I'll admit, I'm a huge fan of Jim Collins' work. I am always challenged in my thinking and my leadership. This summary is of his book Great by Choice which asks the question: why do some companies thrive in uncertainty, even chaos and others do not?
Chapter 1 - Thriving In Uncertainty
We live in uncertain times. Companies, leaders, organizations, and societies do not thrive on chaos. But they can thrive in chaos. To answer the question Collins set out to find companies that started from a position of vulnerability and rose to great performance in very unstable environments, as well as comparison companies that did not fare as well to ask, “why?” He deemed those that succeed as10Xers (as they achieved 10X higher performance than industry).
In so doing, the research undermined a number myths:
Myth: Successful leaders in a turbulent world are bold, risk-seeking visionaries. False: The research found that these leaders are more disciplined, more empirical, and more paranoid.
Myth: Innovation distinguishes 10X companies in an uncertain world. False: 10X companies, though innovating, were sometimes less innovative than their comparison companies.
Myth: A threat-filled world favors the speedy (your either quick or dead) False: 10X leaders figure out when to go fast, and when not to.
Myth: Radical change on the outside requires radical change on the inside: False: 10X cases changed less in reaction to their changing world than comparison companies.
Chapter 2 – 10Xers
In 1911, two men (Amundsen and Scott) led expeditions, a race, to the South Pole. They took very different approaches and achieved very different results. Amundsen, who reached the Pole first, is representative of the 10X leader and the critical components that set these leaders apart:
Fanatic Discipline - Consistency of action, values, long-term goals, performance standards and methods, over time. Often a LONG period of time.
Empirical Creativity - Innovation is based on data; not blind hope and optimism. Often foregoing conventional wisdom, unless the data supports it. They rely on direct observation and practical experimentation.
Productive Paranoia - Always scanning the environment for what could go wrong. They have a hyper-vigilance in good times as well as bad. AND they prepare for those “what-ifs” by storing away strong reserves to buffer adverse conditions.
Level 5 Ambition - They are leaders with inspiring standards as opposed to inspiring personality. They have a deeply inspiring form of ambition: 10xers channel their ego and intensity into something larger and more enduring than themselves.
Chapter 3 – 20 Mile March
Amundsen progressed towards the South Poll at a very consistent rate. Regardless of the weather, his team moved forward at about 20 miles each day. Even when they could have goner further, they were disciplined to stop to ensure health. Scott was erratic and would hunker down in bad whether and try to make up ground in the good. It was a failed approach.
The 20 Mile March requires hitting specified performance markers with great consistency over a long period of time. It requires two distinct types of discomfort, delivering high performance in difficult times and holding back in good times. It has seven key characteristics:
Setting Clear Performance Markers – they must create productive discomfort and must be challenging (but not impossible) to achieve in difficult times. The lower bound of performance.
Self-imposed constraints – The upper bound. These should create discomfort in the face of pressures and fears that you should be going faster and doing more.
Appropriate to your organization
Goals are mostly within your ability to achieve – you shouldn’t need luck to achieve it.
Have a proper timeframe (long enough to manage – short enough to have teeth)
Imposed by the company on itself
Achieved with high consistency
20 Mile Marching helps you succeed because it builds confidence in your ability to perform well in adverse circumstances. It reduces the likelihood of catastrophe when you’re hit by a turbulent disruption. If you deplete your resources, run yourself to exhaustion, and then get caught at the wrong moment by an external shock you can be in serious trouble. It helps you exert self-control in an out-of-control environment.
Key Quote: There is an inverse correlation between pursuit of maximum growth and 10X success.
Chapter 4 – Fire Bullets, Then Cannonballs
“The great task, rarely achieved, is to blend creative intensity with relentless discipline so as to amplify the creativity, rather than kill it. Innovation does not make one company more successful than another. It is not necessarily a key success differentiator – though successful organizations DO innovate (goal: be innovative enough). Each industry has a threshold of innovation necessary to be a contender.
“First, you fire bullets to figure out what will work. Then once you have empirical confidence based on the bullets, you concentrate your resources and fire a cannonball. After the cannonball hits, you keep 20 Mile Marching to make the most of your successes.”
What makes a bullet? A bullet is low cost. It's low risk and low distraction to the overall enterprise. Step one is to fire a bullet (an idea, a pilot, a trial). Assess, did you hit anything? Consider whether any of the successful bullets warrant firing a cannonball. If so, focus resources on the cannonball. However, do not fire uncalibrated cannonballs, fire sufficient bullets to calibrate. Terminate any bullets that show no evidence of eventual success.
Fire LOTS of bullets. Failure to fire cannonballs, once calibrated, leads to mediocre results.
Chapter 5 – Leading Above the Death Line (Productive Paranoia)
To lead above the death line you have to have productive paranoia about what could go wrong. You have to prepare for those possibilities. First, build cash reserves and buffers to prepare for unexpected events and bad luck before they happen. Second, bound risk – 10X companies took less risk than comparison cases.
Avoid Death line risk – decisions that could kill or severely damage the organizations (don’t go “all in”)
Avoid Asymmetrical risk – risks where the potential downside is much bigger than the potential upside.
Minimize Uncontrollable risk – events or risks that expose the organization to forces and events that it has little ability to control.
Productive paranoia requires that you "zoom out, then zoom in" – remaining hyper-vigilant to sense changing conditions and respond effectively. Zooming out (Big Picture)– give you a sense of sense a change in conditions. Assess the time frame: how much time before the risk profile changes, assess with rigor, do the changes require a change in plans? If so how? Then zoom in – focus on supreme execution of plans and objectives.
Productive paranoia require understanding time based risk – Critical question: How much time before your risk profile changes? Be hyper-vigilant to recognize risks early. Fast decisions are not necessarily best decisions. Use the time you have to make a deliberate fact-based decision. (Go slow when you can, fast when you must). Sometimes the quick are the dead. Let the situation unfold – IF you have the time. Focus on superb execution once a decision is made.
Chapter 6 SMaC (a Specific, Methodical, and Consistent recipe for success)
A solid SMaC recipe is the operating code for turning strategic concepts into reality, a set of practices more enduring than mere tactics. It forces order amidst chaos. However, it’s not the existence the recipe that is most important, it is the fanatic discipline to follow it.
When faced with declining results, 10Xers do not first assume that your principles and methods have become obsolete. Rather, they first consider if you have strayed from your recipe. Then, they look to see if the conditions have fundamentally changed. The signature of mediocrity is not an unwillingness to change; it is chronic inconsistency.
There are two healthy approaches to amending a SMaC recipe: (1) exercising empirical creativity (more internally driven) and (2) exercising productive paranoia (more externally focused).
Chapter 7 Return on Luck
All organizations face both positive and negative “luck.” The key differentiator to success is not the amount of one type or the other. The key differentiator is the response to luck; rather the degree to which we leverage the good or mitigate the bad. (Your Return on Luck – ROL) .
Recommendation: This is a great book to own - here is the link to it on Amazon: http://ow.ly/BmobW
