Jim Collins wrote a significant book in 2001 titled Good to Great. It was about why some companies make the leap from good companies to truly great, successful companies and others do not. Ten years later he and his colleague, Morten Hansen, returned with another book called Great by Choice: Uncertainty, Chaos, and Luck – Why Some Companies Thrive Despite Them All.
How do you lead successfully in an uncertain, disruptive, even chaotic world? Collins and Hansen pondered that question and for nine years gathered research from many leaders in biotech, semiconductor, personal computer, and airline industries. They led companies that grew to become great in highly uncertain, even chaotic, industries. Over the years, the CEOs of these companies faced massive technology disruptions, deep industry recessions, sudden collapses in demand, price wars, oil shocks – every chaotic event you can imagine. But even so, they led their companies to great long-term performance.
Some of these leaders have become legends, such as Andy Grove of Intel and Herb Kelleher of Southwest Airlines. Others are fairly unknown outside their industry, such as John Brown of Stryker and George Rathmann of Amgen. But Collins and Hansen found in them the distinctives that separated them from the pack. What then were the leadership characteristics that separated the winning leaders from their industry peers?
You might think the common dynamics were their visionary ability or their charisma. Instead, we found three other characteristics. The book is very helpful and instructive through these stories about three outstanding shared characteristics.
Empirical Creativity. Just staying alive does not produce greatness. You must also create to stay in the game. We typically expect leaders to be highly creative and dream up new, wonderful products and systems. But here’s the difference. The leaders of very average industries also displayed lots of creativity. The difference was what Collins and Hansen call empirical creativity: the ability to empirically validate your creative instincts. This means using direct observation, conducting practical experiments, and engaging directly with evidence, rather than relying on opinion, whim, and analysis alone, which is what leaders typically do.
Fanatic Discipline. Discipline can mean many things: working hard, following rules, being obedient, and so on. But Collins and Hansen mean something else. The leaders in their study exhibited discipline as consistency of action. They were consistent with values, long-term goals, and performance standards. They had consistency of method and consistency over time. This kind of discipline rejects conventional wisdom, hype, and the craziness of crowds – essentially, these leaders are able to be nonconformists. They tell the story of John Brown of Stryker. He set the long-term goal of 20% annual net income growth, year in and year out (he hit it more than 90% for 21 years), and was so committed to this that it could only be described as fanatical. Markets down? Competition severe? Recession? Market hype? He did not care. He built a system of fanatic discipline to achieve his goal, no matter what. He was highly disciplined by showing consistency between his words (the goal) and his behaviors (everything he did to make it happen).
Productive Paranoia. This one is my personal favorite. Productive paranoia is the ability to be hyper-vigilant about potentially bad events that can hit your company, and then turn that fear into preparation and clearheaded action. You can’t sit around being fearful; you must act, like Herb Kelleher, who insisted on cutting costs and running lean operations in good times, so that they would be prepared for the next storm, imagined or real. Bill Gates was hyper-vigilant about what could hit and damage Microsoft. “Fear should guide you,” he said in 1994. “I consider failure on a regular basis.” Herb Kelleher once joked that “our pilots have accused me of predicting eleven of the last three recessions.” Andy Grove ran around “looking for the black cloud in the silver lining.” Why? They were productively paranoid.
When things are good it’s easy to get loose and wasteful and lazy in our thinking, leadership, focus, expectations. It’s in the good seasons that we need to focus and maximize profitability and growth. Then when unexpected things come, and they will, we will be ready for the adjustments we will need to make and be in position to take advantage of the circumstances, and leverage it when everyone else is overwhelmed by it.
Great leaders need to be paranoid about four things: direction, operations, people, and engagement. If you monitor these, you will enable yourself to be a great leader in chaotic times.
But you need all three leadership skills in an uncertain world: Fanatic discipline keeps you on track; empirical creativity keeps you vibrant; and productive paranoia keeps you alive.
When you consider these three leadership skills, which do you perceive as your weakest one, and how can you turn that into a strength?