When Jim Collins wrote his best-selling book, Good to Great , he became an instant business hero. Executives from around the world aspired to be Level 5 leaders and focused intently on finding their hedgehog concepts.
But there was a question that remained unanswered. In a world that is increasingly in financial turmoil and constant change, how do you succeed? Methodology similar to Good to Great , Jim and his team studied companies that outperformed the marketplace by significant margin. He called these the 10x companies.
There were 3 main attributes of a 10x company –
• Fanatical Discipline
• Empirical creativity
• Productive paranoia
Fanatical Discipline: Discipline can mean many things —The best-performing leaders in their study exhibited discipline as consistency of action — consistency with values, long-term goals, and performance standards; consistency of method; and consistency over time. Collin’s gives us the metaphor of the 20 mile march. Starting out on a cross-country journey, the metaphor goes, you’d be much better off walking 20 miles per day consistently than walking much more on the good days and much less on the bad days. In business, the 10x companies realized that a similar principle applied – that you should do whatever you need to do in order to get results in the down years, and resist the urge to grow too wildly in the up years. When John Brown of Stryker set the long-term goal of 20% annual net income growth, year in and year out (he hit it in more than 90% during 21 years), he was so committed to this quest that it could only be described as, well, fanatical. Markets down? Competition severe? Recession? Market hype? He did not care. He built a system of fanatic discipline to achieve the quest, no matter what. He was highly disciplined by showing consistency between his words (the goal) and his behaviors (everything he did to make it happen). According to Investor’s Business Daily, “John Brown doesn’t want to hear excuses. Markets bad? Currency exchange rates are hurting results? Doesn’t matter.” Describing challenges Stryker faced in Europe due partly to currency exchange rates, an analyst noted, “It’s hard to know how much of [the problem] was external. But at Stryker, that’s irrelevant.” The 20-Mile March is more than a philosophy. It’s about having concrete, clear, intelligent, and rigorously pursued performance mechanisms that keep you on track.
Empirical Creativity: Fire bullets, then cannonballs is a great metaphor for the process of creative experimentation and planning that seems to be popular with web startups, but I bet that will now also become more popular with the mainstream business community. The idea is that if you were down to your last bit of gun powder, and had an enemy ship bearing down on you, you’d need to be judicious in your use of last reserves. Take it all and fire a cannonball, and the chances are that you are going to miss, and perish. But fire bullets first instead, and sooner or later you are going to find the right trajectory for your shots. Then, and only then should you load up the cannonball and take your shot. When Peter Lewis of Progressive, the car insurance company, had the idea of expanding into the safe-driver market, he did not move in one big swoop. Rather, he started with trials in Texas and Florida, then added more experiments in other states, and finally, three years later, when the concept was validated, he bet big on the new business. His idea was rooted in empiricism, not analysis alone.
Productive Paranoia: Bill Gates was hyper-vigilant about what could hit and damage Microsoft. “Fear should guide you,” he said in 1994. “I consider failure on a regular basis.” Andy Grove ran around “looking for the black cloud in the silver lining.” Productive paranoia is the ability to be hyper-vigilant about potentially bad events that can hit your company and then turn that fear into preparation and clearheaded action. You can’t sit around being fearful; you must act, like Herb Kelleher, who insisted on cutting costs and running lean operations in good times, so that they would be prepared for the next storm, imagined or real.
Summary: You need all three leadership skills in an uncertain world: Fanatic discipline keeps you on track; empirical creativity keeps you vibrant; and productive paranoia keeps you alive.
Content is extracted from the Book itself