Book Review – Great By Choice

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I was listening to an audio book that really caught my attention. It is a book about some basic strategies and thought processes that go into being a leader that makes a difference. The book is called Great by Choice. It was written by Jim Collins and Morton Hansen.

The book is basically a study they performed on a series of companies during the time periods of the late 70’s to right around 2001. One set of companies (which they call 10X’ers) were compared to a comparable company during that time. 10X’ers are companies that surpassed the market by 10 times. Only 7 companies out of over 20,000 companies passed the test. So, the 10X’er company would be Microsoft and the comparable would be Apple (which was a 10X’er, fell without Steve Jobs, and became a 10X’er again when he came back). Another was Intel, compared to AMD. Yet one last example was Southwest Air compared to PS Air (which isn’t even around anymore).

The question laid out was “in a time of uncertainty, turmoil, and chaos, how come some companies thrive and yet others in the same market with a lot of the same capabilities fail?”.

They found some interesting patterns.

20 Mile March

The first thing they identified as a commonality was the concept of a 20 mile march. This is a behavior of discipline. Consider, walking across the country. If you started out and walked 20 miles every day (no more and no less) no matter what the weather and conditions were, you would get to the other coast faster than someone that went longer distances when they felt good and went shorter distances when the weather was bad. It’s about the consistency. It builds stamina, strength, and confidence. If you know you can do 20 miles in the snow, in the rain, or over the mountains, when you are faced with a real challenge, you know you can perform. If you are working in the “start/stop/stutter” method, you have not trained for the tough situations and that’s when you fail.

The other part of this is to set a growth ceiling floor for yourself and a minimum level of success that you must meet. Just because you can grow really fast doesn’t mean you should. Also, you have a minimum you have to do, so you stretch to always make that goal.

The goal is a consistency of action.

Fire Bullets, Then Cannonballs

Actually, this rang the truest for me. The concept is simple – Imagine you are on a boat. You have a small amount of gunpowder. A war ship shows up and takes an antagonistic approach. You can load up a cannon with all your gunpowder and fire a cannonball…but what if you miss? Now you are dead. Another option is to take a little bit of gun powder and fire a bullet. If it misses, you recalibrate and fire again. If it misses, you recalibrate and fire again. If it hits, you take all your remaining gunpowder and fire at that calibration. HIT! You survive and win the battle.

I happened to be in two scenarios over the last two weeks where this thought process was extremely valuable. Essentially, it causes you to try things and explore possibilities a little more, but only with a limited level of risk. Both times I had a more positive result and the resulting project cost less money. We also had a situation where we did not fire bullets and we let a cannonball fly. This was not good and it was a bad situation and cost a lot of unnecessary money.

Understanding the Death Line

This has to do with what they called “productive paranoia”. Not doing things out of fear is bad. However, constantly asking yourself “What can possibly go wrong” is not bad. This helps you step back for a moment and analyze risk. There is always risk. The question is how to mitigate as much risk as possible. If you know things can happen, and you identify what those things are, you are not surprised when they do happen and you have a plan in place to deal with it.

The Death Line is the point at where you can no longer function as an entity and your organization essentially dies. Any risk that causes you to potentially cross this line is unacceptable risk. This means doing things such as building cash reserves, buffers, and flexibility into your plans. You don’t go diving with just enough air, you take extra air. If the marketing campaign is going to take three months and cost $100,000, you give it four months and $200,000. Then, no matter what comes your way, you are prepared for it and can make the right decisions, not the ones that are simply tied to cost and time.

SMaC and Luck

SMaC stands for Specific, Methodological, and Consistent. The more uncertain your environment, the more SMaC you need to be. A SMaC recipe is a set of durable operating principles and practices that create a replicable and consistent success formula. This formula incorporates the three previous items.

Many times, you look at companies or situations and think “Wow, what a stroke of luck that was!” However, during the study, they identified the definition of a “luck event”. Based on this definition, they found that most of the comparison companies were no more lucky or unlucky than the other. The key was Return on Luck (ROL). 10Xer’s took full advantage of good luck and minimized the effects of bad luck. Knowing when you got lucky and how to take advantage of it, rather than blindly thinking you are great is really the key to this.

I think this book was interesting because it raises some good questions to think about, some basic principles to think about when faced with a decision…or you have to present options to a colleague or manager. Being able to present options that manage risk, provide a way to eventually hit the target with a powerful blow, and are consistent with the goals presented by management or stakeholders is a very valuable skill. Interestingly, this is a more conservative approach to creativity and I kind of like it. It has taught me that it is not always best to be the one that jumps off the cliff or rides the front of the wave hoping you don’t get smashed or become a poof of smoke like Will E. Coyote at the bottom of the canyon.

Core Ideology Questionnaire
Diagnostic Tool
Excerpt from the book

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