Great By Choice: Uncertainty, Chaos, and Luck--Why Some Thrive Despite Them All [Hardcover]

In Collins' new book he relies on the method you've seen in previous books like Built to Last and Good to Great. What's different in this one is he selected companies not just on their status or explosive growth, but because they succeeded in an extreme and uncertain environment. However, there's a caveat here: his research stopped in 2002, meaning there's no thorough analysis of how companies performed in the last 10 years (aka one of the most uncertain and chaotic business climates in decades). Collins and Hansen believe the future will be unstable and environments will be extreme for the rest of "our lives" (remember, these guys aren't Spring Chickens). So, they try to analyze company performance/greatness within the context of difficulty.

I always wish Amazon would show an easy-to-find Table of Contents for books, so I've created one for you here, complete with a summary of each chapter/section.

1 - THRIVING IN UNCERTAINTY
Collins and Hansen explain what the method for their book (what I described above), including the definition of a 10Xer, which is a company that beat their industry by 10 fold. Just 7 companies were selected as a 10X case out of 20,400 companies. The seven are Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines, and Stryker. They don't include Apple because their research lens of Apple vs. Microsoft focused primarily on the 1980s and 1990s (remember they stopped collecting data in 2002), which makes no sense to me. The present environment (the one in which Apple has exploded) is a far more difficult climate than the 80s-90s.

2 - 10Xers
Example of a 10xer is Southwest airlines, whose growth since 1972 is greater than that of Walmart, despite this period being a particularly harsh one for the airline industry. Anecdotes describe historic examples of 10xers and explains they aren't more creative, more visionary, more charismatic, or more ambitious, more blessed by luck, more risk seeking, more heroic, or more bold. The glaring fact that Apple is missing goes against this model, as Jobs and company were many of these things.

3 - 20 MILE MARCH
Here they introduce discipline as the key that sets 10Xers apart (hence the 20 mile march). 10Xers are focused on data with GREAT discipline and stick to their plan, like a 20 Mile March.

4 - FIRE BULLETS, THEN CANNONBALLS
10Xers were not more innovative than the control companies; indeed, they were considered less innovative in some comparisons. 10Xers scale innovation (firing bullets) and then the fire cannonballs once they know what's on target.

5 - LEADING ABOVE THE DEATH LINE
Explains "productive paranoia," the idea that you need to build cash reserves and buffers, bound your risk, and show flexibility in looking at macro and micro factors at play in your business and industry.

6 - SMaC
SMaC stands for Specific, Methodological, and Consistent. The more uncertain your environment, the more SMaC you need to be. A SMaC recipe is a set of durable operating principles and practices that create a replicable and consistent success formula.

7 - ROL (RETURN ON LUCK)
10Xers weren't more lucky or unlucky than comparisons. They had better ROL because they took full advantage of good luck and minimized the effects of bad luck. If you think about it, that's the real key to luck. Knowing when you got lucky and how to take advantage of it, rather than blindly thinking you walk on water (like so many businesses do).

Like Jim's other books, the how to is what's missing. An outstanding book for that (increasing your leadership skill set) is Leadership 2.0

Jim Collins is at it again. Collins, along with co-author Morten Hansen and a team of over 20 researchers, spent roughly nine years trying to determine why some companies thrive during chaotic, uncertain and unstable times while other companies do not. If you have read some of Collins' earlier books, the theme in "Great by Choice" certainly won't surprise you. In "Built to Last," published in 1994, Collins, co-author Jerry Porras and their research team wrote about what makes for a "visionary" company, comparing a group of objectively and subjectively defined visionary companies with comparison companies that weren't so visionary. The authors would argue that their company selections were much more objectively chosen, and I wouldn't argue much with that claim. In "Good to Great," published in 2001, Collins and his research team analyzed a number of good companies that took the next step to achieve greatness, while a comparison group of similar companies did not.

In both of these two earlier books, as well in the current one (I'll get to "Great by Choice" presently), the authors conspicuously note how much better the subject companies performed, stock market wise, compared to the comparison companies. However, it is important to realize that Collins and his co-authors are not suggesting that you run out and invest in their subject companies. If you did that for the "Built to Last" companies, your investments would have included Citigroup, Ford, Sony and other companies that subsequently didn't set the world on fire. Similarly, from the "Good to Great" focus companies, Circuit City eventually filled for bankruptcy and Fannie Mae proved to be a major disappointment, in more ways than one. The point is that the reader can learn from what these companies did during their periods of success, regardless of whether some of the companies lost their way later on. Interestingly, one company, Wells Fargo, actually went from the comparison list in "Built to Last" to the focus list in "Good to Great." Okay, forewarned is forearmed regarding investing in the subject companies.

A couple of years ago Collins wrote another book, "How the Mighty Fall," which is a study of leadership failure, not success. This short book is a very enjoyable and informative read, but somewhat different from the books I mentioned above. All of Collins' books are interesting, hard to put down, and written with a passion for understanding the mechanisms of corporate success. When it comes to writing, I think of him as the Michael Lewis of management gurus. Collins is also an exceptional speaker, if you ever have the chance to hear him.

In "Great by Choice," Collins and Hansen select just seven companies (out of an initial list of over 20,000) as examples of those that have thrived during chaotic times. The companies are Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines and Stryker. These companies are called "10X" companies, given that their stock prices outdistanced the comparison companies by roughly an order of magnitude during the study period. Consider, for example, Southwest Airlines. During the study period (1970s through 2002), Southwest faced fuel price jumps, deregulation, labor problems in the airline industry, competitors moving through the revolving door of bankruptcy, and an absence of flyers in the aftermath of September 11, 2001. Still, the company consistently grew and prospered. During this time, comparison company Pacific Southwest Airlines had an entirely different experience.

So how does Collins explain the different fortunes between the subject companies and the comparison companies? Simplistically put, the great-by-choice companies were much better able to differentiate between situations and factors they could control and those they couldn't. Also, they exemplified "fanatic discipline, empirical creativity and productive paranoia." If you have read Collins' other works, these terms have a certain familiar ring to them.

This wouldn't be a Jim Collins book if it didn't coin some new expressions, like the "big, hairy, audacious goal (BHAG)" from "Built to Last" and "Level 5 leadership" from "Good to Great." This time one of the main new expressions is the "20-mile march," which Collins uses to describe the very steady progress, through good times and bad, of the companies that thrive best during chaotic times, versus those companies that make exceptional progress during better times, but perform more poorly during tough times.

There is no such thing as a management guru with perfect insight or analysis, so I am not holding Collins to that standard. The real measure of a book such as this is more in its ability to raise important questions and through sound (even passionate) discussion help stimulate the reader to come to grips with important concepts. That's how people grow. If you have read and enjoyed Collins earlier books, chance are good you will like this one, too. If you are new to Collins, but have an interest in what makes companies tick, this book--along with his earlier works--are worth your consideration.

Jim Collins extends and deepens the body of knowledge around the fundamentals of success. Great by Choice represents the second half of Collin's earlier book on company failure - How the Mighty Fall. While that earlier book concentrated on factors that drive failure, this describes the characteristics of sustained success.

This book is classic Collins. Well researched, clearly describes and expertly packaged for executives to incorporate these concepts into their lexicon and thoughts. This book is recommended as the capstone of the study of the fundamentals of great companies.

Great by Choice is a lot like How the Mighty Fall as it's a short, concise and focused book. About half of it is content and half is appendices, FAQs and methodology - just like HtMF. Put the two together and you get a comprehensive look at modern corporate success.

This is a book for understanding and admiring the factors Collin's points out as driving superior performance.

The book describes these factors, but description is not prescription.

This book is not a 'how to' book, nor one that provides much action oriented help. It relies on the reader understanding Collins points and then tailoring them to their situation. That places the burden of value on the reader, which is where it should be as greatness is less a recipe than a recommitment to hard work.

Great by Choice contains a set of core concepts that define the major chapters in the book. Here is a short description of each to provide an idea of what is in Great by Choice and how Collins describes the characteristics of companies that have exceptional performance, what Collins calls 10x.

20 Mile March describes the fanatic discipline that leads you to manage for the long term rather than chasing short-term results or the fade. Essentially this is the business version of the classical Greek axiom of balance and discipline.

Fire Bullets, Then Cannonballs by being empirically creative by experimenting intelligently everywhere and exploit where you know you are having success. This is more than the idea of `failing fast'. It is a definition of innovation based on the combination of creativity, discipline and data.

Leading above the death line describes the productive paranoia that was captured by Andy Grove's management mantra. This is a business version of the Boy Scout's principle of `Be Prepared.' This chapter concentrates on the success and practices of preparation and having reserves that enable you to achieve more.

SMaC describes the company's principles that are Specific, Methodolical and Consistent. This chapter in essence describes the power of common vision, direction and culture. Collins points out that SMaC is one of the more powerful ways to exert control in a dynamic world.

Return on Luck discusses how leaders and laggards face unpredictable positive and negative events. This is perhaps one of the best chapters as it describes how Collins and his team investigated the phenomenon of luck. As expected the conclusion is that luck does not play a guiding factor, rather its how you take advantage of good luck and are prepared (death line) for bad luck.

These concepts are all interrelated and go beyond the book' s triangle graphic. You cannot do a 20 mile march well without SMAC and both are worth lest without the preparation associated with leading above the death line.

Overall, I recommend Great by Choice for both fan's of Collins' work and for people who are new to this discussion. Yes this book is a continuation the prior books, but it does a great job of providing new insight without overly repeating prior points.

Great By Choice to be a good place for people to start. You do not need to read Collin's other books, but logically this book is the second half of How the Mighty Fall. I would suggest that if you are going to read both that you read HtMF first as you need to fix that first before the ideas in this book will have an effect.

Strengths

The book contains strong ideas that are simple to communicate and easy to mentally think about how they fit with your organization. Its easy to see how they would may your company a 10X performer.

The case descriptions are informative, insightful and illustrative. The cases are well worn: Southwest Airlines, Microsoft, Apple, Progressive Insurance and Intel, but well applied.

The use of mountaineering and explorers as non-business based examples will give you the stories to tell around the water cooler.

Challenges

The book provides powerful description of concepts that we already know. Rewriting Collins' points boil down to the following: have along term vision (20 miles), experiment to innovate (bullets and canon), `Be Prepared' (death line), follow your core (SMaC) and take advantage when possible (Return on Luck)

The companies featured are studied from 1977 to 2002 which was a period of significant change: the internet, oil crisis, stagflation, etc. However, historically economists have dubbed this period part of what they call the great moderation. So while these principles are timeless, they do not account for what has happened and happening now.

There is no treatment of technology in the book. Given that much of the global, collaborative and social world is driven by technology, this is a big omission.