Great by ChoiceChapter 1 By: Spencer Brown, Laura Carr, Ike Huestis, Brad Klingberg, TreanneTurner
Thriving in Uncertainty • “We simply do not know what the future holds.” • Peter L. Bernstein • No one can predict with certainty what direction our lives will take. • Why do companies thrive in uncertainty, while others do not?
What makes these companies successful? • They don’t merely succeed, they thrive. • Chaos, uncertainty, and instability are not good for business. • Successful leaders do not thrive on chaos, but they can thrive in chaos.
What the study shows • Study selected companies based on above average performance AND extreme environmental conditions. • The future is unpredictable • Understand the factors that distinguish great organizations in times of great uncertainty and adversity. • Gain insights that might remain hidden
Finding the 10X Cases • Three basic tests were used, • The company sustained truly spectacular results for an era of 15+ years relative to the general stock market and relative to its industry. • The company achieved these results in a turbulent environment, full of uncontrollable and uncertain events. • The company began its rise to greatness from a position of vulnerability, being young or small at the start of the 10X study period.
The Power of Contrast • Critical Question is NOT: What did the great companies share in common? • Critical Question is: What did the great companies share in common that distinguished them from their direct comparisons?
10x Cases & Comparisons • Amgen vs. Genentech • Biomet vs. Kirschner • Intel vs. AMD • Microsoft vs. Apple • Progressive vs. Safeco • Southwest Airlines vs. PSA • Stryker vs. USSC (U.S. Surgical Corporation)
Data Categories • Risk • Financial management • Strategy • Strategic change • Speed • Luck • Industry dynamics • Founding roots • Organization • Leadership • Culture • Innovation • Technology
Entrenched Myths • Successful leaders are bold, risk-seeking visionaries • Innovation distinguishes 10x companies • Threat filled world favors the speedy • Radical change on the outside requires radical change on the inside • Great enterprises have a lot more good luck
Contrary Findings • The best leaders are actually more disciplined, more empirical, and more paranoid. • No evidence to support that 10x companies are more innovative than their comparisons. • Successful leaders figure out when to go fast, and when not to. • The 10x cases changed less in reaction to their changing environment than the comparisons. • 10x companies do not have any more luck than their competitors.
A New Lens • Primary purpose of the book is to share the new concepts of this particular study, instead of dwelling on the well covered materials in previous books. • The book is not fundamentally about business, but about the principles that distinguish great organizations from good ones. • The overall goal is for the reader to not only be able to react to events, but to also shape events.
“They don’t merely react; they create. They don’t merely survive; they prevail. They don’t merely succeed; they endure.”-Great by Choice
The 6 Principles of Blue Ocean Strategy • Reconstruct market boundaries • Focus on the big picture, not the numbers • Reach beyond existing demand • Get the strategic sequence right • Overcome key organizational hurdles • Build execution into strategy • Blue Ocean Strategy
Common Elements in Successful Strategies • 1. Goals that are simple, consistent and long term • 2. Profound understanding of the competitive environment • 3. Objective appraisal of resources • 4. Effective Implementation • Foundations of Strategy
Evolution of Strategic Management • 1960: Financial Budgeting • 1970: Corporate Planning • 1980: Strategy as Positioning • 1990: Quest for Competitive Advantage • 2000: Strategy for the New Economy • 2009: Strategy in the New Millennium • 2011: Strategy in Turbulent Times • Foundations of Strategy
High Speed Rail Advantages • Faster overall travel time • More comfortable • Less subject to delay • Less noise and pollution • Dallasnews.com
“Strategy is forward looking. It is concerned not only with how the firm will compete now, but also with what the firm will become in the future.” -Foundations of Strategy
Fundamentals of Personal Financial Planning • Financial Goals • Basic Understanding of Finance • Time Value Money • Budgeting
Management • Weathering a storm • Building companies to last • Lead Employees
Finance • Theory, methods and concerns • Time Value of Money • Capital Budgeting Techniques • Risk and Risk Assessment • Dividend Policy • Long term relationships with clients
Investments • Portfolio Analysis • Investment Performance • Long Term • Value of the Company • Pension Funds
Economics • Macroeconomics Microeconomics • Macro-Performance, Structure and behavior of the economy as a whole • Micro-behavior of individual households • Global Economics • Behavior of employment • Inflation • Demand and Surplus
Dish Network in it’s Industry • Released IPO in 1995. • Listed on the NASDAQ. • Part of the Cable Television industry (CATV). • Turbulent industry, rapid innovation. • Is being outperformed by many competitors.
Questionable Decision Making • Acquisition of Blockbuster. • Focusing innovation on DVR technology. • Lack of innovation in on demand technology.
DVR Technology • Dish’s main innovations and marketing campaigns have been based around DVR’s, such as the Hopper. • Other companies have used ulterior methods, such as Virgin Media TiVo applications.
On Demand Technology • Is very important in retaining customers with the introduction of companies like Redbox and Netflix. • Has on demand services, but are very limited. • Other companies offer better services, such as Virgin on Demand TV.