Jim Collins: How to Thrive in 2009

That's interesting. Of course, it's a not-for-profit.

Yes, but think about the leading entrepreneurs of the past three decades: Steve Jobs, Ken Iverson, Herb Kelleher, Anita Roddick, Yvon Chouinard, Howard Schultz, Jeff Bezos. What jumps out at you as being consistent across all those people?

The larger purpose of what they were doing.

Right. They defined success on a very big scale. For Steve Jobs, it was about much more than selling computers. For Yvon Chouinard, more than clothing. For Anita Roddick, more than cosmetics. For Howard Schultz, more than coffee. For Jeff Bezos, more than online retailing. Wendy Kopp fits right in. We're talking big -- millions of kids, transforming society. The ambitions are huge.

Steve Jobs was in the very first issue of Inc., back in April 1979. How have the basic skills required to build a great company changed from then to now?

I would say that the basic principles have largely not changed, but the skills are always changing. For example, nothing would suggest that the importance of the who has changed. If anything, our turbulence research reinforces the idea that the most important decisions are always who decisions. Whether you're running a business in 1812, 1886, 1925, 1950, 1975, 2000, 2050, I see nothing to contradict the principle that who comes first and what comes second, for a very simple reason: If you cannot predict the what, you have to be able to do a good job with the who, because the what is going to be constantly shifting.

What exactly do you mean by doing a good job with the who?

Do you have a culture of people who A. share a set of values, B. have very clear responsibilities, and C. perform? Those who build a culture around those ideas are building upon something that is largely unchangeable.

But what has changed if you're building a business now, as opposed to 10, 20, or 30 years ago?

The skills. You need to be continually learning. For example, if you accept the idea that work is infinite and time is finite, you realize you have to manage your time and not your work. You need a laserlike focus on doing first things first. And that means having a ferocious understanding of what you are not going to do. The question used to be which phone call you wouldn't take. Now, it's the discipline not to have your e-mail on. The skill is knowing how to sift through the blizzard of information that hits you all the time. That's a different skill from what you needed 50 years ago, but the fundamental principles don't change.

I also see huge changes in the environment for entrepreneurship over the past 30 years.

Since 1979, I would suggest, there have been five key evolutions that have helped bring to life the idea of entrepreneurship as a systematic, replicable process. They amplify it. They facilitate it. They reinforce it. Number 1 has to do with capital mechanisms. Venture capital was still a relatively new concept in the 1970s. Now, you have all kinds of venture funds, angel networks, private equity, search funds. There's also the democratization of the stock market, which made it easier for companies to have IPOs. If you compare 1979 with 2009, the evolution of the capital markets has been a big change and a really positive one.

Actually, there are all kinds of resources available to entrepreneurs today that weren't around in 1979 -- including, dare I say, Inc.

That's the second evolution: the idea that entrepreneurship is a learnable process and the emergence of various education mechanisms to support it. In 1979, there were almost no entrepreneurship courses in business schools. Now, there are hundreds. You have the rise of resources like Inc., explicitly targeted at entrepreneurs and designed to give them practical guidance as well as inspiration. There is a fairly robust literature in the form of books. These are all premised on the concept that entrepreneurship is learnable -- a big change from 1979.

And meanwhile, entrepreneur itself has turned from a bad word into a good word, which is the third evolution. It used to be that entrepreneurs were viewed as exploitative or sleazy. But the popular image of entrepreneurship has undergone a drastic transformation -- from negative to not only socially acceptable but heroic. That draws more and young people into entrepreneurship.

Are you saying that the image of entrepreneurship has changed even though the fundamental nature of entrepreneurship is pretty much the same?

Not exactly. That's the fourth evolution. There has been a big shift away from seeing the essence of entrepreneurship as the creation of a better mousetrap to viewing it as the development of a better process. Did Starbucks have a better mousetrap? Did Home Depot have a better mousetrap? There's always an element of the better mousetrap, but there are lots of really great mousetraps and very few really great processes -- whether it be a process of building a brand, building a culture, rolling your approach out to the world. To me, building a better mousetrap seems a very strange way to think of entrepreneurship. Isn't it much more important to create a better process that will produce many mousetraps over time?

But people who focus on the mousetrap have a different mindset from those who focus on the process. In a sense, you're talking about inventors as opposed to company builders, aren't you?

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