The key ideas

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

Jim Collins, Morten T. Hansen, 2011

Why do some companies survive crises and outperform their industry tenfold while others in the same conditions perish? Jim Collins and Morten Hansen compared pairs of companies and revisited Amundsen and Scott’s race to the South Pole. You will discover why winners stand out through steady progress, empirical testing, and reserves for a rainy day, rather than boldness or luck.

Who it is for

For anyone running a business, team, or career in an unpredictable world. And for anyone tired of explaining other people’s success through luck alone.

We cannot predict the future. But we can create it.

Two expeditions under the same sky

In October 1911, two teams prepared to set out for the South Pole. Norwegian Roald Amundsen led one, British naval officer Robert Scott the other. They faced a round trip of more than two thousand kilometers over ice, in freezing temperatures and blizzards, under the same weather conditions. Amundsen’s team returned without losses. The five members of Scott’s team who reached the pole never came home. Why?

Jim Collins and Morten Hansen begin their 2011 book with this question. Collins had previously written Good to Great; Hansen teaches at Berkeley. This time they wanted to know why some companies thrive where nothing can be predicted while others perish in the same conditions. Starting with 20,400 companies, they applied eleven selection stages and retained seven. Each outperformed its industry index at least tenfold, so the authors called them 10X companies.

The conclusion is uncomfortable for anyone explaining others’ success through luck or genius. The best companies were no luckier, bolder, or more inventive than their peers. They behaved differently: maintained a steady pace, tested ideas through small experiments, and prepared for the worst while things were good.

You will learn about the 20 Mile March, why to fire bullets before cannonballs, where the uncrossable boundary lies, and how luck differs from knowing how to use it. And you will see how Amundsen and Scott’s story ended.

Twins separated by the storm

To understand why a company became great, studying it alone is insufficient. Anything might explain its success: the era, market, luck. Collins and Hansen therefore matched each of the seven with a comparison company: an industry peer with almost the same initial opportunities that never became great.

Seven pairs emerged. Airlines Southwest and PSA. Chipmakers Intel and AMD. Medical companies Stryker and USSC, and Biomet and Kirschner. Biotechnology companies Amgen and Genentech. Microsoft and Apple from computing. Insurers Progressive and Safeco.

Each pair resembles twins whose lives took different paths. Their circumstances were shared, but their outcomes differed. The difference therefore cannot be dismissed as the market or era. Look instead at what people did.

An important qualification applies. This is a comparison of historical pairs rather than a laboratory experiment, revealing patterns rather than natural laws. But it poses the question precisely: what did one company do that the other did not?

Read in Livria

About the author

Jim Collins is an American business researcher and author of Built to Last and Good to Great. Morten Hansen is a professor at the University of California, Berkeley, researching management and how companies work.

All books by this author: Jim Collins, Morten T. Hansen

Terms from the book

  • Scott
  • Ford
  • Jobs
  • Intel
  • 10X
  • Lewis
  • Amundsen
  • NeXT
  • Pixar
  • Gates
  • Berkeley
  • Southwest
  • PSA
  • Brown
  • Putnam
  • Albuquerque
  • Good to Great: Jim Collins’s 2001 book about how ordinary companies become outstanding.
  • AMD: Advanced Micro Devices, an American chipmaker and longtime Intel competitor.
  • Stryker: An American company making medical equipment, instruments, and implants.
  • USSC: United States Surgical Corporation, an American surgical-instrument manufacturer acquired by Tyco in 1998.
  • Biomet: An American orthopedic-implant manufacturer.
  • Kirschner: Kirschner Medical, an American orthopedic-products manufacturer paired with Biomet in the study.
  • Amgen: An American biotechnology company, one of the world’s largest.
  • Genentech: An American biotechnology company and one of the industry’s pioneers.
  • Progressive: An American insurer best known for car insurance.
  • Safeco: An American insurer paired with Progressive in the study.
  • Fanatic discipline: The book’s concept of consistency in goals, values, and methods, even when pressure and fashion encourage a change of course.
  • Empirical creativity: The book’s concept of creativity grounded in testing through experience and data, rather than opinions and authorities.
  • Productive paranoia: The book’s concept of constant readiness for a bad scenario, expressed in action: reserves, protection against risk, and attention to threats.
  • 20 Mile March: An image from the book rather than a scientific term: a clear performance standard maintained year after year, neither falling below it in bad times nor exceeding it in good times.
  • Laparoscopy: Surgery through several small incisions using a camera and long instruments.
  • Tyco: Tyco International, a large diversified corporation that acquired USSC in 1998.
  • Innovation threshold: The book’s term for the level of novelty needed to compete in an industry. It varies between industries.
  • Advanced Memory Systems: A small American company that released a dynamic-memory chip before Intel.
  • Bullet: An image from the book: a cheap, low-risk experiment to test an idea.
  • Cannonball: An image from the book: a large bet requiring substantial effort and money.
  • Interferon: A protein cells release in response to a virus. Researchers tried using it as a medicine.
  • Indigo: A blue dye used to color denim.
  • Erythropoietin: A hormone that makes bone marrow produce red blood cells. A drug based on it became Amgen’s main product.
  • Ballmer: Steve Ballmer, Bill Gates’s longtime associate and Microsoft’s head from 2000 to 2014.
  • Sharer: Kevin Sharer, Amgen’s head from 2000 to 2012.
  • Custer: George Custer (1839–1876), an American general. He died with his entire detachment at the Battle of Little Bighorn after underestimating the opposing forces.
  • Death Line: The book’s term for the boundary beyond which risk can destroy a business or cause irreparable damage.
  • Asymmetric risk: Risk whose potential loss is far greater than its potential gain.
  • SMaC: The book’s term for specific, methodical, and consistent operating rules that turn strategy into everyday action.
  • Deregulation: Removal of government control over prices and routes. In US air travel, this began in 1978.
  • United Airlines: One of the largest airlines in the USA.
  • BASIC: A simple programming language created in 1964. Microsoft’s first product was a version for the Altair computer.
  • Altair: The Altair 8800, one of the first personal computers, released in 1975.
  • Return on Luck: The book’s term for how much a company or person gains from the luck they encounter, good or bad.
  • Proposition 103: A law approved by California voters in a 1988 referendum. It required insurers to lower rates and changed insurance rules.

All terms

Similar books