How to Decide When You Don't Have All the Facts | Good to Great Author Jim Collins (Audio)

KEYPOINTS

• 01

  A real mentor invests in your character and expects nothing back.

  Collins's biological father was so absent that, visiting him in an adobe hut with a dirt floor, Collins realized 'there is no dad here'. Bill Lazier, a successful entrepreneur teaching his first class at Stanford, took a genuine interest in Collins with no agenda. He didn't want a company to invest in or research help. Over dinners with his wife, Dorothy, he talked about values, commitments and what you'll serve. Collins saw himself as 'a super high-energy propulsion machine' with no guidance system, and Lazier helped him build one. Collins re-released Beyond Entrepreneurship (BE 2.0), which they wrote together, with a new chapter to share Lazier, who died in 2004, with the world.

• 02

  Build your own 'father': 100 biographies, a personal board of directors and mentor moments.

  In his 20s Collins set out to read 100 biographies, because each gives the full arc of a life. Churchill's six-volume war memoirs shaped how he leads through turbulent times. Driving down Alma Street in Palo Alto, he heard Truman say in the audiobook Plain Speaking that if you don't know right from wrong by 30, you never will. He pulled over, realizing he had about five years. He drew a board table with seven seats, chosen for character rather than success, with his wife Joanne and Lazier among them, and hung it above his desk as a moral compass. Most of those members have died, so in his 60s he keeps a 'personal band of brothers', some much younger, whom he wouldn't want to let down.

• 03

  The test of a great relationship: each person thinks they benefit more.

  Lazier divided people into those who treat life as transactions and those who build relationships. You can have a successful life through transactions, he said, but a great life only through relationships. When Collins asked what makes a great relationship, Lazier said that if you ask each person separately who benefits more, both answer 'I do', because both are giving rather than taking. Collins counts curiosity and relationships as his two core values. He distrusts assigned mentors and 'mentoring' that is really networking for doors to open. Discipline, he adds, is more about a stop-doing list than a to-do list.

• 04

  Decide your opening bid: trust by default, and guard against catastrophe.

  After leaving Stanford, Collins was shocked when people abused his trust. Lazier, who had been burned financially by someone close, called the choice one of life's most important forks: start with trust that can be lost, or with mistrust that must be earned. He chose trust, as a hard-headed bet. The best people are drawn to trust and repelled by 'earn it' suspicion, and trusting people makes them more likely to act in trustworthy ways. Losses are 'part of the cost of living', but you never trust your CFO without watching the cash. Collins notes that game theory points the same way: open with cooperation.

• 05

  Don't confuse a long life with a great life. 'Put the butter on your waffles.'

  Collins was throwing pages away while writing their first book. Instead of a lecture on grit, Lazier said: 'If this isn't fun, we should stop doing it.' The day after they handed in the manuscript, Lazier had a quintuple bypass. Months later, at their Saturday waffle fest at Peninsula Creamery in Palo Alto, he buttered his waffle while Collins watched in horror. Lazier explained that being wheeled into surgery, he'd smiled, because he knew he'd had a great life and everything after was gravy. Time speeds up ('Christmas will come as fast as garbage day'), so a life is the sum of the quality of its moments. Lazier died in 2004, and Dorothy said he had a smile on his face.

• 06

  The first decision question isn't fast or slow. It's how much time you have before your risks change.

  The 10X leaders in Great by Choice made some big decisions fast and others slowly. Comparison companies often rushed just to do something. Diagnosed with prostate cancer, Andy Grove had months, not days, before his risk changed, so he did a self-directed 'second PhD' and then made a clear, decisive choice. When a 2009 fire came over the hill, the time was minutes. Jorge Paulo Lemann told Collins that people act prematurely to make uncertainty go away, but in Latin America 'the uncertainty never goes away', so let events unfold until you must act. Consensus doesn't correlate with good decisions. The pattern is debate and table-pounding, then an executive decision and unified commitment, plus 'autopsies without blame'.

• 07

  Great companies change about 20% of their recipe and understand why the rest works.

  Southwest Airlines began as a near photocopy of Pacific Southwest Airlines; drop 'Pacific' and you get the name. The difference was that Southwest's people could explain the recipe: only 737s means one set of parts, manuals and simulators; fast turns because planes earn money only in the air. PSA's version became rote, and after deregulation and fuel shocks it panicked into wholesale changes and a doom loop. Over about 30 years, the winners changed roughly 20% of their recipe and the comparison companies about 80%. Buffett's move from cigar butts to great companies at fair prices is the 20%. Pair the recipe with trusted people, like Nordstrom's one rule: 'Use your best judgment in all situations.'

• 08

  Real understanding shows up as the ability to teach it.

  Asked how to tell genuine masters from imitators, Collins says the real ones are great teachers. Buffett's annual letters are seminars. Herb Kelleher would explain, sometimes in tears, why Southwest didn't serve meals. Jack Bogle, at 88 and after a heart transplant, gave Collins almost a full day ('It's Jack, not Mr. Bogle'), his eyes 'burning with an 18-year-old's intensity'. He was still teaching why high fees are a wealth tax.