While most business authors tend to explain their concepts and argue their points by using their own personal experience and wisdom as their source, Jim Collins provides roughly 100 pages of research citations in the back of each his books. He isn’t selling books because of some larger than life personality, but because no one’s research is more thorough. Because of this I was dieing to get my hands on his latest book Great By Choice.
In this book, Collins and his co-author ask the question: “Why do some companies thrive in uncertainty, even chaos, and others do not?” Through exhaustive research they break it down to a few key elements that sets successful companies apart from the rest.
One of the most insightful parts of the book in my opinion, is his study of the factor of luck. He sets out to see if more successful companies tend to have more good luck and less bad luck than others, and after reviewing over 6000 years of corporate history between the successful companies and their comparatively less successful competitors, he discovers that there is no noticeable difference in the frequency of luck events occurring. Where the difference comes in is what that company did with that turn of luck, whether good or bad. The successful companies tended to take much more advantage of good luck and learned valuable lessons from bad luck events. This is a refreshing discovery, because it objectively demonstrates that we do have more control over our level of success, and it can only rarely be truthfully blamed on good or bad luck.
So what is it we all need to do in order to thrive in uncertain times? Through their research, they find several consistencies across successful companies and lists them as a roadmap. Here is a summary of what they are:
- Fanatic Discipline. Successful companies set up a specific plan with clear performance markers, self-imposed constraints and measurable results. Collins & Hansen describe it as an attempt to walk across the country. Your best strategy is to walk 20 miles a day, as opposed to walking 40 miles, then being sore, then taking a day or two off, then walking more on a sunny day and less when it’s storming. The message here is that undisciplined growth is a very common cause of complete failure. It requires holding back in good times and ramping things up in bad times, but over time it builds confidence and causes you to succeed. Trying to maintain too many listings over too many marketplaces could be an example of potentially overshooting. Instead, a slow and steady addition of products and marketplaces should yield higher long term results.
- Empirical Creativity. For this component they use the metaphor of shooting bullets before cannonballs. You want to get the coordinates right by shooting bullets until you make a hit, and then when you know you’ve got them all lined up you shoot the cannonball. He talks about a similar concept in his book Good To Great where Collins suggests we try many things and keep what works. In this case though it is even more amplified. Not only should you keep what works, you should pour resources into it to grow it to it’s maximum potential. Again, you don’t do this until you can verify through facts, not opinion and hunches, that this is a worthwhile bet. So an example of this could be finding a supplier that sells like crazy on your e-tail site. Once you see those sales you should promote that supplier even more and give them better real estate on your site.
- Productive Paranoia. Being an extreme optimist, this is the hardest one for me to wrap my mind around. The leaders of the most successful companies are constantly concerned about a sudden event that can change everything and try to fanatically anticipate this moment. In truth, it is not a matter of if, but when some major event will change your business, so this is a logical mindset for us all to try and be in. Naturally, having that mindset causes people the be more prepared, keep larger cash buffers, and be able to react to disaster quicker. This in turn helps them thrive while all those unprepared go under. Are you prepared for Amazon’s next move? Or if your Google rankings suddenly plummet?
This is a tiny fraction of the valuable information provided in this book, and anything Jim Collins writes should be required reading for anyone in business, but if you focus on these key takeaways, with history as our guide, you should see tremendous success.