An MBA Book Club, Part 3

Great by Choice

Jim Collins and Morten T. Hansen

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Summary

In an age of increasing instability and turbulent industries, the world’s most effective businesses —the 10Xers, so named for their superior financial performance—demonstrate a set of common traits: fanatic discipline, empirical creativity, and productive paranoia.  These traits, manifest in practices such as the 20 Mile March, Firing Bullets, then Cannonballs, and avoiding Death Line risk, allow companies to thrive in uncertainty. 

Favorite Quotes

·         Amundsen v. Shackleton: a South Pole contrast in styles

·         “Innovation by itself turns out to not be the trump card we expected; more important is the ability to scale innovation, to blend creativity with discipline” (p 10)

·         “On the one hand, 10Xers understand that they… cannot control, and cannot accurately predict, significant aspects of the world around them.  On the other hand, 10Xers reject the idea that forces outside their control or chance events will determine their results; they accept full responsibility for their own fate” (p 19).

·         “Fanatic discipline keeps 10X enterprises on track, empirical creativity keeps them vibrant, productive paranoia keeps them alive” (p 20).

·         Fanatic Discipline: “Discipline, in essence, is consistency in action—consistency with values, consistency with long-term goals, consistency with performance standards, consistency of method, consistency over time” (p 21).

·         Empirical Creativity: “Social psychology research indicates that at times of uncertainty, most people look to other people—authority figures, peers, group norms—for their primary cues about how to proceed.  10Xers look to empirical evidence” (p 25).

·         Productive Paranoia: “10Xers believe that conditions will—absolutely, with 100 percent certainty—turn against them without warning” (p 29).

·         Level 5 Ambition: “They are passionately driven for a cause beyond themselves” (p 33).

·         “What is your 20 Mile March?” (p 68)

·         “Firing an uncalibrated cannonball that succeeds can be even more dangerous than a failed cannonball.  Keep in mind the danger of achieving good outcomes from bad process” (p 85).

·         4 Types of risk: Death Line, Asymmetric, Uncontrollable, Time-based (p 103).

·         “How much time before our risk profile changes?” (p 111).

·         “Most men die of their remedies, and not of their illnesses.” –Moliere

·         “The signature of mediocrity is not an unwillingness to change; the signature of mediocrity is chronic inconsistency” (p 138).

Response

I’ll admit it: I’m a sucker for Jim Collins’ work.  I’m not overly impressed by the apparently rigorous process through which he and his team identify great companies and their comparisons.; the numbers aren’t what get me.  But as Rozenweig states in The Halo Effect, “The test of a good story is not whether it is entirely, fully, scientifically accurate—by definition it won’t be.  Rather, the test of a good story is whether it leads us toward valuable insights, if it inspires us toward helpful action.”  And that is what Jim Collins does for me. 

I love the way he conveys concepts in concrete, memorable stories or analogies—he is the poster child for Made to Stick strategies.  The use of the Amundsen and Shackleford expeditions as polar opposites (pun intended!) was a perfect way of capturing the difference between companies that thrive in chaos and those who falter.  Similarly, the models of the 20 Mile March and Bullets and Cannonballs—like the Hedgehog Concept before them—have a way of firmly implanting themselves in my brain.  That is Collins’ wheelhouse.  (He begins to lose me when he becomes more abstract—zooming in and out or SMaC as a noun, verb, and adjective.)

I read this book through two lenses, evaluating both my own personality and that of Amazon in our ability to survive these uncertain times.  I found that of the four traits­—fanatic discipline, empirical creativity, productive paranoia, and Level 5 ambition—I exhibit two, empirical creativity and Level 5 ambition, while falling short in the other two.  As a company, Amazon seems to possess the same two traits.  In one sense, this makes me a great match for the company culture—I’m good at what they like (and visa-versa)—but it may also mean that I need to seek ways to shore up those deficits, both personally and professionally.