One of my goals over winter break was to do the reading that was indefinitely stalled on my ever growing to-read list. “Great by Choice” by Jim Collins was an interesting read, introducing me to some practices that I hadn’t thought of, but will now be implementing religiously in my own life. The main thesis of the book, backed by a fair amount of analytical evidence and research, is that we control whether we succeed or fail, and that the most successful companies that beat their respective markets by far (which Collins calls “10X companies”) all share similar traits. All 10X companies plug and chug away at a constant pace (which he calls the “20 mile march” in which progress is marked and paced so that the company does not overextend itself but always hits profits and goal margins, even during unideal times), make a habit of delivering, save up large cash reserves for inevitable bad luck events, and adhere to what works consistently and with discipline. The CEO’s of 10X companies are not necessarily visionary, creative or even charismatic; they are neurotic, paranoid, obsessive, and validate all of their methods and decisions with field evidence. Surprisingly, they take less risks, and change less than their less successful competitors. Here are some of the other points that struck me:
The 20 miles per day concept can really be applied to anything, including learning to code, exercising, writing a book, or building a company. Successful people make reasonable measures and adhere to them religiously, even during busy or stressful times, so that regardless of conditions, they always make progress.
2. Fire bullets, then cannonballs.
This aspect reminded me greatly of The Lean Startup A/B testing wisdom, in which companies first test their theories on a small scale before launching into massive expenditure.
3. Expect, and prepare for disaster.
Save cash. Maintain a high cash:assets ratio. Build a sturdy culture to weather upcoming storms. Take less risk on the three risks Collins outlines: Death line (in which faltering can entail company (or personal) death or debilitation), asymmetric (in which the potential downside far outweighs the potential upside, i.e. not bringing water on a long hike through a desert, etc. Can be avoided through some foresight and planning), and uncontrollable risk (which can be prepared for). Time-sensitive decisions don’t mean that you need to rush into a decision, merely that hypervigilence, early recognition of threat, and constant worrying for worst case scenarios pay off. It entails making a deliberate, not rushed, decision in the time available before the risk profile changes.
4. Be consistent in methodology. Once you find something that works, don’t fall for the new fad. You can make amendments, but don’t change the constitution.
5. Luck is like flipping coins. There will inevitably be both bad and good luck. You can increase luck by swimming with great people, and you can also ensure that your preparation means you receive great returns on good AND bad luck.
“Great By Choice” was overall an interesting read, and although it mostly reinforced the ideology that I possessed before, that hard work determines one’s fate, it brought up interesting specificities in how 10X companies are managed and propelled into success.