The Learning Leader Show With Ryan Hawk - 397: Jim Collins - How To Create A Generosity Flywheel, Make The Trust Wager, & Earn WHO Luck (Part 1)

Episode Date: December 21, 2020

Text LEARNERS to 44222 Full show notes at www.LearningLeader.com Jim Collins is a student and teacher of what makes great companies tick, and a Socratic advisor to leaders in the business and social sectors. He has written a series of books that have sold more than 10 million copies worldwide. They include Good to Great, the #1 bestseller, which examines why some companies make the leap and others don't; the enduring classic Built to Last, which discovers why some companies remain visionary for generations; How the Mighty Fall, which delves into how once-great companies can self-destruct; and Great by Choice, which uncovers the leadership behaviors for thriving in chaos and uncertainty.  Notes: Shortly before Jim's 25th birthday, during his second year at the Stanford Graduate School of Business, he got hit with a lightning bolt of WHO luck. The type of luck that comes as a chance meeting with a person who changes your life. That person was Bill Lazier... Bill Lazier was the closest thing to a father Jim ever had. Jim's dad died when he was 23. Creating a Generosity Flywheel -- "One day, two large wooden crates appeared on your front porch, the address labels indicating they'd be shipped by Bill. He sent you a few dozen bottles of spectacularly good wine. You called and asked him what prompted him to send to you and he said, "Dorothy and I had an inventory problem in our wine cellar, and we needed to make room for some new bottles. We thought you could help us out by taking some of it off our hands." Bill mastered the art of getting people to accept his generosity, somehow framing it as if you were doing him a favor. Jim's question to me: How is quarterbacking a football team similar to quarterbacking a conversation for a podcast? Make the Trust Wager - "I choose to assume the best in people and accept that they sometimes disappoint." (Lead With Trust) Build a Meaningful Life by Building Relationships — Life can be a series of transactions or you can build relationships. Transactions can give you success, but inky relationships make for a great life." —- How do you know if you have a great relationship? "If you were to ask each person in the relationship who benefits more from it, both would answer "I do." Both feel like they're getting the better end of the deal. Start with Values, Always Values — values aren't the "soft stuff." Living to core values is the hard stuff. "Prep prep prep so that you don't have to be rote." -- "For me the opening plays are questions. And I know the opening two or three questions to get the session started." "Then the game starts. I have this set up things, but then something really surprising happens. What I found interesting about it, is that you'd think high levels of prep, it's actually being so well prepared that you can adapt. That's the critical thing. It's only because you're super prepared that you can do something surprising." The opening question to a company he works with is always the same: "It starts at exactly 8:00am. I have an atomic clock and it's set to the exact atomic time. At 8:00, I open the doors. I walk in and say, "Good morning, I feel a tremendous responsibility to make the most of our time. Everybody take out a blank sheet of paper. I want you to write down the top 5 most brutal facts that face the company today. Go!" -- "We're 12 seconds into the meeting. There are no pleasantries, they're not going to talk about how the flight was, or dinner last night. We are here to make the most of our time. I'm trying to set the tone that we don't have time to waste. I can't waste your time. You're here to have your brain challenged." And then Jim has them allocate 100 points for the 5 most brutal facts. You need to start with an honest account of the brutal facts. This gets the group talking immediately. "The entire thing opens up." "Preparation is respect." "That previous podcast we did (episode #216) was masterfully done by Ryan. There's some wonderful things he pulled out." How has your style evolved? I'm less robotic, less formulaic, more agile, and able to go with the conversation. Bill Lazier -- "Bill went to the Dean at Stanford and put himself on the line for me. He believed in me. He bet big on me. Nothing I've accomplished happens without Bill Lazier." Here is WHY joining a Learning Leader Circle is a good idea...

You know, you would think that high, high levels of prep, you know, it's like I'm planning for what I'm going to do. It's actually being so well prepared that you can adapt. And that's the critical thing, right? Even though you know certain plays you're going to run, it's only because you're super prepared that you can go, oh, I didn't expect this. So I'm going to run this plate. And I'm going to run it now. Welcome to the Learning Leader Show presented by Brixie and Meyer. I am your host, Ryan Hawk.

Thank you so much for being here. Text learners to 44222 in order to join tens of thousands of learning leaders from all over the world. Receive Mindful Monday updates. What I'm reading, writing, watching. Thinking about it would also give you more details about how my book, Welcome to Management will help you become a more effective leader. Text learners to 44222. Now on to tonight's featured leader.

A very special part one, a two-part episode with the legendary Jim Collins. Bestselling author of many books, including Good to Great, Great by Choice, and Built to Last. His most recent book is called Beyond Entrepreneurship 2.0. It's an ambitious upgrade of his very first book, and it returns Jim to his original focus on small entrepreneurial companies and honors his co-author and mentor Bill Lazier. Here are a few of the topics we covered in part one of my conversation with Jim Collins. The opening question, he asked all leadership teams that he works with when they travel to his site in Boulder, Colorado. And what you should ask your team in your very next meeting. And then his preparation process for working with leadership teams and why he compares it to an NFL coach.

And then Jim covers what it means to make the trust. wager and why it's vital that you as a leader think about this. Ladies and gentlemen, a very special part one episode with the legendary Jim Collins. I'm curious, how does preparing for quarterbacking a podcast episode compared to preparing to quarterback a football game? Wow, have never been asked that correlation. So I'll talk about the similarities. The preparation, as you've probably seen when you study quarterbacks, like watching film, taking notes, understanding tendencies of the opposition.

Some of that carries over. So part of my process is when I played football was trying to understand the tendencies of my opponent, trying to create formations and looks that will be advantageous to match up. So if I have a really good outside receiver, my Z receiver, if I have a really good receiver, how can we get him in a position to where we're one-on-one with one of their weaker defenders? And so it's a game plan of trying to scheme that up.

Now, when you shift to interviewing, another part that's similar is I don't fully know what you're going to say. I have some ideas. I know where I want to go. I kind of know the offense I want to run. I know the plays I want to call. I have an outline. I have notes.

I have thoughts. But I can't predict what you're going to do. I don't fully know. Just like I can study a defense and have some ideas of what they're going to do based on our looks. I'm not certain of that. So the similarity there is there is uncertainty in both interviewing on a podcast and playing quarterback. And we're trying to, in football for sure, trying to minimize that uncertainty in the podcasting world, I'm not always striving for that because that's where some of

the magic and the fun is. Like I didn't know you're going to ask this and this is fun. Like, this is where the magic happens. So there are definitely similar process. I learn the value, I will say, Jim, of preparation from the legendary Bob Gregg and Ron Allery. My two of my coaches in high school that I was so, so, so, I mean, lucky to play for it. Like when you talk about who luck, which with you and we're talking about Bill here in a second, I mean, the greatest who luck of my life outside of obviously my mom and my dad are Ron, Ron Alery and Bob Gray, because they taught me the vow, they modeled that behavior as some of the leaders that you study and some of the ways that you behave and your wife, Joanne, with trying to run a triathlon,

that preparation is everything. And it also can be the greatest, medicine for fear. But I'm nervous or scared to play a football game, to give a big speech in front of a crowd, to interview Jim Collins. One of the greatest medicines, for me at least, is my prep. So I think that's where a lot of the similarities arise. And when you would be preparing for a football game, and I'm curious if it carries over here to preparing for quarterbacking a conversation, which is in many ways what you're doing, would you, you, you'd, you, usually have, know your opening plays, right? So, you know, Lombardi would have, like, you know, we have, we're going to run the sweep somewhere in the first three plays. Like, we just do that.

But do you have when you prepare, you say, okay, I know what my, probably in my first series, what my plays are going to be. Would you tend to go into a game knowing, even though the game's going to unfold, what the first three or four plays are going to be? Yeah, we started scripting plays my freshman year in high school. And we'd have them on, we'd get the sheet of paper the morning of the game so we'd have an idea. And the reason for those plays and the formations is we're trying to get an understanding of how the defense is going to defend our looks, our different formations, so that we can get information for later on in the game. So we're going to do a lot of different looks, a lot of different formations, different plays. Now, if,

if though we wind up behind schedule, so behind schedule would be like third and long, we might have to go off the script if we don't have a good third and long play. Similar to quarterbacking a conversation. Like, I know we've already started, but I know where when it's my turn, since when you're finally going to let me ask the questions, I know where I'm going to go first. And I have a general sense of other places. But really, it depends on how you answer my first kind of official question that then will determine kind of some of the paths that we're going to take.

But there's a lot of different options for us here, I think, based upon what you say there. You know, in your case, by the way, I had two different opening plays I wanted to go with and said, I'll decide in the moment. And I think I know what I've decided, but I'm not sure yet. Okay. That's interesting. You know, and it's interesting because when I prepare for, say, when I'm quarterbacking a conversation, it's a different kind. When people come to my lab in Boulder and say there's an executive team here or maybe a gathering of 20 CEOs around the table that we've created here in my management lab space, my job is to be very Socratic.

And I never really give people answers. I try to really push them with the right questions. And the way that I've thought of it is I'm preparing for it like I'm an NFL coach, that what I have is I have a play shoot. And I know, I mean, like I've researched all the players in the room, or researched the company in great depth. And I know certain things that I know they're going to need to get to. I know at some point I'm going to need to get to challenge them on X. And I know my opening questions, right?

I know, and I've actually got certain openings that I use very repeatedly, just like, you know, the Packer Suite. You know, here comes Jerry Kramer, number 64, pulling out his guard, and you're going to know it's going to happen. And they're like, we're even going to even know it's happening, but we're still going to run it because it gets our rhythm going. And I think of it is I've got, when I watch a coach on the sideline, you know, they're always looking at their sheet as the game is unfolding. And I actually picture it very similar. You prep, prep, prep, prep, prep, prep so that you don't have to be wrote. And it's this really interesting mixture of, okay, for me, the plays are questions. And there are different kinds of questions that are different kinds of plays.

And I go in, okay, I know the opening two or three. Okay, that's like my first series. But then like you say, then the game starts, right? And then it's like, okay, I've got this. this set of things and touchstones, and then something really surprising happens, right? That hour two where I've really pushed on something, it's like, whoa, I didn't see that, or I thought that wouldn't happen until day two, but it opened up right here. So I'm going to take it now.

And what I found interesting is I truly think of it as, you know, like preparing as an NFL coach. And what I found very interesting about it. And that's why I'm fascinated by your prep. kind of analogy between these two are sort of putting them together is that you know you would think that high high levels of prep you know it's like I'm planning for what I'm going to do it's actually being so well prepared that you can adapt and that's the critical thing right even though you know certain plays you're going to run it's only because you're super prepared that you can go oh I didn't

expect this. So I'm going to run this plate and I'm going to run it now. So true. What are some of those first opening questions that are, I don't want to say stock, but are, but are regular questions that you ask when somebody comes to one of your Socratic sessions in Colorado? So it's interesting because you and I are both, you know, try to use the, you know, the artistry of of questions. And so I think of it as I've got, it depends on whether it's a multi-organization group, like say 20 CEOs from 20 separate companies around the table where I'm going to be getting and challenging them to learn from each other or whether it's an in-company or an inside

organization where I'm going to be challenging them to think very hard about themselves. The in-company ones, and by the way, they both all start with the exact same sort of flavor. but there's always an opening question for an in-company one. And that opening question, you have to just sort of picture the way it works. I'm actually in that room right now. We have a table that was built specifically for this room. It's got six corners in the room, not four, so that I can use those corners to put people in. It's completely secure space.

That if you, you know, one side or windows, one side is a hallway that we control. One side is a buffer room and one side is a mechanic. room. So we've even had people send security teams to sweep the place beforehand because what would be discussed here should not escape into the world for any number of reasons. And so you're in this space. They're in Boulder. They have to come here. The flat irons are outside the window. And I always sort of set it up that they're all in there. And they know that they're going to get a lot of questions. They're not going to get a lot of answers. And I wait until and I say we're going to start at eight.

And I'm very clear. Eight, eight is eight. It's not, I mean, it's eight zero zero zero zero. I actually have an atomic clock, a clock that is set to the exact atomic time. And at eight zero zero zero zero zero, I open the door and walk in. And I say, good morning. I feel a tremendous sense of responsibility to make the most of our time. everybody take out a blank sheet of paper

I want you to write down the top five brutal facts that face the company today go it were eight and what 12 seconds I mean the whole idea is there are no pleasantries there's no they're not going to talk about how the flight was or did they enjoy dinner in bold or like we are here to make the most of our time just even the tone setting part of it is very important Because I'm trying to set the tone of we don't have time to waste.

I can't waste your time. You're here to have your brains challenged. And then they're just all of a sudden in silence on pieces of paper. And then one of the next things is I want to allocate 100 points across those factors. Because what I've learned and what a really powerful thing with point allocations is they come up with the five. But often if you ask people, tell me the top five brutal facts, they'll start with number one. and they'll put a lot of conversation on number one. But if I say, I want you to now allocate 100 points based on importance and impact, concern,

total is 100 across the five. Well, actually number four gets 70 points. And so that allows you to say, we need to talk about number four. And how is that really a fact? And what's brutal about it? What are its implications, right? And if you start right out of the gate with, let's start with an honest accounting of the brutal facts as you face them. What are they?

And you get people talking about that by within seconds thinking about and then talking about within minutes after the session opens, the entire thing opens up. Because that is, that's like this, you know, remember of the first Star Wars, right? where if you can just get the shot in the one place in the Death Star, the Death Star sort of explodes. Well, what are the brutal facts is one of those shots, right? It always just goes right to the heart of the matter. Bang, right out of the game. And that's always the opening play.

That's the Packer's Sweet. Jim, you are speaking my language with the 8-0-0-0-0. row always one of my biggest life pet peeves is to start a meeting one second late start on time every time it shows respect responsibility as you said and and you certainly don't have to do that with your stature and what you've done so the fact that you show that type of respect and responsibility for them and the second you start the meeting don't wander don't wonder let's go like it's time to go once the meeting starts we are going to go now and if somebody walks in late, whatever. My dad told me this early. He goes, hey, don't start your meetings

late. Don't wait. Oh, we'll wait for a few to get. No, never, ever, ever do that. They'll learn. They'll learn that your meetings are one of the few leaders whose meetings start on time. I got to get to this meeting on time. We start exactly at 8-0-000-0. I love that part of it. Well, and you used a really key word there, Ryan, which is respect. Yeah. And there is, respect preparation is respect. Preparation is respect. Preparation is respect. So if you don't respect your opponent, one of the great ways to show it as an athlete is you don't prepare for the game. Oh, you know, they're, you know, they're two and nine. Well, actually, then you're going to lose, right? Because you haven't given them the respect. And when people come to the lab in Boulder or you're holding meetings,

you have a responsibility. It is. It's a tremendous sense of responsibility. We must, for your sake, not for my sake, for your sake, we have to make the must of this time. And again, it's back to like preparing for an NFL game. I mean, when that, when that game starts, like it starts. It's in the clock. You're head knocked off if you're not ready to go. Right. Exactly. So you're not going to be like, hey, Aaron Donald, can you just kind of hang out? there for a minute. It's not going to work out very well. Well, you may end up on your back very quickly. But so let me, I just want to ask you one of the questions we're getting into this then as we're, as we're, you know, as we're talking about this as last time we started with something that was

very interesting to me. And I just, by the way, I want to go back on something, Ryan, for anybody who's listening to this, Ryan did one of the very first podcasts that I'd ever done before. I'd done a couple of others related to events or a couple of experiments, but Ryan was one of the first ones that just kind of organically came for us that I agreed to do. And we vetted it and decided to do it. And it was actually for me, a real eye-opening of how the right conversation with the right host can be potentially great teaching moments through the process of great conversation. And so it was a real turning point for me to open up. Now, I'm still going to be highly selective and not do too many of them. It takes back to preparation.

It takes a lot of work to prepare. So Indians can't do that many as a result. But that previous podcast was a, if anybody who's listening, if you haven't heard it, it was masterfully done by Ryan. And I think there are some wonderful things they pulled out. I hope you folks will go back and find it. But at the beginning of that one, though, I came to you with a real sense of curiosity of like, what is this whole genre? What do you do it? Why do you like it?

What? How do you do it? What's it about? and we had a nice conversation at the start about that. What I want to ask you just following up on that real briefly is, so we talked about your recipes and your preparation last time. Has it changed substantially in the three years since we've been together? Have you honed it, revised it?

Or is it still like, no, I've kind of got a similar recipe. I'm just doing it better and better. It evolves. it's evolved to the point to where, like a lot of things in life, the more you do it, the better you get. And I've got a lot of repetitions. I study, listen to others. I think now I'm probably less robotic, less formulaic, more agile, more willing and able to go where it's going to go. This one is being like, pretty meta, but this is an example of it since we haven't covered anything that I've written down. We'll get to that in a moment. No, I love it. I love it. The one thing I did remind myself, by the way, your team is the best. Mel, and I mean, I just had great pre-call. So I got to tell you,

Jim, like it means a lot to me. Like, you're one of my heroes to hear you say those kind words means a lot. I'm okay saying that because good to great, you know, change my life. And so the fact that that you appreciated it was episode 216 for those I get asked all the time at keynotes what's your favorite and 216 comes up all the time it's Jim Collins so I would just say I

just become a little bit more agile I've started talking more because I try to be coachable I try to listen to feedback from people that I really respect and I would say the overwhelming feedback I've gotten from long time listeners, from people I look up to, from people I love that care about me is we like it when

you talk more, meaning when you share your perspective, you share your point of view. You've talked to 400 people now. You've done all these other things too. Will you speak up? It's not an interview anymore. It's more of a conversation. That's what we want. And so I try to do that. I try to lend and share more of my beliefs. I've had some people say, I actually, like, will you just do solo episodes? You know, and so that warms my heart. So I try to do more of that where it's more of a conversation and less of an interview, whereas probably the first two to 300 of them were interviews.

And since that, it's become more of a conversation, which people seem to like, and I know I certainly enjoy, even though initially it made me a little nervous to kind of lean into speaking up a bit more. That's interesting. That's very interesting. And so in that spirit of the conversation, I'm going to put our conversation in your hands.

And I trust your curiosity. And I will follow your. I will follow your lead into where you'd like to go. We're going to go to a few days or shortly before your 25th birthday. That's where we're going to start. Okay. This is your second year of study at Stanford Graduate School of Business. And you got hit with a lightning bolt of who luck.

This is the type of luck that comes as a chance meeting of a purpose. with a person who changed your life. You know, you're one of these people for me. And that person was the legendary Bill Lazier. And there's a number of life lessons that you've written about from Bill. And I want to hit a couple of them. But I first want you to take us to that moment right around your 25th birthday when you get struck by some who luck. Yeah.

Yeah. So I was in in my second year at the Stanford business. a school and there there was a course that you know you have courses there where you have really popular professors and popular courses and then some that are lesser known or whatever and and i was uh and i didn't get into a section that i wanted to just you know if it's oversubscribed there's kind of a lottery about who gets in who doesn't so i ended up uh because of this sort of chance process uh in a section uh of a course of a course that was taught by a brand new professor at the school by the name of Bill Lazier.

And Bill had been an entrepreneur, an accountant turned entrepreneur, very successful and was really going through a real shift in his life where he was going to go from building companies to building young people. I didn't know that. I mean, I had no idea who he was. And I remember going around to my classmates and say, I got this, you know, Professor Lazier, like, anybody know who he is and nobody had heard of it. What was the first time he'd ever taught? And so I said, well, I'll just go and see what he's like. Truly just, I mean, there's, I walk into that room and there is the person who would turn out to be among many mentors I've had. The one is really the chairman of the board of directors, the closest thing to a father that I ever had.

Now, when I first started, I didn't know that. Bill took an interest in me. I don't know why he took an interest in me, but he took an interest in me. And he sensed, I think, that I was this sort of high energy propulsion machine, but I really lacked a guidance. And that was true. And Bill began inviting me and Joanne over to his house with his wife, Dorothy, and we would have dinner.

And he just began gradually shaping me by asking and pushing and challenging and crushing within this very, very kind way. But what he was really doing was he was beginning. to give me something that I'd never had before, which is the parental caring of trying to shape your character, trying to instill values. And that's what he was doing. But he was doing it in a very subtle way. It wasn't pedantic at all. It was just in a series of conversations. Then a few years after that, so probably just about five years after that, there came this really critical moment. And Bill had known that I had always, I was sort of heading towards

the end of Joanne's athletic career. And I was coming up on age 30. And Bill knew that I had this interest in potentially teaching and maybe researching and studying things. And I had a real interest in entrepreneurship and small business and so on and so forth. And then there was another stroke of luck. This was a tragic stroke of luck for someone else, but it still was a stroke of luck that hit me, which is that another professor had a family tragedy and had at the last minute basically not be available to teach a section of entrepreneurship and small business, Business 352, which is the course that Bill also taught sections of. And so the deans were scrambling for somebody to come in and fill this section.

And Bill goes to the deans on my behalf and completely puts himself out on the line. and says, I think we should give this young guy, Jim Collins, shot to do this. And the deans, I think, were quite skeptical, but Bill basically just said, I'll take all the risk, I'll take all the responsibility. I will hope he, you know, I'll make sure he doesn't mess up too much. And they really kind of didn't have any choice. I mean, the analogy I've always had is, in my mind is, you know, this young pitcher way down in the minor leagues, and you happen to be standing there in Yankee Stadium.

and for whatever reason, the bus carrying all the pitchers, you know, ends up, you know, stuck and can't make it to the game, and the game's about to start. And you're just kind of standing there. And somebody says to you, hey, you know, why don't you let him pitch and put him out on the mound? But then Bill comes basically, essentially, helps me understand this is your shop. And you get these moments in life. And what you do now is going to, and how well you do now is going to make this huge. difference potentially in your life. So if you go out there and you throw a really good game,

like you might get to pitch again in Yankee Stadium. And I ended up, you know, pitching in the Yankee Stadium there for seven seasons. And that became where, you know, Bill Talas was done and beyond entrepreneurship was done and then the launch out of that and everything that's happened since. And so this mentor did so many things for me. But one is shaping me as a person, shaping me in my values, setting a standard for what character was about. And then the second was when it came time to bet big, he bet big on me. And he believed in me and he trusted me. And I think the

big kind of part of it was his trust that, I don't know why he, what gave him the trust in this, but he trusted me with really in the end his reputation because he's gone back for me. And he had this sense that I would take that as I can't let him down, right? Now this is huge. It's not just an opportunity. It is a massive burden of responsibility. I've got to make good on it. Right. I have to make good on it. And that became the turning point and the inflection. Everything that's happened since. Every book, every piece of research, this conversation, everything, none of it would have happen. None of it would have happened had it not been for this tremendous mentor that stepped in on my behalf at the right stages of my life. What do you think he saw in you that gave him the

confidence to put his name on it, to back you with his juice, his capital, like all of his weight? I mean, he could have picked anybody and he picked you. What do you think it was he saw in you. I've often wished I could ask him that. Bill died in 2004, which is part of why I wanted to go back and upgrade and re-release beyond entrepreneurship, which is where I've written about Bill, where the story is coming from, and to really honor Bill and bring Bill to the world. I knew in 2004, when he died, I wanted to write something about him, and I didn't know what. And Joanne had this great idea. Why don't you upgrade beyond entrepreneurship, add new material, but most important. important, put in a great chapter about Bill to bring Bill to the world and gift Bill to the world

as part of it. But Bill died in 2004. And I never asked him that. I never asked him that. And I think it was because, you know, remember, there were five years in there where we had many conversations, where he, we would be, you know, whether it be over dinner or going for a walk or on the phone. And I think what happened was he just, he had enough iterations, right? Enough conversations. And he knew how I handled the stuff with Joanne. And I don't know. I think he had, it wasn't just totally out of the blue. It wasn't like he threw a dart at the board. But over time, I think he gained confidence from our conversations enough. But I also think Bill just, Bill just had this, this gene in him, which is to believe in people.

He just, and so I think also part of it, I don't know if there was anything particularly special about me because I think he did this for a whole bunch of other people and other walks of life. And he just was, just had this instinct that if he believed in people and he trusted them and he threw them out there, that even if some people disappointed, the net benefit of, it's almost like being a venture capitalist, right? where maybe you place 10 bets and seven of them end up, you know, kind of not making it. Two of them may, you know, do reasonably well. And one is, you know, a huge, a huge impact on the world. I think Bill kind of looked at it as he was like a people capitalist, a people venture.

And he would place bets on people. But not so much like from the, he wouldn't want anything in return. He wasn't seeking a return on investment. He just kind of had the sense of if you bet on enough people, of them are just going to do really remarkable things. And isn't that marvelous? I think that's just Bill had that gene. Well, I'm going to cover a couple of them. I'm going to jump around since you just brought it up. So I'll go with it. But you talk about one of the lessons you learned was to make the trust wager. And the quote was, I choose to assume the best in people and accept that they

sometimes disappoint. This is about leading with trust. And Jim, this one, particularly spoke to me. because I think this is, one, the right way to lead. And two, I just a more enjoyable way to live life of believing the best in people trusting them, knowing that every once in a while you might get burned. But isn't that a better way to live? Isn't that a more enjoyable way to go about living and leading is to assume the best in other people, to assume they're telling the truth? as well as then that is the signal like, hey, look, I'm a trusting person too.

Like, I'm going to do what I say of higher integrity, but I'm going to lead with it outwards as well. And that's one of the critical life lessons that you say you've learned from him. Yeah. And that lesson and another one sort of go hand in hand. So maybe I'll share the story I put in BE 2.0 about me coming to Bill. So in our last conversation you and I had, I shared the story of leaving Stanford. and placing a big bat and, you know, Peter Drucker so kindly saying, you know,

to go focus on being useful and, but it was still very scary and on out on our own. And our film in Louise Loop, the Louie Leap that Joanne and I talk. But what's interesting is when I left the kind of reasonably, you know, comfortable and nice environment of a place like the Stanford campus, it kind of go out into the regular world. And I was shocked and stunned to discover that, there were people who behaved in ways that I experienced as highly untrustworthy. I mean, they abused my trust.

And I was initially just really destabilized by this. I was just stunned by it. And so I went to Bill, and I said, Bill, I really want to talk to you about this because my faith in human nature is getting really tested here. But you seem to always trust people. And I'm really struggling because what I'm finding is people are not always trustworthy. So how do I deal with this? And Bill, Bill said this is just one of the huge forks in life.

And you need to decide, Jim, as a basic stance on the world, which side of this you want to be on because it's going to affect so much of everything for the rest of your life. You've got to come down on one side of this. So the basic choice you have to make is what's your opening bid with people. is your opening bid that you trust them, you grant them, you invest a sense of trust in them from the get-go. They don't have to earn it. They don't have to prove it. They don't have to gain it. They have it from the start. And they can lose it, but that's the opening bid. Or your opening bid is, I'm more wary. I'm going to have an opening bid of distrust, but you can earn my trust.

You can become somebody who I trust by virtue of what I see. And Bill said, this is one of those big choices. His view was to make the trust of it. And when I pushed him, I said, but Bill, the truth is not all people are trustworthy or not all people are all trustworthy in all situations. I've been burned. Haven't you ever been burned? I mean, have you just been forced to.

He said, of course they've been burned. And he told me this story about somebody who was very close to him. that he had taken advantage of his trust. And it cost him, he said, enough that it actually really hurt. Bill was always very careful. He was also, you know, watch the cash flow. Don't leave yourself open to catastrophe. And he had these controls in place and things like that.

But still, the sense of, I think in the end, sort of betrayal is what most hurt him. But there was a financial cost as well. And he said, but I still continue to. to have the opening bit of trust. And he said, Jim, it comes down to this. It's upside and downside. And I just choose to believe that there's much greater upside in trusting people and much greater downside

and not trusting people. And then that kind of came around to something that I don't think I really understood until later, which was for Bill, it was always about people and about kind of ultimately the great flywheel effect of just the best people engaged with the best people. And the most trustworthy people engaged with the most trustworthy people. And Bill's view was that if you have an opening bit of trust,

the best people will be attracted to that. And it will serve like a magnet. They'll bring those people to you. And it will also help them be more trustworthy. Bill's view was, look, if you trust people, you're going to change the behavior to be more trustworthy. Your trust will make them want to be worded. of that trust if they're the best people.

So you win on all dimensions on that. And then he went to the other side. He said, think about the downside of not trusting. The best people are going to be repelled by that. You're not going to have that magnet of them. And then he also said, you never know the full story. He said, sometimes you have to be very, very careful. It could be that somebody isn't untrustworthy.

It could be they were incompetent. They just simply weren't able to execute what they said. Did they try? They weren't trying to do something wrong. They just blew it. And it's like, you know, I dropped the pass. Well, does that mean he's, you know, lacks integrity? No, just dropped the pass. Or the other, and this is something I really learned from Bill, it could also just be a misunderstanding. And Bill gave me, you talked to me about the importance of having like really great attorneys. And I initially thought that was about, like, you know, so you protect yourself and you have really good, you know, contracts you're

He said, oh, no, if you do this really right, you'll never have to invoke a contract. The whole point of a really good contract is so that you never have to go to the contract. And the whole point of a good contract is so that two trustworthy parties are both writing down on paper their understanding of what they're committing to. so that down the road there's no inadvertent misunderstanding that damages the relationship. And good contracts make for good understandings, make for good relationships. That's their purpose. And so this was just builds, you can just sort of feel his whole ethos, right? Everything that's like this web people, trust, relationships, all of that is kind of packaged in this idea of

trust. Now, there's one other thing about it is, is that I actually think that he's, you know, if he just did a hardheaded analysis, he probably, if you did enough iterative cases of this over time so long as you don't have something catastrophic, he's probably just rationally right as well as emotionally right on this. I still find it hard, but he had a big impact on me with that. Which leads to the relationship part of life, can be a series of transactions or you can build relationships. Transactions can give you some success, but relationships make for a great life. And I would, and one of the questions you pose is, how do you know if you have a great relationship? And that's if you were to ask each person in the

relationship, who benefits more from it? Both would answer, I do. And I think that's a good question for all of us to ask with all of our relationships. And I think of it, first and foremost, with the most important person my wife is would she say that? I hope so. I hope I'm trying everything because I know I would say that because I certainly get the better end of the deal. But I think it's good personally with your loved ones and your spouse, but also with anyone you have a relationship with. And it seems like I love to hear more about that aspect when it comes to the transactional life, which we all know people who do that. And they do have varying levels of whatever you would call success from time to time versus the person who works to build meaningful relationships.

Yeah. So, so this was, this was one of the, uh, the other lessons that you, of course, you've referenced in there that that, that Bill taught me that had a big impact on me because, you know, he, he had this view. The, you know, you basically, another one of those like forks in the world of just how do you come at life? And, and Bill, uh, said, you can go at life as a series of transactions, and that can actually be highly correlated with success. Or you can come at life as building relationships. And Bill's view was the only way to have a great life is to build relationships. And I think that, first of all, gets it to the essence of a lot of this. Let's be really clear. Bill is an enormously successful person. Just to kind of tick a couple

of the aspects of his growth and his success. He was about to be a partner at an elite accounting firm and then quit just before he got partnered because he was afraid that if he got partner, he wouldn't do his entrepreneurial group. And so he left his Thelman leaves. We did his own businesses. They are all still private today, still taking along years and years later, became a very successful entrepreneur. Then really got interested in developing young people, to Stanford to teach. And by the end of his life, you know, he served as the first ever, inaugural holder of the Nancy and Charles Munger chair for the study of business and law at the

Stanford Law School. And he was so impactful there that when, after he passed away, when they created the Munger residence center, the courtyard. called the Lizier Courtyard. And he also was chair of the board of trustees of Grinnell. He had been on multiple boards. I mean, if you sort of look at it and say, the arc of what's in the success curve of Bill's life, you would say, you know, tick, tick, tick, tick, tick on almost every dimension.

But that's not how Bill looked at life. Bill looked at life as not a series of successes, but as a constant compounding set of relationships. And everything he did went back. And if I think about what are my deepest core values that I got from Bill, relationships, relationships, relationships. And that you can come at every situation as is this a relationship or a transaction. How do I make it a relationship situation?

And Bill's, it really is true. I would ask him that question about what makes a great relationship. And he said the thing about you ask each person independently, they both would say I benefit the most. And I thought that was insane because I thought, man, I'm the one that hugely benefited from Bill. And Bill's like, yeah, but you see, I would answer that I benefit more. And so, yeah, and our relationship, Bill died in 2004.

Our relationship is alive. Bill's alive right here in this conversation. I still have a relationship with Bill. I want a bill to build to the world. That's because of this incredible relationship. There's no transactions, it's relationship. And so where that's really affected, though, in a lot of ways is when you even take it into, say, an operating operation here to go to grade project, which kind of exists to support me doing my creative work and so on and so forth, we think about relationships and everything we do. And as you know, we say no to the vast number of things that people ask us to do or ask me to do.

But there's kind of two ways to do that. You can say no in a way that's transactional. Or you can say no in a way that achieves what we call the prime directive. And we have a thing we call the prime, I suppose taken from Star Trek, but to me it's this prime directive, which is we have this sort of Uber responsibility, which is no matter what answer. somebody gets, and in most cases it has to be known. They have to walk away with an enhanced sense of relationship to us and to the work and to the ideas that enhanced no matter what answer they get. And that's what we call the prime directive. And there are lots of ways to achieve that. So if it's just a series of transactions, you're processing yes, no, yes, no, oh, this is a good one

to do whatever, but if you're thinking about it, it is every single situation is a relationship from the beginning and the relationship to be enhanced by the time we're done with the conversation, even if it's a no, which it usually is, how do we accomplish that? And that I learned from Bill. And I absolutely agree with him. Life's really short, right? And so in the end, what does it all add up to? At some point, it comes down to the quality of relationships. How many people can you just say, hey, man, I love you? I'm still sitting here in a bit of awe that Jim and I sat down for over two hours and recorded. He just blows my mind with his level of care and preparation and curiosity and the questions he asked.

There's so many takeaways. It's hard to even point them out. I mean, I love the way that he starts his meetings when a leadership team comes to Boulder. It makes me want to ask him to be a fly out. the wall. I think I will to see if I could ever be a part of one of those meetings. Start exactly at 8 o'clock, walk in the room, get out a sheet of paper. There's no wasted effort, no wandering around, no walking into the meeting. They're sprinting from the second he enters. I love that part of it to making sure they're confronting the brutal facts of their business. The openers, I think, are

critical to setting the tone for a great meeting. And then his prep process, he shared how he feels like an NFL coach with his play sheet, but also being willing and able to be agile and adapt, as well as what it means to make the trust wager. And all of the great Bill Lazier talk, there's more of that in part two. But there's, uh, I just love the approach of leading with trust and making that wager, even if every once in a while you get burned. It's a much more enjoyable way to build great relationships, to build a team, to live a happy life. there's so many benefits to it, I will continue to espouse that method forever.

And I just want to once again say thank you so much for continuing to spread the word, telling a friend or two, you should listen to The Learning Leaders Show. This episode with Jim Collins will help you become a more effective leader. And because you continue to do that, you continue to give me the opportunity to do what I love on a daily basis. And for that, I will forever be grateful. And one, ask, I would love it if you would write a room. review, rate the show, hopefully five stars in Apple Podcasts. It helps spread the message to others

who have never seen it before. A few highlights about what's coming in part two in a couple days. Jim defines what leadership is, and he does so with probably more clarity than I've ever heard. Talks about your personal hedgehog, how to develop that and create that, as well as the one key metric that towers above all others that rarely is spoken about. Thank you once again for continuing to spread the word. Let's get on with Part 2 coming soon.