As you may know, I take the serious entrée and fun dessert course approach to reading. My latest reading meal consisted of Jim Collins’ “Great By Choice” as my main course, followed by Stephen King’s “11/22/63″ for dessert.
Let’s start with the serious book first. Like Collins’ others books, “Great By Choice” takes a data-driven approach to answering a fascinating question about what makes companies successful. This book focuses on figuring out which companies thrive, and which don’t, in an environment fraught with uncertainty and upheaval.
One of the key findings of the book is that it’s not the more innovative companies that do best in a high change milieu. Nor is it the lucky. Indeed, the old Bible quote, “the race is not to the swift, nor the battle to the strong. . .but time and chance happeneth to them all” is most apt at describing which companies thrive during times of change. According to Collins, companies that institute a disciplined approach to growth and innovation lead the pack.
A memorable concept in the book that illustrates this finding is the 20-mile march. Collins and co-author Morten T. Hansen contrast two different teams that were each trying to reach Antarctica first. Roald Amundsen led the team that succeeded, and he did so by establishing a consistent goal of traveling between 15 and 20 miles per day. Meanwhile, the team that failed (led by Robert Falcon Scott) went fast when the environment was favorable and slow (or not at all) when the weather didn’t cooperate.
Alas, as the authors point out, far too many companies today fall into the same trap when focusing on quarterly earnings. In the good years, they take on too many capital projects, thinking the good times will last forever, and in the bad times, they cut when there may be the keenest need to invest. When one looks at the financial performance of the best companies, the “10Xers” in the parlance of the book, stay focused and deliver consistent results, year after year.