small business
JUSTIN STEPHENS
Jim Collins’ business books
have been consistent best-sellers because his research
can apply in many fields.
Greatness amidst uncertainty
Enter the new book, Great by Choice, whose
inspiration dates back to 2002, when the world suddenly felt less certain, less predictable, less safe and
far more chaotic. The book punches another hole in
the black box by asking: What systematically separates those who build great companies in an uncertain, chaotic and fast-moving world?
“That is really a question we’re going to be living
with not just for months, but for decades and prob-
ably for the rest of our lives,” Collins says. “Almost
everything is ultimately out of our control, and I
think we’re really waking up to that.”
Indeed, today’s business leaders are waking up to
a new, uncertain landscape amid everything from
technological change and globalization to earth-
quakes and tsunamis. Consumers are scared, inves-
tors are skittish and companies have less room for
error. The second decade of the 21st century feels
like a whole different world compared with the sec-
ond half of the 20th century, a period of time that
Collins believes fostered an artificial sense of pros-
perity and stability and a feeling that the United
States was largely insulated from world shocks. “But
that’s not normal history,” he says. “Normal history is
uncertainty, chaos, disruption and things that are
very much out of our control.”
The good news, Collins says, is that today’s lack
of stability and turmoil isn’t necessarily bad news for
those who come at it the right way. “What we learned
in this project is that if you lead yourself with certain
disciplines, this kind of environment favors you,” he
says. “You should actually
almost be thankful for it,
because those who really exem-
plify many of the things that we
found will really shine and
thrive. They won’t just survive.
They’ll do exceptionally well.”
CONTINUED FROM PAGE 23
24 The Costco Connection NOVEMBER 2011
Industry leaders
The companies profiled in
Great by Choice had to meet
three basic criteria: First, they
had to be “10Xers,” meaning
their earnings beat their industries’ average by 10 times after they went public.
Second, they had to deal with a particularly uncertain and chaotic environment. Third, they had to be
small and vulnerable at some point. “We studied
Intel when it had five people. We studied Microsoft
when it had two people. We studied Southwest
Airlines when it had three airplanes,” Collins says.
What Collins and his team discovered is that
small-business owners who thrive in chaotic economic environments tend to be financially conservative but continue to invest, build, hire and
reinforce the company culture and business model
whether times are good or bad. Leaders such as
Southwest Airlines founder Herb Kelleher and
Microsoft’s Bill Gates were “disciplined to the point
of being fanatics, and they’re so disciplined that as a
result they were nonconformist,” Collins says. “You
follow your disciplines; you don’t follow what everyone else thinks you should do.”
Consider Southwest Airlines, which never
grows too fast and in tough times sticks to funda-
“Almost everything is ultimately out of
our control, and I
think we’re really
waking up to that.”
mentals while maintaining a strong company
culture—a strict, bottom-line discipline that has
resulted in 30 consecutive years of profitability.
“In the difficult times, when the industry goes
through one of its convulsions, they don’t start
just jettisoning people and destroying their cul-
ture and saying, ‘It’s OK to be unprofitable,’ ”
Collins says. “They stick with all of the same fun-
damentals in the difficult times as well. And as a
result they’re very, very consistent.”
Companies that not only survive but thrive in
chaos also know how to make the most of the luck
they get, whether it’s good or bad luck.
Consider Progressive Insurance, which once
found itself confronted with Proposition 103, a 1988
voter-approved California initiative that mandated
20 percent price reductions and customer refunds.
But instead of circling the wagons, leader Peter
Lewis saw an opportunity to transition Progressive
Insurance into new areas such as 24-hour claims
service and other offerings that would appeal to an
insurance-wary public.
Likewise, Bill Gates wasn’t thinking in terms of
operating systems when Microsoft was a start-up,
but he quickly realized his luck as soon as IBM
walked through the door. These leaders “allowed
luck to disrupt their plans. And that, I think, is really
interesting,” Collins says.
Bottom line: Uncertainty isn’t all bad, and we
shouldn’t necessarily fear it as much as we do.
Collins says that he used to fear uncertainty and
chaos, but after nine years of intense research on
the topic he’s come out the other end with a sense
of calm. “I don’t have any more emotion about
[uncertainty] than I do about gravity,” he says.
“Gravity just is. I don’t wake up in the morning
afraid of gravity. You’ve got to learn how to live with
gravity; you’ve got to learn how to live with uncertainty. The beauty of it is, you can. Successfully, and
in very practical ways.”
Greatness extends beyond business
When he’s not authoring or co-authoring best-selling books, Collins operates a management laboratory in Boulder, Colorado, where he conducts
research and consults with business and nonprofit
executives on sustainability, growth and leadership
principles. Is he surprised Good to Great has become
a business classic that’s on every entrepreneur’s
must-read list? “I had no idea that it would become
what it was,” he says. “I guess really what it validates
for me is that our approach to the research—because
it’s so empirical and so data driven—translated into
these findings that people can use.”
In fact, 40 percent of Collins’ readership is now
non-business people, including readers who are try-
ing to build nonprofit organizations. “What I love
more than anything is knowing there are people I
will never meet who benefit from all the work that
we’ve done,” he says. “You can’t ever predict some-
thing that delightful.”
Now that’s the kind of unpredictability anyone
could live with. C
Chris Pentilla is a Washington, D.C.–based freelance
business journalist.
