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Executive Interviews: Interview with Jim Collins on Level 5 Leadership
January 2008
Jim Collins Founder of Management Laboratory in Boulder, Colorado, 
How do you study greatness?
We employ a rigorous matched-pair
research method, comparing
companies that became great with a
control group of companies that did
not, and we make empirical
deductions directly from the data. In
Good to Great, we studied companies
that made a leap from good
performance to exceptional
performance sustained for at least
fifteen years in direct contrast to
companies that failed to make a
similar leap in performance, and we
asked a simple question: what
principles explain the difference? All of our research involves research
teams, of up to twenty people over the
course of a project, and each research
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project generally requires about five
years to completion.
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Where should leaders begin if they
want to build a great company?
The first most important decisions are
people decisions. The corporate
leaders we studied who ignited
transitions from good to great
practiced the discipline of First
Who: First get the right people on the
bus, the wrong people off the bus, and
the right people into the right seats
and then figure out where to drive the
bus. To be clear, the First Who
principle is not the only requirement
for building a great company, it is
one of eight concepts we have
identified in our research, but it is
the first principle in sequence. Until
you have 90% to 100% of your key
seats filled with the right people, there
is no more important priority. -
Can you illustrate what you mean
by First Who?
When we studied Wells Fargo Bank in
contrast to its comparison company
during the era of deregulation, we
found that Dick Cooley at Wells Fargo
practiced the principle of First Who,
and the comparison leaders did not.
Instead of first developing a strategy
for how to handle the turbulence of
deregulation, he created the best, most
adaptable team in the industry.
Thats how you build the future,
said Cooley. If I am not smart enough
to see the changes that are coming,
they will. And they will be flexible
enough to deal with them. Dick
Cooley understood that in a volatile
world, the ultimate hedge against
uncertainty is to have the right people
who can adapt to whatever the world
might throw at you like having the
right climbing partners with you on
the side of a big, dangerous and
unpredictable mountain. -
How did the leaders you studied
get the right people on the bus?
They adopted the approach: Lets
take the time to make rigorous A+
selections right up front. If we get it
right, we will do everything we can to try
to keep them on board for a long time.
If we make a mistake, then we will
confront that fact, so that we can get
on with our work and they can get on
with their lives. Early assessment
mechanisms turn out to be as
important as hiring mechanisms.
There is no perfect Interviewing
technique, no ideal hiring method;
even the best executives make hiring
mistakes. You can only know for
certain about a person by working
with that person. -
What would you see as the most
common mistake that impeded
progress toward greatness?
Looking for the dramatic big decision
that will catapult a company to
greatness in one fell swoop; greatness
just doesnot happen that way. When
you study the long course of great
companies, looking at their
development over years, we see that
no decision no matter how big
accounts for more than a small
fraction of the companys total
momentum. Greatness gets built by a
series of good decisions, executed
supremely well, added one upon
another, over a long period of time
what we came to call The Flywheel
effect. Certainly, some decisions are
bigger than others Kimberly Clarks
decision to sell the mills, Gillettes
investment in the Sensor shaving
system, Boeings big bet on the 747,
IBMs bet on the 360, and so forth
but even these decisions account for a
small fraction of the total outcome. In
the long arc of a great company, no
single decision makes for even 10% of
the ultimate greatness of the
institution. -
Where did the term BHAG come
from, and what does it mean?
BHAG (pronounced Bee-Hag) stands
for Big Hairy Audacious Goal. The
term popped out one day when
teaching my course at Stanford
Business School. We were discussing
the Patagonia case (about the outdoor
clothing company) and we were
trying to capture the sheer audacity of
the companys ambitions to serve as a
role model for social change. In the
conversation, out popped the term
BHAG, and it stuck. A BHAG is only a
true BHAG if it takes 10 to 25 years to
achieve.
1.
Leadership and Entrepreneurship Case Studies
2. ICMR
Case Collection
3.
Case Study Volumes
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