Books – Great by Choice and How Mighty Fall

These two books reflect on the same concept – instability of our fast-changing business environment. Surprisingly, the data challenges our traditional views of bold visionaries taking risks… and succeeding.

Great by Choice

Interesting: it is the discipline rather than innovation that allow companies to succeed in turbulent environment.  The authors point out that the innovation is necessary, but it is necessary up to a certain industry-specific level. As soon as the level is reached, more innovation would not help, and can even hurt if the discipline is scarified.

Evariant has a very interesting interview with one of the authors:

“20 miles march” – a steady progress with limitation on the bottom and on the top of the task to achieve. This approach allow the company to produce steady growth, rather than unsustainable expansions during good years and decline during bad years. Successful companies methodically progressed in most of the years comparing to unstable companies.

“Bullets first, and then cannon balls” – a strategy of inexpensive low-risk and low-impact “trials” in new opportunities before committing more resources to invest into empirically proven areas.

“Productive paranoia” – realization of possibility (and probability) of unknown adverse events and preparedness for them (cash reserves, etc.).

Do successful companies have to “act fast”?  Not necessarily. It is better to take time to investigate and evaluate the situation if delay will not significantly increase the risk. 

Consistent recipe of success – successful companies have a rather stable “recipe” of success and change it less than less successful companies, but do change it to some degree.  Successful companies in general more disciplined and consistent than unsuccessful companies.

Interesting perspective on luck (good and bad) and its role in company’s success: unless it it a catastrophic bad luck, company’s discipline helps to capitalize on the good luck and overcome the bad luck. However, the role of luck can not be denied.

How Mighty Fall

How Mighty fall is the book that preceded Great by Choice; the most surprising for me was the innovation component.  The company that is about to fall could “out-innovate” the market. After reading Great by Choice it is clear why – just certain level of innovation is needed; after this level is met, extraordinary innovation might hurt rather than help the company.

Stages of the fall:

Stage 1: Hubris Born of Success
Stage 2: Undisciplined Pursuit of More
Stage 3: Denial of Risk and Peril
Stage 4: Grasping for Salvation
Stage 5: Capitulation to Irrelevance or Death