Greatness is a Choice

Greatness is not a function of circumstance rather it is a matter of choice. We cannot predict the future but we can create it. That is the principle outlined in the classic Great by Choice. The authors Jim Collins and Morten Hansen studied companies that thrived under immense uncertainty bordering on chaos. How these 10X companies (Microsoft, Biomet, Intel, Stryker, Southwest Airlines, Progressive Insurance, and Amgen) came through this extreme environment is the basis of this study. Keep in mind the study was how the companies performed till 2002 that was the cut off for the research. They studied dynastic performance which ended in 2002.

Considering what had happened to the airline industry with deregulation, recession, hijackings, bankruptcy and the September 11th 2001 terrorist attacks it was indeed amazing that in spite of all this Southwest Airlines returned a profit every single year and they were the only airline to do so. This stood in stark comparison to Pacific Southwest Airlines which capitulated in the same conditions. These companies which thrived under extreme uncertainty were called 10X companies and the leaders of these companies were called 10Xers. They displayed three key qualities fanatic discipline, productive paranoia, and empirical creativity.

The book starts with the journey of two explorers in the year 1911 that were trying to reach the South Pole (I read about the same thing in John Maxwell’s 21 irrefutable laws of leadership as well in the chapter on law of navigation). The winner was Roald Amundsen the Norwegian explorer and the loser was Robert Falcon Scott of Great Britain. Roald Amundsen prepared with monomaniac discipline. He practiced eating raw dolphin meat just in case he was ever shipwrecked, observed the Eskimos even taking their clothing, for a trip from Norway to Spain to get a masters certificate he bicycled, he used dog sleds and he killed the weaker dogs to feed the stronger dogs. In contrast Robert Falcon Scott used ponies which sweat on their hides, used motor sledges which had not been tested in extreme conditions, didn't have enough food planned for the conditions and didn't prepare with Eskimos.

The moral of the story is what you do before a storm hits that will ultimately determine your ultimate success. Are you more like Amundsen or Scott? Amundsen famously said “Victory awaits him who has everything in order — luck, people call it. Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck.”

Here are the major principles I liked in the book

20 Mile March: My 20 mile march is to exercise every day and I don’t deviate from that even if I am travelling. The key for a good 20 mile march is to have a lower bound but at the same time not going too far as well. For example Amundsen went nearly 17 miles every day including bad days whereas Scott went too far on good days and didn't go at all on bad days. Southwest ensured it didn't grow too much or too fast always maintaining consistency. Some of the key elements of a 20 mile march are clear performance markers, self-imposed constraints, a proper time frame, and measures achieved with great consistency.
This is the principle which details fanatic discipline.

Fire Bullets then Cannon balls: The main principle always make sure you fire bullets before doing something big. A bullet is low risk, low cost and if it fails the organization is not severely impacted. An example is the Apple Stores concept. Steve Jobs brought in the expert Mickey Drexler then CEO of GAP to the Apple board. Mickey advised to first do a prototype of a store before launching. Steve Jobs brought in retailing expert Ron Johnson to help him build the prototype. They designed, tested, redesigned until they had the model they wanted. Only then did they expand the stores across various locations. This was also well documented in the Steve Jobs biography by Walter Isaacson. You can also do this in your personal life. For example if you want to run a marathon do one 5k race, then 10k, then a half marathon before attempting a full marathon.
This is the principle which details empirical creativity.

Leading above the Death line: An example provided here is David Breashears who was the first to shoot an IMAX film at the top of Mount Everest. The main story is on May 8th 1996 sensing conditions were not right he headed down to base camp instead of proceeding further on his expedition. However on the way down he saw an expert mountain climber Rob Hall and few others who actually proceeded and finally when David reached the summit successfully on May 23rd 1996 he found them frozen on the way up (This was the infamous blizzard at Mount Everest on May 10th 1996 which killed eight climbers). The key lesson from this principle is you must prepare for bad events before they occur and you must be able to sense conditions when they do change. This is translated into building cash reserves and buffers which are oxygen canisters to prepare for bad events should it occur. For example Southwest always had healthy cash in hand and they never overplayed the market. The main point of this principle is that the 10X companies took less risk than their comparison counterparts. Another strategy outlined was Zoom out and then Zoom in. Zoom out of the situation to view upcoming changes remaining hyper vigilant in changing conditions and then Zoom in to respond effectively.
This is the principle which details productive paranoia. The key question to ask all the time how much more time before the risk profile changes.

Specific, Methodical and Consistent (SMaC): An example provided is the 10 point formula by Howard Putnam in 1979 for Southwest Airlines which didn’t change much over a period of 20 years.
Another analogy provided is the US constitution which was amended only a handful of times in more than 200 years after the initial Bill of Rights. That is the key of a SMaC recipe something that keeps the core intact and requires minimal change.

Return on Luck: Finally yes there is a chapter on luck and what role it played. I believe this is the most scientific research done on luck. Collins and Hansen defined luck as an event that meets three tests: (1) some significant aspect of the event occurs largely and entirely independent of the actions of the key actors in the enterprise. (2) The event has a potentially significant consequence and (3) the event has some element of unpredictability.

The basic thesis is that both 10X companies and their comparison counterparts had luck but the key factor is the 10X companies got a greater return on luck by consistently doing a 20 mile march, consistently firing bullets then cannonballs and displaying productive paranoia. On an individual level Bill Gates is considered lucky to have been born at the right time into an upper middle class family, going to a great school which had access to computers not a normal occurrence during his time and read the Popular Electronics magazine at the right time. The key point is he was not the only one in his era to have had these opportunities but he was the one who had a great return on the luck. My own view is he did more with his luck through a combination of sheer tenacity, risk taking, questioning the status quo and fanatical discipline. It is not the cards you are dealt but how you play with the cards dealt that is the key.
I was very inspired after reading this and I believe all the principles can apply to individuals as well as companies. I first read this book 2 years back and have subsequently reread it quite a few times. On a personal note one of my favorite authors is Jim Collins and I believe he is one of the foremost management thinkers alive.

 

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