Great by Choice
A business book analyzing the practices and disciplines that separate truly exceptional companies from their peers over decades of sustained success.
“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.” —Roald Amundsen, The South Pole1
10Xers then bring this idea to life by a triad of core behaviors: fanatic discipline, empirical creativity, and productive paranoia.
The 10Xers don’t favor analysis over action; they favor empiricism as the foundation for decisive action.
They found that only 9 percent of pioneers end up as the final winners in a market. Gillette didn’t pioneer the safety razor; Star did. Polaroid didn’t pioneer the instant camera; Dubroni did. Microsoft didn’t pioneer the personal computer spreadsheet; VisiCorp did. Amazon didn’t pioneer online bookselling and AOL didn’t pioneer online Internet service. Tellis and Golder also found that 64 percent of pioneers failed outright. It seems that pioneering innovation is good for society but statistically lethal for the individual pioneer!
A bullet is an empirical test aimed at learning what works and that meets three criteria: 1. A bullet is low cost. Note: the size of a bullet grows as the enterprise grows; a cannonball for a $1 million enterprise might be a bullet for a $1 billion enterprise. 2. A bullet is low risk. Note: low risk doesn’t mean high probability of success; low risk means that there are minimal consequences if the bullet goes awry or hits nothing. 3. A bullet is low distraction. Note: this means low distraction for the overall enterprise; it might be very high distraction for one or a few individuals.
the only mistakes you can learn from are the ones you survive.
Financial theory says that leaders who hoard cash in their companies are irresponsible in their deployment of capital.14 In a stable, predictable, and safe world, the theory might hold; but the world is not stable, predictable, or safe. And it never will be.
Sometimes acting too fast increases risk. Sometimes acting too slow increases risk. The critical question is, “How much time before your risk profile changes?” Do you have seconds? Minutes? Hours? Days? Weeks? Months? Years? Decades? The primary difficulty lies not in answering the question but in having the presence of mind to ask the question.
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.
The amount of change swirling about is both gigantic and, for most people, accelerating. If we tried to react to every single external change, we’d quickly find ourselves incapacitated. Most change is just noise and requires no fundamental change in ourselves. Yet some change is not noise, demanding that we adjust and evolve, else we face demise, catastrophe, or missed opportunities. A great company must evolve its recipe, revising selected elements when conditions merit, while keeping most of its recipe intact.
“If we were replaced and new management came in, what would they do?”
There’s an interesting asymmetry between good luck and bad luck. A single stroke of good luck, no matter how big the break, cannot by itself make a great company. But a single stroke of extremely bad luck that slams you on the Death Line, or an extended sequence of bad-luck events that creates a catastrophic outcome, can terminate the quest.