Unpacking the Greatest Entrepreneurship Book Ever
Reed Hastings, CEO of Netflix, says that he only rereads one book every year, and it's Beyond Entrepreneurship.
In 2020, Jim Collins published a revised edition of his 1994 book Beyond Entrepreneurship, which he calls BE 2.0. It contains additions and reflections on over 25 years of research on books like Built to Last, Good to Great, and How the Mighty Fall.
When I read BE 2.0 for the first time in 2021 and now in 2024, I concluded that this is the best book, out of all the hundreds of business books I've read over the years, on how to be an entrepreneur and grow a business.
After re-reading the book, I looked at hundreds of highlights that I took from it. I wanted to bring forth two unique insights from this book that Good to Great and the others haven't touched on as much. I've previously referenced Jim Collins' models in the newsletter, including Bullets, not Cannonballs, and Right People On The Bus.
Here are two of my favorite ones I picked up:
Strategy planning to generate insight
There's a quote from Dwight D. Eisenhower on planning.
I tell this story to illustrate the truth of the statement I heard long ago in the Army: Plans are worthless, but planning is everything. There is a great distinction because when you are planning for an emergency, you must start with this one thing: the very definition of "emergency" is that it is unexpected; therefore, it is not going to happen the way you are planning.
The plan for your business is helpful, but your planning is more important than having the actual plan. Here's what Jim Collins writes when reflecting on their research for Good to Great and how the great companies planned:
Instead of [planning] being a rote exercise followed by rote implementation of decisions, effective planning involves vigorous debate, infused with the brutal facts and insight seeking, from which comes an iterative series of decisions that add up over time. It requires discipline and rigor. One thing that stood out to me about the [research for Good to Great], the feel of these companies as they did their planning, was the extent to which it was driven by a search for the right questions more than a search for the right answers.
Jim Collins, The Role Of Strategic Planning As A Mechanism For Disciplined Thought
In BE 2.0, Collins outlines a document you can use to ask the right questions. These include understanding the corporate vision and asking, "What are our values and core beliefs?" "What is our purpose," and "What is our current mission." The documents also cover an internal assessment of the company's strengths, weaknesses, resources, and innovations. Then, it continues to an external assessment of market and technology trends, competitors, etc.
I've included a link to the document outlining the complete strategy formulation that you can use for your company, whether it's mature or just at the idea stage.
Remember, these are meant for planning, to surface the insights, not for a plan that will be rigorously followed.
Performance and innovation
The second insight is around performance and how to thrive as a company.
Collins talks about how the right people in the right company culture will produce extraordinary results. This approach is based on only a few things that need to be done right. It involves hiring the right people and trusting them, which leads to high performance and innovation.
I'll reference my 2022 piece on the Right People on The Bus. The concept is simple: before hiring, you must know what kind of person needs to sit on each bus seat. Once you've filled the seats with the right people, they will know where to drive the bus.
In BE 2.0, Collins shares a story about Brazilian company builders Jorge Paulo Lemann and his two partners, Marcel Herrmann Telles and Carlos Alberto Sicupira, which illustrates the bus concept.
They became so good at building culture that they eventually began to consider buying entire companies outright and then running them based on their cultural operating system with the goal to build and grow them forever. Their ultimate "strategy" was to find passionate, driven young people; put them in an intense meritocratic culture; challenge them with audacious goals; and give them a stake in the outcome—what they summarized as Dream-People-Culture.
Page 29 - BE 2.0
Where does poor performance in a company originate? As a startup investor, I've repeatedly seen haste as a common culprit. In the high-pressure environment of startups, with their limited 12-24 month runways, there's a tendency to rush through critical activities like collecting all the information for decision-making and spending enough time on vision and strategy. These can be detrimental to a company's long-term success.
Quickness has its place in a startup, but making decisions quickly is essential only once you've gathered all the information needed. Don't let haste dictate your every move.
Poor performance is usually the result of poor hiring decisions, poor training, lack of clear expectations, poor leadership, inadequate appreciation, poor job design, or some other failure of the company, not the employee.
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Another cause of poor performance is the half-hearted embrace of decentralization or flat hierarchies. Companies may adopt this trendy approach without fully understanding why or how to implement it effectively, resulting in management still pulling the strings behind the scenes.
It's impossible to have an organization with all the fire and zeal of decentralization and the complete efficiency of centralized control. Pick decentralization, fully implement it, and live with its difficulties as best you can. If you try to go halfway, it'll be like having a country shift from driving on the right side of the road to driving on the left side of the road, but only implementing it part way.
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The third failure is a lack of trust, often stemming from the previous two issues. Transparency and communication between owners, management, and staff are crucial for fostering trust. Sometimes, owners may have ulterior motives they don't openly share with their team, leading to confusion and conflicting agendas.
[Great managers] respect their people, and therefore, they trust them. They respect their people, and therefore, they're open and honest with them. They respect their people, and therefore, they give them freedom to act and make decisions. They respect their people, and therefore, they believe in their inherent creativity, intelligence, and ability to solve problems.
Page 301 - BE 2.0
If you can create an atmosphere where people depend on each other—where people think, "I can't let these people down"—you'll get extraordinary performance.
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Avoiding these traps while focusing on the book's guidance regarding strategy and vision can set the stage for innovation and motivation within startups. As Jim Collins notes, this potent combination can create enduring success.
In Chapter 8, "Innovation," we stress the importance of decentralization and autonomy. The problem, of course, is how to unleash individual creativity and, at the same time, move in a unified direction. Vision is the link. If all people in the company have a guiding star on which to sight (a common vision), they can be dispersed in hundreds of independent little boats, rowing in the same direction.
Page 101 - BE 2.0
Final words
If you haven't read BE 2.0., I highly recommend that you get it and read it. Here's the link to Amazon to get a copy today. You won't regret it.