Great by Choice

We can be great by choosing Discipline in execution...Leaders win by this. No longer do Leaders need to be the visionary kinds.

Discipline is key...execution requires only discipline.

First, the successful leaders were not the most "visionary" or the biggest risk-takers; instead, they tended to be more empirical and disciplined, relying on evidence over gut instinct and preferring consistent gains to blow-out winners. The successful companies were not more innovative than the control companies; indeed, they were in some cases less innovative.

Summary By ALAN MURRAY

'Great by Choice" is a sequel to Jim Collins's best-selling "Good to Great" (2001), which identified seven characteristics that enabled companies to become truly great over an extended period of time.

Mr. Collins's new book tackles the question of how to steer a company to lasting success in an environment characterized by change, uncertainty and even chaos.

Lessons of "Great by Choice" are not meant to apply to a particular moment of economic turbulence but to a continuous condition—a business world "full of rapid change and dramatic disruption."

For their study, the authors chose a set of major companies that achieved spectacular results over 15 or more years while operating in unstable environments; Messrs. Collins and Hansen call them "10Xers" for providing shareholder returns at least 10 times greater than their industry. Then the authors compared those companies—Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines, Stryker—to similar, but less successful, "control" companies: Genentech, Kirschner, AMD, Apple, Safeco, PSA and United States Surgical. It is an indication of the volatile nature of today's business success that, using 2002 numbers, Microsoft came out as a "10Xer" while Apple was its less successful "control" company, a ranking now reversed. More on that below.

Messrs. Collins and Hansen draw some interesting and counterintuitive conclusions from their research.First, the successful leaders were not the most "visionary" or the biggest risk-takers; instead, they tended to be more empirical and disciplined, relying on evidence over gut instinct and preferring consistent gains to blow-out winners. The successful companies were not more innovative than the control companies; indeed, they were in some cases less innovative. Rather, they managed to "scale innovation"—introducing changes gradually, then moving quickly to capitalize on those that showed promise. The successful companies weren't necessarily the most likely to adopt internal changes as a response to a changing environment. "The 10X companies changed less in reaction to their changing world than the comparison cases," the authors conclude.

Like its predecessor, "Great by Choice" is far from a dry work of social science. Mr. Collins has a way with words, not least with metaphor. A whole chapter is devoted to pursuing a "bullets-then-cannonballs" approach to competition. The book's organizing metaphor is built around the story of Roald Amundsen and Robert Falcon Scott, the two men who set out separately, in October 1911, to become the first explorers to reach the South Pole. Amundsen won the race by setting ambitious goals for each day's progress but also by being careful not to overshoot on good days or undershoot on bad ones, a disciplined approach shared by the 10Xers, according to Messrs. Collins and Hansen. Scott, by contrast, overreached on the good days and fell apart on the bad, mirroring the control companies in "Great by Choice."

The authors find Amundsen-style discipline in Peter Lewis of Progressive Insurance, who refused to play the analysts' game of "predicting" quarterly earnings and made Progressive the first SEC-company to publish monthly financial statements so that analysts could follow actual results instead. Another disciplined leader is Andy Grove, who was willing to take decisive action at Intel, such as abandoning the business of memory chips in 1985, but only after immersing himself thoroughly in the evidence of a changed marketplace. Herb Kelleher of Southwest Airlines, the authors say, was always preparing for the next recession even when none was in sight.

If "Great by Choice" shares the qualities that made "Good to Great" so popular, it also shares some that drew criticism. The authors' conclusions sometimes feel like the claims of a well-written horoscope—so broadly stated that they are hard to disprove. Their 10X leaders are both "disciplined" and "creative," "prudent" and "bold"; they go fast when they must but slow when they can; they are consistent but open to change. This encompassing approach allows the authors to fit pretty much any leader who achieves 10X performance into their analysis. Would it ever be possible, one wonders, to find a leader whose success contradicted their thesis?

Which brings us back to Apple. Messrs. Collins and Hansen had no way of knowing, when they began sifting through their data in 2002, that Apple would become one of the most stunning turnaround stories in business history, soaring past Microsoft in market value. The late Steve Jobs accomplished that turnaround with a run of boldness, innovation, visionary thinking and egotism that might seem counter to the studied conclusions of "Great by Choice" as well as those of "Good to Great," in which Mr. Collins found that one of the leading attributes of the best business leaders was "humility." Steve Jobs?

But Messrs. Collins and Hansen have no trouble fitting Mr. Jobs into their framework. They write that his first task in getting Apple back on track was "not iTunes, not the iPhone, not the iPad"—i.e., not an act of innovative brilliance. Instead, "he increased discipline. That's right, discipline, for without discipline there'd be no chance to do creative work." A veritable Amundsen.

Mr. Murray is deputy managing editor of the Journal and the author of "The Wall Street Journal Essential Guide to Management."