Monday, July 18, 2016

Monday Review: Great by Choice

For the next few Mondays, I'm going to do reviews of Jim Collins and Morten Hansen's book, Great by Choice. Now that I'm done with my theology Sunday series, I'm moving my schedule around a little. Normally, I would do the electronics series on Mondays, but I'm moving that to Saturdays.

Collins is of course known for a series of books on successful businesses: Built to Last, Good to Great, and How the Mighty Fall. This latest asks why some companies do better than others in chaotic times. The first chapter is titled, "Thriving in Uncertainty."

So why did Southwest thrive under the same circumstances in which Pacific Southwest Airlines failed with "a similar business model in the same industry with the same opportunity" (3)? Southwest gave the greatest 30 year investment on stock from 1972-2002. It was 63 times better than the stock market in general.

In this book, Collins and Hansen are going to look at ten companies in this book that fit the following criteria: 1) truly spectacular results for 15+ years in comparison to the stock market in general, 2) it happened in a turbulent, uncontrollable, fast-moving, uncertain, and potential harmful environment, and 3) the starting point was vulnerable.

The ten he picked were Amgen, Biomet, Intel, Microsoft, Progressive, Southwest, and Stryker. He's contrasting these with comparable companies that had similar circumstances but quite different results: Genentech, Kirschner, AMD, Apple (which floundered during this period), Safeco, Pacific Southwest Airlines, and the US Surgical Corporation.

Here is a small taste of what they found:
  • Successful leaders in a turbulent world are not necessarily risk-taking visionaries. "They observed what worked, figured out why it worked, and built upon proven foundations" (9). They were "more disciplined, more empirical, and more paranoid." 
  • Successful companies were not necessarily more innovative than those that were unsuccessful. They were able to scale innovation.
  • Speed did not necessarily mean success. These companies knew when to move fast and when not to.
  • They did not simply change just because the broader context was changing.
  • They did not necessarily have more good luck.
He ends chapter one with a Peter Drucker quote: "The best--perhaps even the only--way to predict the future is to create it" (12).

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