Great by Choice, by Jim Collins & Morten Hansen

Great by Choice book coverJim Collins’ most recent work, Great by Choice, is intended to answer the question, “Why do some companies thrive in uncertainty, even chaos, and others do not?”  In this book, Collins’ research focused on a comparative study between organizations with growth that exceeded industry norms over a 15 year or more time period, and similar organizations that struggled or failed during the same time period.  He determined that the differences between these comparison companies boiled down to three core behaviors, which he labeled as fanatic discipline, empirical creativity, and productive paranoia, with an underlying motivation of “passion and ambition for a cause or company larger than themselves.” (p. 37)

Fanatic discipline is described as “consistency of action – consistency with values, goals, performance standards, and methods.” (p. 36) It is explained with the concept of a 20-mile march, or “hitting specified performance markers with great consistency over a long period of time.” (p. 65) This means setting minimum thresholds of achievement, even in difficult times, while also applying self-imposed constraints to keep from over-extending, even in good times. Empirical creativity is described as “relying up direct observation, conducting practical experiments, and/or engaging directly with evidence rather than relying upon opinion, whim, conventional wisdom, authority, or untested ideas.” (p. 26) It is explained with the concept of firing bullets, then cannonballs, which involves testing ideas in a low-risk and low-cost manner, using that information to empirically validate what will actually work, and then concentrating resources on those ideas that have been validated.  Productive paranoia is described as “hyper-vigilance, staying highly attuned to threats and changes in the environment, even when – especially when – all’s going well.” (p. 37)  It is explained using the concept of “leading above the death line,” which means there is an assumption that great difficulty can happen at any time without predictability, therefore decisions, discipline, and buffers are put in place in preparation for those events.  There is also great vigilance to be aware of changing conditions, and an unwillingness to take risks that could destroy the company.

Collins then explains two additional concepts:  SMaC and ROL.  First he states the importance of being SMaC (Specific, Methodical, and Consistent) in creating and adhering to a durable set of operating practices.  Next he explains a concept which he describes as “return on luck” (ROL), and says that the successful companies were not necessarily luckier than the comparable unsuccessful companies; rather, they were better prepared for bad luck and had a better return on good luck.  In his analysis, the three core behaviors – fanatic discipline, empirical creativity, and productive paranoia – are used to build an effective SMaC plan and to get the greatest ROL.  (Note: I will have an upcoming post on the place of luck in a Christian worldview.)

I found this book to be a practical benefit to my leadership, and have already used several concepts in my own planning, decisions, and communication. I resonated with the importance of consistency in behavior and actions, and especially found the idea of “firing bullets, then cannonballs” to make a lot of sense.  I would encourage this book as a valuable and practical resource.

Collins, J., & Hansen, M. T. (2011). Great by Choice:  Uncertainty, Chaos, and Luck – Why Some Thrive Despite Them All. New York, NY: Harper Collins Publishers.

 

 

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