their BHAG scoreboard.

Theme/Celebration for 2009/2010 — and to add a little spice to the Growth Summit, we featured Gazelles customer Wide Open Baja (Christian Hammarskjold, CEO) and one of their $100k high-performance off-road vehicles. If you’re looking for a reward for your team for doing a great job, a place to host your strategic planning session, or a customer appreciation event, it’s one of the best I’ve found. Check out their executive excursions and Horsepower Ranch at www.wideopenbaja.com NOTE: Gazelles isn’t receiving any compensation for this — we’re just enthusiastic supporters since we know how hard it is to come up with fun executive activities and rewards.

Do you need expert assistance constructing a winning plan for 2010? — At the Summit, Jim Collins talked about how the best companies are actively taking advantage of the current market conditions to come out as big winners. Are you playing to win in 2010 or not to lose? Take the time now to block out two days to work with your team to develop a solid plan for 2010. If you need help with your Annual Planning, Gazelles can help you. Contact Cindy Praeger at Gazelles (cindy@gazelles.com or 704-996-0399). If you sign up before December 31, we will help you jumpstart your plan with 1 free month of Rhythm Execution Coaching and Software.

Feedback from Benetton India — and India Tour Dec 1 — 3 — I’ll be leading one day workshops in Mumbai Dec 2 and Bangalore Dec 3. I’ll also be leading another private session for Benetton India — this note from Sanjeev Mohanty, CEO of Benetton India post our first session earlier this year. “During our session we had set up a challenging target of 65% growth for the 3rd quarter. I am happy to share that we have achieved this target! We had launched a very creative campaign across the organization and charged up and motivated everyone with the same and it was a great experience. This is an amazing achievement as most of our competitors are either no growth or even worse, de-growth in business. The most amazing part of the story was that more than the sales guys the supply chain, design, manufacturing and HR guys were chasing the numbers on an hourly basis.” The Rockefeller Habits tools are effective across various cultures.

Jim Collins Top Ten Lists:

Ten Books Jim Collins Recommends

1. Churchill, The Second World War
2. Caro, Master of the Senate
3. Goodwin, Team of Rivals
4. Bernstein, Against the Gods: The Remarkable Story of Risk
5. Lewis, Moneyball
6. Homer, The Iliad
7. Drucker, The Effective Executive
8. Gardner, Self-Renewal
9. Lewis, Assault on Lake Casitas
10. Manchester, Goodbye Darkness

Jim Collins Top 10 Great Courses from the Teaching Company

1. How to Listen to and Understand Great Music by Robert Greenberg.
2. Great American Presidents
3. Argumentation — The Study of Effective Reasoning
4. What are the Chances? Probability Made Clear
5. Economic History of the United States, 1900 – 2000
6. Art Across the Ages
7. Dante’s Divine Comedy
8. Emperors of Rome
9. The History of Ancient Egypt
10. History of Modern Russia + From Yao to Mao — 5000 years of Chinese History

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Click on this link to review the BHAG for Red Balloon in Australia – provides an example of BHAG measurement.

http://www.gazellestv.com/player.cfm?fid=45

Its also a great story of leadership in the non profit word.

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Good to Great author Jim Collins explains how to control company growth, Dont lose your cool: EO DC member Anna Birch on maintaining control in business, and Entering a new international market? Tips from EO Charlotte members Michelle and Vernon Menard

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This interview with Wendy Kopp, founder and chief executive of Teach for America, was conducted and condensed by Adam Bryant.

Q. Tell me about the first time you started hiring and managing people.

A. I was dismal at it. Some people seem to sort of have a gut for hiring. I literally had a gut that was exactly the opposite. So whenever I thought someone would be great, it was sort of the opposite.

You meet people and they seem nice and charismatic and they seem to have presence. And at that time, I was looking for people who could, in fact, build a movement on campuses. So maybe I was going on that, versus diving into people’s past experiences and figuring out how they actually operated. But I have since become obsessed with building the right team.

Q. So how do you hire people now for staff positions?

A. I start with someone’s experience, just to try to understand how they’ve operated in past environments and challenges, to see if they have demonstrated what we would think of as the core values for Teach for America.

Are these people who operate with a relentless pursuit of results, and with a sense of possibility and disciplined thought and respect and humility and integrity? I’ll just dive into people’s pasts and try to look for evidence of that. And then if it seems like someone would be a fit here, based on that, then we’ll actually try to simulate the job.

I used to hire people and then realize within two days whether someone was going to thrive or not. So I said, “Let’s actually find out what we’re going to know two days in, before someone starts.” We just send them a bunch of stuff that they would get otherwise on their first day and say, “Here are the challenges of the day.” And we ask them to write up their answers, and then actually engage with them deeply so that we understand whether they have the skills that a particular role is going to require.

For most of the leadership roles around here, we desperately need people who are going to be visionary thinkers, set big goals and own the responsibility for meeting them.

Q. Talk about the art of goal setting.

A. It’s all about setting a goal that’s at the right intersection of ambitious and feasible. We do see the incredible power of setting stretch goals. But if you set a goal that’s really not within reach, people will just give up on it and you really don’t have a goal. We’ve seen this over and over. I think there’s as much talking down of goals around here as there is of actually saying, “You’re not thinking big enough.”

Q. What are you looking for in teachers you recruit?

A. We’ve done a lot of research on the characteristics of our teachers who are the most successful. The most predictive trait is still past demonstrated achievement, and all selection research basically points to that. But then there is a set of personal characteristics. And the No. 1 most predictive trait is perseverance, or what we would call internal locus of control. People who in the context of a challenge — you can’t see it unless you’re in the context of a challenge — have the instinct to figure out what they can control, and to own it, rather than to blame everyone else in the system.

In this case, there are so many people who could be blamed — kids, kids’ families, the system. And yet you’ll go into schools and you’ll see people teaching in the same hallway, and some have that mentality of, “It’s not possible to succeed here,” and others who are just prevailing against it all. And it’s so much about that mind-set and the instinct to remain optimistic in the face of a challenge.

Q. What else?

A. The ability to influence and motivate others in a sophisticated way — but not necessarily charisma. And that’s an interesting one, right? Because people think of teachers who are born to teach, and you think of all these charismatic folks. Some of the most successful teachers are some of the least charismatic, interestingly. But they have a gift of figuring out what motivates people.

Q. How do you create a sense of mission?

A. Maybe this is easier in our endeavor than some, in the sense that we’re looking for people who are magnetized to this notion, this vision, that one day all children in our nation should have the opportunity to attain an excellent education. And that magnetizes certain people. And so it’s more about them — it’s their vision, it’s not my vision. It’s our collective vision, and so that creates a sense of internal drive at some level.

At one point, I also had this revelation that we were no longer going to go through all this development of strategic plans. We would go through this massive process of creating these endless strategic plans and reviewing them. And I don’t know how many years we did that until I said: “Forget it. We don’t even need to do this anymore. Let’s figure out our priorities and how we are going to measure our success. And then we’re going to let people run after those goals.” And that just freed up all the energy.

That was sort of foundational — then lots of other people came into the picture to figure out how you really create a kind of data-driven organization where, at every level, we’ve got the right goals.

We spent the last year asking ourselves, “Where do we want to be in 2015?” And that led to this analysis of our priorities. How are we going to measure our success? What should our goals be? But it wasn’t a plan for exactly what everyone in the organization should do, or what should even be the key strategies. It was this massive, from-the-ground-up inclusive process that just got everyone aligned with our priorities and goals.

Q. It sounds like you’re really focused on measurement.

A. We had a very rocky start in the first decade, and it was not clear at many points that we were going to actually make it financially. For three years, every single payroll was a huge question. But ultimately that near-death experience led us to see the power of really clear, measurable goals. We realized the only way out of this mess was to raise money in the communities where we’re placing teachers.

Fund-raising is so measurable, and it’s easy to manage that system. And then once we worked ourselves out of our financial crunch, we stepped back and said, “How do we bring the same kind of rigor to the rest of the organization?”

Q. Have you read any leadership or management books through the years that you found helpful?

A. I am sort of obsessed with Jim Collins. “Built to Last,” “Good to Great” — loved those. Those have probably been the most instrumental. Another book that was important for us was “The Leadership Pipeline.”

Q. Any particular time-management techniques?

A. The best time-management thing I do is reflect an hour a week on the overall strategic plan for myself — what do I need to do to move my priorities forward? And then there are the 10 minutes a day that I spend thinking about, “O.K., so based on the priorities for the week, how am I going to prioritize my day tomorrow?” I don’t know how I could do what I do without spending that time.

I am obsessive about that system because the world seems to be moving faster and faster, so you have to figure out how to still drive things proactively instead of just becoming completely reactive.

Q. When do you make the time to reflect?

A. I get up very early. I just can’t even admit how early I get up. But I go to bed really early. I put my kids to bed about 9, and I’ll go to bed at 9 p.m. or 10 p.m. I’ll get up at — I don’t know — early.

Q. 3 a.m.?

A. Sure. I’ll get up at 3 a.m., make a pot of coffee and plow through e-mail. And then I’ll go run and then I’ll just assume I’m just going to be in meetings until — if I’m in New York — about 7.

Q. Thoughts on failure?

A. I think that the near-death experiences of our first decade were completely formative. Every single day, I feel like I think differently and probably we operate differently as an organization because of that.

Q. How?

A. I’d say a few things. There are certain lessons — you could read them in any textbook. But because we learned them the hard way, they’re just so deeply ingrained. One of them is the importance of focus, the importance of saying no.

There was so much good momentum and we were asking all sorts of good questions and launching new, good ideas. But ultimately, they took away resources and energy from the fundamental core of what we do, which we came back to believing was the most powerful thing. The obsession with truly staying focused on our core mission, I think, came from that.

And also, I’m obsessed with the idea that what goes up comes down, and the need to be very, very careful. And not to get too caught up in all of the good stuff and just to constantly be thinking about whether we are getting out in front of ourselves.

Q. What’s your two-minute commencement speech?

A. My two-minute commencement speech would be to tell graduates to take on the world’s inequities now, because they’re huge and have such important human consequences. But they are solvable. It’s just that it takes incredible amounts of time. They’re very complex problems. So better to start early so that you have enough time.

And also, I just think there’s actually a huge power to inexperience. In the context of deeply entrenched problems that many people have given up on, it helps to not have a traditional framework so you can ask the naïve questions. That can help you set goals that more experienced people wouldn’t think are feasible.

You set those big goals, and you wake up a year later after insane amounts of work and realize you actually met them. So I think that that would be my message.

Q. How did you come to learn that?

A. I was so lucky. The way I got to this was that I was in a desperate funk my senior year in college — when I realized somehow for the first time, in October, “I have to figure out what I’m going to do next year.” I just thought, “Well, I’ll apply for jobs.” But it hadn’t really clicked that I was actually going to have to figure out what I wanted to do with the rest of my life.

And I was just uninspired. I just couldn’t find the thing that I really wanted to do. And that led me into a funk for the first time in my life.

And that’s what ultimately led me to this. Because I thought, “You know what I’d want to do?” Having never previously even contemplated teaching, I thought, “I’m going to go teach in New York City.” And I started exploring it and realized what a maze it was to try to teach in New York City.

That’s what led me to realize: You know what? We should recruit people to teach in low-income communities as aggressively as people were being recruited at the time to work on Wall Street.

I’m glad that I somehow landed on this thing that I became so passionate about. Because I’ve spent not one bit of energy for 20 years trying to figure out what I really want to be doing.

Copyright 2009 The New York Times Company

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By Verne Harnish

“…keeping you great”

HEADLINES:

Mojo Triples Membership Subscriptions using just one discipline, but first…

Jim Collins Backlash — I received three emails from readers warning me that there’s some dissatisfaction brewing over Collins’ ideas given the recent failures of Fannie Mae and Circuit City. And one email hinted that a third company is failing and has been doing less than honorable things, though they failed to mention the company. I encourage you to read his latest book (and question him at the Growth Summit) — I just finished How the Mighty Fall last night and he addresses the controversy head-on — following are my highlights from the book (then I’ll give Collins and his book “a rest”).

Need for Change — notes Collins on p.11 “Clearly, the solution to decline lies not in the simple bromide ‘Change of Die’; Bank of America changed a lot and nearly killed itself in the process.” A strong message throughout the book is that complacency was not what caused firms to decline — instead, it was misplaced innovation, acquisitions, activities, and change, in general, that precipitated the decline.

Neglect Primary Flywheel — p. 32 — those familiar with Jim’s flywheel analogy from Good to Great know that it’s important for companies to be clear what they are and/or can be “best at” and then put all energies toward this one focus. Instead, leaders either get bored with their existing focus or get distracted by new adventures which take energy away from their primary flywheel. Jim outlines a 5 step “cycle of arrogant neglect” on p. 32.

Vacuum Peoples’ Brains — p. 39 “Like inquisitive scientists, the best corporate leaders we’ve researched remain students of their work, relentlessly asking questions — why, why, why? — and have an incurable compulsion to vacuum the brains of people they meet.” He differentiates the knowing person who claims to already know everything and why what they do works vs. the learning person. On p. 43 he lists five markers that are the earliest signs you might be in stage 1 of eminent decline, one of which notes the failure of leaders to “maintain a learning curve as steep as when they first began their careers.”

Job vs. Responsibility — p. 57 — this is one of my favorite “how to’s” in the book — notes Collins “One notable distinction between wrong people and right people (in key seats) is that the former see themselves as having ‘jobs,’ while the latter see themselves as having ‘responsibilities. Every person in a key seat should be able to respond to the question “What do you do?” not with a job title, but with a statement of personal responsibility. “I’m the one person ultimately responsible for x and y.” Think columns two and three on our People Accountability worksheet (http://www.gazelles.com/4decisions/people.pdf). In fact, Collins, when he’s hosting executive teams at his research lab often challenges executives to introduce themselves not with titles, but by articulating their responsibilities. As he notes “those who have lost (or not yet built) a culture of discipline find this question to be terribly difficult.”

Key Indicators (Metrics) of Pending Decline — p. 76 — Collins describes some of the quantitative metrics that are early indicators of decline, yet seemed to be ignored by management. Notes Collins “For businesses, our analysis suggests that any deterioration in gross margins, current ratio, or debt-to-equity ratio indicates an impending storm.” I personally find companies not watching gross margins enough — one reason is that it’s in the middle of the P&L. Too many execs look at top line and bottom line to assess health while gross margins might be slipping unnoticed. Three to four percent decline (from 52% to 48% for instance) doesn’t seem like much, but can have a dramatic long-term impact on the business. Collins outlines a couple other non financial indicators as well on p. 76.

Weakest Part of the Book — p. 77 — I’ve always felt that Collins’ “Levels of Leadership” was his weakest and less substantiated idea (based on research) i.e. the Level 5 Leader. Similarly, he created a chart on p. 77 of “Leadership-Team Dynamics On The Way Down Versus On The Way Up.” He says in the beginning of the book that he chose NOT to interview any leaders of the fallen companies because of his concern for hindsight bias. Therefore, I don’t know how he was able to reach such specific conclusions about Leadership-Team Dynamics. I suspect it’s his own observations of team dynamics vs. specific research-based analysis — I intend to ask Collins about this.

Solid Management Disciplines — p. 119 (the main part of the book is only 123 pages long) — concludes Collins “If you’ve fallen into decline, get back to solid management disciplines — now!” I couldn’t agree more. And I love this line also on page 119 “In fact, our research shows that if you’ve been practicing the principles of greatness all the way along, you should get down on your knees and pray for severe turbulence, for that’s when you can pull even further ahead of those who lack your relentless intensity.” Again, I couldn’t agree more. I’m seeing what I consider our best students of business remain learners, disciplined, and gaining market share right now.

Back to Mojo…yesterday I received this note “I attended one of your courses near Dulles with my employer. While there, I immediately recognized the benefits of daily huddles, BHAG, and alignment. I took those ideals back home and applied them to my personal BLOG (www.insanemoney.com – where I discuss stock option investments). I’ve created a community of several hundred option traders and we collectively created a BHAG of “Creating and Supporting 1,000 Option Traders Producing Full Time Income”. Just from these changes we’ve been able to attract three of the top option traders in the country, increased our readership, and tripled our membership subscriptions! Keep up the good work and thank you!”

Beware of Fear — and in one of Mojo’s blog postings he notes “The media drives hype and promotes fear in order to increase consumption. Ultimately it teaches us to fear what we shouldn’t and not fear what we should. So do yourself, your family, and me a favor. Turn off your TV, put down that glossy newspaper, and pick up a short book on statistics. We haven’t allowed the news to be on or in our house since 9-11. Evil, villainy, and fear can’t come into your home unless you invite it. If something is really important someone will tell you. Trust me, your life will be much better for it.” Again, I couldn’t agree more.

Keep on Learning and Remain Disciplined and Focused

EDUCATION:

Final two-day Rockefeller Habits Workshop before summer break

Washington, DC – Jun 9-10, 2009

Growth Series Webcasts

June 23 — Keith Ferrazzi “Who’s Got Your Back: 3 Critical Relationships”

Summits & Conferences

Growth Summit
October 20-21, 2009 Dallas, TX

Great Game of Business with Jack Stack

Gazelles DVD/Online Learning Products — Gazelles.tv

PEOPLE
What’s the Secret to Providing World Class Customer Experience
Topgrading

STRATEGY
High Stakes Negotiations
The Art of Advantage

EXECUTION
Mastering the Rockefeller Habits
Execute Without Drama

Did you miss previous insights? – read here (http://verneharnish.typepad.com/growthguy/archives.html)

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Boulder, Colo.

JIM COLLINS calls his third-floor offices in the heart of this mountain-ringed city a “management lab.” But little distinguishes his workspace from most others, save for a few things.

There is, for example, the small sign outside the door: “ChimpWorks.” In case anybody doesn’t get the point, a large Curious George doll sits in a leather chair, delivering the we-ask-a-lot-of-questions-here punch line. And in a corner of the white board at the end of his long conference room, Mr. Collins keeps this short list:

Creative 53%

Teaching 28%

Other 19%

That, he explains, is a running tally of how he’s spending his time, and whether he’s sticking to a big goal he set for himself years ago: to spend 50 percent of his workdays on creative pursuits like research and writing books, 30 percent on teaching-related activities, and 20 percent on all the other things he has to do.

These aren’t ballpark guesstimates. Mr. Collins, who is 51, keeps a stopwatch with three separate timers in his pocket at all times, stopping and starting them as he switches activities. Then he regularly logs the times into a spreadsheet.

He has a good jump, too, on another overarching goal he’s set for himself: to produce a lasting and distinctive body of work.

Within the sprawling and overpopulated world of self-styled gurus dispensing advice on management and leadership, Mr. Collins is in rare company. His last two books — “Built to Last” and “Good to Great” — were breakout hits, selling about seven million copies combined.

Rather than presenting silver-bullet formulas that are easily forgotten, Mr. Collins’s books offer tangible frameworks for understanding why organizations succeed. His winning streak is about to be tested with his just-released book, which takes a turn, as he says, to the “dark side,” focusing on why companies fail. At any other time, it would seem a long shot, in that it lacks the upbeat message of his previous books. But his timing, given the number of once-great companies now in ruin, couldn’t have been better.

It seems that Mr. Collins, for all his exacting approaches to time management and research, has been blessed with something he cannot control: repeated bouts of flat-out luck.

He started researching his new book, titled “How the Mighty Fall: And Why Some Companies Never Give In,” in 2005. Back then, the Dow Jones index had passed 10,000 and was still climbing, eventually to more than 14,000, and Bear Stearns, Lehman Brothers, General Motors and Fannie Mae still had bright futures.

Now the stages of decline that he maps out in the book — hubris born of success; undisciplined pursuit of more; denial of risk and peril; grasping for salvation with a quick, big solution; and capitulation to irrelevance or death — offer a kind of instant autopsy for an economy on the stretcher.

He writes that he’s come to see institutional decline as a “staged disease” — harder to detect but easier to cure in the early stages — which is likely to foster a sense of corporate hypochondria in many readers.

He started working on his previous book, “Good to Great: Why Some Companies Make the Leap … and Others Don’t,” in the mid-1990s, smack in the middle of New Economy fever.

“Good to Great” was finally published in late 2001 — not long after the dot-com bubble burst, the pixie dust surrounding visionary leaders had fallen away, and the 9/11 terrorist attacks shook the country to its core. The book struck a chord with its back-to-basics message: Quiet but determined leaders who remained focused on clear and simple goals were the real success stories of corporate America.

It won a following, about four million copies’ worth, that extended well beyond the business world and included football coaches, pastors and school principals.

“We were really slow, and so it comes out right after everything is falling apart,” Mr. Collins recalls. “If we had come out in 1998, I don’t think anyone would have read it.”

His first best seller, “Built to Last: Successful Habits of Visionary Companies,” another five-year project, which he co-wrote with Jerry I. Porras, came out in 1994, on the heels of the re-engineering craze in corporate America; it also went on to sell millions of copies.

And his next book, which he is writing with Morten T. Hansen and is due out in two or three years, is about why certain companies manage to thrive through tumultuous times.

“I think it’s just pure luck,” says Mr. Collins, parsing his track record in an interview here. “You flip a coin and it comes up heads, and you flip a coin and it comes up heads, and you flip a coin and it comes up heads, and one day you have four heads in a row. You can’t really say you made it come up heads.”

But it’s not all luck, of course.

PART of the Jim Collins method borrows from other hypersuccessful people. He approaches every aspect of his life with purpose and intensity.

Consider a few examples.

Four days after his first date with Joanne Ernst in the spring of 1980 — an eight-mile run when both were students at Stanford — they were engaged, and married later that year.

When she announced over breakfast one day that she thought she could win an Ironman Triathlon, Mr. Collins gave up his job at Hewlett-Packard to help her train, be her roadie and negotiate her sponsorships with companies like Nike and Budweiser. Joanne won the 1985 Hawaiian Ironman Triathlon.

Back then, he says, his wife was the better-known half of the couple, and everyone assumed that his name was Jim Ernst.

For his 50th birthday — his “gift to myself,” as he put it — Mr. Collins, a lifelong climber, trained for 18 months to try a climb El Capitan, the 3,000-foot vertical rock formation in Yosemite National Park.

Most climbers take a few days for the ascent. He wanted to do it in less than 24 hours. So he trained with a younger, stronger partner. He studied weather patterns at Yosemite going back almost 100 years to figure out the best window for an attempt. They climbed the first 1,400 feet in the dark, and completed the ascent in 19 hours.

Oh, he sleeps with vigor, too. He figures that he needs to get 70 to 75 hours of sleep every 10 days, and once went to a sleep lab to learn more about his own patterns. Now — surprise, surprise — he logs his time spent on a pillow, naps included, and monitors a rolling average.

“If I start falling below that,” he says, pointing to the short list on his whiteboard, “I can still teach and do ‘other,’ but I can’t create.”

Mr. Hansen, his co-author on the current turbulence project, occasionally teases Mr. Collins about his relentless self-improvement.

“I always laugh about the sleep log,” he says.

Mr. Collins also is quite practiced at saying “no.” Requests pour in every week for him to give speeches to corporations and trade associations. It could be a bustling sideline, given that he commands a top-tier fee of $65,000 to dispense his wisdom. But he will give only 18 speeches this year, and about a third of them will be pro bono for nonprofit groups.

Companies also ask him to consult. But he mostly declines, agreeing only if the company intrigues him and if its executives come to Boulder to meet him. Over two half-day sessions, for $60,000, he will ask pointed questions and provide very few answers.

“I am completely Socratic,” he said, “and I challenge and push; they come up with their own answers. I couldn’t come up with people’s answers.”

Book tours? No. Splurging with the millions he’s earned from his books? No, too.

He and his wife still live in the 2,500-square-foot Craftsman-style house they bought when they moved back from California 14 years ago to Boulder, their hometown. He keeps his overhead low, with a staff of five people, and adds students for research work as needed.

This orientation — a willingness to say no and focus on what not to do as much as what to do — stems from a conversation that Mr. Collins had with one of his mentors, the late Peter F. Drucker, the pioneer in social and management theories.

“Do you want to build ideas first and foremost?” he recalls Mr. Drucker asking him, trying to capture his mentor’s Austrian accent. “Zen you must not build a big organization, because zen you will end up managing zat organization.”

Therefore, in Jim Collins’s world, small is beautiful.

“We could have had a big consulting firm and training firm and it would have been a huge lucrative machine,” he says. “But I want to answer the questions.”

THOSE questions have a certain good-dumb flavor. Why do certain companies enjoy enduring success? How did some companies make the transition from good to great? Why do certain companies thrive in turbulent times?

Whenever an intriguing question arises, usually spawned by a good conversation, Mr. Collins becomes obsessed with it. “Like a wolf, it grabs me around the throat and it won’t let go,” he says.

His new book, “How the Mighty Fall,” grew out of a discussion he led in the fall of 2004 at West Point, with 12 Army generals, 12 chief executives and 12 leaders of nonprofit organizations.

Mr. Collins put this question on the table: “Is America renewing its greatness, or is America dangerously on the cusp of falling from great to good?”

At a break, one C.E.O. pulled him aside and asked him a question that boiled down to, “How would you know if your successful company is on a path to decline?”

An article trying to answer that question grew into his current book. He looked for useful matched pairs — similar companies whose performance clearly diverged at a certain point.

Once he narrowed the field, he compiled decades of data and articles on each company to help explain what led to an inflection point, then kept sifting the data for patterns, divining theories from the data, and seeking out arguments to tell him why the theories were flawed.

It’s roughly the same method he’s used for all of his books.

“Jim is a very interesting combination of things,” said Mr. Porras, his co-author on “Built to Last” who taught Mr. Collins many of the research techniques he uses today. “He’s amazingly creative, amazingly disciplined, amazingly thorough. He has strong opinions about things, but after a lot of arguments, he certainly would change his mind. A lot of people who have strong opinions never really let go of them.”

For each book, he hires a research team of university students, up to a dozen at a time, to help him during long summers of work. He is picky about whom he hires, typically from Stanford and the University of Colorado. They’re not always business students; they might be studying law or engineering or biochemistry.

He prefers to learn as much as he can about them before he meets them. “Because if I meet them, I may like them, and then all the assessment of the person is going to be filtered by the fact that I like them, and what I really want to see is the quality of their work,” he says.

So he will look at their transcripts. “If they even have a small glitch in their academic record over the last year, they don’t really get considered,” he says. “I need people who have that just weird need to get everything right.”

He gives the candidates a list of different academic activities, including field work and lab work, and makes them rank the activities in order of preference, to give him a clear idea of their interests.

If they clear other hurdles, he will finally meet them in person. He’s looking for four intangibles: smart, curious, willing to death-march (“there has to be something in their background that indicates that they just will die before they would fail to complete something to perfection”) and some spark of irreverence (“because it’s in that fertile conversation of disagreement where the best ideas come, or at least the best ideas get tested”).

“So I look for somebody who on the one hand was an Eagle Scout, because that’s death-marching,” he explained. “And, on the other hand, somebody who took time off to travel to 14 third-world countries on no money.” One of his researchers, an M.B.A. student, had studied medieval literature at Princeton and served in the Marines.

The research on his books can cost up to $500,000. (For the first two, he was writing personal checks out of his and his wife’s personal savings.) With the research complete, Mr. Collins retreats into “cave mode” for months and months, seven days a week — a period when his wife says he is “there, but not there.”

He will read through every page of every binder that’s been assembled, making notes that he will then use for a first draft.

“I call it monk mode, and I love monk mode,” he says.

Writing is not so much fun — “painful,” “excruciating” and “brutal” is how he describes the process. It’s not that he’s after a certain lyricism. His writing is clear and unadorned. But it does feel as if every sentence has been pressure-tested and carefully calibrated so that it doesn’t go beyond what he can back with evidence from one of his binders.

It is slow going.

“If I’m going really, really fast, I can do a page of finished text a day, on average,” he says. A 36-page monograph he published, “Good to Great and the Social Sectors,” took him the better part of two years to write. It sold 400,000 copies.

He then gets feedback from a large circle of people. To make sure they don’t hold back, he refers to them as his “critical readers,” and types in large letters atop the manuscript, “Bad First Draft.”

“That gives them the freedom to say, ‘Jim already knows it’s bad, so let me tell him how it’s bad,’ ” he says.

THE findings are by no means pure science — everything does get filtered through Mr. Collins’s brain, after all. And there are plenty of critics, taking issue with what they say are generic and obvious points, based on research methods that are not as ironclad as they appear.

Others have pointed out that some of the companies he held up as models in “Good to Great,” including Fannie Mae and Circuit City, no longer look so good or great — or, in the case of Circuit City, are even in business.

On his Freakonomics blog, Steven D. Levitt wrote last year that the message of a book like “Good to Great” is “that the principles that these companies use not only have made them good in the past, but position them for continued success.” He added, “To the extent that this doesn’t actually turn out to be true, it calls into question the basic premise of these books, doesn’t it?”

Mr. Collins takes issue with the criticism, even devoting a long passage in his new book to defending “Good to Great” in light of the subsequent failures of some companies it praised.

“Just because a company falls doesn’t invalidate what we can learn by studying that company when it was at its historical best,” he writes.

He says the merits of analyzing the reasons for a company’s long winning streak — or, for that matter, a sports team’s — are just as valid even if the company or team can’t maintain the winning formula. If people eat right and exercise, then stop doing so, it doesn’t make those habits any less valid, he writes.

Still, anyone looking for code-cracking formulas for success in business is going to be disappointed by Mr. Collins’s books — and every other book, for that matter. What he offers are provocative models for assessing why companies succeed and fail, supported by research that fills dozens of boxes now stored in his basement.

He also has a deft touch with metaphors that enliven what might otherwise read like dry case studies — flywheels and doom loops, hedgehogs and foxes, and a bus analogy borrowed from “The Electric Kool-Aid Acid Test” by Tom Wolfe.

VIGOROUS debates continue on blogs about the merits of Mr. Collins’s books. One of the more thoughtful comments, on Business Pundit, says, “The points in the Good to Great book may seem very general, however you’ll be amazed that not many people understand ‘general’ concepts like that things don’t happen overnight or the importance of facing facts.”

Given that every company and industry is different, the books’ real value may be not so much in the answers they provide, but in the questions they raise — the kind that every company and manager should be asking.

Mr. Collins’s success has provided him with a financial cushion that allows him to search around, without worry, hoping to stumble upon more of those throat-grabbing wolves. “Now, fortunately, I can probably spend the rest of my life picking any question I want to, regardless of whether it will be profitable,” he says. “I can just let my curiosity wander unleashed.”

Copyright 2009 The New York Times Company

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By Verne Harnish

“…keeping you great”

HEADLINES:

Urgent Media Request from FORTUNE Small Business Magazine — May 27 deadline — looking for small business owners/CEOs who have cut their own salaries (permanently or temporarily) sometime in the last two years to help keep the business running and seen positive results. They are looking for upbeat stories, told by people who are willing to be honest about their experiences. They are NOT looking for start-up stories where the entrepreneur didn’t take a salary for a couple years. If you think you fit the bill, or know of anyone who does, please email Megan Erickson at Megan_Erickson@Timeinc.com.

What Jim Collins Say About Circuit City and Fannie Mae — Two of the “Good to Great” companies, many have wondered what Jim has to say about these failures. He dedicates a long passage in his new book, How the Mighty Fall, defending Good to Great — and he shares some thoughts in a major Sunday NY Times piece. To quote Jim from the article “Just because a company falls doesn’t invalidate what we can learn by studying that company when it was at its historical best.”Take five minutes and read this article (http://www.nytimes.com/2009/05/24/business/24collins.html?pagewanted=1&_r=2&th&emc=th) more for an insight into Jim Collins the person, how he writes, hires assistants, his personal goals, and his amazing discipline.

Sleep and Time Logs — among Jim’s disciplines are to make sure he sleeps enough, so he remains creative, and that he spends at least 50% of his time on creative work. He went to a sleep lab to understand his sleeping patterns and has found that he needs 70 to 75 hours of sleep over a ten day period, so he keeps a sleep log (I think I’m running short myself and I’m going to track for a few weeks). To track his creative time, he keeps a stopwatch in his pocket which tracks three times — his creative time, his teaching time, and his “other” time. To understand “mastery” take five minutes and read the NY Times article (http://www.nytimes.com/2009/05/24/business/24collins.html?pagewanted=1&_r=2&th&emc=th) about Jim — lessons in there for all of us.

Only 18 Speeches per Year — notes the article “Mr. Collins also is quite practiced at saying ‘no.’ Requests pour in every week for him to give speeches to corporations and trade associations. It could be a bustling sideline, given that he commands a top-tier fee of $65,000 to dispense his wisdom. But he will give only 18 speeches this year, and about a third of them will be pro bono for nonprofit groups. “BTW, one of those top-tier speeches is at our upcoming Growth Summit (http://www.gazelles.com/executive_growth_conference.html), October 20 — 21, Dallas, TX. Joining Jim will be four other best-selling authors.

Private Luncheon with Jim Collins — companies that send an executive team of four or more to the Growth Summit (http://www.gazelles.com/executive_growth_conference.html) will receive a seat at a private luncheon with Jim Collins (eight or more will receive two seats).

Front Ten Tables Already Reserved — instead of playing games with early bird discounts, etc., we’re more like a rock concert — the earlier you reserve a seat (simple deposit of $250) and the more seats you reserve, the closer your table is to the stage. Companies have already reserved the front ten tables. Reserve your seats and the balance isn’t due until Sept 20 (help you save cash), so grab the best seats now.

June 1 Full Page Ad for Growth Summit Reaches over 1 Million CEOs in FSB magazine — we usually get a big spike in reservations when the ad hits. We want you to have preferential seating — so reserve seats now and beat the crowd. Here’s a link (http://www.gazelles.com/growth_summit_09/FSBJuneGrowthSummitADfin.pdf) to the ad

How the Mighty Fall — It’s time to grab market share and gain a leg-up on our competition. It’s been over 70 years since we’ve had similar market conditions. In 48 hours we’ll give you the ideas, tools, and techniques to take advantage of this opportunity. It’s the bold that win during times like this, not the faint at heart. Come join a growing list of winners at our upcoming Growth Summit 2009 (http://www.gazelles.com/executive_growth_conference.html).

Growth Summit Sponsors: American Airlines, American Express, AFLAC and Pitney Bowes

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Jim Collins New Book — his long awaited next book, How the Mighty Fall And Why Some Companies Never Give In, arrives in bookstores (and ships from Amazon) next Tuesday, May 19. And an excerpt from the book will be in the May 22 Business Week that hits the newsstands tomorrow (Friday, May 15). This is the new material Collins, author of Good to Great and Built to Last, will be sharing in a four hour presentation at our Growth Summit Oct 20 — 21 in Dallas. Mark your calendars.

Chocolate Covered Grasshoppers — talk about “lumpy mail” — GotVMail just changed their name to Grasshopper and to highlight the change and guerilla market their company (they provide virtual phone systems for entrepreneurs) they FedEx’d out 25,000 chocolate covered grasshoppers to influential entrepreneurs and received Fox News coverage. And it’s working. I spoke to the EO Chapter in Chicago yesterday where several members were talking about the chocolate covered grasshoppers they had just received and whether or not they had tried them!

Entrepreneurs Can Change the World — CEO David Hauser and the Grasshopper team also produced an excellent video on how entrepreneurs can change the world, part of a viral marketing campaign — take a few minute to watch this inspiring piece and share with other entrepreneurs and your children. BTW, this is the same company that got actor Gary Busey to do the YouTube video piece on their core values and uses Post-it-Notes to share their values around the office — they continue to find clever ways to market internally and externally. Thanks to their Gazelles’ coach Les Rubenovitch for alerting us to these innovations.

Looking to Expand Into New Zealand? — Rockefeller Habits practitioner and fan, Adrian Low, is between gigs and looking to see if any other companies aligned with our techniques is looking to expand into New Zealand. Low would like to help you rapidly grow and expand your business in one of the most beautiful spots on the planet. Contact Low at Adrian.low@duffillwatts.com.

6 Critical Success Factors for Managing a Successful Acquisition Program — white paper available. Gary Moon, BOGer, Rockefeller Habits practitioner, and M&A guru and his team have developed their buy-side acquisition program methodology across hundreds of transactions including best practices from today’s most prolific acquirers, developed specifically with Gazelles mid-market client companies in mind. Here’s the link.

Should you be considering acquisitions today? Most of our client companies have done well in identifying new markets, developing new revenue streams, and growing their companies organically — but they often overlook an equally important path to growth – Acquisitions. The more successful a company gets, the more likely they will need to acquire in order to develop new and varied streams of growth and earnings. When the economy turns and the recovery shifts into full swing, the playing field in many industries will have shifted, sometimes dramatically. Companies can either participate in this reordering, or risk watching it happen around them. Acquisitions in today’s environment create an unprecedented opportunity to separate from your competition in this time of uncertainty.

Frequent buyers consistently outperform non-buyers — Bain and McKinsey studies have shown that companies that pursue an active balanced program of acquisitions create more shareholder value than those with passive, or no M&A strategies. They also show that constant acquirers – or those that buy consistently through economic cycles, and recession acquirers — or those that increase their buying in recessionary times, consistently outperform growth buyers — those which buy principally in growth periods.

Yet, why do such a high portion of acquisitions fail? According to many studies, up to 70% of acquisitions fail to create value for owners, yet it is virtually impossible to build a world-class company through organic growth alone. Most firms should engage in disciplined, strategy driven deal making, which usually means both buying and selling, and need to bring on specific deal expertise to increase probability of success. Get some help by finding the right “who.”

Are you Playing Not to Lose, Or Are You Playing to Win — My Last Two-Day Rockefeller Habits Workshop This Season — June 9 — 10, DC. Before I move the family to Barcelona in August I’ll be personally leading a two-day Rockefeller Habits workshop. You have a six to twelve month window to grab market share and take advantage of your competitors’ weakened business. I’ll be working with you on five strategies for doubling revenue in the next twelve months and providing specific updated tools for reducing by 80% the time it takes for you to manage the business so you can spend more time on market-facing activities. Join me in DC (next to Dulles airport) June 9 — 10.

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This week’s Webcast includes:
Highlights from the 2009 EO Arizona University
Advice from Jim Collins on business success
Michael Goldberg on outsourcing in the Member Spotlight
On the phone with EO Idaho member Edward Moore
Tip of the Week from author and speaker Dewitt Jones

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