Archives For Jim Collins

Productive Paranoia: Lesson #3 From Jim Collins’ Great By Choice

January 3, 2012 — 4 Comments

Jim Collins and Morten Hansen have written a book titled, Great By Choice in which they explore three behaviors that allow companies and organizations to thrive in chaotic and uncertain environments. I wrote about the first behavior, FANATIC DISCIPLINE, and the second behavior, EMPIRICAL CREATIVITY. In this post I’ll tackle the third core behavior employed by what they call “10x companies”: PRODUCTIVE PARANOIA.

Collins and Hansen make it clear: “The only mistakes you can learn from are the ones you survive” (p. 91). The idea of Productive Paranoia is not for leaders to walk around scared, afraid to make decisions and suspiciously paranoid about their employees. Rather, the authors note that leaders in the 10x companies constantly ask “What If.” They state, “The 10x winners in our research always assumed that conditions can–and often do–unexpectedly change, violently and fast. They were hypersensitive to changing conditions, continually asking, ‘What if?’” (p. 91)

Collins and Hansen examine three dimensions of productive paranoia employed by 10x organizations:

1. Build Cash Reserves and Buffers - Companies rarely hoard cash but rather deploy it, working hard to take advantage of new opportunities. However, the 10x companies were careful to build cash reserves and create a buffer against unpredictable environments. They were careful to prepare for the worst before it happened. This was a pattern since the early days of the 10x companies. Collins and Hansen observe:

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In Leadership, Organizations Jim Collins, Leadership, Organ, Productivity, Risk
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Empirical Creativity: Lesson #2 from Jim Collins’ Great By Choice

January 2, 2012 — 3 Comments

In my last post, I shared lesson #1, FANATIC DISCIPLINE, from Jim Collins and Morten Hanson’s book, Great By Choice. It’s the first of three core behaviors that mark the 10x companies shared in Collins and Hanson’s latest research. The second behavior that allowed 10x companies to thrive during chaotic and uncertain environments is EMPIRICAL CREATIVITY.

There is a common perception in leadership that innovation is the key to success. Or, put more plainly, the more innovative you are, the more successful you’ll be. However, Collins and Hansen discovered a different reality:

“The evidence from our research does not support the premise that 10x companies will necessarily be more innovative than their less successful comparisons. And in some cases, such as Southwest Airlines versus PSA and Amgen versus Genentech, the 10x companies were less innovative than the comparison….we’re not saying that innovation is unimportant…We concluded that each environment has a level of ‘threshold innovation’ that you need to meet to be a contender in the game; some industries such as airlines, have a low threshold, whereas other industries, such as biotechnology, command a high threshold. Companies that fail even to meet the innovation threshold cannot win. But–and this surprised us–once you’re above the threshold, especially in a highly turbulent environment, being more innovative doesn’t seem to matter very much.” (p. 65, 67)

What’s essential is that creativity and discipline exist together. “Intel’s founders believed that innovation without discipline leads to disaster” (p. 69). In fact, Intel’s #1 core value isn’t innovation or creativity, it’s discipline. Collins and Hansen observe, “The great task, rarely achieved, is to blend creativity intensity with relentless discipline so as to amplify the creativity rather than destroy it” (p. 70).

But the key is not just creativity…it’s EMPIRICAL CREATIVITY. In other words, 10x companies don’t innovate blindly, throwing huge amounts of resources at new ideas. They employ what Collins and Hansen call, “Bullets, Then Cannonballs.”

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In Leadership, Organizations Creativity, Discipline, Failure, Innovation, Jim Collins, Risk, Success
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Fanatic Discipline: Lesson #1 From Jim Collins’ Great By Choice

December 30, 2011 — 5 Comments

Jim Collins and Morten Hansen’s latest book, Great By Choice, is the result of a nine-year research project aimed at answering one question: “Why do some companies thrive in uncertainty, even chaos, and others do not?” Our world is unstable, uncertain, and filled with unanswered what ifs. And while we cannot predict the future, as the authors observe, we can create it. And a handful of companies have done so exceptionally well.

Collins and Hansen identified what they call “10x Companies.” They write: “We set out to find companies that started from a position of vulnerability, rose to become great companies with spectacular performance, and did so in unstable environments characterized by big forces, out of their control, fast moving, uncertain, and potentially harmful” (p. 7).

Starting with 20,400 companies, their rigorous research identified seven 10x companies including Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines, and Stryker. These 10x companies beat their industry index by at least 10 times. And they did it during chaotic environments.

For example, in the chaotic airline environment from 1972 to 2002 filled with fuel shocks, deregulation, labor strife, air-traffic-control strikes, interest-rate spikes, hijackings (including 9-11), recessions, and multiple bankruptcies, Southwest Airlines had a stock return 63 times better than the general stock market. Had you invested $10,000 in Southwest Airlines on December 31, 1972, it would have been worth $12 million by the end of 2002.

How did the 10x companies achieve such astounding results in such uncertain environments? Collins and Hansen’s extensive research reveals three core behaviors that set the 10x companies apart from their comparison companies. Over the next three posts, I’ll explore each of these behaviors.

The first behavior is FANATIC DISCIPLINE. Discipline is “consistency of action” (p. 23). It’s not the same as regimentation, measurement, hierarchical obedience, or adherence to bureaucratic rules. “For a 10xer, the only legitimate form of discipline is self-discipline, having the inner will to do whatever it takes to create a great outcome, no matter how difficult” (p. 23).

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In Leadership, Organizations Discipline, Jim Collins, Leadership, Organizations
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The Achilles’ Heel of Leadership

April 26, 2010 — 1 Comment

Kirk Hanson, professor and executive director of the Markkula Center for Applied Ethics, shares some great insight on the leader’s achilles’ heel. He says it is found when leaders:

  • Believe they know it all
  • Believe they are in charge
  • Believe the rules don’t apply to them
  • Believe they will never fail
  • Believe they did it all by themselves
  • Believe they are better than the “little people”
  • Believe they are the organization
  • Believe they can focus everything on the job

In essence, pride is the achilles’ heel of leaders. Or as Jim Collins says, “hubris born of success.” So what would happen if we embraced a reversed-version of Hanson’s observations? What if we:

  • Readily admit that we don’t know it all
  • Realized that the people we lead come first
  • Applied the rules to ourselves before others
  • Understood that pride goes before a fall
  • Gave credit to the people who did all the work
  • Flipped the pyramid upside down and became the chief servant
  • Viewed ourselves as only one small piece in a very big puzzle
  • Had a life outside of work

This provides a much better perspective on humility and leadership. I think the Apostle Paul captured it quite well  when he instructed us to follow Jesus’ pattern of humility with these words:

“Think of yourselves the way Christ Jesus thought of himself. He had equal status with God but didn’t think so much of himself that he had to cling to the advantages of that status no matter what. Not at all. When the time came, he set aside the privileges of deity and took on the status of a slave, became human! Having become human, he stayed human. It was an incredible humbling process. He didn’t claim special privileges. Instead, he lived a selfless, obedient life and then died a selfless, obedient death–and the worst kind of death at that–a crucifixion. (Philippians 2:5-8, The Message)

Isn’t it interesting that Jesus became human and yet we try to act like God. Something’s wrong with that picture. Jesus called us to status-busting leadership.

Question:  What roles does humility play in your life?  In your leadership?

 

In Leadership, Personal Growth Bible on Leadership, Humility, Jim Collins, Leadership
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