Great by Choice

15 min readJan 8, 2021

Great by Choice: Uncertainty, Chaos, and Luck — Why Some Thrive Despite Them All?

By Jim Collins

The Paradox of Choice

The observation of having too many choices that can cause you stress and decision-paralysis instead of making you feel content and in control is what’s known as The Paradox of Choice. So, when it comes to Greatness, do we really have a choice; especially that most of the things that happen to us in our lives are out of our control? We all want to be Great, but are some people more disposed towards achieving Greatness than others? What’s the role of luck in achieving Greatness and is luck even a “Thing” that we can seek?

Uncertainty is inevitable and unavoidable in business because every company has to face external forces that cannot be predicted nor controlled. The question then becomes: Why do some companies thrive in uncertainty, even chaos, while others don’t? This book addresses this question and breaks down the myths and realities of what it takes to create a lasting success in a rapidly changing world. This book also reinforces the value of meticulous preparation and steadfast adherence to ironclad self-discipline.

Many companies could claim that their success is attributed to their resilient leadership or their ability to hit some market index that investors deem valuable during steady and stable economic conditions. However, the real test to their claim is how well they respond to threats when the economy tanks! What separates Great companies from Good ones is their level of preparedness when the unexpected Strikes without warning. Their level of preparedness doesn’t come from some mysterious galactic force, rather, it comes from a series of conscious Choices that they’ve made during calm market conditions when there were no threats!

Companies that thrive during global pandemics, market fluctuations, or extreme political events that disrupt the “Business as Usual” model, exhibit different leadership characteristics that are put to the test when the going gets tough. That’s because the survival of the organization is at stake! So, what are these magical skills that would force a company’s leadership to go from Good to Great by Choice?

Uncertainty is permanent, chaotic times are normal, change is accelerating, and instability will characterize the rest of our lives, and all of this got amplified during the unprecedented Covid19 pandemic that the world hasn’t seen in decades! As it turns out, the leaders at Great companies made 4 key Choices that allowed them to beat their industry indexes by at least 10X over a 15-year period, which challenged conventional wisdom. You may be surprised to learn that 10X companies exhibit the following behaviors:

Implement a Counterintuitive Mindset: Great companies were not more risky, visionary, or creative than their counterparts.
Adopt a Surprising Approach to Technologies: Great companies focused more on scaling-up innovation than innovation itself.
Deliberate before Executing: Great companies changed less often to changes in the market than their comparison companies.
Curb Impulsive Reactions: Great companies believed that impulsive reaction to changes in the market could lead to their demise.

Extreme and unstable forces by themselves don’t cause Great companies to crumble, rather, it’s the undisciplined leadership that becomes the organization’s Achilles Heel. So, what distinguishes 10X companies from their comparison companies? What are some of the key characteristics that 10X companies exhibit that allows them to stay afloat through market crisis?

What are 10X Companies?

10X companies are those companies that perform at more than 10X their industry average over an extended period of time (more than 5-years). 10X companies are not more creative, more ambitious, or more visionary than the average ones. What sets them apart are 4 distinctive behaviors:

Fanatic Discipline: Great companies and their leaders have incredible consistency between their actions and their core values, goals, performance standards, and methods. Great leaders never ask their team to do something that they wouldn’t do themselves, where their behavior doesn’t fit anywhere on a normal scale.
Empirical Creativity: This is about blending creativity with discipline. Great companies take bold decision and execute creative moves from a sound empirical base. Great companies do what others can’t fathom by considering empirical evidence, instead of just conventional wisdom or what others are doing before taking decisive action.
Productive Paranoia: This is when leaders fear that their loss of productivity is due to their employees not putting forth their best effort, even when activity metrics are met or even increased. On regular basis, Great leaders are paranoid about immanent failure that might occur, where they maintain hypervigilance in Good times as well as during bad times by periodically asking themselves probing questions like; What if…? In what ways…? What about…? Can we...? What’s the worst that could happen if…?
Level 5 Ambition: Great leaders at Great companies display a delicate balance between personal humility and self-discipline, where they’re incredibly ambitious, but their ambition is first and foremost for the cause of the company and its purpose, NOT themselves!

What’s interesting about 10X companies is that they are NOT all cut from the same cloth, where they come from different backgrounds. Some leaders within 10X companies come from privileged backgrounds while others from poor ones. Leaders at 10X companies have different personalities, where some may be flamboyant while others are reserved, but what sets 10X companies apart from the rest of the crowd is their behavior.

What makes 10X companies so valuable is that they’re multidimensional, where they’re smart, good communicators, and have interests beyond their core specialty. Their curiosity and love of learning drives them to do more and better than most people. Leaders at 10X companies love what they do, and they love solving problems! Now, let’s examine each of the 4 behaviors and how 10X companies and their leaders execute on them…

Becoming a Great Company by Choice

1. Fanatic Discipline — The 20-Mile March

Great leaders at 10X companies set a consistent pace for success over a long period of time, where their performance does not change much with the environment. That’s to say that they hold-back during good times by not allowing themselves to get fatigued, while requiring an equivalent high-performance during difficult times. In times of change or uncertainty, this discipline acts as an anchor for the company, which keeps the company on-track by preventing it from blindly following the herd and end-up in an economic nosedive. Fanatic discipline is about:

Adhering unyieldingly to certain values, purpose, long-term goals, or high-performance standards.
Taking consistent action by doing whatever it takes to deliver high-performance outcomes.

The 20-Mile March addresses the importance of consistency in performing well over a long period of time, instead of going through a mixture of spectacular peaks and catastrophic blunders. A good 20-Mile March has the following features:

Clear performance indicators
Self-imposed constraints
Goals are within the team’s ability to reach
Realistic timeframe to complete tasks that make-up the goals
Imposed by the company itself, NOT by outside forces
Achieved with high-consistency

The 20-Mile March creates two types of self-imposed discomforts:

The discomfort of unwavering commitment to high-performance in difficult conditions.
The discomfort of holding back in good conditions.

The more turbulent the environment, the more important it is to have self-discipline!

2. Empirical Creativity — Fire Bullets, then Cannonballs

In times of uncertainty, most people follow what others do thinking that they’re playing it safe! Imagine if you’ve built one large cannonball that is made of expensive ammunition and you’ve fired it at your target, but you ended-up missing, then you would’ve lost all of your valuable and expensive resources. Alternatively, what if you considered firing bullets at your target until you know exactly where and how to fire. Then, and only then, you can go ahead and build your expensive cannonball that will hit your large target and allow you to win the battle!

Instead of big leaps in innovation, 10X companies implement the strategy of firing bullets first, then cannonballs! This means that 10X companies like to first test their ideas before going all-in by prototyping new products or services first, then implement their ideas in a phase-based approach across different business units only after a series of bullets have hit their intended targets. 10X companies don’t like following the herd, trusting conventional wisdom, blindly believing expert opinions, or implement untested ideas. They perform their own due diligence through direct observation, experiments, and research. This allows them to take bold and decisive moves based on a solid empirical foundation.

Bullets are experiments that are low-cost, low-risk, and low-distraction, which allows you to test and see what works and what doesn’t. Instead of trying to predict the future, test the waters by asking yourself these following simple questions:

How can we fire a bullet on this?
What bullets have others fired?
What does this bullet teach us?
Do we have enough empirical validation to fire a cannonball?

Bullets must be low cost, low risk, and must offer a decent assessment for what will work and what wouldn’t. Once you have enough empirical evidence that something works, the next step is to focus your resources on changing your bullets into cannonballs. If you don’t focus your resources, you’ll end-up moving too slow, and if you move too slow, you’ll lose the market opportunity!

Interestingly enough, 10X companies and their comparison companies innovate often, fire many bullets, and both have many failures. The key difference between both is that 10X companies avoid firing uncalibrated cannonballs. 10X companies place their biggest bets on innovation only after testing them using bullets to make sure that they’ve hit their intended target. Comparison companies don’t fire bullets first, instead, they go straight to firing cannonballs and take-on a big risk. Occasionally, 10X companies fire uncalibrated cannonballs, but they’re quick to self-correct.

3. Productive Paranoia — Lead Above the Death Line

There are very few things in life that are scarier than planning for the unknown because you simply can’t definitively know what to expect! That’s why saving liquid cash, not assets, for the inevitable rainy days to come becomes essential in order for companies to stay afloat and above the death line threshold. The death line is a series of criteria that a company is considered doomed and finished if reached. A company hits the death line when it becomes so battered that it cannot fully recover.

Productive Paranoia can be broken down into 3 categories:

Cash Reserves: Leaders at 10X companies use cash reserves as shock absorbers to prepare for unexpected events in case low probability events with disastrous consequences actually occur.
Bounding Risks: Leaders at 10X companies are surprisingly risk averse when compared to comparison companies who’re more aggressive risk takers, who tend to adopt the latest and greatest technologies out there before thoroughly testing it out.
Zoom-out & Zoom-in: Leaders at 10X companies periodically assess the big picture by zooming-out, then having seen where they stand, Great leaders then zoom-in and take decisive action. They remain hypervigilant to sense changing conditions and then respond to them accordingly.

10X companies remain super-vigilant; even when market conditions are hunky-dory. They know that things could change at any time and are paranoid about being prepared for unforeseen circumstances in an ambiguous future.

4. Level 5 Ambition: Be Specific, Methodical, and Consistent

Leaders at 10X companies are Level 5 Leaders, who build enduring Great companies through a paradoxical blend between personal humility and professional will. To consistently translate their strategies into real-world actions, leaders at 10X companies develop their SMaC recipe (Specific, Methodical, and Consistent). The more uncertain and unforgiving the situation may be, the more SMaC Great leaders need to become! Level 5 leaders stick to their recipe that works for the organization, where they don’t falter under pressure or get caught-up seeking low-hanging fruits that aren’t worth picking. Level 5 leaders set-out their Do’s & Don’ts beforehand by specifying operating conditions that work effectively, and then adhere to them religiously.

Return On Luck — ROL

To most people, good luck means good fortune that comes by chance and similarly, bad luck means bad fortune that also comes by chance! The role of luck in both of our personal and professional lives has been a subject of debate between some of the greatest minds of our time. The following are the criteria for classifying an event being lucky:

The event is independent of the person receiving it
The event is important
The event is unpredictable to a greater or lesser degree

A lucky event is something that happened outside of the company’s actions, that could either impact it in a good or bad way, which is also an event that is somewhat unpredictable. I define luck as the crossroad between opportunity and preparation, and not some fairytale Pixi dust that magically falls upon us. You need to work your tail-off to be lucky, so that you can become well equipped to capture opportunities when they present themselves to you.

Return on Luck is a concept that refers to how Great companies reap the fruits of their labor, not because they got struck upside the head with luck, but because they’ve busted their rearends doing what they do best. Surprisingly, Great 10X companies are generally not luckier than comparison companies, far from it. Great 10X companies’ great fortune wasn’t because they got more good luck and less bad luck, instead, they just got a higher Return on Luck (ROL)! 10X companies distinguish themselves by how they handled lucky events; whether good or bad.

Getting a high Return on Luck requires you to throw yourself at the luck event with ferocious intensity. The real difference between 10X companies and comparison ones is their ROL, where 10X companies tend to zoom-out periodically to see if they can recognize a lucky event for two reasons:

Humble themselves by acknowledging that their success is not exclusively attributed to their skills or hard work.
Realize that not all opportunities can be predicted or calculated to leverage lucky opportunities when they come your way.

When bad luck strikes, 10X companies use difficulties as a catalyst to deepen their purpose, recommit to their values, increase discipline, respond with creativity, and heighten their Productive Paranoia. Great leaders don’t count on luck to win, they just know what to do with it when it comes knocking on their door. The behaviors of Great leaders at 10X companies (Empirical Creativity, Fanatical discipline, Productive paranoia, and Level 5 Ambition) all contribute directly towards earning a Great Return on Luck — ROL. So, the critical question becomes; in what ways will you capture a “Lucky” opportunity when it comes running your way?

Takeaways

Your company’s greatness depends on what you do, not on what happens in your environment.
Preparation keeps you alive when uncertainty creeps into your life.
“Goals live on the other side of obstacles and challenges.” — Ray Bourque
The signature of mediocrity isn’t the unwillingness to change; rather, it’s chronic inconsistency.
The businesses that survive tough times look at the facts, prepare for the worst, and hope for the best.
10X companies reach their goals despite what happens in the economy because they weather the storms by preparing for them well ahead of time during calm tides.
10X companies take their leaps when they believe that it’s necessary by taking calculated risks.
10X companies recognize that what matters the most is what they do before the storm strikes.
Great companies never relax when they’re blessed with good fortune, and even if competition is lagging behind; they compete with themselves to ensure that they never faulter or fall behind because it’s only a matter of time before the inevitable hard times strike and overwhelm the market.
The only mistakes you can learn from are the ones you survive because they make you stronger.
10X companies always assume that conditions can change violently, fast, and without warning!
10X companies obsessively focus on their objectives & are hypervigilant about changes in their environment.
The environment doesn’t determine why some companies thrive in chaos while others don’t; it’s people!
People are the collective face behind the mask of the organization.
Great leaders reject the idea that forces outside their control will determine their results.
Great leaders accept full responsibility & maintain fanatic discipline, empirical creativity, and productive paranoia.
Great leaders attract others by having a goal that is bigger than any one individual that serves a higher cause.
Great leaders' figure-out when to go fast & when to slow down because they realize that it’s not all about sprinting.
Committing to a 20-Mile March consistently, in good and bad times builds confidence and self-discipline.
No matter how great you perceive yourself to be, you cannot beat the market to the punchline and expect to receive wide acceptance.
Change on the outside doesn’t necessarily mean change on the inside.
Great leaders will only know if something works through empirical validation, not by pure analysis that is performed in isolation.
Great leaders don’t allow discipline to inhibit or erode creativity because discipline is the consistency of action!
The real difference between 10X companies and comparison ones wasn’t luck per say, but what they did with the luck once they got it.
When catastrophe strikes an industry or the overall economy, companies fall into one of three categories: those who pull ahead, those who fall behind, and those that die, so the disruption itself does not determine your category; You do!
Great leaders don’t believe in their hype or that of the company; rather, they believe that sooner or later, the conditions in the market will turn against them without warning.
Great leaders prepare for hard times by channeling their paranoia into productive action.
The more turbulent the environment, the more important it is to have self-discipline!
Great leaders save-up for a rainy day by building-up enough cash reserves & buffers to prepare for the unexpected.
We can’t predict the future, but we can choose to create it.