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UNCERTAINTY, CHAOS, AND LUCK- WHY SOME THRIVE DESPITE THEM ALL AUTHOR OF GOOD TO GREAT JL^U^O i>vJ J USA $29.99 THE NEW QUESTION Ten years after the worldwide bestseller 6000* to Great, JimCollinsreturns withanothergroundbreakingwork,this timetoask: Whydosomecompaniesthriveinuncertainty, even chaos, and others do not? Based on nine years of research, buttressed byrigorous analysis and infused with engaging stories,Collinsand hiscolleague, MortenHansen, enumeratethe principlesforbuildingatrulygreatenterprise inunpredictable, tumultuous,and fast-moving times. THE NEW STUDY Great by Choice distinguishes itselffrom Collins's prior work byitsfocus notjust on performance, but also on the type ofunstable environments faced byleaderstoday. With a team ofmore than twenty researchers, Collins and Hansen studied companies that rose to greatness- beating their industry indexes bya minimum of ten times over fifteen years-in environments characterized by big forces and rapid shifts that leaders could not predict or control. The research team then contrasted these "10X companies"toacarefullyselectedsetofcomparison com paniesthatfailedtoachievegreatness insimilarlyextreme environments. THE NEW FINDINGS Thestudyresultswerefull ofprovocativesurprises.Such as: •Thebest leaders werenotmorerisktaking,morevisionary, and morecreativethanthecomparisons; theyweremoredisciplined, more empirical,and more paranoid. • Innovation byitselfturns out notto be the trumpcard ina cha oticand uncertainworld; moreimportantisthe ability toscale innovation,to blend creativitywithdiscipline. •Followingthe beliefthatleadingina"fastworld"alwaysrequires "fastdecisions"and "fastaction"isagood waytoget killed. • The great companies changed less inreaction to a radically changing worldthanthecomparison companies. Theauthorschallengeconventionalwisdomwiththought- provoking, sticky, and supremelypracticalconcepts.They include: 10Xers; the 20 Mile March; Fire Bullets, Then Cannonballs; Leadingabovethe Death Line;Zoom Out, Then Zoom In; and the SMaC Recipe. (CONTINUED ON BACK FLAP) 1011 GREAT BY CHOICE ALSO BY JIM COLLINS BeyondEntrepreneurship (withWilliamC. Lazier) Managing the Smallto Mid-SizedCompany (withWilliamC. Lazier) BuilttoLast(withJerryI.Porras) Goodto Great Goodto Greatandthe SocialSectors HowtheMightyFall ALSO BY MORTEN T. HANSEN Collaboration GREAT BY UNCERTAINTY, CHAOS, AND LUCK- WHY SOME THRIVE DESPITE THEM ALL Jim Collins --\i/\j^ Morten T. Hansen HARPER BUSINESS AnImprintofHarperCoWmsPublishers www.harpercollins.com greatbychoice.Copyright©2011 byJimCollinsandMortenT.Hansen.Allrights reserved.PrintedintheUnitedStatesofAmerica.Nopartofthisbookmaybeusedor reproduced inanymannerwhatsoeverwithoutwrittenpermissionexceptinthe case ofbriefquotationsembodiedincriticalarticlesandreviews. Forinformation,address HarperCollins Publishers,10East53rdStreet,NewYork,NY10022. HarperCollinsbooksmaybe purchasedforeducational,business, orsalespromo tional use. For information, please write: Special Markets Department, Harper CollinsPublishers, 10East53rdStreet,NewYork,NY 10022. FIRSTEDITION LibraryofCongressCataloging-in-PublicationDatahasbeenappliedfor. ISBN978-0-06-212099-1 11 12 13 14 15 dix/rrd 10 9 8 7 6 5 4 3 2 1 F R O M J To mygrandmotherDelores, who atage 97stillhadbigdreamsandaudaciousgoals. FROM IOOEN: To mydaughters,Alexandra andJulia, whosegeneration willcreate thefuture. JUUHEIHSl Acknowledgments ix 1 Thrivingin Uncertainty 1 2 lOXers 13 3 20 Mile March 39 4 Fire Bullets, Then Cannonballs 69 5 Leadingabove the Death Line 99 6 SMaC 125 7 Return on Luck 149 Epilogue: GreatbyChoice 181 FrequentlyAsked Questions 184 Research Foundations 199 Notes 255 Index 295 vii ACKNOWLEDGMENTS fecould nothave completed this projectwithoutthe small armyof people who made significantcontributions oftimeandintellect. We had a wonderful team of research assistants. They are smart, curious, irreverent, fanatically disciplined people who area joytowork with. Wewould like to thank the following members ofthe Chimp- Works research team: Robyn Bitner for multiplie years of marching on a range of analyses, Kyle Blackmer for turbulence insights, Brad Caldwell for Biomet and Southwest analyses, Adam Cederberg for companyselection and IPO analyses, Lauren Cuje for lOX-company updates and title analysis, Terrence Cummings (a.k.a. Grande) for thousands ofhoursinvested indozens ofpieces ofthe project, Daniel DeWispelare forAmgenanalysis, ToddDriver for lOX-leader analyses and lOX-company updates, Michael Graham for comparison selec tion and comparative analyses, Eric Hagen for the IPO-list SMaC checkandhisbig-brain contributions, Ryan Hallforarangeofquanti tativeanalyses, BethHartmanforturbulenceanalysesandcompanyse lections,Deborah Knoxforindustry-turbulence analyses and extensive IPO analysis, Betina Koski forindustry-turbulence analyses, Michael Lane forcomparisonselectionand comparative analyses, LorileeLin- field for company updates andmultiple years ofSMaCwork, Nicholas M. Osgood for industry-turbulenceanalyses, Catherine Pattersonfor comparison selections and comparative analyses, Matthew Unangst forbackupanalyses and Moore's Lawresearch,and Nathaniel (Natty) ZolaforbecomingtheguruofSouthwestAirlinesversus Pacific South westAirlines (PSA). From Mortensresearch assistants, wethank Chris IX x ACKNOWLEDGMENTS Allen for data analyses, Muhammad Rashid Ansari for industry analy ses, Jayne Brocklehurst for research support, Attrace Yuiying Chang forfactchecking, Hendrika Escoffierfor research support, Roisin Kelly for research support, ChittimaSilberzahn for financial dataandanal yses, Philippe Silberzahn for Microsoft and Apple analyses, William Simpson for data analyses, Gina Carioggia Szigetyfor data analyses in companyselections, Nana von Bernuth for years ofamazing effortand commitment in conducting a wide range ofindispensable analyses, andJames Zeitlerfor data analyses. Weareindebtedtoourcriticalreaderswhoinvestedhours inreading drafts ofthemanuscript, criticizingthe work, offeringsuggestions, and pushingateveryturntomaketheworkbetter. Fortheircandor, insight, and perspective, we would like to thankRon Adner, Joel T.Allison, FACHE, Chris Barbary, Gerald (Jerry) Belle, Darrell Billington, Kyle Blackmer,JohnM.Bremen,WilliamP. Buchanan,ScottCalder,Robin Capehart,ScottCederberg,BrianCornell,LaurenCuje,JeffDonnelly, Todd Driver, David R. Duncan, Joanne Ernst, Mike Faith, Andrew Feiler, Claudio Fernandez-Araoz, Andrew Fimiano, Christopher For- man,JohnFoster, Dick Frost, Itzik Goldberger, Michael Graham,Ed Greenberg, Eric Hagen, Becky Hall,Ryan Hall,Beth Hartman, Liz Heron,JohnB. Hess,JohnG.Hill, Kim HollingsworthTaylor,Thomas F. Hornbein, MD, Lane Hornung, Zane Huffman, Christine Jones, ScottJones, DavidD.Kennedy,AlanKhazei, BetinaKoski, EvaM.H. Kristensen,BrianC.Larsen,KyleLefkoff,JimLinfield(fatherofchimp Lorilee), EdLudwig,WistarH.MacLaren, DavidMaxwell, Kevin Mc- Garvey, MD, MBA, BillMcNabb, Anne-Worley Moelter(SFVG), Mi chael James Moelter, Clarence OtisJr., Larry Pensack, Jerry Peterson, AmyPressman, SamPresti, Michael Prouting, David P. Rea,JimReid, Neville Richardson, Sara Richardson, Kevin Rumon, David G. Sal- yers, Kim Sanchez Rael,VijaySathe, Keegan Scanlon, DirkSchlimm, WilliamF Shuster, Anabel Shyers, Alyson Sinclair, Tim Tassopoulos, Kevin Taweel, JeanTaylor, TomTierney, Nicole Toomey Davis, Mat thewUnangst, NanavonBernuth,H.LawrenceWebb,DavidWeekley, ChuckWexler, Dave Witherow, and Nathaniel (Natty) Zola.Wealso