Jim Collins Drucker Day Keynote

Summary

The speaker pays tribute to Peter Drucker's legacy, emphasizing his belief in the power of effective management and leadership to uphold a free society. Highlighting Drucker's impact on enduring companies and the importance of self-managed organizations, the speaker reflects on the role of 'level five' leaders and the need for individuals to find their personal 'three circles' of passion, talent, and contribution. Addressing the younger generation, the speaker urges them to prepare for instability, embrace values, and strive for self-actualization, ultimately encouraging everyone to be useful in their endeavors.

Takeaways

• 😀 The speaker emphasizes the importance of being passionate and being among friends and role models, highlighting the influence of individuals like Peter Drucker on his life and work.
• 💑 The speaker shares personal anecdotes about his own marriage, illustrating the concept of a role model in relationships and the significance of enduring commitments.
• 🏫 The speaker praises the Claremont Graduate School and the Drucker Institute for their role in fostering important conversations and the legacy of Peter Drucker, who contributed significantly to the triumph of freedom and free societies.
• 🛠️ The speaker discusses the critical role of management in effective organizations, distinguishing between leadership and management, and argues that effective management is essential for the functioning of democratic systems.
• 🌐 The speaker warns against the potential decline of freedom and the need for self-managed organizations to ensure the continuation of free societies, referencing historical examples to emphasize the non-inevitable nature of freedom.
• 🔍 The speaker shares insights from his research into what makes enduring great companies, attributing their success to the application of timeless principles and effective management practices influenced by Drucker's work.
• 🤔 The speaker poses questions about the future, such as how to build legions of level five leaders and prepare for future instability, encouraging a forward-looking perspective based on timeless principles.
• 💼 The speaker introduces the concept of the 'three circles' of personal effectiveness: passion, ability, and contribution, and challenges individuals to find the intersection of these areas in their lives.
• 👴 The speaker addresses the misconception that work ends at a certain age, using Drucker's own prolific writing career as an example of lifelong contribution and the potential for ongoing impact.
• 📝 The speaker provides actionable advice for personal development, such as building a personal board of directors, turning off electronic gadgets to think, and focusing on questions rather than statements to foster learning and growth.
• 🏆 The speaker concludes with a call to action, urging everyone to go out and make themselves useful as a way to honor Peter Drucker's legacy and to contribute positively to society.

Q & A

What is the significance of the Claremont environment and the Drucker School in the context of the speaker's speech?

The Claremont environment and the Drucker School are significant as they represent a place for important conversations and a hub for academics and thinking, which the speaker highly values. The speaker sees the school as playing an important role in shaping the world of ideas and academics, much like Peter Drucker's legacy.

How does the speaker describe the role of management in a free society?

The speaker describes management as a critical function in a free society, emphasizing that high-performing and self-managed organizations are essential for democracy to function effectively. He suggests that the relationship between well-managed individual organizations and the inherent inconsistency of democracy allows for a workable combination that supports freedom.

What is the speaker's view on the balance between leadership and management?

The speaker believes that while leadership is important, effective management is equally crucial. He warns that charismatic leadership without effective management can be not only ineffective but also dangerous, highlighting Drucker's teachings on the importance of both aspects.

How does the speaker relate the concept of 'Built to Last' to Peter Drucker's influence?

The speaker relates 'Built to Last' to Drucker's influence by explaining that the enduring principles and values found in companies that were successful over time were often influenced by Drucker's teachings. The speaker's research found that companies with 'intellectual fingerprints' of Drucker's work at pivotal stages were more likely to become great and remain so.

What is the 'Level Five Leader' concept mentioned by the speaker, and why is it important?

The 'Level Five Leader' concept refers to a leader who combines a deep personal humility with professional will. These leaders are ambitious, but their ambition is channeled into something bigger than themselves. The speaker considers this type of leadership crucial for building great organizations and societies.

What does the speaker suggest as a method for young people to prepare for future challenges?

The speaker suggests that young people should embrace the 'Stockdale Paradox,' which involves maintaining unwavering faith in their ability to prevail while also confronting the brutal facts of reality. This mindset will help them navigate through the expected instability and uncertainty in the future.

How does the speaker define the 'Three Circles of personal Hedgehog' concept?

The 'Three Circles of personal Hedgehog' concept involves finding the intersection of what you are passionate about, what you can be the best at, and what drives your economic engine. The speaker encourages individuals to focus their energies at this intersection to achieve personal fulfillment and societal contribution.

What is the 'Stockdale Paradox' and how did Admiral Stockdale explain its importance?

The 'Stockdale Paradox' is a concept that balances unwavering faith in eventual success with the discipline to face the harshest facts of the current reality. Admiral Stockdale explained its importance as a means to endure and prevail in the face of great difficulty, as he did during his time as a prisoner of war.

What advice does the speaker give for building a 'personal board of directors'?

The speaker advises selecting individuals for one's personal board of directors based on their character rather than their accomplishments. These should be people whose opinions you value and whose judgment you respect, even if they are not aware they are on your board.

How does the speaker emphasize the importance of values in building enduring success?

The speaker emphasizes the importance of values by stating that enduring success is built on a rock-solid set of core values that are not open for negotiation. He cites research showing that companies and individuals who adhere to their values are more likely to build something great.

What is the speaker's view on the role of age in one's capacity to contribute meaningfully to society?

The speaker challenges the notion that age limits one's capacity to contribute, pointing out that Peter Drucker's most significant works came after the age of 65. He suggests that reaching 65 should be seen as the beginning of the most productive phase of life, rather than the end.

What final advice does the speaker offer to the audience, particularly the younger generation?

The speaker's final advice is to focus on being useful, as per Drucker's influence. He encourages the audience to apply the disciplines of management to amplify their leadership and personal impact, thereby making a significant difference in the world.

Outlines

00:00

🤝 Embracing the Legacy of Peter Drucker

The speaker expresses gratitude for being among esteemed company and friends, highlighting the influence of Peter Drucker on his life and work. He discusses the importance of role models, the significance of marriage as a model of relationship, and the privilege of contributing to the legacy of Drucker's emphasis on conversation and the timeless principles of effective management. The speaker also reflects on the role of management in upholding freedom and democracy, suggesting that Drucker's ideas on self-managed organizations are crucial to the functioning of a democratic society.

05:01

📚 The Intersection of Leadership and Management

This paragraph delves into the critical role of management and its often-underappreciated importance in the success of organizations. The speaker challenges the modern tendency to idolize leadership at the expense of management, emphasizing that effective management is essential for the success and safety of organizations. He discusses the historical context of totalitarian states and the imperative of self-management for the triumph of freedom, drawing on his research into enduring companies and their adherence to Drucker's principles.

10:04

🔬 The Empirical Approach to Enduring Success

The speaker outlines the empirical approach of Peter Drucker, who emphasized observing reality to derive insights and theories. He discusses the importance of starting with results and asking why they work, as well as the courage to ask audacious questions. The speaker also highlights Drucker's unique blend of practicality and big-picture thinking, which has influenced his own approach to ideas and research.

15:06

🌟 The Role of Level Five Leadership

The speaker introduces the concept of Level Five Leadership, which is characterized by a combination of personal humility and professional will. He discusses the findings from his research on enduring great companies, emphasizing that the leaders of these companies were not just ambitious but channeled their ambition into something larger than themselves. The speaker also raises concerns about the direction society is taking and the potential dominance of self-ambitious individuals over those who are ambitious for the greater good.

20:07

🏫 Cultivating Greatness in Education

In this paragraph, the speaker discusses the importance of having Level Five leaders in education, using the example of schools in challenging environments that have managed to excel. He argues for the necessity of such leaders in driving educational excellence and criticizes the idea that increased budgets alone can solve educational challenges. The speaker calls for a West Point-like institution for education to cultivate Level Five leaders.

25:08

⛰ Preparing for the Challenges of Instability

The speaker addresses the need to prepare for a future that may be characterized by instability and uncertainty, likening it to climbing at high altitudes where conditions are harsh and unpredictable. He contrasts the recent period of global stability and prosperity with the historical norm of instability and suggests that the younger generation, which has grown up during this anomaly, must learn to adapt and thrive in more challenging conditions.

30:09

🤔 The Stockdale Paradox and Facing Adversity

The speaker introduces the Stockdale Paradox, a concept based on the experiences of Admiral Stockdale during his time as a prisoner of war. The paradox involves maintaining unwavering faith in eventual success while simultaneously confronting the harsh reality of the situation. The speaker emphasizes the importance of this mindset in dealing with great difficulties and suggests it as a guiding principle for the upcoming generation.

35:09

🔑 The Power of Core Values and Self-Management

The speaker discusses the importance of core values and self-management in building enduring success, drawing on examples from his research into companies that have thrived over time. He argues that values are not soft but rather the foundation for resilience and success in the face of adversity. The speaker also asserts that individual and organizational destiny largely lies in our own hands, shaped by our disciplines and choices.

40:10

🔄 The Three Circles of Personal Fulfillment

The speaker explores the concept of the 'Three Circles of Personal Hedgehog Concept,' which involves finding the intersection of what one is passionate about, what one can be best at, and what drives one's economic engine. He encourages individuals, especially the younger generation, to discover and pursue these intersections to achieve fulfillment and contribute meaningfully to society.

45:10

👴 Redefining the Meaning of Success at 65

The speaker challenges the notion that work and contribution end at a certain age, using Peter Drucker's prolific writing career as an example. He suggests that reaching 65 should be seen as the beginning of a new phase of work, where one's best efforts are yet to come, rather than the culmination of a career.

50:10

📘 The Art of Being Useful: A Tribute to Peter Drucker

In the concluding paragraph, the speaker reflects on a personal encounter with Peter Drucker and the profound advice he received about focusing on being useful rather than merely successful. He encourages the audience to honor Drucker's legacy by applying his teachings to amplify their impact through disciplined management and leadership, thereby making a significant difference in the world.

Keywords

💡Passion

Passion is a strong emotional drive or enthusiasm for a subject or activity. In the video's context, it is a core component of an individual's personal Hedgehog concept, which is about finding what one loves to do and stands for. The speaker emphasizes the importance of aligning one's work with their passions, as it contributes to a fulfilling life and meaningful contribution to society.

💡Role Model

A role model is a person who serves as an example, inspiration, or ideal for others to follow. The script mentions looking up to certain individuals like Peter Drucker and Doris and Bob Buford for their marriages and professional accomplishments. The concept of role models is integral to the video's theme of personal and professional development, highlighting the impact such figures can have on one's life direction and values.

💡Management

Management refers to the administration of an organization or institution. The video underscores the importance of effective management, especially in contrast to mere leadership. It discusses how management is not mundane but critical for the functioning of organizations and the triumph of free societies, drawing on Peter Drucker's teachings that management is a critical function that should not be denigrated.

💡Leadership

Leadership is the ability to guide, influence, and inspire others towards achieving goals. The speaker discusses the concept of Level 5 leadership, characterized by humility and a blend of personal humility with professional will. It is portrayed as a key factor in building great organizations and contributing to society, with the script highlighting the difference between leaders who are ambitious for themselves versus those who are ambitious for the greater good.

💡Institute

An institute is typically an organization established for a specific purpose, such as education or research. The Claremont Graduate School and the Drer Institute are mentioned in the script as places that play an important role in academics and the world of thinking. They represent the value of institutions in fostering conversations on important topics and contributing to societal progress.

💡Freedom

Freedom, in this context, refers to the state of being free from control or restriction, particularly in a societal and political sense. The video discusses the triumph of freedom and free societies over totalitarianism, attributing significant contributions to this triumph to individuals like Peter Drucker. It also touches on the idea that freedom is maintained through the effective self-management of organizations within society.

💡Empirical

Empirical refers to information or knowledge that is based on observation and experience, rather than on theory or pure logic. The speaker admires Drucker's empirical approach, which involved looking out the window to see what's actually there and deriving insights from real-world observations. This approach is highlighted as a key element in Drucker's methodology for understanding and influencing the world.

💡Values

Values are the principles or standards of behavior that guide an individual or social group. The script discusses the importance of core values in enduring great companies and individuals. It suggests that having unwavering faith in one's values, even in the face of great difficulty, is a key to success and a defining characteristic of organizations and people that prevail.

💡Conversations

Conversations refer to the act of talking in an informal way, often exchanging ideas or information. The video script mentions the importance of conversations as a place for the exchange of important ideas that matter. It is suggested that the ethos of an institution like the Drucker Institute is built on the foundation of fostering meaningful conversations.

💡Legacy

Legacy refers to something transmitted by or received from an ancestor or predecessor. In the script, the speaker refers to the legacy of Peter Drucker, emphasizing his impact on the understanding of management's role in society and the enduring principles he advocated. The legacy is portrayed as a guiding influence for future generations in both thought and action.

💡Usefulness

Usefulness is the quality of being useful or having a practical value. The speaker concludes the video with an emphasis on being useful as a guiding principle in life. It is suggested that making oneself useful, particularly by applying the teachings of Drucker to lead and manage organizations effectively, is a way to honor Drucker's legacy and make a meaningful difference in the world.

Highlights

Passionate presence and commitment among influential friends and colleagues.

Applauding the remarkable work of The Institute and its role in shaping academic conversations.

The importance of the Claremont environment in fostering critical thinking and academic discussions.

Honoring Peter Drucker not by reflecting on his past but by looking ahead with timeless principles.

Peter Drucker's significant contribution to the triumph of freedom and free society.

The role of management as a critical function for the functioning of a free society.

The balance between leadership and management for effective organizational performance.

The necessity for self-managed organizations to support the inherent inconsistency of democratic systems.

Drucker's legacy in shaping the ethos of institutions focused on conversations and important topics.

The empirical approach of Drucker in deriving insights from practical observations.

The concept of 'Built to Last' and its connection to Drucker's principles of management.

The importance of enduring values for organizations to prevail through economic crises.

The Stockdale Paradox as a method for dealing with great difficulty and uncertainty.

The need for individuals to find their personal 'Three Circles' of passion, ability, and contribution.

The significance of self-actualization as described by Maslow and its relation to Drucker's teachings.

The potential impact of increasing the percentage of people living within their 'Three Circles'.

The advice for young people to build a personal board of directors and focus on character.

Encouraging the next generation to embrace the challenge of instability and uncertainty.

The importance of being 'useful' as a guiding principle for life and work, as emphasized by Drucker.

Transcripts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ourselves useful and so I leave you with

that please go out and make yourselves

useful thank

you