Jim Collins Talks to Chinese CEOs About Leadership

Finding the Right People for the Key Seats

    Q: In "How the Mighty Fall" you identify the five attributes of the right people, one of which is passion about the company and its work. Does responsibility for generating that kind of passion start with the CEO?

    A: Well, if the CEO is not passionate, you're sort of dead. They need to have a genuine infectious passion. You would think it would be hard to be passionate about some of the businesses we have studied -- commodities, steel, groceries -- but there are people who are really passionate about them.

    They may be equally passionate about the company culture, or values, or about doing something really well. There are a lot of things you can be passionate about.

    The critical thing is the key seats, where I don't think you can have people who are not passionate about what you're doing; otherwise they won't be capable of doing great things.

    I think you find people who are passionate. I don't think you can necessarily make people passionate.

    In "Good to Great" we were wrestling with the question of how did these executives, who were not particularly charismatic, get people motivated and excited about the changes that needed to take place.

    We kept asking them this question, and getting a blank response. They didn't understand the question. And we finally realized they didn't spend time motivating people. They thought the idea of motivating people was a waste of time.

    What they spent time on was finding self-motivated people, and then putting things in place in such a way so as not to demotivate them.

    One of the key qualities of the right people in the key seats is they don't think of their work as a job. They think of it as a set of responsibilities, and that's a huge difference. "I'm responsible. I don't have a job. I don't have a list. I have a responsibility."

    The second is that the right people in the key seats do what they say they're going to do. Period. Accountability. That means they are very careful about doing what they say they will do.

    Third is what we call "window and mirror" maturity. When something goes badly, they don't blame others. Even if it wasn't their fault, but was their responsibility, they'll stand in front of a mirror and say "I'm responsible." The flipside is, when things go really well, they don't take a lot of the credit. They point to other people or forces or factors that helped them be successful.

    These are character traits. What we've learned about great companies with great cultures is that they focused on character more than skills. They would hire people who didn't necessarily know the business, and teach them the business.

    You can't teach the work ethic, a sense of responsibility, a set of values. People bring those with them. You can teach skills.

    It's very interesting in Nucor's case how they opened their steel mills in farming towns. They did so because of the strong rural, agrarian work ethic in those communities, with the idea they could teach those people to make steel.

Core Values of Great Companies

    Q: The biggest challenge in China today is finding, developing and retaining key talent. Until recently, the best and the brightest tended to choose MNCs in China as their ideal places to work, but a growing trend is for them to choose Chinese companies. In a hyper-competitive talent market like this, what if anything can companies do to differentiate their core values from the competition to enhance their ability to attract the best talent?

    A: When Jerry Porras and I did the research on "Built to Last", it was absolutely clear that enduring great companies have a set of strong values that they hold to over a long period of time. This was a key finding, and they didn't change those values over time. They changed their practices, they evolved their culture, moved into different businesses; but the values were like fixed posts in the ground.

    Then we asked the question: "Is there a right set of core values?"

    What we found was that among different companies there was no right set of core values. There may be some wrong ones, but there certainly was no right one.

    What we learned is that it's not what core values you have; it's that you have core values. That you know what they are, that you believe in them very deeply, and that you live them very consistently over time.

    That brings me to the key point, which is how they translate those core values into a set of mechanisms. That is enormously powerful.

    To return to the Nucor example, Ken Iverson built this company which basically defied gravity, remaining very profitable year in and year out. He had this incredible sense of egalitarianism. He didn't write this down on a sheet of paper. He did things like the following:

    When they were already a FORTUNE 500 company, the corporate headquarters staff was less than 25 people. This sends a signal that corporate is not where it's at. They were crammed into a rented office, the size of a dentist's clinic. It had cheap veneer furniture, and Ken Iverson would answer his own telephone. The corporate dining room was a little strip mall diner across the street, called Phil's Diner. The workers in the company had more perks than the executives -- it was inverted.

    When they had a profitable year, everyone would share in that. But, what's very interesting is that in times when profits would go down, the people at the top took the biggest hit, rather than the other way around.

    They had all these productivity mechanisms, with competing teams of steel workers with pay tied directly to the productivity of their teams. It was an incredibly intense place to work, and anyone who came in there who just kind of wanted to hang out rather than work hard, didn't last very long. They had very high employee turnover in the first year, something like 50%, followed by almost no turnover the year after.

    So, you step back and ask whether it was Nucor's values that were distinctive, or their ability to translate those values into a whole series of specific mechanisms and consistencies that brought it all to life. That is really how they differentiated themselves.

    If you're an entrepreneur or you're building a company, and you're bringing folks in, you're trying to create this feeling of momentum and uniqueness; but the critical question is how you build those tangible mechanisms of alignment with your values. Not just one or two, but a whole series of them.

    It wasn't that Nucor had a better value statement. In fact we never really found a value statement at Nucor. What we found were these very specific attributes. That's where you really build the company. Then the culture becomes distinctive. People who love it stay, and people who don't fit with it leave.

Can Teamwork Be Taught?

    Q: You spoke a moment ago about character traits in the context of finding the right people, and the five attributes of the right people. One of the attributes which struck me as missing from that list is the ability to work in teams. Some would say that the Chinese education system is not particularly strong at fostering teamwork. You've said that character traits are not easily taught, but what about teamwork? Is that something that companies can teach?

    A: I do believe that the sense of people really depending on each other is something that can be taught, and we can see that.

    One of my favorite company start-up stories is Fedex, which I understand has a fairly substantial presence in China; but many people don't know about the early days of this company. Fred Smith, whom I greatly admire, came back from serving in Vietnam with the U.S. Marine Corps. What he learned through that experience was that you only get through the worst situations together.

    Related to that, I once asked a Marine Corps General what the purpose of boot camp is. He responded that the purpose is not to find the toughest people, it's to teach people that under the worst circumstances everyone will break; so the only way you get through is by helping each other. That's what it's really all about.

    Fred Smith had this experience, and he hated the idea of an executive class and everybody else, preferring a "We're all in this together" spirit. So he built an entire system in which everyone depends on each other. His belief was that you can train people in the ethic of "You're depending on me; I'm depending on you," and he made this the cornerstone of the Fedex culture.

    I would argue that teamwork is very important, but also a very learnable capability.