Ten years after his groundbreaking bestseller Good to Great, Jim Collins returns with new focus and a new question to ask: “Why do some companies thrive in uncertainty – even chaos – and others do not?” This time, with the help of his colleague Morten Hansen*, Collins enumerates the principles for building a truly great enterprise in unpredictable, tumultuous, and fast-moving times.
Whereas Collins’ focus in Good to Great was on company performance, this time he conducted a much more scientific study. With a team of twenty researchers, he targeted companies whose performance beat their industry index by a minimum of ten times over fifteen years in environments characterized by big forces and rapid shifts that company leaders could not have predicted or controlled. These companies were designated as “10X companies.” They were then compared to similar companies that failed to thrive in similarly extreme environments.
Only 7 companies were chosen as 10X-ers out of over 20,000 samples. They are Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines and Stryker.
Here are 5 entrenched business myths that were undermined by the authors’ research:
- Successful leaders in a turbulent world are bold, risk-seeking visionaries. Quite to the contrary, the best leaders observe what works, figure out why it is working, and build upon proven foundations. They are more disciplined, more empirical, and more paranoid.
- Innovation distinguishes 10X companies in a fast-moving, uncertain, and chaotic world. Surprisingly, no. Evidence supported that innovation itself did not affect success. More important was the ability to scale innovation – to blend creativity with discipline.
- A threat-filled world favors the speedy; you’re either the quick or the dead. 10X leaders figure out when to go fast and when not to.
- Radical change on the outside requires radical change on the inside. The 10Xers changed less in reaction to their changing world than the comparison cases.
- Great enterprises have a lot more good luck. Both sets of companies had luck and lots of it, both good and bad. The critical issue is what you do with the luck you get.
If I gain only one insight from this book it is this, “…yet the question of what it takes to achieve superior performance amidst unrelenting uncertainty faces them all [public schools, sports teams, churches, military units, businesses, hospitals, orchestras, etc]: Greatness is not just a business quest; it’s a human quest.” (p.12)
*Morten Hansen is a management professor at UC Berkeley and a former professor at Harvard Business School. Currently he consults and gives talks for companies worldwide – when he isn’t helping colleagues write groundbreaking bestsellers.