Note: This is a pretty long article (~4000 words). You can skim it now but you might want to also bookmark it and fully review it when you have 15 mins or so.
Summary: Great by Choice describes the results of a deep investigation into how young companies can survive and thrive in chaotic, turbulent environments to achieve spectacular results. The book is of great value startups and entrepreneurs seeking to build enduringly great companies. In this blog post, I look at how his concepts of fanatical discipline, productive paranoia, and empirical creativity apply to building a startup that succeeds over the long-term .
I just finished reading Jim Collins’ new book Great by Choice: Uncertainty Chaos and Luck—Why Some Thrive Despite Them All (GBC from here on out). GBC is the spiritual sequel to a highly-regarded & best-selling book published by Collins in 2001 called Good to Great: Why Some Companies Make the Leap… and Others Don’t. Both are great reads, but I find GBC particularly relevant to technology entrepreneurs (like myself). Why? Two reasons.
The level of research behind the book:
Unlike many business books, this is not just one successful guy waxing philosophical about how he made stuff happen . Jim Collins and his coauthor Morten Hansen had entire teams of research analysts work for 9 (!!) years to complete the book.
They picked industries that were highly volatile and selected young/small companies that did extraordinarily well (beating their industry’s average stock growth by 10x or more for at least 15 years). They found comparison companies that were started off very similar to the “10x companies” but only had average performance, and dissected all the data they could gather on both companies to find the differences. For more, see Appendix A below.
The companies / industries studied:
- Computing/Software: Microsoft vs Apple 
- Integrated Circuits: Intel vs AMD
- Biotechnology: Amgen vs Genentech
- Medical Devices: Biomet vs Kirschner
- Surgical Devices: Stryker vs USSC
- Insurance: Progressive vs Safeco
- Airlines: Southwest vs PSA
The companies are relevant and familiar to tech entrepreneurs like me and many of the folks on this blog. My focus in this post is to look at how the conclusions from the research could be applied to early stage startups that WANT to build enduring and spectacularly successful companies. I’m excited to see what we find.
MYTH-BUSTING: It’s not about more vision, creativity, risk-taking or luck
One of the great things about this study is that it’s not just studying winners but looking at the difference between winners and losers. GBC found that the 10x companies were NOT more creative, visionary, ambitious, lucky, hard working, risk-taking, innovative, etc. It’s not that those things weren’t important – I think they were/are. And GBC acknowledges this.
It’s just that both groups had lots of these things. Yet they had different outcomes. So we have to look at what DIFFERED between the 10x and comparison companies. Let’s start by looking at how innovation happens at 10xers. Continue reading →