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Great by Choice: Uncertainty, Chaos, and Luck--Why Some Thrive Despite Them All: 5 Hardcover – Illustrated, 11 October 2011
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"Collins and Hansen draw some interesting and counterintuitive conclusions from their research....far from a dry work of social science. Mr. Collins has a way with words, not least with metaphor."--Wall Street Journal
Entrepreneurs and business leaders may find the concepts in this book useful for making choices to increase their odds of building a great company.--Booklist
From the Back Cover
The new study
Great by Choice distinguishes itself from Collins's prior work by its focus not just on performance, but also on the type of unstable environments faced by leaders today.
With a team of more than twenty researchers, Collins and Hansen studied companies that rose to greatness--beating their industry indexes by a minimum of ten times over fifteen years--in environments characterized by big forces and rapid shifts that leaders could not predict or control. The research team then contrasted these "10X companies" to a carefully selected set of comparison companies that failed to achieve greatness in similarly extreme environments.
The new findings
The study results were full of provocative surprises. Such as:
- The best leaders were not more risk taking, more visionary, and more creative than the comparisons; they were more disciplined, more empirical, and more paranoid.
- Innovation by itself turns out not to be the trump card in a chaotic and uncertain world; more important is the ability to scale innovation, to blend creativity with discipline.
- Following the belief that leading in a "fast world" always requires "fast decisions" and "fast action" is a good way to get killed.
- The great companies changed less in reaction to a radically changing world than the comparison companies.
The authors challenge conventional wisdom with thought-provoking, sticky, and supremely practical concepts. They include: 10Xers; the 20 Mile March; Fire Bullets, Then Cannonballs; Leading above the Death Line; Zoom Out, Then Zoom In; and the SMaC Recipe.
Finally, in the last chapter, Collins and Hansen present their most provocative and original analysis: defining, quantifying, and studying the role of luck. The great companies and the leaders who built them were not luckier than the comparisons, but they did get a higher Return on Luck.
This book is classic Collins: contrarian, data-driven, and uplifting. He and Hansen show convincingly that, even in a chaotic and uncertain world, greatness happens by choice, not chance.
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I realized that I never reviewed Great by Choice for my website, so I picked it up and, just like the last time, found myself still reading a couple of hours later. I think Great by Choice is, Jim Collins’ best book. The partnership with Morten Hansen makes the reasoning tighter and the research a bit broader than in Collins’ other books. Here’s the authors’ statement of what they want the book to achieve.
“First, we believe the future will remain unpredictable and the world unstable for the rest of our lives, and we wanted to understand the factors that distinguish great organizations, those that prevail against extreme odds, in such environments. Second, by looking at the best companies and their leaders in extreme environments, we gain insights that might otherwise remain hidden when studying leaders in more tranquil settings.”
The opening chapter, Thriving in Uncertainty, is an introduction to the book. The research is typical Jim Collins. He went looking for enterprises that had great performance over many years in a particularly turbulent environment and that started from a position of vulnerability.
In this chapter, the authors share their findings about five what they call “entrenched myths” that were disproved by their research. Here are the myths.
1. Successful leaders in a turbulent world are bold, risk-seeking visionaries.
2. Innovation distinguishes those companies that succeed in a fast-moving, uncertain and chaotic world.
3. A threat-filled world favors the speedy.
4. Radical change on the outside requires radical change on the inside.
5. Great enterprises have a lot better luck than other enterprises.
All of those, are false. So, what is this book about? It’s simple, Great by Choice will prepare you to succeed in a world that you cannot predict.
Chapter two is “10Xers.” That’s what the authors call the super successful and adaptable companies that they studied. The core of the chapter is the story of Roald Amundsen and his race to the South Pole. Next, they define 10X leadership as three important things: fanatic discipline; productive paranoia; empirical creativity.
Every chapter ends the same way. There’s a summary of key findings, of course, but also unexpected findings and another part called “One Key Question,” which they suggest you answer.
The authors call chapter three “The 20-Mile March” and it’s about having concrete, clear, and rigorous performance mechanisms that keep you on track. They phrase this philosophy as a commitment to high performance in difficult conditions and (this is important) “the discomfort of holding back in good conditions.”
This all made sense to me. I’m a proponent of getting a little better, pushing forward, and making a little progress every day. The finding that I found surprising and helpful was that the idea of the 20-mile march also includes not pressing too hard ahead when conditions are good. It’s a continued steadiness. When times are good, stick to your discipline. Don’t try to go explosive.
Chapter four is titled “Fire Bullets, Then Cannonballs.” For the authors, a bullet is a test that you make to determine what works. A bullet is a low-cost, low-risk, low-distraction trial. It’s what puts the “empirical” in “empirical creativity.”
This is what I learned in my early direct-response career. You test things. When those things work, you expand a little bit, but you also understand that many of the things you test won’t work.
Chapter five is “Leading above the Death Line.” The chapter is about risk in two areas. First, it is about the things you can do to minimize the risk of unforeseen and uncontrollable events. Then, the authors talk about three kinds of risk. Death line risk is where there’s a risk of destroying or severely damaging the enterprise. Asymmetric risk is where the downside is much larger than the upside. Uncontrollable risk is what it sounds like, something that can’t be either controlled or managed. The big takeaway for me is in the “One Key Question” that the authors suggested you ask about yourself and your enterprise: “How much time before the risk profile changes?”
Chapter six is about “SMaC.” SMaC stands for Specific, Methodical, and Consistent. The lessons in this chapter were a lot like the ones in “20-Mile March” chapter. The key point is that in an uncertain, fast-changing environment, you need to be specific, methodical, and consistent.
The final chapter is about “Return on Luck.” As you might expect, the basic thing to learn is you’re going to have good luck and you’re going to have bad luck, and what’s going to matter is what you do with it. That’s a lot like the message of a bevy of motivational speakers, but it’s still important. My mother had a question she asked in all kinds of situations: “What good can we make of this?” You improve your return on luck by asking questions like that
As with every book with Jim Collins’ name on the cover, this one is superbly written with dozens of well-told stories, liberally seasoned with facts. What makes this book special is the tightness of the reasoning and the phrasing of the research. The big plus of this book, for me, was that this is not only about organizations. You can apply the things you find here to a career or a project or just about any part of life. You’re going to have luck. It’s what you do with it that matters. To find out how to do the best possible job dealing with the luck you get, read Great by Choice.
I always wish Amazon would show an easy-to-find Table of Contents for books, so I've created one for you here, complete with a summary of each chapter/section.
1 - THRIVING IN UNCERTAINTY
Collins and Hansen explain what the method for their book (what I described above), including the definition of a 10Xer, which is a company that beat their industry by 10 fold. Just 7 companies were selected as a 10X case out of 20,400 companies. The seven are Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines, and Stryker. They don't include Apple because their research lens of Apple vs. Microsoft focused primarily on the 1980s and 1990s (remember they stopped collecting data in 2002), which makes no sense to me. The present environment (the one in which Apple has exploded) is a far more difficult climate than the 80s-90s.
2 - 10Xers
Example of a 10xer is Southwest airlines, whose growth since 1972 is greater than that of Walmart, despite this period being a particularly harsh one for the airline industry. Anecdotes describe historic examples of 10xers and explains they aren't more creative, more visionary, more charismatic, or more ambitious, more blessed by luck, more risk seeking, more heroic, or more bold. The glaring fact that Apple is missing goes against this model, as Jobs and company were many of these things.
3 - 20 MILE MARCH
Here they introduce discipline as the key that sets 10Xers apart (hence the 20 mile march). 10Xers are focused on data with GREAT discipline and stick to their plan, like a 20 Mile March.
4 - FIRE BULLETS, THEN CANNONBALLS
10Xers were not more innovative than the control companies; indeed, they were considered less innovative in some comparisons. 10Xers scale innovation (firing bullets) and then the fire cannonballs once they know what's on target.
5 - LEADING ABOVE THE DEATH LINE
Explains "productive paranoia," the idea that you need to build cash reserves and buffers, bound your risk, and show flexibility in looking at macro and micro factors at play in your business and industry.
6 - SMaC
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.
7 - ROL (RETURN ON LUCK)
10Xers weren't more lucky or unlucky than comparisons. They had better ROL because they took full advantage of good luck and minimized the effects of bad luck. If you think about it, that's the real key to luck. Knowing when you got lucky and how to take advantage of it, rather than blindly thinking you walk on water (like so many businesses do).
Like Jim's other books, the how to is what's missing. An outstanding book for that (increasing your leadership skill set) is Leadership 2.0