2012 Crown Partners.

All Rights Reserved

Great By Choice
Insights and Learning's from Great By Choice
Presented by
Doug OKeefe
Director of Delivery Excellence
dokeefe@crownpartners.com
615.516.9955
Source
Great by Choice:Uncertainty, Chaos, and Luck - Why Some Thrive Despite Them
All
Jim Collins,Morten T. Hansen

2012 Crown Partners. All Rights Reserved

Great By Choice
The Author

Other books

Good to Great
Built to Last
How the Mighty Fall
Great By Choice
Beyond Entrepreneurship

Operates a management
laboratory in Boulder CO

Consults with leaders and

executives from around
the world

2012 Crown Partners. All Rights Reserved

Agenda
Great By Choice

Why Do Some Companies

Thrive In Uncertainty?
Even Chaos

And Others Do Not?

2012 Crown Partners. All Rights Reserved

Why Do Some Companies Thrive in Uncertainty?

Great By Choice

They dont merely

react

They CREATE

They dont merely

survive

They PREVAIL

They dont merely

succeed

They THRIVE

2012 Crown Partners. All Rights Reserved

Why Do Some Companies Thrive in Uncertainty?

Great By Choice

They dont merely

react

They CREATE

They dont merely

survive

They PREVAIL

They dont merely

succeed

They THRIVE

2012 Crown Partners. All Rights Reserved

Why Do Some Companies Thrive in Uncertainty?

Great By Choice

They dont merely

react

They CREATE

They dont merely

survive

They PREVAIL

They dont merely

succeed

They THRIVE

2012 Crown Partners. All Rights Reserved

Why Do Some Companies Thrive in Uncertainty?

Great By Choice

They dont merely

react

They CREATE

They dont merely

survive

They PREVAIL

They dont merely

succeed

They THRIVE

They build GREAT enterprises that can

ENDURE
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2012 Crown Partners. All Rights Reserved

Myths About Success

What Makes The Good, Good?

Myths to Break Down

Successful leaders in a turbulent market are bold, risk-seeking
visionaries
Innovation distinguishes 10X companies in a fast-moving,
uncertain, and chaotic world
A threat-filled world favors the speedy, youre either the quick or
the dead
Radical change on the outside requires radical change on the
inside
Great enterprises with 10X success have a lot more good luck
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2012 Crown Partners. All Rights Reserved

The Race To The South Pole

October 1911

2 Teams One Goal

Team 1:
Roald Amundsen (Leader)

Team 2:
Robert Falcon Scott (Leader)

2012 Crown Partners. All Rights Reserved

Amundsen versus Scott

Philosophy

Amundsen
Preparation is a MUST
Dont wait until you are there to figure out what to do
Prepare for everything with intensity

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2012 Crown Partners. All Rights Reserved

Amundsen versus Scott

Philosophy

Amundsen
Preparation is a MUST
Dont wait until you are there to figure out what to do
Prepare for everything with intensity

Scott
A good plan but not a systematic plan
Had a goal (the South Pole) and a plan to get there
Ran everything dangerously close to his calculations

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2012 Crown Partners. All Rights Reserved

Is It Luck?
Great By Choice

Id rather be lucky than

good
Scott v Amundson

1st 34 days same ratio of

good days to bad days
Same environment
Same year
Different results

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2012 Crown Partners. All Rights Reserved

Different Behaviors
Great By Choice

Luck had nothing to do

with it
Different outcomes

Different BEHAVIORS

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2012 Crown Partners. All Rights Reserved

10Xers
Great By Choice

Theyre not
More creative
More visionary
More charismatic
More ambitious
More lucky

More risk-seeking
More heroic
More prone to
making big, bold
moves

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2012 Crown Partners. All Rights Reserved

10Xers
Great By Choice

They
Have Fanatic
Discipline
Show Empirical
Creativity
Live In Productive
Paranoia

Fanatic
Discipline

Level 5
Ambition
Productive
Paranoia

Empirical
Creativity

15

2012 Crown Partners. All Rights Reserved

10X Companies
Companies That Outperform Their Industry Index By 10X

20,400
companies
11 criteria layers
Left with 7
Outperform
comparison
companies
30:1

10X
Case

Value of 10K
Invested

Market

Industry

Comparison
Company

Amgen

$4.5MM

24X

77X

Genentech

Biomet

$3.4MM

18X

11X

Kirschner

Intel

$3.9MM

21X

46X

AMD

Microsoft

$10.6MM

56X

119X

Apple

Progressive

$2.7MM

15X

11X

Safeco

Southwest

$12.0MM

63X

550X

PSA

Stryker

$5.3MM

28X

11X

USSC

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2012 Crown Partners. All Rights Reserved

Fanatic Discipline
Progressive Insurance

October 16, 1998 Progressive stock jumps 18%

January 26, 1999 Progressive stock plummets 19%

WHY?

Progressives CEO Peter Lewis refused to play the games that

Wall Street wanted by smoothing results to meet expectations
He didnt want to sacrifice company direction to satisfy Wall
Street expectations
Instead, Progressive became the 1st SEC-listed company to
start reporting results MONTHLY

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2012 Crown Partners. All Rights Reserved

Fanatic Discipline
Progressive Insurance

FANATIC DISCIPLINE

Consistency of action
With values
With long-term goals
With performance standards
Over time

True discipline requires the independence of mind to reject

pressures to conform in ways incompatible with values,
performance standards, and long term aspirations
10Xers having the inner will to do WHATEVER it takes to
create a GREAT outcome, no matter HOW DIFFICULT

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2012 Crown Partners. All Rights Reserved

Empirical Creativity
Intel

1994 Intel CEO Andy Grove has a PSA test with

abnormally high numbers
He didnt elect to enter the treatment plan right away

WHY?

Instead he did research at night

He tested the tests
He used his connections to interview other doctors

He chose a combination radiation therapy over traditional

surgery

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2012 Crown Partners. All Rights Reserved

Empirical Creativity
Intel

EMPIRICAL CREATIVITY

Relying on direct observation

Conducting personal experiments
Engaging directly with evidence

Having empirical creativity in the foundation allows making

BOLD, CREATIVE moves and BOUNDS risks around those
moves
10Xers dont look to conventional wisdom or what other
people would do. They look to empirical evidence.

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2012 Crown Partners. All Rights Reserved

Productive Paranoia
Microsoft

June 27-30, 1991

Bill Gates loses $300MM as Microsoft stock drops 11%
A memo, written by Gates, was leaked to the media detailing a
series of threats and worries about competition, technology,
intellectual property, legal cases, and Microsofts own
shortcomings

WHY?

Gates lives in fear

Gates always feels vulnerable

Gates lives in a productive paranoia regardless of how good or

how bad Microsoft is doing

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2012 Crown Partners. All Rights Reserved

Productive Paranoia
Microsoft

PRODUCTIVE PARANOIA

Hyper-vigilance in good times and in bad

Like a boy scout always prepared
Consistent state of preparedness for what might come next

Paranoid behavior is enormously functional IF fear is channeled

into extensive preparation and CALM, CLEARHEADED action
10Xers Constantly consider that conditions will ABSOLUTELY
100% - turn against them without warning

22

2012 Crown Partners. All Rights Reserved

Level 5 Ambition
Biomet

In the 1990s, Biomet CEO Dane Miller was consistently ranked

by Business Week as delivering more value per dollar of his
own compensation than any other CEO
In the 1990s, stock options for CEOs were at their peak
Dane Miller owned ZERO stock options in Biomet

WHY?

He owned his own equity so his personal fortune linked directly

to the companys upside AND downside

Miller: What incremental value does 100,000 shares have? At

some point, youre just satisfying an uncontrollable greed
complex.

23

2012 Crown Partners. All Rights Reserved

Level 5 Ambition
Biomet

LEVEL 5 AMBITION

Deflects attention from themselves

Personal humility and professional will
Builds the company to be great WITHOUT them

10Xers incredibly ambitious FOR THE CAUSE, for the

company, and not for themselves

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2012 Crown Partners. All Rights Reserved

10Xers
Great By Choice

They
Have Fanatic
Discipline
Show Empirical
Creativity
Live In Productive
Paranoia

Fanatic
Discipline

Level 5
Ambition
Productive
Paranoia

Empirical
Creativity

25

2012 Crown Partners. All Rights Reserved

20 Mile March
Great By Choice

20 miles a day
regardless

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2012 Crown Partners. All Rights Reserved

20 Mile March
Great By Choice

Stryker 20 Mile March

Company
20% net income
growth per year
Every year
The LAW

Versus USSC
Stryker grew more
slowly more than half
the time
Then a series of
storms
By 1998, USSC was
acquired by Tyco
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2012 Crown Partners. All Rights Reserved

20 Mile March
Great By Choice

Southwest Airlines 20
Mile March Company
Demanded a profit
EVERY year
Maintain the culture
Dont expand TOO
much in any year

1996 100 cities want

SWA
They expanded to 4
Enjoyed a profit EVERY
year for 30 years

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2012 Crown Partners. All Rights Reserved

20 Mile March
Great By Choice

Crown 20 Mile March

Company?
25% organic growth
per year
Top line revenue
focus

2012 25% growth over

2011
2013 25% growth over
2012
Eliminate business not
focused on Top Line
Revenue
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2012 Crown Partners. All Rights Reserved

20 Mile March
Great By Choice

Elements of a Good 20
Mile March Company
Performance markers
Self-imposed constraints
Tailored to the enterprise
Lies largely within our control
Goldilocks timeframe
Designed and self-imposed
Achieved with great consistency

Why it works
1. Builds confidence in
ability to perform well in
adversity
2. Reduces the impact of
catastrophe
3. Helps exert self-control in
an out of control
environment
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2012 Crown Partners. All Rights Reserved

20 Mile March
Great By Choice

Back to the South Pole

Amundsen 15-20 miles per day
Scott exhaustion on good days;
rest on bad days
Amundsen 15 days of gale force
winds; traveled on 8
Scott 6 days; traveled on none

You know how the story

ends

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2012 Crown Partners. All Rights Reserved

Fire Bullets Then Cannonballs

Great By Choice

32

2012 Crown Partners. All Rights Reserved

Fire Bullets Then Cannonballs

Great By Choice

What Makes A Bullet?

Low cost
Low Risk

Empirical tests

Low Distraction

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2012 Crown Partners. All Rights Reserved

Fire Bullets Then Cannonballs

Great By Choice

Firing Bullets
Fire bullets
Assess: Did they hit anything?
Consider: Do any bullets merit a
cannonball?
Convert: Calibrate and fire a
cannonball

Dont fire uncalibrated

cannonballs
Terminate bullets that
show no evidence of
eventual success

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2012 Crown Partners. All Rights Reserved

Fire Bullets Then Cannonballs

Apple

Apple Rebirth
Bullet: going back to what they did best personal computers
Bullet -> Cannonball: the Apple Store (rolled out slowly)
Bullet: Hire Tim Cook (supply chain expert) to put discipline
into manufacturing
Bullet: iPods that connected to the Mac (iTunes)

Cannonball: iTunes and iPod for non-Mac computurs

Cannonball: iTunes store with $0.99 songs
Cannonballs: iPod mini, iPod Clickwheel, iPod Photo, iPod
Shuffle, iPod 30GB, iPod 80GB, iPod Nano, iPhone, iPad, iPad
mini

35

2012 Crown Partners. All Rights Reserved

SMaC
Great By Choice

SMaC
Specific
Methodical
and
Consistent

A set of durable operating

practices that create a
replicable and consistent
success formula

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2012 Crown Partners. All Rights Reserved

SMaC
Southwest Airlines

1. Remain a short-haul carrier, under two-hour segments.

2. Utilize the 737 as our primary aircraft for ten to twelve
years.
3. Continued high aircraft utilization and quick turns, ten
minutes in most cases.
4. The passenger is our #1 product. Do not carry air freight or
mail, only small packages which have high profitability and
low handling costs.
5. Continued low fares and high frequency of service.
6. Stay out of food services.
7. No interliningcosts in ticketing, tariffs and computers and
our unique airports do not lend themselves to interlining.
8. Retain Texas as our #1 priority and only go interstate if
high-density short-haul markets are available to us.
9. Keep the family and people feeling in our service and a fun
atmosphere aloft. Were proud of our employees.
10. Keep it simple.

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2012 Crown Partners. All Rights Reserved

SMaC
Southwest Airlines

Specific
2 hour segments
737s
10 minute turns
No air freight or mail
No food service
No seat selection

Methodical
Based on empirical evidence on what works

Consistent
This list changed only 20% in 25 years!

38

2012 Crown Partners. All Rights Reserved

SMaC
Great By Choice

SMaC
SMaC isnt a strategy, culture,
set of core values, purposes, or
tactics

Include WHAT NOT to do

39

2012 Crown Partners. All Rights Reserved

SMaC
Great By Choice

John Wooden UCLA

Basketball
10 NCAA championships
7 NCAA championships in a row
National coach of the year 6
times
There was a way to do everything. You could
have taken UCLA people who played in 55,
65, 70, and 75; put them on the same
team; and they would have been able to play
with each other, instantly.
40

2012 Crown Partners. All Rights Reserved

ROL: Return on Luck

Great By Choice

1980s & 1990s: PSA and Southwest

Both faced spiked jet fuel costs
Both experienced an air traffic control strike
Both faced recession and inflation
Both faced high interest rates that increased jet leasing costs
Both faced a change in CEOs

PSA basically went out of business; Southwest THRIVED

WHY?

SMaC
Productive paranoia
Empirical creativity

41

2012 Crown Partners. All Rights Reserved

ROL: Return on Luck

Great By Choice

Bill Gates
Upper middle class family that sent him to private school
Born at the right time electronics advancements being made
Teamed with Paul Allen to develop BASIC into a product for a
PC
Went to Harvard where they had a PDP-10 he could work on
LUCKY GUY, HUH?

42

2012 Crown Partners. All Rights Reserved

ROL: Return on Luck

Great By Choice

Bill Gates
Was he the only person that grew up in an upper middle class
family?
Was he the only person born in the 1950s that went to a
private school with computing access?
Was he the only person who went to a college (or to Harvard)
with computing resources?
Was he the only person that knew how to program in BASIC?

No
No
No
No

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2012 Crown Partners. All Rights Reserved

ROL: Return on Luck

Great By Choice

Bill Gates
The difference IS NOT LUCK

Gates did MORE with his luck

He created a high RETURN ON LUCK

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2012 Crown Partners. All Rights Reserved

ROL: Return on Luck

Great By Choice

Dont Confuse Luck with RETURN ON LUCK (ROL)

Return on LUCK
(ROL)

Grea
t

Defining Moments in
10X Journey

Essential Skill for

10X Results

Can Lead to Hitting

the Death Line

A Sure Path To
Mediocrity

Poor
Bad
Good
------------------- LUCK ------------------

45

2012 Crown Partners. All Rights Reserved

Conclusion
Great By Choice

Why Do Some Companies

Thrive In Uncertainty?
Even Chaos

And Others Do Not?

46

2012 Crown Partners. All Rights Reserved

Thank You
And purchase Jim Collins Book
Presented by
Doug OKeefe
fdokeefe@crownpartners.com
615.516.9955

47