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Good morning.

I caught up last week with Jim Collins, whose book Good to Great ranks high on my list of the best business books of all time. Collins recently released an update of an earlier work, Beyond Entrepreneurship 2.0, originally published in 1992. I was eager to talk with him about how the business world had changed since then.

Collins work focuses on enduring rules of business leadership, and he resists those who trumpet change. In the new book, he tells of a conversation with a twenty-something who said his generation “requires a whole new way of leading to inspire and motivate us…We demand that our leaders not only provide direction, but that they also tell us why. And it needs to be a ‘why’ that’s much more than maximizing profits for shareholders.”

Collins’ response: “The greatest company builders have always done that. You are confusing what’s rare with what’s new.” His examples include companies like Johnson & Johnson, Merck, and Patagonia.

Readers of this newsletter know that I believe much has changed. Intellectual property and intangibles are a bigger part of the value of today’s companies today than they were three decades ago; that forces companies to focus more on their employees. The pace of change is faster and scaling is easier than it used to be; that makes it harder for top leaders to provide detailed direction, and more important that they empower employees and set a bright North Star. Social media has enhanced transparency; that makes leaders more accountable for the impact of their companies on society. And the younger generation is indeed different—perhaps not in their desire for meaning, but in how they fulfill it. Millennials are slower to marry, less likely to belong to organized religion, less inclined to join civic clubs, than previous generations—leaving the employer as their main formal connection to society. They want meaning in their work.

Collins didn’t dispute those changes. And he acknowledged more businesses today are pursuing purpose beyond profit—although he warned of the need to distinguish between true purpose and ‘purpose-washing.’ Nevertheless, in his view, the fundamental rules have not changed. In the 1992 book he wrote: “We ask you to reject the classic business school doctrine. ‘Maximize shareholders wealth’ is a simple theoretical way of looking at a business, but it’s not supported by the reality of many great companies…For them, profit is simply a strategic necessity rather than the supreme end point.”

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Alan Murray

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