Book Summary: Great by Choice

Why did I choose this resource?

 I chose this book because I enjoyed Jim’s seminal book Good to Great and wanted to read this follow up work. His use of empirical data to identify trends in actions of successful companies, in my mind, lends extra weight to his arguments.

What did you learn from it?

This book attempts to answer the question “Why do some companies thrive in uncertainty, even chaos, and others do not?”. Example companies in this book were chosen because they performed well in “unstable environments”. They all outperformed the market by a 10x multiple. I learned that there are a set of consistent actions/behaviors that describe companies that are successful in unstable environments.

Key Knowledge

• Fanatic Discipline – self-discipline of being unwaveringly consistent. Discipline is described as consistency of action – with values, long-term goals, performance standards, methodology and over time. Having a consistent, unchanging goal is important
• Empirical Creativity – Try something on a small scale first, make adjustments (recalibrate) and then, when you’re sure you’re going to have a hit, spend significant resources and time on that initiative. Essentially, take measured steps before pouring resources into a potential growth opportunity.
• Productive Paranoia – There are three core sets of practices:
  1. Prepare for the worst – maintaining significant cash reserves is one of the best ways to prepare
  2. Manage risk carefully – there are three types of risk identified in this book. Companies that did not outperform the market took a greater number of each risk than the 10x companies.
     • death line risk – any risk that can kill an enterprise
     • asymmetric risk – risk where the downside is larger than the updside
     • uncontrollable risk – the action taken exposes the company to threats or conditions outside of their control
  3. Be vigilant about changing conditions – when change is on the horizon, take action in response. “Zoom out” to see what is happening or about to happen, “zoom in” and respond with a specific action
• Key insights
  • Companies must meet the minimum innovation threshold within their industry (biotech = high innovation, insurance = low innovation threshold)
    • However, further innovation is not the key to success.
    • Consistency is the key to success. (example: Intel. Intel did not invent the memory chip. It instead focused on manufacturing, delivery, and scale to overcome its second-mover disadvantage.)
  • Luck is overrated
    • Based on empirical data, successful companies do not have any better luck than companies that fail (and vice versa)
    • The difference is how the companies handle luck and turn it into sustainable success
  • Discpipline and will are key factors to success.
  • SMaC (Specific, Methodical, and Consistent) recipe for success
    • these are a set of self-determined practices and strategies that a company establishes and from which they never waiver

Key Changes / Key Actions

• Be consistent in service/product delivery – standardize and implement with discipline. We must make improving the quality of our service one of our main priorities.

Source

• Name : Good to Great
• Author : Jim Collins
• Summary.com: Link to Book