Greatness is a Human Quest

Hello and many thanks to you for reading Thoughts on the Good Life. This month, my book recommendation is New York Times bestseller “Great by Choice: Uncertainty, Chaos, and Luck – Why Some Thrive Despite Them All.” It’s a book about companies and why a select few enjoy outrageous success.

You might be wondering what the success of companies has to do with the good life. Well, in this capitalist society we live in, all of our lives are enhanced by the effectiveness of the companies we come into contact with. This fact makes the subject fascinating and relatable to me. For I example, I work for a company, I sell to companies, I invest in companies, and my household economy resembles a company.

Furthermore, as Great by Choice co-authors Jim Collins and Morton T. Hansen say, “Greatness is not just a business quest; it’s a human quest.” This book is full of thoroughly researched wisdom that seems to apply not just to businesses, but to life in general.

Great by Choice was published in 2011. I read the print version and listened to the audiobook as well, which is read by author Jim Collins. Both versions are excellent and energizing. Collins has authored several books, some of them New York Times bestsellers, including Good to Great, How the Mighty Fall, and Built to Last. Collins wrote the books Great at Work and Collaboration.

Great by Choice is focused on this central question: “Why do some companies thrive in uncertainty, even chaos, and others do not?” The authors, along with a team of 20 researchers, took an in-depth look at standout companies like Microsoft, Progressive Insurance, Southwest Airlines, and Stryker, in comparison to similar companies that were much less successful. These standout companies were not able to predict the future, and they faced the same turbulent world that everyone else faced. Collins explains, “this work began with the premise that most of what we face lies beyond our control, that life is uncertain and the future unknown. Luck plays a role for everyone, both good luck and bad luck.” With that in mind, Collins and Hansen were determined to find out what allowed some companies to thrive.

10X Companies Outperform Their Industries by 10 Times

Collins and Hansen considered thousands of companies, but ultimately focused on seven wildly effective companies they label as “10X”: “We labeled our high-performing study cases with the moniker ’10X’ because they didn’t merely get by or just become successful. Every 10X case beat its industry standard by at least 10 times.” For each of these seven high-performing companies, they also considered a comparison case company that did not thrive in the same turbulent environment, spanning time periods of 15-30 years.

The authors were surprised and intrigued by their own research findings. They explain, “10Xers embrace a paradox of control and non-control. 10Xers then bring this idea to life by a triad of core behaviors: fanatic discipline, empirical creativity, and productive paranoia. Animating these three core behaviors is a central motivating force, level 5 ambition.”

Here’s how Collins and Hansen define Level 5 Ambition: “They’re passionately driven for a cause that’s beyond themselves.”

Fanatic Discipline

Collins and Hansen found all the 10X companies exhibited Fanatic Discipline. The authors found that even with the same average growth rate, companies that performed steadily and consistently over many years enjoyed greater compounded results overall than companies that experienced extreme highs and lows over the years.

They use an analogy of a “20 Mile March,” to illustrate how 10X companies employ fanatic discipline day after day, year after year, often for decades. Collins and Hansen say, “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.” The authors add that it’s important for companies to pace themselves when the going gets good, and to conserve resources, in order to refrain from burning out and maintain stamina.

The 10X companies Collins and Hansen studied had excellent 20 Mile March track records. When these companies occasionally fell short of their own standards, they were quick to course correct and get back on track. “The 20 Mile March helps you exert self-control in an out-of-control environment,” explain the authors. The authors add that it’s possible for an established company to begin an effective 20 Mile March later in the game.

Empirical Creativity

The 10X companies also displayed what Collins and Hansen call Empirical Creativity. They say analytical skills are still important, but carefully executed trial and error is even more important. The authors illustrate empirical creativity with their analogy “Fire Bullets, Then Cannonballs.” They explain this concept in detail: “Fire bullets, then fire cannonballs. First, you fire bullets to figure out what’ll work. Then once you have empirical confidence based on the bullets, you concentrate your resources and fire a cannonball. After the cannonball hits, you keep 20 Mile Marching to make the most of your big success.”

Collins and Hansen found that 10X leaders don’t have greater predictive genius than their competitors. But they resist the temptation of firing uncalibrated cannonballs, and they are better at testing the waters with carefully chosen bullets. The authors say, “a bullet is an empirical test aimed at learning what works and meets three criteria: A bullet is low cost… A bullet is low risk… A bullet is low distraction.” Once a winning tactic is identified, the 10X companies know it’s safe to fire a cannonball. With this disciplined method, companies can amplify their innovations and creativity.

Productive Paranoia

Collins and Hansen say the 10X companies exhibited what they describe as Productive Paranoia. They took well-thought-out risks. But surprisingly they took overall fewer risks than the comparison companies. The authors explain the “10X cases are extremely prudent in how they approach and manage risk, paying special attention to three categories of risk: (1) Death Line risk (which can kill or severely damage the enterprise), (2) Asymmetric risk (in which the downside dwarfs the upside), and (3) Uncontrollable risk (which cannot be controlled or managed).”

10X companies stay productively paranoid even in good times. They take action by preparing for inevitable storms ahead of time, and they build buffers and create huge margins of safety. Collins and Hansen say, “10X leaders remain obsessively focused on their objectives and hypervigilant about changes in their environment; they push for perfect execution and adjust to changing conditions.” The 10X leaders recognize not all time in life is equal. It’s important to recognize defining moments and act quickly when appropriate. But it’s equally important to exercise the patience required to wait for the right time to act, the authors explain.

Systemizing Success

The 10X companies all had self-designed systems and codes or conduct in place to systemize their success. Collins and Hansen call such a system a SMaC Recipe. They explain, “a SMaC recipe is a set of durable operating practices that create a replicable and consistent success formula. The word “SMaC” stands for Specific, Methodical, and Consistent.”

With a SMaC recipe, companies can consistently do what makes them exceptional, even in an environment of turbulent change. The authors say 10X companies are cautious and conscientious about changing their established core guiding systems. They point out “tactics change from situation to situation, whereas SMaC practices can last for decades and apply across a wide range of circumstances.”

Positive Return on Luck

During their research, Collins and Hansen dove deep into the subject of luck. Personally, I’m very interested in the subject of luck. Several months ago, I blogged about another research-based book on the subject: “The Luck Factor” by Dr. Richard Wiseman. The authors of Great by Choice report findings of the role of luck that are similar, yet different in perspective.

Collins and Hansen contend that we are all swimming in a sea of luck, both good and bad. All companies and individuals are bound to encounter plenty of good luck and bad luck, inevitably, and we don’t have much control over that. What we do have some control over, is managing our Return on Luck.

The authors elaborate: “Life offers no guarantees. But it does offer strategies for managing the odds, indeed, even managing luck. The essence of ‘managing luck’ involves four things: (1) cultivating an ability to zoom out to recognize luck when it happens, (2) developing the wisdom to see when, and when not, to let luck disrupt your plans, (3) being sufficiently well-prepared to endure an inevitable spate of bad luck, and (4) creating a positive return on luck – both good luck and bad – when it comes. Luck is not a strategy, but getting a positive return on luck is.”

So Collins and Hansen say it’s important to get a good return on good luck. They say it’s also crucial to not squander your good luck – or your bad luck. In fact, the authors say the defining moments of 10X company journeys are when they manage to get a good return on bad luck. They explain, “10Xers use difficulty as a catalyst to deepen purpose, recommit to values, increase discipline, respond with creativity, and heighten productive paranoia. Resilience, not luck, is the signature of greatness.”

Great by Choice

Collins and Hanson, wrap up Great by Choice with some compelling statements: “Greatness is not primarily a matter of circumstance; greatness is first and foremost a matter of conscious choice and discipline.” It’s inspiring to reaffirm excellence is something we can influence. The authors insist, “we are not imprisoned by our circumstances.” With a mixture of fanatic discipline, empirical creativity, productive paranoia, and level 5 ambition, companies – and perhaps individual people – can increase their positive return on luck. Collins and Hanson conclude, “in the end, we can control only a tiny sliver of what happens to us. But even so, we are free to choose, free to become great by choice.”

Next Week: “Time is Moving So Fast – My Thoughts on the Good Life”