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Leadership Lessons for Chaotic Times

Dec. 11, 2011
In Great by Choice,' Jim Collins and Morten Hansen explain how companies and their leaders can thrive in the most challenging environments.

Fanatic discipline. Productive paranoia. Empirical creativity. They may sound more like afflictions than leadership characteristics, but Jim Collins says they are the attributes that separate the leaders of the most successful companies from the runner-ups.

In their new book "Great by Choice," Collins and his co-author, Morten Hansen, examined companies that had risen from small or start-up status to outperform their peers by a minimum of 10 times for at least 15 years. Their research focused on seven so-called "10X" companies - Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines and Stryker.

Collins and Hansen were interested in the pivotal role their leaders played in the rise of these companies. What they found surprised them. These leaders were not more charismatic or creative or daring than the executives they competed against. Instead, they found these leaders consistently exhibited three traits:

Fanatic discipline. In "Great by Choice," the authors recount several stories of outrageous behavior by former Southwest Airlines CEO Herb Kelleher, including resolving a trade slogan dispute with another company by arm wrestling the firm's CEO in an arena in front of hundreds of employees. He did this not for the sake of weirdness, they point out, but because by "behaving with outlandish consistency," he was animating a culture designed to be high-spirited and fun-loving. Their point: 10Xer CEOs exhibited a fanatical level of self-discipline, doing "whatever it takes to create a great outcome, no matter how difficult."

Jim Collins
Morten Hansen

Productive paranoia. Operating in a world that can change on a dime, dealing with everything from technology threats to political chaos, leaders need to exhibit almost a sixth sense for potential disruptions. Collins says the issue is not to be frozen by unproductive paranoia. Instead, he told IndustryWeek, "Fear should guide you' is a phrase that Bill Gates has, but guide you to what? Towards very productive action; calm, clear-headed decisions; and action, extensive preparation and building buffers to absorb shocks. In the long run, if you don't survive the shocks, you can't build a great enterprise. Productive paranoia is very much about being able to endure shocks and to be in very good position to be able to seize opportunities when they come."

Empirical creativity. The 10Xer CEOs were independent and creative, but they relied on empirical evidence (direct observation, practical experiments, etc.) rather than relying on authority figures or conventional wisdom. "The 10Xers don't favor analysis over action; they favor empiricism as the foundation for decisive action," Collins and Hansen write.

While leaders must be able to operate in a world undergoing constant change, that doesn't mean the most successful executives are the quickest to demand changes in their companies. In fact, Collins says, the "signature of mediocrity is chronic inconsistency." He says great companies come up with a game plan that is detailed and specific -- what he and Hansen call a SMaC (Specific, Methodical and Consistent) plan -- and then follow it in a consistent, disciplined fashion. He notes that while Intel was innovative in developing new chips, it was the company's consistency in developing technology and delivering it at an affordable cost. "If Intel had only had innovative chips but hadn't had that incredible consistency in the way it went about building things, it would not have been Intel," Collins asserts.

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