Great by Choice is the latest book by Jim Collins author of Good to Great: Why Some Companies Make the Leap... and Others Don't and How the Mighty Fall: And Why Some Companies Never Give In and Morten Hansen. In this book the authors take a look at how companies have achieved superior performance in the face of chaos and uncertainty. For example one case study examines how SouthWest has maintained superior performance in the face of all the hurdles encountered by the airline industry.
If you are familiar with any of Collins’ previous books you will be familiar with how the book is organized. The authors begin by defining their goals; to identify and analyze companies that were high performers through turbulent times with a twist being they achieved this success during a period of vulnerability. As usual Collins picks highly successful companies and then finds comparison companies in order to analyze the differences in how the companies were managed. The authors use an interesting analogy of the Roald Amunden and Robert Scott expeditions as they both raced to be the first to the elusive South Pole. Both expeditions faced the same set of circumstances with the result being one succeeded while the other…., well you need to read the story. As an aside, for more on the race to the South Pole, I recommend An Empire of Ice by Edward Larson.
The authors then present the key behaviors for surviving in chaotic time. These behaviors being:
· Fanatic Discipline
· Imperial Creativity
· Productive Paranoia
· Level 5 Ambition (the only holdover from previous books)
The authors suggest looking at the first three as the three tips of a triangle with the last being the inside of the triangle. The remainder of the book provides a more in-depth look at these behaviors using the identified successful companies and their comparisons.
Fanatic Discipline (the 20 mile march). The key concept for this section is that companies which have sustained long term success, especially during uncertain times, remain consistent in their pace and practices during both good times and bad. This behavior includes having the discipline to hold back in good times, keeping to you original plan but also make sure to keep up the pace during the tough times. Why hold back in the good times? So you do not get ahead of yourself and lose control. Say you plan to grow by 20 employees a year. You stick to this plan for a couple of years and then have the opportunity to grow by 100 employees in a given month, do you take it? The authors would say the analysis suggests no, stick to your march – you may not be organizationally ready to grow that rapidly and the book provides real life examples from the unfortunate comparison companies.
Imperial Creativity (Fire bullets then cannonballs). The biggest eye opener from this chapter is that the successful companies were not the big innovators. Think mp3 players, which were introduced first, compared with the IPod today. Most of the successful companies in this study built on other’s major innovations and then applied consistent processes to add to these
innovations incrementally. A case study used is South West airlines, detailing how they were modeled from Pacific Southwest Airlines (PSA) and how they continued to succeed long after PSA was gone.
The catch phrase used in this chapter is “Bullets before Cannonballs”, the meaning being that you have to fire many ideas on a small scale (bullets) to see what is successful before firing a huge cannonball. Success with un-calibrated cannonballs can lead to firing more un-calibrated cannonballs which can lead to disaster. When one of the successful companies fired and unsuccessful un-calibrated cannonballs they don’t follow up with another, instead they went back to firing bullets.
I thoughts this section was particularly insightful and was very well aligned with the principles found in Adapt: Why Success Always Starts with Failure by Tim Harford.
Productive Paranoia (Zoom Out then Zoom In). Be afraid, be very afraid. This section is all about Risk Management and the paranoia of successful companies. The authors start by defining three types of risk:
· Death Line – can kill the organization
· Asymmetrical – there is more to lose than gain on a risk
· Uncontrollable – taking a risk where you have no control on the outcome
It is also noted that the perceived timing of the impacts of the risks should be considered. When analyzing risk one needs to consider timing so you do not react too quickly; act fast when you must but slowly when you can.
An appropriate analogy used in this section details the events leading up to the 1996 Mount Everest accident which claimed the lives of several expert climbers.
I found it interesting to note that both Imperial Creativity and Productive Paranoia revolve around Risk Management, obviously an important process that all companies should embrace.
Next the authors review the concept of a SMaC recipe – and the need to keep this recipe as consistent as possible. The successful companies in the study try new things on a small scale before changing SMaC recipe. The successful companies remain steady and don’t react too severely to risks or opportunities.
Finally the authors attempted to determine if good or bad luck plays a part in determining long run success.
An important note to keep in mind is that the authors do not claim there is a causal relationship between these behaviors and success. Instead they admittedly are only able to show a correlation. Although it is intuitive that the behaviors discussed in this book would put a company on the right path for long-term success, but that is not to say success is guaranteed. Nor should we assume that only by following these behaviors can a company sustain success. My advice is to use the book to learn the practices of other companies and decide for yourself which you should be implementing.
There are some camps that have critiqued the methods and conclusions drawn by Collins in his previous book. The thoughts being that we need to consider how randomness plays a role in company outcomes, and how we tend to think that everything a successful company has done is brilliant. If you are interested in another side of this story I recommend The Halo Effect by Phil Rosenzweig. I believe that both sides make strong points and again readers should decide for themselves.
If you have read Collins’ other books you will want to pick this on up as well, since the authors have done a fairly good job at not repeating material. If you have never read his previous writing you can start with any of his books if interested in learning the behaviors of successful and unsuccessful companies.
