Great By Choice by Jim Collins and Morten T. Hansen

Last updated: Jul 15, 2023

Summary of Great By Choice by Jim Collins and Morten T. Hansen

Great by Choice is a book written by Jim Collins and Morten T. Hansen that explores the factors that differentiate successful companies from their less successful counterparts in chaotic and uncertain environments. The authors conducted a nine-year research study to identify the key principles and strategies that enable certain companies to thrive in turbulent times.

The book introduces the concept of "10Xers," companies that outperform their industry by at least ten times over a sustained period. Collins and Hansen compare these 10Xers to their less successful counterparts, referred to as "comparison companies," to uncover the distinguishing characteristics that set them apart.

One of the main findings of the research is that great companies are not necessarily more innovative or risk-taking than their comparison companies. Instead, they exhibit three key behaviors: fanatic discipline, empirical creativity, and productive paranoia.

Fanatic discipline refers to the consistent adherence to a set of core values and principles, even in the face of uncertainty and adversity. Great companies have a clear focus and stick to their long-term goals, avoiding the temptation to chase short-term gains. They maintain a culture of discipline, ensuring that everyone in the organization is aligned and accountable.

Empirical creativity involves a combination of creativity and empirical validation. Great companies generate a large number of ideas and experiments, but they subject them to rigorous testing and analysis before committing resources. They embrace the concept of "fire bullets, then cannonballs," meaning they start small, learn from their experiments, and then scale up only when they have sufficient evidence of success.

Productive paranoia is the third behavior exhibited by 10Xers. It involves a constant sense of urgency and a proactive approach to risk management. Great companies anticipate potential disruptions and prepare for them in advance. They build buffers, such as financial reserves and strong relationships with customers and suppliers, to withstand unexpected shocks.

The book also emphasizes the importance of luck in the success of companies. However, luck alone is not enough. Great companies are prepared to seize opportunities when luck strikes, and they have the resilience to bounce back from unlucky events.

Collins and Hansen provide numerous examples and case studies throughout the book to illustrate their findings. They also offer practical advice and actionable insights for leaders and organizations to apply the principles of greatness in their own contexts.

In conclusion, Great by Choice is a comprehensive study that reveals the behaviors and strategies that enable certain companies to thrive in uncertain and chaotic environments. It emphasizes the importance of discipline, creativity, and paranoia, and provides valuable insights for leaders seeking to build enduring greatness in their organizations.

1. The 20 Mile March

One of the key takeaways from Great By Choice is the concept of the 20 Mile March. This refers to the idea that successful companies and individuals consistently set and achieve specific performance targets, regardless of external conditions. The 20 Mile March is a metaphor for maintaining discipline and consistency in the pursuit of goals.

By setting clear and achievable targets, companies can avoid the pitfalls of overreaching during good times and underperforming during bad times. This approach helps to build resilience and ensures steady progress towards long-term success. The 20 Mile March is a powerful reminder that success is not just about taking big leaps, but about consistent effort and discipline.

2. Fire Bullets, Then Cannonballs

Another valuable insight from the book is the concept of firing bullets, then cannonballs. This refers to the idea of testing and validating ideas on a small scale before committing significant resources. By firing bullets (small, low-risk experiments), companies can gather data and learn from their successes and failures.

Once they have gathered enough evidence and confidence, they can then fire cannonballs (big, high-risk bets) with a higher chance of success. This approach helps companies avoid costly mistakes and increases their chances of hitting the target. By being agile and adaptable, companies can navigate uncertainty and make more informed decisions.

3. Productive Paranoia

Great By Choice emphasizes the importance of productive paranoia, which involves being prepared for unexpected events and constantly scanning the environment for potential threats. Successful companies maintain a sense of urgency and are always ready to respond to changing circumstances.

Productive paranoia is not about being fearful or reactive, but about being proactive and prepared. By anticipating potential risks and challenges, companies can develop contingency plans and mitigate potential damage. This mindset helps companies stay ahead of the competition and adapt to rapidly changing markets.

4. SMaC Recipe

The book introduces the concept of a SMaC recipe, which stands for Specific, Methodical, and Consistent. A SMaC recipe is a set of principles and practices that guide decision-making and actions. It provides a clear framework for making consistent and effective choices.

A SMaC recipe helps companies maintain discipline and avoid making impulsive or inconsistent decisions. It provides a foundation for long-term success and helps companies stay focused on their core values and strategies. By following a SMaC recipe, companies can navigate uncertainty and make decisions that align with their overall goals.

5. Return on Luck

Great By Choice introduces the concept of return on luck, which refers to how companies capitalize on both good and bad luck. Successful companies are not just lucky; they know how to make the most of the opportunities that come their way and minimize the impact of negative events.

Return on luck is about being prepared and having the right mindset to seize opportunities and overcome challenges. It involves being proactive, adaptable, and resilient. By maximizing return on luck, companies can create a competitive advantage and achieve long-term success.

6. Leading Above the Death Line

The book emphasizes the importance of leaders who can make effective decisions and lead their teams to success, even in the face of extreme uncertainty and adversity. Leading above the death line means making decisions that increase the chances of survival and success.

Leaders who can navigate uncertainty and make tough decisions are crucial for the success of any organization. They must be able to inspire and motivate their teams, while also being willing to take calculated risks. Leading above the death line requires a combination of strategic thinking, emotional intelligence, and the ability to adapt to changing circumstances.

7. Zoom Out, Then Zoom In

Great By Choice introduces the concept of zooming out, then zooming in, which involves balancing a broad perspective with attention to detail. Successful companies are able to see the big picture and understand the broader trends and forces shaping their industry.

At the same time, they are also able to zoom in and focus on the specific details and actions required to achieve their goals. This approach helps companies avoid getting lost in the details or being blindsided by unexpected events. By zooming out and zooming in, companies can make more informed decisions and stay ahead of the competition.

8. The 10X Rule

The 10X rule is a key concept in Great By Choice, which suggests that successful companies aim for 10 times improvement rather than incremental progress. By setting ambitious goals and pushing beyond conventional limits, companies can achieve breakthrough performance.

The 10X rule challenges companies to think big and take bold actions. It encourages them to innovate, disrupt the status quo, and constantly strive for improvement. By aiming for 10 times improvement, companies can create a significant competitive advantage and achieve extraordinary results.