This is a guest post by Julia Langkraehr. Julia is a pioneering entrepreneur who built three multi-million pound retail businesses in three European countries. Check out her website, Bold Clarity.
Great by Choice, by Jim Collins and Morten Hansen, delivers a potent management message which really resonated with me.
Most people know how successful Norwegian Roald Amundsen was on his mission to be the first to reach the South Pole. His is a story of meticulous preparation and ice-cool composure in the most difficult circumstances. We are also told of the failed expedition of British Captain Robert Scott, whose approach was one that had a more amateur feel to it, utilising make-do-and-mend improvisation. The book, Great by Choice: Uncertainty, Chaos and Luck – Why Some Thrive Despite Them All opens with this same comparison.
The author Jim Collins is one of the most prominent and successful management writers of his generation. He has co-authored this with Morten Hansen, a Norwegian-born professor at UC Berkeley.
They claim that Amundsen displayed the typical attributes of a company that is able to prosper in a chaotic environment – ’empirical creativity’, ‘fanatic discipline’ and ‘productive paranoia’. The less fortunate Scott, meanwhile, went on his expedition ‘unprepared’, and ‘complained’ in his journal about all the bad luck that befell him. Hansen worked with Jim Collins as a researcher on books including Built to Last and Good to Great. In Great by Choice Hansen achieves equal billing.
Through methodical research, diving into corporate data, the book presents a selection of paired companies: seven that defeated their industry index by at least 10x over a period of 15+ years, and seven that didn’t.
These examples provide five or six central lessons.
Understanding why some leaders succeed and others fail
The authors believe that leaders who succeed in a time of great turbulence don’t do so by taking more risks, promoting innovation, acting more promptly, undertaking radical changes or having a greater share of luck than the competition.Instead, they pace themselves carefully. They do not overreach when things appear to be going well, and they certainly do not slack off when things get tough. They stick to a very specific, methodical and consistent approach, basing all strategy on proven elements to achieve progress.
In one of the most compelling chapters, the authors analyse the role ‘luck’ plays in success. The companies they researched experienced similar shares of fortune, both good and bad. The ones that prospered were able to make more of both the good and the bad luck. Through hard work and good strategy, they generated a higher ‘return on luck’, and bounced back more strongly from bad fortune when it came.
For example, AMD Inc. squandered the good fortune it enjoyed in the mid-1990s by failing to bring a new generation of microprocessors to market swiftly enough. Meanwhile, Microsoft’s Bill Gates succeeded by building on his luck, relentlessly pushing, driving and working towards achieving his ambitions.
Learning from past experiences
In the years between writing Good to Great and Great by Choice, the 11 case studies Collins cited in the first book fall prey to various failings. However, in Great by Choice, he is analysing his subjects performance rather than predicting the future.
Great by Choice is not blazing an entirely new trail by praising corporate evolution over revolution. It is a sensible, timely and very targeted lesson for companies who have been shaken by crises outside their control.
In the book’s epilogue, the authors discuss what they see as the increasingly prevalent view that achieving ‘greatness’ is more about circumstance and luck than about ‘action and discipline’.
This is a really interesting book from Jim Collins. His findings that consistency and discipline are a key factor in business success are consistent with the Entrepreneurial Operating System (EOS), a way of running entrepreneurial businesses that enables them to scale and grow.