Researcher and management guru Jim Collins has authored or co-authored six books, including Good to Great and Built to Last that have sold in total more than 10 million copies worldwide. On his web site there are 48 articles written or co-written by him.
Collins has served as a senior executive at CNN International, and also worked with social sector organizations. Driven by a relentless curiosity, Jim began his research and teaching career on the faculty at the Stanford Graduate School of Business, where he received the Distinguished Teaching Award in 1992.
Here are the 10 success lessons from Jim Collins – “Management Guru” for entrepreneurs,
1. Level 5 leadership
Everyone knows that leadership is important, but they don’t necessarily know what makes a great leader. There are many different types of leaders, but what makes a leader truly effective is their ability to look for solutions instead of blaming others.
It’s crucial that the leader is willing to get their hands dirty rather than focusing on the glory. A great leader will also plan for the future of the business even when it exceeds their leadership term and set up their successor to achieve even greater success.
2. Get the right people in the key seats
When problems arise in the company, many will look for someone to blame and will focus on that particular person rather than the problem itself. A great company will first make sure they have the right people on their team (on the bus) before even creating the strategic direction of the company, and then it will determine if the employees are in the right position (in the right seats).
If an employee isn’t succeeding in their role, the problem may not be that they are a bad fit for the company. Instead, it could be that their role doesn’t play to their strengths and they are simply in the wrong seat.
3. Practice productive paranoia
Collins says he fondly refers to his entrepreneurial subjects as PNFs, or paranoid neurotic freaks. “Successful companies have three to ten times the cash on their balance sheets as their peers even when they are very small,” says Collins. Or as one of the CEOs he studied said to him, “We’re very proud of the fact that we’ve predicted 11 of the past three recessions.”
How exactly can one practice productive paranoia? Collins recommends making a plan that will allow you to go for an entire year with no revenues, and still survive.
4. Be a hedgehog
There are two distinct types of companies–foxes and hedgehogs. The fox is very clever, but chases too many opportunities at once and becomes unfocused. On the other hand, the hedgehog is extremely focused and does one thing, and does it perfectly.
The fox tries many strategies to catch the hedgehog, where the hedgehog only needs to roll up into a ball to protect itself. Your company needs to find its one big thing that it can be great at and focus on that to drive the business.
5. Once a quarter, have a brutal facts meeting
Be careful about who you include in this meeting. You will be discussing just the brutal facts. This is not the time to express opinions or strategize. Repeat: Only discuss the brutal facts.
6. Does it fit?
Shiny objects, especially when it comes to technology, are huge distractors for companies. Companies are often worried that they are going to be left behind or that they need to be first for everything. As a result, they can be easily distracted by new trends that might not fit their business or their hedgehog.
Technology should be used as an accelerator of momentum, not a creator of it. Only utilize new technology if it is going to propel success and deliver results!
7. Place at least one really big bet in the next three years
No entrepreneur has unlimited resources, just as no small army has unlimited gunpowder. The best use of limited gunpowder, or resources, says Collins, is to fire bullets to ensure that your aim is calibrated properly and that you can indeed hit your target. Only when you’re sure of your ability to hit your target should you load lots of gunpowder into a cannonball and fire away. “Fire bullets to calibrate. Fire cannonballs to go big,” says Collins.
8. Confront the brutal facts
The human body’s natural reaction to a difficult situation is fight or flight. When a problem arises, some choose to hide from the problem. A great company will instead take that problem head on and not be afraid to make a change.
Great companies were not afraid to listen to the data and to what their consumers were telling them. Once they were aware of a problem or a growing consumer trend, they acted quickly and were willing to pivot the company to better fit their customers’ needs.
9. Set a 15 to 25-year big, hairy audacious goal (BHAG)
This is a goal that is concrete enough, and ambitious enough, to guide your company’s progress for years. Collins writes that “With his very first dime store in 1945, Sam Walton set the BHAG to ‘make my little Newport store the best, most profitable in Arkansas within five years.’
He continued to set BHAGs, which continued to get larger and more audacious, as his company grew.
10. Don’t procrastinate firing someone
No one likes to terminate another human being and Collins was no exception. However, he believed that we usually know when a person is “just not working out” much sooner than we are willing to admit. Prolonging the agony is not fair to the non-performing individual or the team.
Collins’ rule of thumb is intervene twice: If two attempts at coaching fail to produce results then let the person go. According to Collins, while termination may elicit anger initially, in the long run it usually produces relief and a happier human being working somewhere else.