Book Review: Great by Choice

October 21, 2011

Great by Choice: Uncertainty, Chaos, and Luck--Why Some Thrive Despite Them All

Why do some companies thrive in uncertainty, even chaos, and others do not?

This is the key question that Great by Choice seeks to answer. I’ll state up front that if you are looking for a how-to cookbook on success, this book isn’t for you! Instead, Great by Choice leverages solid research, analysis, and examples to clearly illustrate the principles used by seven companies to significantly outperform comparison companies in the same industry during turbulent times by an order of magnitude – generating 10 times the performance – to become what Collins and Hansen call “10Xers” (pronounced “ten-EX-ers”). But it’s still up to you to figure out how to apply those principles to your situation.

How is it that some companies were more successful than others? Did the more successful companies take greater risks? Were they more innovative? Did they have a bias for action versus getting caught up in an “analysis paralysis” trap?

Collins and Hansen found that preparation and approach – which takes into consideration that events can and will go wrong – are the hallmarks of successful companies. Collins and Hansen paint a compelling picture of the benefits of preparation and approach by citing a real-life adventure, asking Are You Amundsen or Scott?

Roald Amundsen and Robert Falcon Scott began their race to the South Pole with their respective teams in October of 1922. Both teams operated in the same environment, with the same goal; they both faced uncertain terrain, and both experienced the same ratios of good days to bad days. In the end, both experienced very different outcomes.

Amundsen spent years training and learning as much as possible about what actually worked in arctic conditions, Scott did not. Amundsen anticipated that bad events might strike his team and prepared for them, while Scott left himself unprepared. For example, Amundsen set up multiple supply depots along the way – buffers – of extra food, whereas Scott operated “dangerously close to his calculations.” Amundsen used sled dogs while Scott used ponies – that froze; Scott also relied on motorized sleds that weren’t tested in arctic conditions – which failed.

On Dec 15, 1922, Amundsen reached the South Pole. One month later, on Jan 17, 1912, Scott reached the South Pole. On Jan 25, Amundsen and his team reached their home base in good shape. Running out of supplies, Scott stalled in mid-March, exhausted. Eight months later a British reconnaissance party found the frozen bodies of Scott and two companions.

Pace is another important finding in Great by Choice. Collins and Hansen used another illustrative example in the book of hiking between San Diego and Maine, contrasting two individuals with two different approaches: one using a consistent 20 miles per day – regardless of the weather, the other pushing hard on good days to cover the maximum amount of ground possible and resting on bad days. The end result was that a consistent marcher completes the journey faster and with less total energy expended. By conserving strength and not over-extending in good times (using a 20 Mile March approach), a consistent pace can be maintained in both good and bad times.

Great by Choice summarizes all of this nicely: “If you deplete your resources, run yourself to exhaustion, and then get caught at the wrong moment by an external shock, you can be in serious trouble. Every 10X winner pulled further ahead of its less successful comparison company during turbulent times. Ferocious instability favors the 20 Mile Marchers. This is when they really shine.”

And what about innovation? As Collins and Hansen state, “Our research suggests that treating innovation alone as the silver bullet for achieving a competitive advantage would be na├»ve and unwise. We conclude that 10X success requires the ability to scale innovation with great consistency, by blending creativity and discipline to build organizations that turn innovation into sustained great performance.”

Great by Choice finds that the correct approach to innovation pays off for 10Xers. Great by Choice determined that, “…when you’re faced with an uncertain and unstable world, an obsessive focus on innovation by itself does not make for great success and might even lead to demise; bet big on the wrong innovations or fail to execute on the right innovations, and you leave yourself exposed. On the other hand, if you just sit still and never do anything bold or new, the world will pass you by, and you’ll die from that instead. The solution to this dilemma lies in replacing the simplistic mantra ‘innovate or die’ with a much more useful idea: fire bullets, then fire cannonballs.”

The bullets versus cannonballs analogy asserts that if you waste your gunpowder firing a single cannonball shot at an opposing ship during a battle – and miss – you are dead. Instead, it is better to fire a few bullets – using far less gunpowder – to calibrate your shot, and then fire the cannonball.

Collins and Hansen discovered that “10Xers were much more likely to fire calibrated cannonballs, while the comparison cases had uncalibrated cannonballs flying all over the place.” Their research demonstrates that 10Xers had a 69 percent calibration rate on cannonballs versus 22 percent for the comparison companies.

Of course, there are exceptions, dangerous ones. Great by Choice reminds us to, “Keep in mind the danger of achieving good outcomes from bad process. Good process doesn’t guarantee good outcomes, and bad process doesn’t guarantee bad outcomes, but good outcomes with bad process—firing uncalibrated cannonballs that just happen to succeed—reinforces bad process and can lead to firing more uncalibrated cannonballs.”

Firing bullets is a great technique to avoid getting caught over-analyzing as well. To be successful, companies need to try things (small bullets versus large, expensive cannonballs), and to obtain feedback – good or bad – to inform them on what should be changed. Great by Choice states that, “In the face of instability, uncertainty, and rapid change, relying upon pure analysis will likely not work, and just might get you killed. Analytic skills still matter, but empirical validation matters much more.

“The point is to be more empirical to buttress your mental independence and validate your creative instincts. By ‘empirical,’ we mean relying upon direct observation, conducting practical experiments, and/or engaging directly with evidence rather than relying upon opinion, whim, conventional wisdom, authority, or untested ideas. Having an empirical foundation enables 10Xers to make bold, creative moves and bound their risk.”

Wrapping this up, Great by Choice finds that the consistency in your approach is essential: “If you really want to become mediocre or get yourself killed in a turbulent environment, you want to be changing, morphing, leaping, and transforming yourself all the time and in reaction to everything that hits you. We’ve found in all our research studies that the signature of mediocrity is not an unwillingness to change; the signature of mediocrity is chronic inconsistency.

“Those who spend most of their energy ‘reacting to change’ will do exactly that, expend most of their energy reacting to change. In a great twist of irony, those who bring about the most significant change in the world, those who have the largest impact on the economy and society, are themselves enormously consistent in their approach.” (Through being well-prepared and well-considered in their approach.)

Great by Choice is a well-researched, well-written book that provides a solid perspective on how to thrive in turbulent times. If you enjoyed reading Good to Great, you’ll enjoy this book!