10Xers

In my last post ("Lucky Breaks"), I talked about the role of luck in determining success.  Perhaps Janice Kaplan and Barnaby Marsh said it best in an article they wrote in 2018 for the Wall Street Journal ("To be successful, make your own luck"), "Luck is at the intersection of random chance, talent, and hard work."  In other words, it takes a combination of all three factors - good luck, talent, and hard work - to be successful.  As I discussed, two Italian physicists (Alessandro Pluchino and Andrea Rapisarda) and one Italian economist (Alessio Emanuele Biondo) used what is called a "toy mathematical model" (which they called their "Talent versus Luck" model, or TvL model) to show that luck plays a much larger role in determing success than perhaps previously appreciated (see their 2018 paper, "Talent vs Luck: The role of randomness in success and failure").  I wanted to continue this discussion, focusing this time on organizations rather than individuals.

I have always enjoyed reading the series of books by Jim Collins, and I particular enjoyed Great by Choice, which he co-wrote with Morten Hansen.  The subtitle for this book explains exactly what this book is about - "Uncertainty, Chaos, and Luck - Why Some Thrive Despite Them All."  Collins and Hansen completed a nine-year research project beginning in 2002 that gathered data from an initial list of 20,400 companies in a variety of industries.  Their goal was to identify organizations that performed exceptionally well, even in a world of uncertainty and chaos.  After sifting through reams of data, they identified 7 organizations that met their criteria for high-performance.  Collins and Hansen called these organizations "10Xers" because they didn't just get by, they truly survived.  Every 10X organization beat their industry competition by a factor of ten!

So how do these organizations become (and stay) 10Xers?  Are they just lucky, or are they really that good?  Collins and Hansen noted four key characteristics that seemed to set these organizations apart from their peers (shown in their Figure below):

"Fanatic Discipline" is characterized by consistency of action, values, goals, performance standards, and methods.  These organizations are relentless in their approach, almost monomaniacal in their unbending focus on their goals and objectives.  Collins and Hansen talk about something they call the "20-Mile March", using the "Race to the South Pole" by Roald Amundsen and Robert Falcon Scott as a case study.  Both teams have the same resources, arguably the same level of experience and expertise, but Amundsen's team was the first to reach the South Pole and survived, while Scott's team reached the South Pole 34 days after and died on the return journey.  What was the key difference?  Amundsen's team marched 20 miles every single day.  If the weather was bad and the team was tired, they would push on and reach their daily goal of 20 miles.  Here was the important difference though.  Even if the conditions were perfect, the team would stop every day at 20 miles.  In contrast, Scott's team frequently traveled in spurts, going as far as they could one day and then either taking the day off or going only a short way on the alternating days.  He drove his team to exhaustion and quickly used up their supplies.  Fanatic discipline means setting a goal and sticking to it, no matter what (even if it means holding back).

As an example of this "20-Mile March" concept, Collins and Hansen explained how one 10Xer, Southwest Airlines' goal of generating a profit every single year.  Between 1990 and 2003, the U.S. airline industry as a whole turned a profit in only six of the 14 years.  In the early 1990's, the industry as a whole lost $13 billion and furloughed over 100,000 employees.  But not Southwest Airlines - during that same period of time, Southwest remained profitable every single year and didn't furlough a single employee.  They did so by this fanatic discipline to their goal.  Even when things were going very well for the company, they were very deliberate about not expanding to new cities if they weren't ready.  As an example, in 1996 more than 100 cities were trying to bring in Southwest Airlines to their airports, but the airline expanded to just four cities. 

"Productive Paranoia" sounds a lot to me like the High Reliability Organization (HRO) principle of "Preoccupation with Failure".  The 10Xers considered every possible "What If?" scenario and prepared for them.  They stayed hypervigilant and attuned to threats and changes in their environment, even when things were going well for them.  They channeled fear, anxiety, and worry into action.  Collins and Hansen talk about Microsoft founder Bill Gates' famous "nightmare memo" in which he outlined all the real and potential threats that could torpedo the company's success, even though the company experienced unparalleled success.  Gates would later say, "If I really believed this stuff about our invincibility, I suppose I would take more vacations."  

Collins and Hansen noted that the 10Xers didn't necessarily make bold or daring moves.  While most leaders rely on conventional wisdom, expert opinions, or even untested ideas, leaders at the 10Xers relied upon their own creative instincts backed by empirical data ("Empiric Creativity").  Their bold moves were backed by the evidence, obtained by extensive observation and experimentation.  Collins and Hansen called this a "Fire bullets, then cannonballs" approach (which to me sounds a lot like "small test of change" that I discussed in my post, "Simplify your offense!").  10Xers would run pilots before going "all in" in order to build on proven success.

If you've read Collins' book, Good to Great, you probably are familiar with his concept of "Level Five Leadership".  Similarly, Collins and Hansen found that 10Xers exhibited "Level Five Ambition".  The leaders within these organizations were focused on the success of their organizations and not personal gain.  They channeled all of their energy and ego into the greater cause or purpose.  

Hansen wrote an article in the Harvard Business Review ("You Can Manage Luck.  Here's How.") based upon their findings from the 10Xers.  He writes, "It's not the luck you get that counts, it's what you do with it - your return on luck."  He suggests four ways that organizations can maximize their "return on luck."  First, organizations should view life as a flow of luck events (similar to the TvL model discussed in my last post).  Second, organizations should prepare for bad luck events (there's that "Preoccupation with Failure" again).  Third, organizations should spot good-luck events when they come and be prepared to act upon them.  Lastly, organizations should execute brilliantly on good-luck events.

I want to leave with one last quote from Great by Choice.  The 10Xer Roald Admundsen said, "Victory awaits him who has everything in order—luck people call it. Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck."  Success is a function of luck, talent, and hard work.