Great By Choice: In a world characterized by volatility, uncertainty, complexity, and ambiguity, the ability to navigate through turbulent times is crucial for success. How is it that some companies not only survive but thrive in such chaotic environments, while others crumble under the pressure? This is the compelling question that “Great by Choice” by Jim Collins and Morten T. Hansen seeks to answer.
In this exceptional book, Collins and Hansen delve into the world of business and leadership, presenting a groundbreaking analysis of companies that outperform their industries by at least ten times. They refer to these exceptional organizations as “10Xers” and set out to uncover the secrets behind their remarkable success.
“Great by Choice” takes readers on a journey through the minds of these exceptional leaders and teams, exploring the traits, behaviors, and strategies that enable them to not only survive but thrive in the face of uncertainty. The authors provide a comprehensive framework based on nine years of research, including extensive interviews and data analysis.
Each chapter of the book uncovers a unique aspect of successful companies, offering practical insights and lessons that readers can apply to their own endeavors. From the importance of team dynamics and disciplined action to the power of empirical creativity and productive paranoia, “Great by Choice” uncovers the principles and practices that set the 10Xers apart.
Moreover, what makes this book truly remarkable is the engaging and authoritative writing style of Collins and Hansen. They seamlessly blend real-life examples, anecdotes, and statistical evidence to create a compelling and highly readable narrative. Their witty and insightful analysis keeps readers captivated from beginning to end.
Whether you are an aspiring entrepreneur, a seasoned leader, or simply curious about what it takes to achieve greatness in the face of uncertainty, “Great by Choice” is a must-read. It provides a roadmap for success, backed by empirical evidence and articulated with clarity and precision.
Great By Choice Chapter Wise Summary
Chapter 1: Thriving in Uncertainty
In the first chapter of “Great by Choice”, authors Jim Collins and Morten T. Hansen introduce the concept of “10Xers” – companies that outperform their industry by at least ten times over a sustained period of time. The book sets out to answer the question of how these exceptional companies succeed in uncertain and chaotic environments, while others fail.
Collins and Hansen argue that 10Xers are not just lucky outliers, but rather, they display distinct behaviors that contribute to their success. They write, “10Xers are not in a different time, place, or set of circumstances than everyone else. They face the same chaos, turmoil, and uncertainty that the rest of us do. What sets them apart is their posture and response.”
The authors highlight companies like Microsoft, Intel, and Southwest Airlines as examples of 10Xers. They quote Microsoft’s then-CEO, Steve Ballmer, who said, “Our job is fundamentally simple: to keep inventing the future.” This quote illustrates the mindset of a 10Xer – constantly looking ahead and actively shaping the future.
Collins and Hansen explain that 10Xers thrive in uncertainty through a combination of “fanatic discipline” and “empirical creativity.” They write, “The 10Xers want fire in their belly, but they have the empirical discipline to channel it appropriately.“
To illustrate the concept of empirical creativity, the authors recount the story of Roald Amundsen, the Norwegian explorer who reached the South Pole before his rival Robert Scott. Amundsen approached the challenge with systematic planning and unconventional methods, such as using sled dogs instead of relying solely on people. The authors write, “Amundsen demonstrated the awesome power of empirical creativity… He drew heavily from the domain of practice, backed by hard-earned personal experience.“
One of the key insights from this chapter is the concept of “productive paranoia.” Collins and Hansen argue that 10Xers are not overly optimistic or pessimistic. They embrace both positive and negative uncertainties and prepare accordingly. The authors quote the CEO of Intel, Andy Grove, who said, “Only the paranoid survive.” This mindset of constantly anticipating and preparing for potential challenges sets 10Xers apart.
Chapter 2: 10Xers
In this chapter, Collins and Hansen delve into the characteristics of 10Xers. They explain that these companies are not born with an advantage, but rather, they consistently display certain behaviors that enable their success. Some of these characteristics include fanatic discipline, empirical creativity, and productive paranoia.
The authors quote, “10Xers are not more risk taking than their less successful comparisons; they are more disciplined in their risk taking.” This highlights the idea that 10Xers do not take reckless or impulsive risks, but rather, they take calculated risks backed by deep research and consideration. They demonstrate a level of discipline that sets them apart.
Collins and Hansen provide an example of Southwest Airlines, a 10Xer in the airline industry. Despite being faced with multiple challenges and uncertainties, Southwest remained disciplined in its approach to managing costs. This discipline allowed them to offer low fares, which in turn attracted a loyal customer base and enabled the company’s long-term success.
The authors also discuss the importance of empirical creativity. They state that 10Xers combine discipline with creativity and innovation, validating their ideas through experimentation and empirical evidence. They quote, “10Xers fire bullets, then cannonballs.”
An example of this is the development of the iPad by Apple. Instead of immediately launching a full-fledged tablet device, Apple released the iPod Touch as a “bullet”, testing the market and gaining valuable insights. Based on the positive response, they then launched the iPad as a highly successful “cannonball”. This approach of firing bullets before cannonballs helped Apple minimize risk and optimize their chances of success.
The authors further emphasize that 10Xers demonstrate productive paranoia. They quote, “Leading in a fast world requires the ability to adapt to accelerating uncertainty, yet without losing sight of an organization’s core business, values, and purpose.” This highlights the need for 10Xers to be constantly vigilant and prepared for unexpected challenges while staying true to their core purpose.
An example cited in the book is that of Intel, a company that successfully navigated through technological changes by being both adaptable and focused. Intel embraced new technologies and markets, but always with a careful eye on their core business of producing microprocessors.
Chapter 3: 20 Mile March
The authors introduce the concept of the “20 Mile March” in this chapter. They explain that 10Xers have a consistent and methodical approach to achieving their goals, much like a hiker who sets a daily mileage target. This helps them navigate uncertainty and consistently perform at a high level.
The idea of the 20 Mile March comes from the story of Roald Amundsen, the first person to reach the South Pole. Amundsen’s team consistently marched 20 miles a day, regardless of the weather conditions or their physical state. This disciplined approach allowed them to reach their goal on time, while many others who were more sporadic in their progress did not.
Collins and Hansen highlight the importance of setting a challenging but achievable performance target and sticking to it, even in the face of adversity. They argue that 10Xers understand the power of consistency and the benefits it brings in uncertain situations.
The authors use the example of Southwest Airlines to illustrate the concept of the 20 20-mile march. Despite facing industry turbulence, Southwest consistently outperformed its competitors by focusing on the same core performance metrics year after year. This relentless adherence to their 20 Mile March helped Southwest become one of the most successful airlines in history.
Collins and Hansen also examine the opposite approach, contrasting the 20 20-mile march with erratic performance patterns. They discuss the case of Scott, an explorer who attempted to reach the South Pole at the same time as Amundsen. Scott’s team did not consistently march a fixed distance each day but rather pushed themselves to exhaustion on good days and made little progress on bad days. This lack of discipline ultimately led to their demise.
One of the key aspects of the 20 Mile March is the understanding that it is not about achieving extraordinary performance every day, but rather about maintaining consistent progress over a sustained period of time. Collins and Hansen explain that 10Xers are not aiming for sporadic bursts of greatness, but rather a disciplined and methodical approach that builds momentum over time.
Chapter 4: Fire Bullets, Then Cannonballs
In this chapter, Collins and Hansen explore the concept of “firing bullets, then cannonballs”. 10Xers are cautious when it comes to making big bets, preferring instead to test the waters with small, low-risk experiments (bullets) before committing fully to a course of action (cannonballs). This approach allows them to conserve resources and make more informed decisions.
One of the key quotes in this chapter is, “10Xers channel their resources into building a foundation of bullets before they ramp up to a cannonball.” This illustrates the idea that 10Xers take calculated risks, starting with small-scale initiatives (bullets), which they use to gather data and adjust their strategy. Once they have validated their approach, they then “fire the cannonball”, going all-in with their resources and efforts.
To support this concept, Collins and Hansen provide various examples of companies that have successfully applied the bullet-cannonball approach. One such example is the story of pioneering microbiologist Carl Woese, who revolutionized the field of biology by firing bullets in his experiments on microorganisms. He first observed and mapped out their genetic sequences (bullets) before launching the cannonball of a whole new classification system, the three-domain model.
The authors also highlight the example of Southwest Airlines, which engaged in rigorous experimentation before becoming one of the most successful airlines in the industry. The company started with small, low-risk routes between cities in Texas (bullets), which allowed them to refine their operational model and customer service before expanding nationwide (cannonball).
Collins and Hansen emphasize that firing bullets is not merely a matter of trial and error, but rather a systematic process of gathering empirical data. They mention the importance of capturing valuable feedback and using it to refine the trajectory of their bullet shots. This iterative approach enables 10Xers to adjust their aim and increase the likelihood of hitting the target with their eventual cannonball.
Chapter 5: Leading Above the Death Line
Collins and Hansen discuss the importance of leadership in uncertain times in this chapter. They argue that 10Xers have leaders who possess a combination of personal humility and professional will. These leaders know how to make tough decisions and inspire their teams to reach the 20 Mile March, even in the face of adversity.
The authors introduce the concept of “Level 5 Leadership,” which is characterized by a combination of personal humility and professional will. Level 5 leaders possess a deep sense of humility, placing the success of the organization above their individual egos. At the same time, they demonstrate unwavering determination and a fierce resolve to achieve the company’s goals.
Collins and Hansen quote John Lehman, former Secretary of the Navy, to illustrate the significance of Level 5 leadership: “The greatest danger in any organization of superstars… is that, if not properly led, they will create, manifest, and act on the most harmful myths—the urge to be great individually at the cost of the company.” This highlights the destructive potential of ego-driven leadership and the need for leaders who prioritize the greater good.
The authors go on to discuss the effectiveness of leaders who display a consistent and enduring commitment to their organizations. They introduce the concept of the “20 Mile March,” which represents a disciplined and methodical approach to progress and goal attainment. The authors provide examples of leaders who set and adhered to specific performance targets, allowing their organizations to consistently deliver results. One such example is British explorer Roald Amundsen, who successfully led the first expedition to reach the South Pole in 1911. He established a strict daily mileage goal, ensuring the team’s progress and survival in the harsh Antarctic conditions.
Collins and Hansen also emphasize the importance of luck in leadership. They emphasize the need for leaders to be prepared for unexpected events and demonstrate resilience in the face of adversity. The authors quote Darwin E. Smith, former CEO of Kimberly-Clark, who said, “We worked hard to make our luck happen. And we also did everything we could not to kill it when we succeeded.” This highlights the proactive and strategic approach taken by exceptional leaders in maximizing opportunities and minimizing risks.
Chapter 6: SMaC
The authors introduce the concept of SMaC, which stands for Specific, Methodical, and Consistent, in this chapter. They explain that 10Xers have a set of operating principles that guide their decisions and actions. These principles provide clarity and help the company navigate ambiguity.
The authors begin by explaining the importance of specificity in formulating a SMaC recipe. They state, “Specificity helps harness the wandering mind and increases clarity”. By defining clear guidelines and rules, companies can align their actions and ensure consistency in their approach.
Collins and Hansen provide the example of Pacific Biosciences (PacBio) to illustrate the power of a SMaC recipe. When the company was faced with financial challenges, CEO Hugh Martin implemented a strict adherence to their SMaC protocols. He states, “We had very specific prescriptions: drive revenue, conserve cash, and limit everything else“. By following these specific rules, PacBio was able to redirect their efforts and successfully navigate the crisis.
Another aspect of SMaC is the importance of being methodical in decision-making. The authors explain that 10Xers do not make impulsive or haphazard choices; instead, they carefully weigh the options and analyze the potential impact. Collins and Hansen write, “SMaC thinking is methodical, disciplined, focused, and thorough”.
The authors cite the example of Southwest Airlines, which had a SMaC recipe of low-cost operations, high-quality service, and employee commitment. This methodical approach allowed Southwest to make consistent decisions and remain profitable, even during industry downturns.
Consistency is the final component of SMaC. Collins and Hansen emphasize the importance of sticking to the established principles even in the face of changing circumstances. They state, “10Xers maintain a consistent march, holding to the SMaC recipe with fanatic discipline” (Great by Choice).
One example of a company that exemplified consistency in their SMaC recipe is Amgen, a biotechnology firm. Despite facing numerous setbacks and challenges, Amgen consistently adhered to their focus on biotech genetics. This consistent approach ultimately led to their success and dominance in the industry.
Collins and Hansen conclude the chapter by highlighting the transformative impact of SMaC principles. They assert, “SMaC operates as a powerful creative force, guiding and focusing decision-making in the midst of the storm“. By following a SMaC recipe, companies can navigate uncertainty and make consistent, informed decisions, positioning themselves for long-term success.
Chapter 7: Return on Luck
In this chapter, Collins and Hansen explore the role of luck in the success of 10Xers. They argue that luck is inevitable, both good and bad, but what sets 10Xers apart is how they react to it. They focus on maximizing the return on luck, capitalizing on the good while minimizing the impact of the bad.
The authors introduce the concept of “return on luck”, which refers to how companies maximize the benefits of good luck and minimize the damage from bad luck. They provide several examples and case studies to illustrate this concept and highlight the strategies employed by 10Xers.
One of the examples mentioned in the book is the story of Amundsen and Scott, two polar explorers who set out to be the first to reach the South Pole. Amundsen’s team carefully planned their expedition, considering every possible contingency and preparing extensively. On the other hand, Scott’s team took a more haphazard approach, relying heavily on luck. Ultimately, Amundsen’s team reached the South Pole first, while Scott and his team tragically perished on their return journey.
Collins and Hansen use this example to emphasize the importance of preparation and discipline in maximizing the return on luck. Amundsen’s careful planning and adherence to a 20 Mile March allowed his team to capitalize on the good luck of favorable weather and reach their goal.
The authors also discuss the concept of “zoom out, zoom in”. They explain that during times of good luck, 10Xers take a step back to assess the bigger picture and seize opportunities. Conversely, during times of bad luck, they zoom in and focus on what they can control to minimize the negative impact.
Another example provided in the book is that of Southwest Airlines. When the 1973 oil crisis hit, many airlines faced significant challenges. However, Southwest Airlines leveraged this crisis as an opportunity to grow by aggressively renegotiating fuel contracts and expanding their fleet. Their strategic decisions and focus on maximizing the return on luck allowed them to not only survive but thrive during a difficult period.
Collins and Hansen emphasize that luck is not the sole determinant of success. While it is impossible to control luck, companies can control how they react to it. 10Xers understand that luck can create fleeting opportunities and take advantage of them through disciplined action and strategic decision-making.
Chapter 8: Final Thoughts
In the concluding chapter, Collins and Hansen emphasize the key lessons from the book. They emphasize the importance of disciplined action, empirical creativity, and team dynamics in achieving greatness in uncertain times. The authors encourage readers to adopt the mindset and behaviors of 10Xers, as described throughout the book.
Collins and Hansen reiterate the importance of fanatic discipline, empirical creativity, and productive paranoia in the success of 10Xers. They emphasize the need for discipline in setting and adhering to ambitious goals, as well as in following the 20 Mile March approach. The authors state, “10Xers did not primarily just generate superior results; they did not primarily just ‘react’ to circumstances; they shaped their circumstances“. This highlights how discipline and calculated actions allow 10Xers to navigate uncertainty and make sustained progress.
The authors also discuss the concept of “productive paranoia”, which they define as the ability to be hyper-vigilant and take proactive steps to mitigate risks and seize opportunities. They assert that 10Xers maintain an unwavering sense of vigilance and plan for the worst-case scenarios. Collins and Hansen mention, “It was striking to us how 10Xers, in different industries, shared a similar mental outlook, a certain skepticism and a critical eye“. This demonstrates how 10Xers anticipate potential threats and take proactive measures to navigate through uncertain times.
Collins and Hansen further highlight the importance of leadership in 10Xers. They stress that great leaders possess a unique blend of personal humility and professional will. The authors state, “10Xers who built great enterprises had this paradoxical blend of humility and willpower“. They provide examples of leaders who embody this paradox, such as Darwin Smith of Kimberly-Clark, who successfully transformed the company by embracing humility and making tough decisions.
The authors conclude the book by urging readers to adopt the mindset and behaviors of 10Xers. They encourage readers to develop a “SMaC recipe” – a set of Specific, Methodical, and Consistent principles that guide decision-making and actions. Collins and Hansen emphasize the importance of aligning the organization around these principles and remaining opportunistic yet focused
Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page