Random Notes

"It was 1994. [My book] Built to Last had just come out. I mean, I was nobody. But a colleague knew Peter Drucker, and one day I got a message on my voicemail: 'This is Peter Drucker. I would be very pleased to meet you for a day in Claremont [Calif., where Drucker lives].' I call back, very nervous, and he says, 'Speak up! I'm not young anymore!' So I'm like, 'PETER DRUCKER, THIS IS JIM COLLINS!' And then he actually set aside a day. Think about the value of a day with Peter Drucker at age 85. The interesting thing is that he absolutely changed my life that day. In one day.

"I was at a point where I could have started a consulting firm, Built to Last Consulting, or something. The first thing he asked was, 'Why are you driven to do this [start a consulting firm]?' I said I was driven by curiosity and impact. And he says, 'Ah, now you're getting in the realm of the existential. You must be crassly commercial.'

"For a moment I had this image of going to Yoda for wisdom, and having him say, 'Have a Coke!' But he was either testing me, or it was a joke. I'm not sure which.

"The huge thing he said to me was, 'Do you want to build ideas to last, or do you want to build an organization to last?'

"I said I wanted to build ideas to last.

"He said, 'Then you must not build an organization.'

"His point was, the moment you have an organization, you have a beast to feed—this army of people. If you ever start developing ideas to feed the beast rather than having ideas that the beast feeds, your influence will go down, even if your commercial success goes up. Because there's a huge difference between teaching an idea and selling an idea. In the end, what are you in a battle for? You're battling to influence the thinking of powerful, discerning people. If you ever abuse that trust, you can lose them. So the moment that arrow changes direction, you're dead.

"He said something else important: 'The real discipline comes in saying no to the wrong opportunities.' Growth is easy. Saying no is hard.

"I'll never forget asking, 'How can I ever pay you back?' and his saying, 'You've already paid me back. I've learned so much from our conversation.' That's when I realized where Drucker's greatness lay, that unlike a lot of people, he was not driven to say something. He was driven to learn something.

"I feel proud that I followed the advice. It's a huge debt. I can never pay it back. The only thing I can do is give it to others. Drucker had said, 'Go out and make yourself useful.' That's how you pay Peter Drucker back. To do for other people what Peter Drucker did for me."

Of all India's failures, lousy infrastructure may be the most puzzling. The nation's highway network stretches just 124,000 miles, compared with 870,000 miles in China. Most of them are simple two-lane affairs, maintained badly if at all. In 1999 the government launched a national program that will build another 28,000 miles of highways at a cost of $38 billion. The first phase calls for construction of a Golden Quadrilateral highway linking India's four largest cities. It's not enough. Morgan Stanley estimates. India is spending only about $2.5 billion a year building roads, while China is spending $25 billion a year. For goods sent by rail, freight costs are twice the average of other developed countries' and three times those in China. At India's ports, shipments often languish for days waiting for customs clearance and loading berths; goods typically take six to 12 weeks to reach the U.S., compared with two or three weeks for goods from China. Electric power in India costs twice as much as in China: Public utilities sock it to industrial producers to make up for the power they give away to farmers and the urban poor. The national grid is so bad that as much as 40% of the electricity generated is simply lost in transmission.

The result is that firms in India pay far more than rivals in China to produce, distribute, and export their products. Consider the plight of Bharat Forge, India's most successful auto-parts supplier. Bharat has the world's largest single-site forging facility. Over the past five years the company has become a trusted supplier of crankshafts, axle beams, and steering knuckles to top-tier clients such as Toyota, Ford, and DaimlerChrysler. Exports account for 40% of sales. But Bharat is located in Pune, an industrial city 75 miles from Mumbai. CEO Baba Kalyani says that, based solely on distance, his trucks should be able to travel to Mumbai's port and back two times each day. Instead, even with the recent completion of a new highway linking the two cities, a roundtrip typically takes three days. Kalyani figures infrastructure-related delays at the port put him at a 17% cost disadvantage relative to overseas competitors.