Jim Collins at World Business Forum 2012: What is your return on luck?

Jim Collins, author of seminal management book “Good to Great” opened the 2012 World Business Forum at Radio City Music Hall in midtown NYC. This was the 9th annual World Business Forum, attracting a full house of attendees for the two day event.

Mr Collins based most of his talk on the historic Antarctic exploration and the race between Robert Scott and Roald Amundsen to be the first humans to reach the south pole. Scott and Amundsen started out on their missions at the same time, from the same distance to the pole, so the differences in approaching their missions are a useful study in goal setting and achievement. After sharing a number of insights which compared the two teams’ approaches to those of companies which prosper and companies which fail, Collins eventually summarized the difference between the two teams. Amundsen reached the south pole and returned to base camp with every member safe and sound, while Scott and his entire team perished on their return journey.

Jim Collins said that these results paralleled 20 mile marcher” companies versus booming but erratic companies. Amundsen was “a 20 mile marcher” with a daily target which he hit like clockwork; Scott was erratic, didn’t empirically test his equipment or have clear daily goals.

Management guru Jim Collins

Jim Collins used this helpful phrase –the 20 mile march– as a simile for setting and sustaining consistent business targets. He demonstrated via data that two companies which differ on constant, conservative progress and goal reaching substantially outperform companies which have exciting bursts of growth.

In summary, Jim Collins encourages businesses to set and achieve a consistent, disciplined target every single year.

Collins talked also about factors beyond discipline and targets. He said that the “X-factor” of great leadership is “humility combined with will”. Putting the vision of the business first is the key which successful leaders apply.

The role of luck was also a feature of Collins’ talk. The management guru tried to rigorously define “luck”, saying it can be the difference between a 3X company and a 10X company. After analysis of copious business data, he said that “luck” did not alone definitively cause 3x to 10x increases in business success, however what companies do with the luck that happens to them does. He defined this factor as a company’s “return on luck” and coached the audience to consider “how [one does] in good times is first and foremost how you do in the difficult times.”

Mr Collins closed his talk with his top 12 questions that all business leaders should ask themselves:

Do we want to build a great enterprise and are we willing to do what it takes?
Do we have the right people on our bus and in the key seats? 95% of key seats filled with the right people one year from today.
What are the brutal facts?
What is our hedgehog? What can we be the best at with our economic engine and with our passion?
What is our 20 mile march and are we hitting it?
Where should we be placing our big bets based on empiricalvalidation?
What are the core values that we will hold to no matter what?
What is our 10-20 year big hairy audacious goal?
What could kill us and how can we protect our flanks?
What should we stop doing to increase our discipline and focus?
What is our return on luck and how can we improve it?
Are we becoming a level-5 leadership team and are we building a level-5 culture?

In a charming postscript to his talk, Mr Collins related a warm meeting between him and Peter Drucker, during which Drucker scolded Collins to “try to be more useful, Mr Collins@”. This final thought reflected the depth of humanity in the management canon of Jim Collins.

My colleagues at Allegravita certainly have plenty of experience of the role of luck, in both good and bad ways. I think that we are laser focused to apply our best responses to good luck when it happens to us; we can probably do better at responding in a more disciplined way to bad luck.

Thanks to the World Business Forum 2012 team which which kindly invited me to represent Allegravita and attend the conference as their guest.