Jim Collins Learned What Makes Great Companies Tick -- and Shared It at MFM's Annual Conference

Looking around the room, there was a notable absence of people checking their cell phones or laptops, atttempting to multitask (as those attending conferences have learned to do so well). All eyes were on Collins as he paced the length of the stage and described the findings from his three decades of research that revealed the keys to what makes some good companies become great and what causes other good companies to falter.

Collins distilled his research -- which covers more than 6,000 combined years of data -- into a two-page document he calls simply "The Map." He provided a copy of it to every attendee and spent the bulk of the first half of the session walking through its key points, which present four stages of critical inputs that lead to "superior results," "distinctive impact" and "lasting endurance."

"It's not leadership that creates great companies," he posited. "It's five specific leadership skills." During Stage One ("Disciplined People"), Collins encouraged attendees to concentrate more on "getting the right people on the bus" than perfecting a business plan. He held up Katharine Graham, former publisher of The Washington Post, as one of the "Level 5 leaders" he most admires -- someone who immersed herself in the business after inheriting the paper from her father, and demonstrated "personal humility combined with indomitable will" -- one of Collins' hallmarks of superior leadership -- to bring the paper to the forefront of the news industry.

As part of Stage Two ("Disciplined Thought"), Collins referred repeatedly to his "hedgehog concept," which initially drew smiles and chuckles, but which the crowd ultimately embraced. He described it as  something of a Venn diagram of three intersecting circles: "One, what you are deeply passionate about; two, what you can be the best in the world at; and three, what best drives your economic or resource engine."

Two concepts within Stage Three ("Disciplined Action") resonated strongly with the group. The first, which serves as the basis for one of Collins' most popular books, is "The Discipline of the Flywheel." Rather than try to determine the big push that makes the flywheel turn -- and causes a company to be successful -- Collins noted the chicken and the egg. "The hatching -- or success of a business -- isn't about the chick suddenly emerging from the egg, but of the growth, evolution and momentum needed inside the egg to allow it to get out."

The second was that of "bullets and cannonballs." Here, Collins described the challenge of sinking an enemy ship. "You only have one cannonball," he said, "so if you fire it right away and miss, you're in big trouble." He advises business leaders to use bullets to calibrate the side of the ship first, then "fire the cannonball with determination." He pointed to Apple using the iPod as the bullet to the cannonball of iTunes, which allowed both Mac and Windows users to legally and inexpensively download millions of songs.

In Stage Four ("Building to Last"), Collins encouraged the audience to exercise "productive paranoia" in order to prevent "the five stages of decline." He noted that less than 15% of companies originally on the Fortune 500 list are still in business, and only leaders who are aware that things can suddenly and quickly go awry can avoid decline and survive turbulence. "The only mistakes you can learn from are the ones you survive," he asserted.

Another key concept in Stage Four is "Preserve the Core/Stimulate Progress," the idea that the most successful companies differentiate their core values (which never change) from their operating strategies and cultural practices around their drive for progress, which is continually changing.

And this was just Part I of the session. During Part II -- in which Collins' had the audience divide into small groups -- he invited attendees to pepper him with questions, and they did so with gusto. (They will be covered in the second installment of this series). The first question was around one of Collins' final statements: "The presence of a to-do list is only effective if you have 'stop-do' lists," reminding us that "You can only manage your time, not your amount of work."

Collins closed out Part I of the session with these thoughts: First, "Be in love with what you do, even with the 'stress/drudgery tax';" "spend less time being interesting than being interested," and "worry about being useful, not successful."

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