Great by ChoiceChapter 1 ~ Thriving in Uncertainty Group 2 Members: Michael Johnson, James Stariha, Mike Mullin, Elizabeth Allen, and Joshua Zamarron
“We simply do not know what the future holds”-Peter L. Bernstein • Cannot predict future, but can create it • Destabilization in last 15 years • Uncertainty neither good nor bad (gravity) • Task remains: how to master our own fate, even so.
Research Behind Book • 9 year research project, began in 2002 • When America awoke from false sense of stability • Long-running bull market crashed • Budget surplus flipped back to deficit • 9/11: America went to war while global competition did not
Why do some companies thrive in uncertainty, even chaos, and others do not ? • Started from position of vulnerability, rose to be great companies, performance • in unstable environment, big forces cannot control • Control group of companies that failed in the same extreme environment • Contrast to uncover distinguishing factors
Blue Ocean Strategy • Cirque du Soleil (1984) • Strategic analysis pointed to limited growth in a declining industry • Took less than 20 years to achieve revenues of top circuses (100 years to achieve) • Created uncontested new market space, made the competition irrelevant (created blue ocean) but still became great in instability
What is a 10X company(High Performing Study Cases) • 10X companies (Industry Index) • $10,000 at end of 1972, worth $6 million at end of 2002 (32 times better performance) • Southwest Airlines: #1 Money Magazine • 63 times better performance • Wal-mart, J&J, GE • Contrasted to PSA is the single contrast that captures the essence of the research question.
How is this book different? • Method similar: comparative historical analysis • Question of greatness is constant • Selected not just on performance or stature, but also on the extremity of the environment (performance plus environment) • Why: 1.future remains unpredictable. 2.insight on companies and leaders in instability (Guide)
Question and Key Point • Why is it important to study companies and leaders in an extreme unstable environment versus a tranquil environment? • Answer: Because you get a much more clear view of what makes them different and great (story of Guide)
Finding the 10X Cases • 1. First year- searched for historical cases meeting three basic tests: a) Enterprise sustained spectacular results for15+ years. b) Enterprise achieved results in turbulent environment. c) Enterprise began its rise to greatness from a position of vulnerability. (young or small)
Company Cuts and Exclusions • Initial list of 20,400 companies a) 11 layers of cuts that met all tests b) Want to study performance in extreme environments led to the use of extreme standards.
Our Company: MD Anderson • MD Anderson has operated and has had continued success throughout the same turbulent years as these 10X cases. • For the past 9 out of 11 years, MD Anderson has ranked No. 1 in cancer care in the “Best Hospitals” survey published in U.S. News and World Report.
Key Point! • The data studied is historical data that ended in 2002. a) One of the companies on the list may have fallen from its place of power b) However, a great company ceasing to be great does not erase the historical dynastic era we focus on.
Question and Key Point • 10X companies experience good results in what type of environment? • Answer: Turbulent
The Power of Contrast • Comparison Set • “What did the great companies share in common?” • “What did the great companies share in common that distinguished them from their direct comparisons?” • Comparisons? • 10X Companies outperformed 30 to 1.
Final Study Set of 10X Cases and their Comparisons • Amgen to Genentech • Biomet to Kirschner • Intel to AMD • Microsoft to Apple (1980’s and 1990’s) • Progressive to Safeco • Southwest Airlines to PSA (Pacific Southwest) • Stryker to United States Surgical Corporation
Great By Choice vs. FOS/Blue Ocean • Blue Ocean • Blue or Red Ocean? • Known or Unknown Marketplace? • FOS • Strategy? • Objectives? • Position of Advantage? • Elements of Success?
Surprised by the Data • Performed a deep historical analysis of each pair of companies • Goal: construct a clear understanding of how each company evolved from founding through 2002 • Systematically analyzed categories of data for each company
Development of Concepts • Did not begin with a theory or test to prove • Built a framework from the ground up • Placed the greatest weight on evidence from the actual time of the events. • The core of the analysis rested on, “What was different?” • Developed insights and shattered entrenched myths
Sampling of Myths • Entrenched Myth: Successful leaders in a turbulent world are bold, risk seeking visionaries. • Contrary Finding: Leaders observed what worked, figured out why it worked, and built upon proven foundations. They were more disciplined, empirical, and more paranoid.
Sampling of Myths Continued • Entrenched Myth: Innovation distinguishes 10X companies in a fast moving, uncertain, and chaotic world. • Contrary Finding: In some cases, 10X companies were less innovative than their comparisons. 10X companies have the ability to scale innovation, to blend creativity with discipline.
Sampling of Myths Continued • Entrenched Myth: A threat-filled world favors the speedy; you’re either the quick or the dead. • Contrary Finding: “Fast Decisions” and “Fast Actions” is a good way to get killed. 10X leaders figure out when to go fast, and when not to.
Sampling of Myths Continued • Entrenched Myth: Radical change on the outside requires radical change on the inside. • Contrary Finding: 10X cases changed less in reaction to their changing world than the comparison cases.
Sampling of Myths Continued • Entrenched Myth: Great enterprises with 10X success have a lot more good luck. • Contrary Finding: 10X cases and their comparisons had generally about the same amount of luck, good and bad. • What will you dowith the luck that you get?
Question and Key Point • How were the concepts supported by this book developed? • Answer: From the ground up. They founded the concepts from the evidence. Not vice versa.
Addition of Previous Work • Built to Last • Good to Great • How the Mighty Fall
A New Lens, An Enduring Quest • What does it take to build a great company? • Black Box • M.D. Anderson • Going Forward
Question and Key Point • What is the one question that is being explored in the text? • Answer: What does it take to build a great company?
Does anyone have any questions?