Great by Choice (Jim Collins and Morten T. Hansen): Chapter 05: Leading Above the Death Line

In this chapter, Jim introduces us to another adventurer, David Breashears, who had been commissioned by IMAX to shoot some video atop Mount Everest. On one fateful day, David's experience and productive paranoia warned him that weather wasn't quite right to go all the way to the top. So he decided to pull back and wait for the weather to clear. At the same time he was going down, some other climbers made their way up, oblivious to the imminent catastrophe that lay ahead of them. David's intuition was right. Eight people died on Everest that day. Lucky for him and his team, his experience and productive paranoia had saved them.

Again Jim points out that the decision on the mountain was not the most important decision that Breashears had to make. The most important decision happened in the planning phase. David's preparation was similar to that of Amundsen from the South Pole expedition. They had packed extra supplies just in case. 

"10X leaders always assumed that conditions can - and often do - unexpectedly change... They understood deeply: the only mistakes you can learn from are the ones you survive."

"By continually asking, 'What if?' 

By building reserves, minimizing risk, 

And honing your disciplines in good times and bad."

The authors' three core practices for building a 10x company with productive paranoia:

Preparation. It's what you do before the storm comes.

10x companies always carried much more cash reserves than was deemed reasonable. They didn't take chances. Better safe than sorry. 10x companies are financially disciplined, and this discipline was grandfathered into their operations from the very beginning.  

Kinda reminds me of peaks and valleys. It's what you do in the good times that helps you survive the bad times. 

Always keep in mind that there are economic catastrophes just waiting to happen, and you want to be prepared. You don't want to be caught napping.

Former Southwest Airlines CEO, Herb Kelleher is quoted as saying, "Our philosophy of managing in good times so as to do well in bad times proved a marvelous prophylactic." This is after 9/11 - they were the only profitable airline in 2001. 

The authors say, "When a calamitous event clobbers an industry or the overall economy, companies fall into one of three categories: those that pull ahead, those that fall behind, and those that die. The disruption itself does not determine your category. You do."

Secondly, 10xers were more averse to risk. "They constrained their growth in their 20 Mile March. They fired bullets before firing cannonballs. They displayed financial prudence."

10x companies identified risks early and sprung to action. Comparison companies were more relaxed.

10x companies decided based on facts. Comparisons were more impulsive and reactive. 

10x companies had superb execution once decisions were made. Comparison companies compromised excellence for speed. Text Text

Zooming out means: 

You sense a change in conditions 

You assess the time frame

Do the new conditions call for disrupting plans? If so, how? 

Then zoom in. Focus on supreme execution of plans and objectives. 

Always take the time to think carefully even when pressed for time. Never panic. Study the situation and formulate the best possible response. And then execute with finesse and discipline. 

"A fast moving threat does not call for abandoning disciplined thought and disciplined action. "

"10x leaders exercise productive paranoia, obsessing about what can go wrong. They ask questions like: What is the worst case scenario? 

What are the consequences of the worst case scenario? Do we have contingencies in place for the worst case scenario? What's the upside and what's the downside of this decision? What's the likelihood of the upside and the downside? What's out of our control? How can we minimize our exposure to forces we can't control? "

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