6 Quotes On How To Make Your Company ‘Great By Choice’

In the business community, unless you live under a rock, you’ve heard of Jim Collins. He wrote the classics, Built to Last with Jerry Porras (on the best seller list for 6 years), followed up by Good to Great (sold over 2.5 million hard cover copies) and How The Mighty Fall (didn’t do nearly as well as his first two).

Collins’ latest master piece might be his best work yet. Written with Morten T. Hansen, they teach lessons by telling riveting stories and relating them back to the various principles about the great companies profiled. One of the best written business books that gives you concepts, based on research, that you can implement in your business. I couldn’t put it down at times, the stories they share keep you glued to the book chapter after chapter. You’re learning through narrative. You can tell Collins’ is really honing in on his writing skill. By far the best book he’s written yet.

Below are the most important concepts you’ll learn in the book:

From the book:

“We labeled our high-performing study cases with the moniker “10X” because they didn’t merely get by or just become successful.  They truly thrived.  Every 10X case beat its industry index by at least 10 times.”

10xers (pronounced “ten EX-ers”) is our term for people who built the 10X companies
Social psychology research indicates that at times of uncertainty, most people look to other people-authority figures, peers, group norms-for their primary look to what other people do, or to what pundits and experts say they should do.  They look primarily to empirical evidence.

In the beginning of the book you’re introduced to Level 5 Ambition a combination of three concepts Morten T. Hansen and Jim Collins’ cover in Great by Choice.  Fanatic Discipline, Empirical Creativity, and Productive Paranoia are all touched on in various parts of the book because they are the characteristic of any leader that exemplifies the Level 5 Ambition.

1.  The 20 Mile March

Never getting too cocky in good times and never taking the bad times too hard.  The 20 mile march refers to a story in the book about two explorers racing to reach the south pole.  One wanted to get there as soon as he could so he traveled like a mad man.  No plan in mind he just had to get there.  The second man had a plan.  Every day they would walk 20 miles.  No more no less.  That way they would save their energy and could calculate certain stops and ideal places to setup camp. The story ends with the first explorer dying before he made it and the second man accomplished his gold.

Great companies don’t have extremely sporadic revenues, they consistently grow year on year.  It’s that long-term outlook that keeps them going year after year, always doing what they do best.

(10xers differ from their less successful comparisons in how they maintain hypervigilance in good times as well as bad.  Even in calm, clear, positive conditions, 10xers constantly considered the possibility that events could turn against them at any moment.  Indeed, they believe that conditions will-absolutely, with 100 percent certainty-turn against them without warning, at some unpredictable point in time, at some highly inconvenient moment.  And they’d better be prepared.)

The 20 Mile March is more than a philosophy.  It’s about having concrete, clear, intelligent, and rigorously pursued performance mechanisms that keep you on track.  The 20 Mile March creates two types of self-imposed discomfort: (1) the discomfort of unwavering commitment to high performance in difficult conditions, and (2) the discomfort of holding back in good conditions.

2.  Creativity is Worthless Without Discipline

Random creativity and an “innovative” spirit doesn’t make a business great.  Innovation, surprisingly was not one of the key attributes of the 10x companies.  The authors found that there was an element of creativity possessed by the 10x companies but not just creativity in general but relentlessly disciplined creativity.

If innovation and creativity are a major aspect of your business you better attempt to understand how you can ensure a creative process is followed throughout your regular business operations.

(The great task, rarely achieved, is to blend creative intensity with relentless discipline so as to amplify the creativity rather than destroy it.  When you marry operating excellence with innovation, you multiply the value of your creativity.)

3. Fire Bullets, Then Cannon Balls – Empirically validate major initiatives

The “fire bullets then cannonballs” lesson is very important to young businesses.  To get in the habit of testing a market before investing substantial resources makes decision making much easier.  It’s much smarter to fail small then to gamble in a big way.  Set up tests to see if ideas will fly.  At the very least you’ll understand your market a little bit better.

(Fire Bullets, Then Cannonballs: A bullet is an empirical test aimed at learning what works and that meets three criteria:  a bullet must be low cost, low risk, and low distraction.10Xers use bullets to empirically validate what will actually work.  Based on those empirical validation, they then concentrate their resources to fire a cannonball, enabling large returns from concentrated bets.)

4.  Productive Paranoia

The term productive paranoia comes from CEO’s like Bill Gates who had a flourishing company but never stopped to smell the roses dollar bills.  He worried about Microsoft in a good way, creating cushions for any unseen negative force that could adversely affect his company.  Productive paranoia isn’t a negative attribute, it’s more of a strategy to ensure your business stays in business for years to come.

(10Xers remain productively paranoid in good times, recognizing that it’s what you do before the storm comes that matters most.  Since it’s impossible to consistently predict specific disruptive events, they systematically build buffers and shock absorbers for dealing with unexpected events.  They put in place their extra oxygen canisters long before they’re hit with a storm.)

 5.  Inconsistency Leads to Mediocrity

An interesting finding by our beloved research team.  A common assumption is that the unwillingness to change will lead to a lackluster business.  Though not a positive attribute but not as severe as the company that chronically changes, never creating an experience anticipated by it’s ideal customers.  Therein lies the mediocre company, never finding itself, we’ve all seen them before.  Mixed messaging, not really knowing who they’re audience is, and providing underwhelming experience one after another (kinda like if you were to put a business on the iPod setting shuffle).

(We’ve found in all our research studies that the signature of mediocrity is not an unwillingness to change; the signature of mediocrity is chronic inconsistency.)

 6.  Very Rarely Do Companies Rely On One Major Creative Breakthrough

If you’re waiting for that aha moment when the universe collides with your intellect and you get the next big idea for your company, you should probably reassess your goals.  Innovation doesn’t happen overnight.  It takes a healthy does of empirical creativity and fanatic discipline to create something that is of revolutionary calibre.   Though some technological advances may seem to be one brilliant idea from an outside perspective, when really they were iteration after iteration of testing and adapting.  Think about that the next time you sit down for your annual “strategy planning sessions”, you can bank on the fact that your first attempt at anything new is going to fail.  It’s how you react to that failure that really matters.

(The iPod story illustrates a crucial point: a big successful venture can look in retrospect like a single step creative breakthrough when, in fact, it came about as a multistep iterative process based more upon empirical validation than visionary genius.  The marriage of fanatic discipline and empirical creativity better explains Apple’s revival than breakthrough innovation per se.)