Great By Choice

Great by Choice, written by Collins and Morten T. Hansen, is the 2011 sequel to Collins’ best-selling Good to Great (2001). It adds new research in the exploration of what it takes to build a great company, this time answering the question of why some companies thrive in uncertainty and even chaos, while others do not.

Although Collins’ research behind the study ends in 2002, the findings are perhaps especially worthy of examination in light of the 2008 financial crisis and its aftermath, a time when economic upheaval and change would challenge the health of most American companies.

The book studies companies not only because of their performance or stature, but also on the extremity of the environment. Within the study, high-performing companies were dubbed “10X” because rather than just become successful, they were exceptional in their ability to thrive, with each company providing shareholder returns at least 10 times greater than their industry.

To determine which companies could be deemed “10X” the authors began with a list of 20,400 companies that were eventually weeded down to seven — Amgen, Biomet, Intel, Microsoft, Progressive, Southwest Airlines, and Stryker. These companies, which were compared to seven similar companies, sustained outstanding results during unstable environments for 15 or more years relative to the general stock market and to their industry.

Perhaps most interesting about the study was that it debunked some preconceived notions about success. For example, rather than being bold, risk-seeking visionaries, the 10X leaders studied “did not have visionary ability to predict the future.” Instead, they were more disciplined and empirical and relied upon evidence rather than instinct.

Another interesting finding was that innovation is NOT what sets apart 10X companies in a fast-moving, chaotic and uncertain environment. The evidence suggested that in some cases the 10X companies were actually less innovative. In addition, what was found was that more important than innovation was the ability to scale innovation, or combine creativity with discipline.

Finally, the study also shed light on the factor of luck in a company’s success. Evidence revealed that both 10X companies as well as their comparison companies had ample, comparable amounts of both good and bad luck and the 10X companies did not generally have more luck than their comparison companies. The book points out that the question is not one of having luck, but what one does with the luck one does have.

In Great by Choice, Collins continues to use the creative metaphors and memorable, newfangled descriptors for both people and actions for which he has become known in his previous work.

Besides the use of the term “10X,” the authors ascribe meaning to other invented terms and phrases such as “20-Mile March,” “Knowing When to Fire Bullets and Cannonballs,” “Productive Paranoia” and the “SMaC recipe.”

Each metaphor is explained as a distinguishing factor of 10X companies and each contains helpful strategies and mindsets that can assist in the creation of success in unstable times – a pattern which Collins shares has been reflected throughout history. In fact, at the close of the book, Collins explains that the dominant pattern of history isn’t stability, but one revealing “instability and disruption.” Rather than there being a “new normal,” he explains that there will only be a continuous series of “not normal” times.

Readers can walk away from this book with insight into those action steps that can be taken to improve the chances for success in one’s future  — however uncertain and unstable that future may be.

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