I have read some of Jim Collins books before when I saw a copy of Great by Choice I thought it would be good. Jim’s books are based on a lot of research and this one is based on a nine year research project to determine why companies thrive in uncertainty and chaos. The research has comparisons with companies that are in the same or similar industries. They are trying to determine what characteristics these great companies share. The companies that are profiled have beaten their industry index by at least ten times, or 10xers.
They wanted to research a few management beliefs to test them out and see if they are true:
• Successful leaders in a turbulent world are bold, risk-seeking visionaries
• Innovation distinguishes 10X companies in a fast-moving, uncertain and chaotic world
• A threat-filled world favors the speedy; you are either the quick or the dead
These 10x companies have three core behaviors that are detailed in the book. Fanatical Discipline is consistent action and standards over the long-term. The comparison companies that don’t perform as well are constantly changing course and grabbing for new techniques. Empirical Creativity is based on empirical data to show where the next move should be. Productive Paranoia is a continual push to achieve goals in good times and bad. Andy Grove, the former CEO at Intel, is highlighted here with his saying, “Only the paranoid survive”. Intel had to constantly stretch to keep up with Moore’s law to double computing power every eighteen months.
The 20 mile march, that I have talked about before, is discussed in more detail. They discuss seven characteristics that companies must have to consistently achieve their 20 mile march.
• Clear performance markers.
• Self-imposed constraints.
• Appropriate to the specific enterprise.
• Largely within the company’s control to achieve.
• A proper time frame – long enough to manage, yet short enough to have teeth.
• Imposed by the company upon itself.
• Achieved with high consistency.
The interesting part to this that surprised me is how companies have self-imposed constraints. The 10x companies don’t pursue maximum growth but would leave growth on the table to avoid being overextended. That seems counter-intuitive to what many companies seem to strive for. These great insights I have gleaned from Jim’s other books.
Fire Bullets, then Cannonballs
One last insight I found interesting is this idea of firing bullets then cannonballs. The bullets are taking small risks then studying the results. When you have empirical data to support an idea you are ready for a cannonball. The cannonball is when you take a big bet and take a large risk. This is where we learn about companies that take bold moves rarely pay off. Instead these 10x companies take small bets and find a winner then take a large risk. Steve Jobs did this at Apple when they got into the retail business. They created two Apple stores and tried different designs and layouts until they were having success. Then they started to roll-out stores nationwide. They started with bullets and then moved to cannonballs.
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