Jim Collins Latest Article

"...keeping you great" Ten Minutes with the Growth Guy
 
HEADLINES:

Jim Collins' Latest Article in FORTUNE -- is worth taking five minutes to read. Here's Jim's key line that sums up his position on enduring greatness "Companies do not fall primarily because of what the world does to them or because of how the world changes around them; they fall first and foremost because of what they do to themselves."

Milken Global Conference -- Michael Milken, the king of junk bonds, hosts an annual conference for 3000 focused on education, health, and finance. I was invited to speak on the importance of small to mid-market firms going global as a way to insulate themselves from local downturns. With developing countries growing at 3 to 4 times the rate of developed countries, it's imperative that mid-market firms take advantage of these growth areas. And it's been THE topic of discussion in Malaysia this week as I co-host our 7th annual "Taipan: Making of Asian Giants" conference. More and more of the local firms have found it necessary to expand regionally, venturing into Vietnam and Thailand as well as India and China. I recommended two books: Doing Business Anywhere by Tom Travis and Riding the Waves of Culture by Fons Trompenaars (which Tom Peters called "...a masterpiece").  BTW, both authors will speak at the Growth Summit Oct 21-22  along with the famous and irrepressible Tom Peters.

Eric Schmidt, CEO of Google -- keynoted the Milken conference. One of his main points was the importance of setting aside email and taking time to think, read, and come up with ideas! He particularly sets aside time each weekend for reading books, a routine critical for keeping himself and Google relevant in today's global marketplace. And he admitted that he has to discipline himself to do it since the pace at Google is grueling.
   
T. Boone Pickens, who also keynoted the Milken conference, explained how he recently turned a $4.3 million investment into over $5 billion! The key? -- a disciplined routine that includes four daily huddles with his team and the equivalent of a mini-CEO Council meeting each morning over breakfast (hey, I'm just asking you to do a single daily huddle and a CEO Council meeting each week!). At 5:30 a.m. his top two traders arrive and begin assembling information about what's happened in the global oil industry in the past twelve hours. Pickens then gets on the phone with his traders at 6:15 a.m.where he's briefed. He then works out with a trainer, allowing him to process what he's just learned while energizing his brain and body. Next is a 7:30 a.m. breakfast (egg white omelet already prepared) with his team where they informally discuss their trading strategy. This is followed, throughout the day, with two or three additional team meetings, including one at 4:30 p.m. to wrap up the day. It's these constant focused synchronous conversations, vs. endless emails, that have driven the success of Pickens portfolio. He must have used the words "discipline" and "routine" a dozen times in his presentation.

Wind and Solar -- BTW, T. Boone was bullish on wind and solar power. Just this past week his firm placed orders for $2 billion worth of wind turbines to be installed near Sweetwater, Texas. Expected to be fully operational by 2015, his wind farm will generate 4000 megawatts of power. And he laid out a plan whereby the U.S. could become energy independent; eliminating the $600 billion paid annually for foreign oil. It involves building a series a wind farms running from Texas north through Oklahoma and Kansas, all the way up to the Canadian border. A similar solar power belt would run west from Texas to California. This would generate enough power to replace the contribution natural gas makes to the production of electricity so it could be used to power our trucks and cars with liquid natural gas (LNG). He pointed out that the distribution system for this is already in place given the extensive network of natural gas lines that run into almost every home. It's a small device that each home could have to convert the natural gas into LNG. It was some bold thinking.

Profitability of the FORTUNE 500 -- the latest list was recently published and the first thing I did was calculate the overall profitability (after tax) of this $10 trillion economic engine. You might recall that historically profit has run around 3%. It almost doubled to 5.9% in 2004 and 2005 and reached a historical level of 7.9% in 2006. Therefore, I was wondering what happened in 2007 with all the bad news. Yes, it did drop, but it still beat 2004 and 2005, coming in at almost 6.1% after tax. We're still looking at profits over twice historical averages! And the companies that performed best had a large share of international business. BTW, Wal-Mart reclaimed its lead as the largest company, surpassing ExxonMobile. Wal-Mart, through clever pricing, managed to grow 7% in 2007 reaching $379 billion in revenue. And the best performing stock for the past five and ten years? Apple, providing an annual return of over 50% per year for the past ten years!!!

Vikram Pandit, New CEO of Citigroup -- was featured in the latest FORTUNE 500 issue. Noted FORTUNE "(Pandit) insists that his schedule include time to think" to which the writer noted "how refreshing!" The article also noted that the first thing Pandit did after taking over in December was announce three priorities for 2008: raise capital; protect earning power by paying people as well as he can; and get their risk assets under control. If the CEO of Citigroup can name three priorities, we all can get this specific in our own companies.