Jim Collins Drucker Day Keynote

Summary

Jim Collins delivered a keynote at the Drucker Day event, celebrating Peter Drucker's incredible contributions to management and society. Collins reflected on the lasting impact of Drucker's ideas, emphasizing the importance of self-management, disciplined organizations, and values-driven leadership. He highlighted the need for humility and selflessness in leaders, cautioning against the danger of charismatic leadership without effective management. Collins also encouraged the young generation to prepare for a future marked by instability, urging them to adopt the Stockdale Paradox: maintaining unwavering faith while confronting brutal facts. Ultimately, he challenged everyone to seek ways to be useful, embodying Drucker's legacy of impactful leadership and practical wisdom.

Highlights

• Jim Collins praises Peter Drucker for his revolutionary ideas in management and society. 🌟
• Collins admires Drucker's marriage as a role model for personal relationships. 💑
• He highlights the critical role of disciplined, self-managed organizations in supporting democracy. 🏛️
• Collins presents a challenge to leadership norms, advocating for humility and effective management. 🕶️
• The future calls for a 'level five' generation—leaders ambitious for causes greater than themselves. 🚀
• He prepares the young generation for upcoming challenges by teaching the Stockdale Paradox. 🏔️
• Economic and social challenges need leaders to adapt successfully to unpredictable environments. 🌦️

Key Takeaways

• Jim Collins celebrates Peter Drucker's impact on management and society, focusing on timeless principles. 📚
• Collins emphasizes the importance of self-management and disciplined organizations for a healthy democracy. 🎓
• Leadership should be paired with effective management to avoid danger, warns Collins. 🚨
• He stresses values-driven leadership and humility as keys to sustained greatness. 🙏
• Younger generations should prepare for future instability using the Stockdale Paradox: combine faith and realism. ⚖️
• Collins inspires everyone to focus on being 'useful', echoing Drucker's teachings. 💪

Overview

Jim Collins kicked off his keynote at Drucker Day by paying homage to Peter Drucker, whom he regards as not just a brilliant mind in management but also a significant contributor to society. Drawing on personal anecdotes, he underscored the influence Drucker had on his own life and work, particularly through Drucker's emphasis on conversation and constant learning. Collins deeply appreciates Drucker's focus on empirical research and practical wisdom as an antidote to the conventional top-down leadership style that often ignores essential management principles.

Collins shared his admiration for the relationship between Peter Drucker and his wife, Doris, attributing them as role models both professionally and personally. As a couple, their dynamic partnership served as an example of enduring strength and mutual respect, similar to Drucker’s approach to organizations. Drucker's teachings, according to Collins, underscore the importance of marrying leadership with effective management, encouraging leaders to be ambitious for their causes rather than themselves. Collins believes this mindset is essential for the next generation of leaders or 'level five leaders', who must navigate an increasingly unstable world with humility and principle-driven action.

Collins also took the opportunity to advise the younger audience on preparing for an unpredictable future, urging them to practice the Stockdale Paradox: maintain unwavering faith while facing harsh realities. He highlights the pressing need to ground organizational practices in core values, which he believes are not 'soft' but rather the cornerstone of enduring success. In closing, Collins inspired the audience to focus on being useful—an endeavor he sees as a fitting tribute to Drucker's legacy of impactful, purpose-driven leadership.

Chapters

• 00:00 - 03:00: Introduction and Personal Reflections The speaker expresses enthusiasm and gratitude for being present, highlighting connections with friends and colleagues such as Bob Buford, John Bachman, Rick Wartzman, and Ira Jackson. They appreciate the initiatives at the school and The Institute.
• 03:00 - 09:00: The Legacy of Peter Drucker The chapter discusses the influence and impact of Peter Drucker, recognized as a significant role model by the speaker and others. The speaker mentions a personal connection through conversations with individuals who also admire Peter Drucker, including Dora Strucker, indicating the broad and personal legacy Drucker has left behind.
• 09:00 - 17:00: Leadership vs. Management This chapter explores the nuances between leadership and management, emphasizing the influence of role models in developing successful relationships and careers. It highlights how personal experiences, such as long-lasting marriages, serve as examples for effective leadership and management approaches, advocating that lasting relationships are foundational to significant achievements.
• 17:00 - 25:30: The Role of Values and Principles The chapter titled 'The Role of Values and Principles' emphasizes the importance of fostering an environment conducive to conversations on significant topics. It highlights the role of academic settings, like Claremont, in facilitating meaningful discussions, drawing inspiration from the approach of Peter Drucker in his interactions.
• 25:30 - 41:00: The Level 5 Leadership This chapter explores the concept of 'Level 5 Leadership', emphasizing the importance of continuous dialogue and the ethos of institutional legacy, inspired by figures such as Peter Drucker. The chapter underscores the privilege and responsibility of contributing to a legacy that fosters a constant series of impactful conversations.
• 41:00 - 54:00: Facing Uncertainty and Instability In this chapter, the text explores the qualities of a great man, emphasizing the importance of looking ahead to our changing world through timeless principles. The speaker intends to provide context and offer a personal perspective on Peter's character, inspired by reflections from Bob Buford's comments.
• 54:00 - 73:00: Empowering the Next Generation The chapter titled 'Empowering the Next Generation' discusses the significant impact that influential figures such as Peter Duer had on the promotion and triumph of freedom and a free society over totalitarian regimes in the 20th century. The narrative suggests that while many may consider this perspective audacious, there is a rationale behind such a belief. It emphasizes the two quintessential methods of changing the world: through the sword, representing force and warfare, and through the pen, representing ideas and ideologies that shape societies. The chapter highlights the transformative power of the pen in reshaping societal values and fostering empowerment across generations.
• 73:00 - 90:00: Conclusion and Call to Action The chapter discusses the dichotomy between people of ideas and people of action, highlighting the importance of both in a free society. It emphasizes that high-performing and self-managed organizations are essential for the functioning of democracy. The chapter reflects on the quote by Churchill regarding democracy, suggesting its complexity and inherent difficulties, yet underscoring its value.

Jim Collins Drucker Day Keynote Transcription

• 00:00 - 00:30 I'm here and I'm very much alive um I am uh really very uh passionate to be here uh with you and to be really among friends friends like uh Bob Buford and John Bachman uh with Rick wartzman and Ira Jackson and the wonderful things they're doing with the school and The Institute uh which I applaud and I
• 00:30 - 01:00 expect remarkable things to come uh with friends from The Faculty uh and also uh to be among a uh a kind of a a role model friend from afar which is uh Dora strucker and uh it's interesting because I was talking with my wife Joanne on the phone uh this morning about uh chatting briefly last night with with Doris and we were just talking about how we always looked at I've always looked at of course uh Peter as a great role model uh
• 01:00 - 01:30 but I also uh always have admired uh their marriage their relationship also as a role model and we were saying yeah you know if you look at that kind of a role model we've been married now 29 years um and we got engaged 4 days after our first date and uh and we were saying with that role model in mind uh 29 years is really nothing other than just a nice start so uh it's also really a priv to
• 01:30 - 02:00 be here in the uh environment of Claremont uh in the drer school because I actually think that that that there it plays a very important role role in the world of thinking and of academics and this idea of it being a place for conversations right a place for conversations and a place for conversations on important topics that matter and of course we know that that's exactly how Peter director interacted
• 02:00 - 02:30 was through that constant series of conversations and the idea of having that as an entire ethos of an institution and I think that's a very important Legacy of uh both Peter Ducker and uh of the institution and so it is a a privilege uh to try to contribute to that in some small way uh here today I have been asked to uh honor Peter uh not by Looking Back and
• 02:30 - 03:00 articulating all the ways in which he was a great man and of course he was a great man uh but by looking ahead a bit at our changing world uh and perhaps uh through that lens building upon some Timeless principles but before I do that I would like to set a context a bit and to to shine a a light uh on Peter through my own lens uh Bob Buford mentioned something in his comments and I and I've reflected
• 03:00 - 03:30 on this a lot and I believe it is true the idea that uh Peter duer contributed more to the Triumph of freedom and free Society over totalitarianism as anyone in the 20th century including perhaps Winston Churchill and that may sound like an audacious statement but as I think about it it it has to be true right there are two ways to change the world The Sword and the pen and those who use the pen rewire the
• 03:30 - 04:00 brains of those who wield the swords there are people of ideas and people of of action and Peter chose the pen and really for for free Society to function uh we absolutely must have high- performing and self-managed organizations spread throughout society and it's really actually the reason why we're able to have this great melee called democracy what was it that Churchill said is absolutely the most hideous awful uh completely
• 04:00 - 04:30 irrational inefficient form of government ever devised except for all the others he also said about us Americans of course we'll always do the right thing after we've tried everything else but if you think about it that there's a n a natural inconsistency in in Democratic systems and nothing great happens in the context of inconsistency so what's the solution to that the solution to that is that spread throughout and people like city
• 04:30 - 05:00 managers and people in nonprofits and people in business corporations and people in organizations they are the ones who lead and manage in a way that produce the consistency that produce Real Results and it is only the relationship between those two between the consistent well-managed individual organizations that might now be creating movements with the kind of inherent inconsistency of democracy which allows us to have freedom that we get a workable combination and of course Rucker gave us the language the metaphor
• 05:00 - 05:30 the lens the understanding of the role of management as the critical function has become fashionable in uh recent years to um Revere the idea of leadership which I think is great but to kind of implicitly denigrate the idea of management and and the idea behind uh you'll have people who will kind of think of it is that the leaders are the ones who are cool right the leaders are the ones who we all want to be the leaders we want to have the black leather jacket and the and the cool
• 05:30 - 06:00 sunglasses and we want to lead and we want to be you know charismatic and we want to be all these things and kind of the managers like you know well that's just management and management is sort of uh more mundane and pedestrian and and that nothing could be further from the truth leadership without effective management and especially as Rick Warren mentioned last night charismatic leadership without effective management is not only ineffective it is
• 06:00 - 06:30 dangerous but of course Dr knew this and pointed it out more than 60 years ago and if we think that the world is permanently and irrevocably beyond the reach of totalitarian dictators that freedom will always Triumph never with a step backward I would simply remind us of our history it is not on our
• 06:30 - 07:00 side most of the world's most dangerous and Powerful totalitarian States came long after 500 BCE Greece which was the birth prace of the notion of the Republic and the democracy and look what happened in between there is no law that says it is an inevitable march to free society and I believe that free Freedom wins as Ducker taught
• 07:00 - 07:30 us in direct proportion to our ability to self-manage if we deliver organizations that deliver results throughout Society in my own first encounter with uh ducker's contribution uh it really came through a research lens and my colleague Jerry poris and I were engaged in a research project at Stanford where we were trying trying to understand what
• 07:30 - 08:00 separated truly enduring great companies from others over long periods of time and we were going back into historical archives uh so for example of companies like hulet Packard and MC and Motorola and Johnson and Johnson and General Electric and and we were studying these companies over the long course of their evolution and so you'd be going through boxes of archived material at places like HP and you actually have David Packard's original typewritten notes from the very very first meeting August
• 08:00 - 08:30 23rd 1937 at 2 p.m. in the afternoon when he and Bill huet got together to form huet Packard by the way there's a very interesting little side note on that it's very fun um they didn't know what they were going to make which I've always just loved uh they uh uh they get together and say we decided to form a company in the radio electronics and electrical engineering field very broadly defined and then it goes on to say the question of what we will Design manufacture and sell however was postponed and this is the founding of the company but if you think of it it's it was a very drer like approach because
• 08:30 - 09:00 what they essentially were saying is our ultimate contribution our ultimate product is not going to be a calculator or an oscillator it's going to be an organization that has values and if we build the right organization with values it will do remarkable things but that is our creation not a product not a spe though all that stuff changes and as we started looking inside these organizations and we were studying
• 09:00 - 09:30 them and I I was not particularly familiar with ducker's work as in in depth kept coming across these notes and I kept picture like David Packard standing up in the early formative days of HP waving a practice of management and giving a sermon to all of the people about what you're going to do if you go back and you look at the original statement of hulet Packard objectives written by David Packard in 195 7 before they went public
• 09:30 - 10:00 CU he said we're going to have pressures of the markets if we go public so what we have to do is we have to be very clear what we are before we hit that pressure writes down what later became the basis of the HP way but was really what he called these 10 objectives objectives where's the word objectives come from right from duer right he writes them down and if you read those 10 points they are straight out of the practice of management it should not have been the hulet Packard company it should have been the hulet Packard Drucker company
• 10:00 - 10:30 HPD and this was true across many of the companies that we studied and want I realize is there was these intellectual fingerprints at pivotal stages of these Enterprises and as we were struggling with what to name the book that came out of this U we tossed aside 125 titles in frustration our publisher was going nuts cuz we just kept vetoing all of our titles finally I just blurred it out one day why don't we just name it drer was right and we're
• 10:30 - 11:00 done and we ended up calling it uh built to last which of course uh he was the interesting thing we talk about this question of Drucker now more than ever um I don't believe that that is just a slogan in any way it is an empirical fact from our research this is not a perspective it's not a philosop it is an empirical fact
• 11:00 - 11:30 that if you look systematically at those that became great in contrast to those that do not and you look at those that were great that lost it that fell and you ask the question two choices those that get those get in uh those that fall fall a because they fail to learn the new stuff as it comes along or B because they fail to implement with excellent the Timeless principles we
• 11:30 - 12:00 already know to be true the answer is very clearly be it is very hard to argue that the financial crisis we went through is because all of the financial institutions were adhering to fundamental sound disciplined management
• 12:00 - 12:30 I believe that Peter's impact and others may have different views this is just my peculiar lens derives not just from the specific ideas but from his approach to ideas an approach that has had a huge influence on the way I like to think about ideas and others have had to think about ideas and I think this Approach at least the the part that H kind of jumped out at me has four parts to
• 12:30 - 13:00 it the first is a number one he was deeply empirical and what I mean by empirical is not necessarily quantitative data what I mean is you go out and you look as he always talked about look out the window see what's actually out there don't try to think what the world should be look at what the world actually is and based upon that empirical observation then to derive insights you look out there then derive Theory rather
• 13:00 - 13:30 than deriving Theory and looking out and trying to make the world fit your theory I think this is why he always loved to interact with people Bob told the story last night about meeting with the uh early mega church leaders they weren't called that at that time and it's because I think that's where he was getting empirical evidence and and when I asked him I said why do you consult why do you work with companies you he said that's my laboratory right that's
• 13:30 - 14:00 empirical hands on number two oh and by the way on the empirical if you look at the the other great thinkers like Darwin they were also empirical I mean you read pages and pages and pages about pigeons but from which comes a single elegant idea that was ducker's approach as well number two he started first and always with results asking a simple question question what actually works and then
• 14:00 - 14:30 asking the question why does it work I recall a conversation I had with a faculty member uh when I was teaching at Stanford and uh we were discussing people that had influenced our thinking and I said well I really admire Peter Ducker and his faculty member had an absolutely remarkable response which was he kind of wrinkled his nose in this kind of disdainful response and a drer oh but he's so practical
• 14:30 - 15:00 I think Peter drer would have loved that he's so practical but it's it was never just kind of the details of the moment if you pick up a copy of concept of the corporation you don't go into it and say this is a how-to book on build how to build a corporation it was by going into the real empirical and the real practical aspects of things but then zooming way out and asking the big question what is the role of the corporation in
• 15:00 - 15:30 the evolution of society at this stage of human history so you get this wonderful blend of practical and very big questions which brings me to the third aspect of his approach he had the courage to ask the audacious questions I remember a conversation I had with uh uh another role model and person I admired greatly John Gardner uh who wrote self-renewal and leadership and Secretary of health education and
• 15:30 - 16:00 Welfare in the Johnson Administration and John Gardner um when I was talking with him about do I want to do a a full traditional academic career and end up doing a type of research that would lead me into that kind of normal path he said that would be fine it' be a good use of your brain but be aware of what has tended to happen Beware of the tendency to answer questions of increasing irrelevance with increasing
• 16:00 - 16:30 precision and I believe that the what what duer had the courage to do was to say you know not all important questions can be answered with increasing Precision but it doesn't prevent you from in the end being right on his approach was to ask increase questions of increasing significance with increasing empirical rigor
• 16:30 - 17:00 and I believe that my own view is there was one overwriting question which is how do we make Society not only more productive but more productive and more Humane and then finally the great signature of it all and I'll return to this at the end because I'm going to go to the questions aspect here is that everything was infused with a a tremendous compassion and deep concern
• 17:00 - 17:30 for the well-being of the individual you know if you built companies that destroyed people if you built well-managed organizations and destroyed human beings in the process this would be a failure and I'm going to return to the individual aspect here maybe towards the end uh shy hands how many young people do we have here I have to be careful I find young I keep changing that as I go
• 17:30 - 18:00 along but just for okay I'm not going to say young or old but how many are under the age of 30 in this room wonderful at the end you and I are going to have a little chat at least for a bit I have some thoughts for you I've brought okay so what I would like to do is to um uh spend a few minutes in this notion of looking forward teeing up some questions I don't know if I have real good answers for these questions but
• 18:00 - 18:30 what might be questions that I don't know if Peter would ask them today or not but they're questions that occur to me as we look forward I'm going to suggest three or four of them depending on my time and uh I brought about 10 but we'll have enough time for three or four the first question that occurs to me is how do we build Legions of level five
• 18:30 - 19:00 leaders and as as we have engaged in our research uh what we do is we're always comparing those that did something exceptional and built a great company in contrast to others that did not and I had always at the very beginning of that process discounted the role of the individual leader it always struck me as a great plug figure right
• 19:00 - 19:30 it basically said when we said it's all leadership we basically were saying we're ignorant because what we say is well we believe the answer is leadership if something was successful it must have been great leadership we went in a circle what did we learn and so I said to the good to Great research team as we're embarking on the research we will not have a leadership answer in good to Great which is of course highly conducive to their freedom of thought and uh I have this strange genetic need to surround myself with young people who really don't care what I think and uh as
• 19:30 - 20:00 the great uh Professor Hal levit uh used to like to say the the um the best students are those who never quite beli they're professors so one day I walked into the research team meeting the whole team had joined hands and I thought well that's a little different what's up and they said today Jim is the day we've decided to tell you that you are wrong what about about this anti- leadership bias that you have see
• 20:00 - 20:30 if we look at the companies that really made these good to Great Leaf you can't take the leaders out of the equation I mean to remove cork Walgreen from the Walgreens story or Coleman mockler from the Gillette story or dick from the Wells Fargo story is to ignore the data you tell us to pay attention to the data not to you we invoke that here today you are wrong and I and I pushed back and I said yes but what about the comparison companies the companies that didn't make it they also had leaders they had leadership would anyone on the team like
• 20:30 - 21:00 to argue that leak coko was not a leader Chrysler is a comparison company anybody want to argue that Jack eard of eard was not a leader but eard was a comparison company you cannot say that the differential was leadership they both had leadership it's like an equation numerator denominator crosses out goes away wrote it on the Whiteboard sat down and said let's go do something useful and the team their hands tightened and they said we thought you would say that that and we did our
• 21:00 - 21:30 homework and this is when the research team had a really remarkable empirical observation that led to an Insight yes both sets of companies had leaders but the good to great leaders were different than the comparisons they wore they had different cloth
• 21:30 - 22:00 and this is where we had this Insight of the level five leader that that leadership is a Ser a hierarchy of capabilities and level one is about individual capabilities level two is about your ability to play well with others right team capabilities level three is good competent effective management level four is then to blend that with the ability to set Direction and to lead but there is a level that ties them all together and the five the signature of the
• 22:00 - 22:30 five was their humility I mean this was an empirical observation that what separated the truly exceptional the true great winners who did this was not their great animist it was their humility defined really as an ability to channel their ambition into something bigger than themselves and it wasn't about them so really interesting talking to Rick Warren last night the first line of his
• 22:30 - 23:00 book right it's not about you well that's a that's a a a religious book we're doing an empirical study drawing upon thousands of years of combined historical and statistical were selecting based on stock returns we find the same sentence they understood it's not about you when I look at some of the people who have been associated with this event
• 23:00 - 23:30 people like Bob Buford and John Bachman and Francis hesslein and Rick Warren andosan Toyota what do they all share in common they are exemplars of the fact that they're they are incredibly ambitious but not for themselves and this is the five I worry and my question is which
• 23:30 - 24:00 way are we going as a society are we going down to where increasingly it's going to be those who are ambitious primarily for themselves who will be the dominant strain or will it be the level fives who will be the dominant strain if it's the for former we go the way of Rome
• 24:00 - 24:30 so we don't have a choice and when you look inside as we've had the privilege to do at even difficult things like education where we had the privilege to study what separated schools the center for future of Arizona did this I just happened to be sort of the thesis adviser looking at schools in poor Latino neighborhoods public schools with all of the constraints of public schools and yet some managed to to beat the odds and to overperform and to deliver outstanding
• 24:30 - 25:00 educational results for those kids and you compare them to other schools that are in the exact same circumstances with the exact same constraints and the exact same teachers unions and the exact same limited budgets and the same kinds of communities who don't overperform the answer cannot be their circumstances and what was really different was that in every one of those schools there was a level five leader like Julie Tate Peach who took responsibility to make her school in
• 25:00 - 25:30 Yuma Arizona a pocket of greatness that would deliver outstanding results and I got into an argument with a senator of the United States of America at a session I had a privilege to do with a group of senators about education and it was an argument back and forth and the senator was arguing the most important thing is to increase the budget and my response is if you increase the budget three-fold but you don't have an army of Julie tap peaches it doesn't matter
• 25:30 - 26:00 how do we have a West Point for Education how do we have level five leaders deployed into those principles that's how we make it work and how do we build armies and of course that's what Claremont is all about now let me give you a hopeful side because I think there's a lot of dark side of this it's pretty hard to argue that what we've watched in the last year is principally played out because of people who weren't ambitious for themselves
• 26:00 - 26:30 I'm deeply uh I have great faith in our self-corrective ability and perhaps we don't even just have level five leaders but this Young Generation coming up as a chief of staff of the army said to me at a session at West Point this is the most inspired and inspiring generation to come through West Point since 1945 I should get out of the way let them lead
• 26:30 - 27:00 maybe we have a level five generation in the making and the sooner we can get that level five generation into positions of responsibility and power the better off I believe we will be so my friends who are under 30 we'll get out of your way but there's a challenge an issue and what I worry about for this upand
• 27:00 - 27:30 cominging generation what I worry about for this wonderfully idealistic collaborative inspired generation is that they grew up in a historical anomaly how many times in human history do we have the combination of global stability which was provided by having
• 27:30 - 28:00 two superpowers and then one and almost unbroken Prosperity at the same time this is not the normal mode of History 200 200 ad Rome 500 BCE Greece 2,000 BCE Egypt I we can go through a few in history but it's not the norm the norm is usually instability and unbroken Prosperity is not also the norm so they grew up in
• 28:00 - 28:30 kind of an artificial time and so my next question is how do we prepare ourselves and how does the Young Generation prepare itself for the coming the Ferocious instability that is about to descend upon us
• 28:30 - 29:00 I'd like you to picture uh s waking up at below Mount Everest at base camp and a big storm comes blasting through the valley and you can hunker down in your tent and when the storm clears you can emerge and you can go climbing again but what happens uh if instead of being in the Safety and Security the stability and prosperity base camp you wake up as a vulnerable little speck at
• 29:00 - 29:30 27,000 ft on the side of the mountain where the storms are bigger and faster everything more uncertain everything more out of control there there you are not prepared there you are not psychologically prepared you are not physically prepared there you might be in real trouble and what we have just been going through might be more of a wakeup call that we're at 27,000 ft and we're very unlikely to be able to go back to the nice safe stability of
• 29:30 - 30:00 base camp we're up on the mountain and if in fact the last 30 years were the anomaly then we're going to be on that mountain now I'm confident Prosperity will return it's what we know how to do I'm not at all confident that stability is going to return
• 30:00 - 30:30 and speaking as an American and I know not everyone in this room is American um this is where I think we are particularly exposed to the competitors from outside our outside the United States when I meet with my friends from say Russia I had a group come to my laboratory from Russia they're in their late 30s early 40s running this giant company in Russia and you realize that in their late teens or
• 30:30 - 31:00 20s they woke up one morning and their entire world had evaporated the tenants that they had grown up with gone the economy doesn't work the entire social system overcome now they've had to learn how to operate in this other mode and what you realize when we were talking about the economic crisis they said oh we don't worry that much about the economic crisis we have a different we just call it New Economic
• 31:00 - 31:30 conditions and I talked to my friends from Brazil who grew up with things like 30% a month inflation at times where you always make sure that you take a cab not a bus because you see you pay for the cab ride at the end and inflation helps you over the course of the ride or my friends from Argentina who say in
• 31:30 - 32:00 Argentina even the past is unpredictable here's my point people in India Brazil Russia emerging Africa they've already been climbing at 27,000 ft and they know how to do it and we are going to have to learn how to
• 32:00 - 32:30 do it now in speaking to our young folks on this I would like to give you a way of thinking that has been enormously helpful to me that came from the good to Great research for dealing with great difficulty and it was what we came to call the Stockdale Paradox and the Stockdale paradox was taught to us by when we were doing
• 32:30 - 33:00 the good to Great research we trying to make sense of the CEOs when and in doing that I just by chance happened to get to know Admiral Jim Stockdale who was the highest ranking military officer in the Hanoi Hilton shot down in 1967 was there till 1974 they could pull him out at any time and torture him and they did who tortured over 20 times and I had the privilege to get to know Admiral Stockdale and uh we were going to The Faculty Club one day and I had read his book in Love and War which was written
• 33:00 - 33:30 in alternating chapters by himself and his wife about their years when he was in the camp and I got depressed reading the book because it seemed so Bleak it seemed so difficult it seemed you know it it's like we can all endure anything if we know it's going to come to an end and we know when but what if you don't know if it's ever going to come to an end and you certainly don't know when so I asked Admiral Stockdale how he dealt with that and he said you have to realize I never got depressed because I
• 33:30 - 34:00 never ever wavered in my faith that not only I would get out but I would turn being in the camp into the defining event of my life that in retrospect I would not trade later when we were up the hill I asked him I said Admiral Stockdale who didn't make it out as strong as you and he said easy it was the Optimus I said The Optimist you sounded
• 34:00 - 34:30 optimistic he said no I was not optimistic I never wavered in my faith that I would Prevail in the end but I was not optimistic I said what's the difference oh the optimists always thought we'd be out by Christmas of course Christmas would come and it would go and then we were going to be out by Easter and Thanksgiving and then Christmas would come again and they died of a broken heart
• 34:30 - 35:00 and that's when Admiral Stockdale grabbed me by the shoulders and said this is what I learned when you're facing in you're imprisoned by great Calamity by great difficulty by great uncertainty you have to on the one hand never confuse the need for unwavering faith that you will find a way to Prevail in the end with on the other hand the discipline to confront the most brutal facts we actually face and we're not getting out of here by
• 35:00 - 35:30 Christmas as I speak to this wonderful upand cominging level five generation and I I is having a conversation with a friend of mine who's going to be running for the US Senate and I asked him why he said nationally as we encounter great challenge we must have the Stockdale Paradox and as you get hit by the things we might get hit by never lose faith and to never deny those brutal facts that's the starting
• 35:30 - 36:00 point for our preparation two related thoughts on that particular question and it really ties to the the Ducker school it ties to The duer
• 36:00 - 36:30 Institute it ties to Claremont and it ties to Peter I mentioned earlier the work built to last it it's very interesting we were studying enduring great companies in contrast to others went back recently and realize we selected the study set for that study in 1989 two decades ago all 18 of the built to last companies are still Standalone independent and almost all of them very successful companies today if you took a random sample of large
• 36:30 - 37:00 publicly traded companies 20 years ago what are the probabilities that all 18 in your random sample would be Standalone independent and largely successful today the number is less the percentage is about 0.02% probability not only that 15 of the 18 built toas companies lived through the 1930s depression what do they teach us what has enabled them to have that what
• 37:00 - 37:30 did we find that separated them and what we found is that what really separated was not necessarily that they had smarter strategies although they often did or that they were sort of more financially Savvy although they often were it was because they were founded first and foremost and built always on a rock solid set of core values that are not open for negotiation and if you look at what gave them the
• 37:30 - 38:00 reason to struggle the reason to fight the reason to endure it wasn't strategic it was values and that is what this school teaches the great irony is people think that values are soft I've never understood that idea
• 38:00 - 38:30 the second point is we have now done two decades of research studying those that do well in contrast to those that do not across six different studies two in the social sectors four in business 7,000 years of combined corporate data and all different kinds of lenses and industries and so forth I would like to suggest maybe even assert as an empirical fact something that stands out and as we face this difficult world that we're heading into not that we're leaving we're heading
• 38:30 - 39:00 into the evidence is overwhelming whether you Prevail or fail endure or die whether you build something great whether you build greatness out of Calamity or from scratch depends largely on what you do to yourselves not on what the world does to you and and something that Peter had always said but now we have seen
• 39:00 - 39:30 empirically in our research there is no question that no matter what the world throws at us our destiny Our Fate and this is an empirical fact lies largely maybe not entirely but predominantly in our own hands from our own disciplines and our own choices
• 39:30 - 40:00 my uh third and probably last question so I have time to speak to our young people here a little bit but it leads into that how do we increase the percentage of people on the planet who find and live the three Circles of their personal Hedgehog
• 40:00 - 40:30 concept okay so this is kind of going to the idea of managing yourself but then scaling it up through organizations if you think about sort of how people apply themselves when we go back and we look at the good to Great data and some of the other data we find that that there's these three circles and you put your energies in the middle of three circles and the first circle is what you're passionate about and what you love to do and what you stand for and the second
• 40:30 - 41:00 circle is what you can be the best at and the third circle is what drives your economic engine okay now and you focus your energies there but let's drop that down a level to the individual how many of the folks under age 30 in here have had cross your mind the thought I wonder what I'm going to do with myself okay I'd like you to think then about finding your own three circles at an individual level which is think about it this way imagine that you could
• 41:00 - 41:30 engage your energies and your time directly in the middle of three tests first it is something for which you have great passion that you love to do and that absolutely reflects your values and when you wake up in the morning there's this sense of my goodness even if I getting paid for this I would want to do it even if I wasn't getting paid for it now imagine if in addition to that you could marry it to a second
• 41:30 - 42:00 Circle which is finding what you're genetically encoded for and there's a big difference of what you're good at and what you're genetically encoded for I discovered this as a young person I went off to college I thought I would be a mathematician I had done well on math test but when I entered courses like real analysis I met those who were genetic encoded for
• 42:00 - 42:30 math not being one of them I needed to find another version of my three circles and now imagine the third circle as you're engaged in something that makes that is of of great value it's of either social or economic or both of value it makes a contribution
• 42:30 - 43:00 you are useful now imagine you have all three man I'm passionate about this I love to do it it expresses my values I'm genetically encoded to do it when I do it I feel like a fish in water and then finally third I'm useful and what percentage of the world do you think has that
• 43:00 - 43:30 5% maybe not even what would happen to the world if let's say it's 3% if we then made it 20% of people who are doing what they're passionate about genetically encoded for and are useful are in positions of real contribution and value now I don't know the answer of how we make that percentage go up but linking back to the idea of maslo how
• 43:30 - 44:00 did he describe self-actualization it wasn't hanging out on the beach he defined self-actualization as discovering what you were meant to do and committing to the ardor of pursuing it with Excellence the purpose of free Society I would suggest is to systematically increase the percentage of people who do
• 44:00 - 44:30 exactly that and then they can do it for very long periods of time we were over at The Institute yesterday and there's this bookshelf with all of Peter ducker's books and I asked a question Bob mentioned this last night which book as it laid out chronologically did he write when he was 6 five management if you look on the Shelf
• 44:30 - 45:00 where does it fall onethird of the way through not 2/3 oneir 2/3 come after the age of 65 isn't that just wonderful and intimidating as a last question and I don't need to spend a lot lot of time that as we look at people who are
• 45:00 - 45:30 getting older and older and we're we're young at 60 and 70 and 80 how do we reverse this tendency to think that at 65 our work is behind us if we look at that bookshelf actually we should look at it is when we hit 65 everything has been a preparation and only onethird of our best work is done
• 45:30 - 46:00 when I asked Peter Ducker when he was 86 which of his 26 books at that point he was most proud of he said I'm still working on it the next one now within that I will leave one question for those who have moved and what Bob likes to think of as halftime I think there's a question that does deserve an answer it might be one that I Channel some of my energies into for those who are thinking about
• 46:00 - 46:30 being useful after they've been successful I was at a group of gathering of philanthropists people who are successful business people that have moved into philanthropy and I brought a question what systematically separates successful business people who become great and effective philanthropists from successful business people who become mediocre
• 46:30 - 47:00 philanthropist they had never thought about the question they thought it was simply good enough to become a philanthropist I would suggest it is not and yet the interesting thing is we don't really know what separates with one thing that came out of the conversation those who are the great and effective focused on results and not on credit
• 47:00 - 47:30 and so as we bring my time to a close I would like to now speak to our young people and give you 10 to-dos to consider those of you who are 40 years young 50 years young 60 years young you can also consider these but I specifically want to speak to our emerging level five generation and these are for your consideration the best students are those who never quite believe their
• 47:30 - 48:00 professors number one build a personal board of directors people selected not for their accomplishment but for their character the people you would be embarrassed to come to if you're thinking is this really the right thing to do that you realize that even asking
• 48:00 - 48:30 them would be embarrassing I remember when the personal board idea occurred to me I was 25 years old I did not have a father who I learned anything from except bad habits and I always resented the fact that my classmates in college could call their dad and ask for advice and I thought wow that is just odd and then I began to resent it and then I finally realized well if I didn't have a father I'll make one I'll create one so I started reading
• 48:30 - 49:00 biographies figure if I didn't get a dad I'll just invent one and as reading those biographies I was driving down Alma Street in Palo Alto one day and I was listening to these interviews with the great President Harry Truman done by Merl Miller and there's this wonderful line where Harry Truman says if you don't know the difference between right and wrong by the time you're 30 you never will and I pulled off the side of the road I'm panting I'm 25 years old I've Got 5 years to figure this out
• 49:00 - 49:30 and hence was born the idea of the personal board of directors your personal board does not always need to know their on your personal board Peter Ducker was on my personal board and never knew it and he was not selected for that because in my mind he was the greatest management thinker but simply because he was one of the
• 49:30 - 50:00 greatest people number two please turn off your electronic Gadget not for others but for yourself effective people take time to think begin the discipline of putting white space on your calendar where there's no phone no no email I was going
• 50:00 - 50:30 to say no facts but they don't even have that anymore uh no Twitter no emails no connections and engag in this glorious pockets of quietude to think do you know that Rick Warden reads a book every single day a book a day a book a day 365 days a year you read a th books in three years
• 50:30 - 51:00 number three uh this would be a great time in life to work on your three circles and perhaps consider the idea of you studying yourself like a bug right and of making empirical observations to say what does this bug do what is this bug passionate about and what is this bug encoded for and and with no judgment don't judge and say this bug should be better at math non-judgmental empirical observation of
• 51:00 - 51:30 what you really are passionate about genetically encoded for and where you can be useful and get input from those who love you who know you as empirical data on you number four what is your questions to statements ratio and can you double it John Gardner another member of my personal board brought me into his office one day and said said it occurs to me Jim you spend way
• 51:30 - 52:00 too much of your time trying to be interesting why don't you Channel your time around being interested that 10 seconds changed my life imagine going into every situation not with how to be interesting but how to be interested how to ask questions how to learn from everybody you meet what is your questions to statements ratio and can you double it and number
• 52:00 - 52:30 five for those who have dealt with health this one also then really jumps out and at some point all of us will add the question a specific question to live by if you woke up tomorrow morning and discovered that you had inherited $20 million and you also discovered you had a terminal disease and you only had 10 years to live what would go on your stop doing list
• 52:30 - 53:00 number six start your stop doing list how many here have a to-do list how many have a stop doing list when we were talking last night Rick war and I and Peter Ducker had asked the same question always of him every time he came not what have you done but what have you stopped doing because someone like rck War doesn't exactly have a shortage of energy to do
• 53:00 - 53:30 stuff and the real task is to always be clear about what to not do what to stop doing number seven unplug the opportunities that distract you just because something's a once- in a-lifetime Opportunity is a fact but not a reason if it doesn't fit your three circles remember there will always be many once in a lifetime
• 53:30 - 54:00 opportunities number eight how do we build that Legion of level five leaders find something for which you have so much passion that you are willing to endure the pain number nine great time of life to articulate the values that you will not compromise as a guiding constellation remember this thing about the 18 and the 15 companies and what held them well the
• 54:00 - 54:30 same applies at individual level if we're going to go through whatever we're going to go through what's the guiding constellation it starts not first with our strategies but with our values and number 10 prepare to live a life where at age 65 you're onethird of the way through your work so I would like to close in the last 5 minutes back with
• 54:30 - 55:00 Peter I mentioned earlier his concern and compassion for the individual I was a very afraid individual in 1994 I was completely unknown uh all I knew is that I didn't want to follow a traditional path I wanted to carve my own path and I was leaving the academic world and I was really nervous about whether this could work and I'd met a good friend of mine who knew Peter duer and he said said who do you admire I mentioned Peter he said well maybe Peter would like to talk with you I thought
• 55:00 - 55:30 Peter wouldn't want to talk with me why would he want to talk with me and then one day I get this message on my message machine this is Peter Ducker call me and I call him and I'm calling from the Seattle Airport and I'm talking into the phone because there's people around and I hear him yell through the phone speak up I'm not young anymore so I'm yelling into the phone scheduled this day to come down I will never forget the moment when he came to his
• 55:30 - 56:00 door he comes to the door and he reaches out and grabs my hand with two of his and he brings me across and he says Mr Collins I am so very pleased to meet you he says that before I have a chance to say it is an honor to meet you and we sit as many in this room has sat with him in the wicker chair and you keep wanting to ask Peter Ducker
• 56:00 - 56:30 questions but you don't get a chance cuz he's asking you questions and I remember how his brain work we went to lunch and he had a double espresso and a glass orer low preserve the core stimulate progress and he gave me great Solace of realizing that you know he stumbled as well I remember to describing the great frustration of writing and then having to write a whole chapter thinking it wasn't any good and throwing it in a
• 56:30 - 57:00 waste basket and he would looked at me and said that is immense progress I remember that every time now I throw a whole chapter in the waist basket progress and he taught me the idea that day that entrepreneurship is not a business idea it's a life idea right you can do a paint by numbers kit to life or you can try to paint a masterpiece on a blank canvas at the end of that
• 57:00 - 57:30 day which was one of those I still have all the notes of course but he said something that has come back to me over and over and over and over and over again he's turned me in that wonderfully challenging and loving way when he said I can see that you are very worried about your survival you'll probably
• 57:30 - 58:00 survive and do you worry a lot at your age about how to be successful that's all fine and good you'll probably figure that out but if you really want to make good on this day and it's time why don't you really think about how to be useful
• 58:00 - 58:30 and that's the level five question I don't see myself I see it as a journey but that's the level five question how do we be useful and so as I said earlier I believe there are two ways to change the world the sword meaning action and the pen and
• 58:30 - 59:00 which is why this idea of having Osan and Ducker on the same building is action and pen and when young people ask what can I do to make a difference I might suggest get your hands on an organization if you can't find one start one be like Wendy cop and employ the disciplines the disciplines of management which will amplify your leadership applying everything you can learn from
• 59:00 - 59:30 Ducker to lead it with disciplined impact to multiply your own personal impact by a thousandfold and therefor for to be useful times a thousandfold and if there is any better way to honor the legacy of Peter Ducker I cannot think of it I'm and he would smile not by saying he was a great man which he was but by going out and making
• 59:30 - 60:00 ourselves useful and so I leave you with that please go out and make yourselves useful thank you