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TIP372: Identifying A Great Company w/ Jim Collins

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Aug 22, 2021

Guest

Jim Collins

Jim Collins, a renowned researcher and author of influential books like "Good to Great," joins the discussion. He delves into the essence of greatness in companies, emphasizing the characteristics of Level 5 leaders and the pivotal role of resilience. Collins explains the 'flywheel effect' and how sustained success comes from consistent efforts, rather than just breakthroughs. He also shares insights on the significant impact of luck in business success, highlighting the importance of seizing fortunate moments and cultivating meaningful connections.

01:26:16

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ANECDOTE

Southwest's Resilience

Trey Lockerbie highlights Southwest Airlines' 30-year performance (1972-2002).
Despite crises, a $10,000 investment grew to $12 million, outperforming the S&P 500.

insights

INSIGHT

The Power of Curiosity

Jim Collins emphasizes the power of curiosity.
He believes everyone is interesting if you are genuinely interested in them.

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ADVICE

Starting Conversations

Ask "Where are you from?" to initiate engaging conversations.
Avoid "What do you do?" as it can feel hierarchical.

Get the Snipd Podcast app to discover more snips from this episode

The Power of Curiosity in Meaningful Conversations

02:21 • 5min

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The Pursuit of Lifelong Learning Through Exceptional Teaching

06:53 • 2min

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Defining Greatness in Business

08:50 • 12min

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The Lasting Legacy of Visionary Leadership and Company Resilience

21:17 • 5min

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From Chaos to Collaboration in Leadership

26:01 • 27min

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The Mechanisms of Strategic Compounding in Business

53:30 • 4min

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Innovating with Discipline

57:30 • 18min

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The Role of Luck in Success

BE 2. 0 is an ambitious upgrade of Jim Collins and Bill Lazier's classic 'Beyond Entrepreneurship'. It includes new findings and insights, offering a roadmap for creating companies that not only survive but thrive over decades. The book focuses on building strong cultures, adapting to change, and ensuring long-term success through leadership and strategic frameworks.

Zen and the Art of Motorcycle Maintenance

Robert Pirsig

This classic novel by Robert M. Pirsig is a personal and philosophical odyssey that delves into the author's search for meaning. The narrative follows a father and his son on a summer motorcycle trip from the Midwest to California, intertwining a travelogue with deep philosophical discussions. The book explores the concept of 'quality' and how it informs a well-lived life, reconciling science, religion, and humanism. It also touches on the author's own struggles with his past and his philosophical quest, making it a touching and transcendent exploration of human experience and endeavor.

How to Win Friends and Influence People

Dale Carnegie

First published in 1936, 'How to Win Friends and Influence People' by Dale Carnegie is a timeless guide to improving interpersonal skills. The book is divided into four main sections: Six Ways to Make People Like You, Twelve Ways to Win People to Your Way of Thinking, and Nine Ways to Change People Without Giving Offense or Arousing Resentment. Carnegie's principles emphasize the importance of genuine interest in others, active listening, and avoiding criticism and argument. The book offers practical advice on how to build strong relationships, communicate effectively, and influence others by aligning their self-interest with yours. It has been a cornerstone of personal development and business success for generations.

In Search of Excellence

Lessons from America's Best-Run Companies

Tom Peters

Published in 1982, 'In Search of Excellence' by Tom Peters and Robert Waterman is a landmark management book. It analyzes 43 top-performing companies from the Fortune 500, using the McKinsey 7-S model, to identify eight common themes that contributed to their success. These themes include a bias for action, staying close to the customer, promoting autonomy and entrepreneurship, productivity through people, hands-on and value-driven management, focusing on core business, maintaining a simple organizational structure, and fostering simultaneous loose-tight properties. The book emphasizes the importance of people, customers, and action in achieving business excellence and has been widely influential in management practices.

Great by choice

Uncertainty, Chaos, and Luck--Why Some Thrive Despite Them All

Morten Hansen

Jim Collins

This book explores why some companies succeed in highly uncertain and chaotic environments while others do not. Collins and Hansen conducted extensive research, studying companies that beat their industry indexes by at least ten times over fifteen years in turbulent conditions. They debunk several myths about successful leadership in turbulent times, highlighting key principles such as fanatic discipline, empirical creativity, and productive paranoia. The authors also examine the role of luck and how successful companies leverage it to their advantage. The book provides practical insights and strategies for building a great enterprise in unpredictable environments.

Turning the Flywheel

Jim Collins

This monograph, a companion to 'Good to Great', delves into the flywheel concept introduced by Jim Collins. It explains how successful organizations, such as Amazon, Vanguard, and the Cleveland Clinic, have used this concept to gain unstoppable momentum. Collins teaches readers how to create their own flywheel, accelerate its momentum, and maintain it in shifting markets. The book emphasizes the importance of understanding the sequence and components of a unique flywheel and provides seven steps to construct and optimize it.

Built to Last

Successful Habits of Visionary Companies

Jerry I. Porras

James C. Collins

Jim Collins

Jim Collins and Jerry Porras's "Built to Last" examines the characteristics of visionary companies, those that have sustained exceptional performance over long periods. The authors identify key principles that contribute to long-term success, including a strong core ideology, a focus on innovation, and a commitment to continuous improvement. They analyze a range of companies across various industries, identifying common patterns and best practices. The book provides valuable insights for leaders seeking to build enduring and successful organizations. "Built to Last" has become a classic in the field of business strategy.

How the Mighty Fall

Jim Collins

In 'How the Mighty Fall', Jim Collins explores the reasons behind the decline of once-great companies. Through a four-year research project, Collins identifies five stages of decline: Stage 1: Hubris Born of Success, Stage 2: Undisciplined Pursuit of More, Stage 3: Denial of Risk and Peril, Stage 4: Grasping for Salvation, and Stage 5: Capitulation to Irrelevance or Death. The book offers leaders practical advice on how to detect early signs of decline and reverse their course to avoid failure. Collins emphasizes that decline is often self-inflicted and that understanding these stages can help companies avoid or recover from decline.

Good to Great

Why Some Companies Make the Leap... and Others Don't

Jim Collins

In 'Good to Great,' Jim Collins and his research team investigate why some companies achieve long-term greatness while others do not. The book identifies key concepts such as Level 5 Leadership, the Hedgehog Concept, a Culture of Discipline, and the Flywheel Effect. These principles are derived from a comprehensive study comparing companies that made the leap to greatness with those that did not. The research highlights that greatness is not primarily a function of circumstance but rather a result of conscious choice and discipline. The book provides practical insights and case studies to help businesses and leaders understand and apply these principles to achieve sustained greatness.

On today’s episode, we have a very special guest and that is researcher and author, Jim Collins. Jim is most well known for his books, such as Good to Great, Built to Last, How the Mighty Fall, Great by Choice, Turning the Flywheel BE.20, which have sold over 10 million copies worldwide. Trey Lockerbie has been having a lot of conversations lately about the global macro environment, and while it can be an endlessly fascinating topic and a fun spectator sport, it’s important to never lose sight on the fact that as investors, we are investing in companies, and it’s important to study the different species of companies and what makes them great. There is no better expert on this topic than Jim.

IN THIS EPISODE, YOU'LL LEARN:

(00:09:14) The definition of greatness.
(00:35:28) What makes up a Level 5 leader.
(00:43:16) How much weight to put into innovation.
(00:51:32) What exactly is a flywheel effect?
(01:16:29) How luck plays into success and so much more.

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
Jim Collins website.
Trey Lockerbie Twitter.

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