– a quick personal note: I’m away attending to some urgent family business, so I’ve suspended the 2013 GsD Fall Term for a week. In it’s place, I’m reposting one of the most popular series on 27gen – a look at Jim Collins’ book Great by Choice with application to ChurchWorld. It continues to get views almost every day, so I hope you enjoy the entire series
In one of the strangest names I’ve seen applied to a business principle, Jim Collins and Morten Hansen describe three key dimensions of productive paranoia in their book Great by Choice with the following chapter title:
Leading Above the Death Line
The authors use a real story (two different climbing teams’ assault on Mt. Everest in 1996; one succeeded, one had a tragic ending) to illustrate the concept of productive paranoia.
- Build cash reserves and buffers to prepare for unexpected events and bad luck before they happen.
- Bound risk – Death Line risk, asymmetric risk, and uncontrollable risk – and manage time-based risk.
- Zoom out, then zoom in, remaining hypervigilant to sense changing conditions and respond effectively.
10Xers understand that they cannot reliably and consistently predict future events, so they prepare obsessively – ahead of time, all the time – for what they cannot possibly predict. They assume that a series of bad events can wallop them in quick succession, unexpectedly and at any time.
It’s what you do before the storm hits – the decisions and disciplines and buffers and shock absorbers already in place – that matters most in determining whether your enterprise pulls ahead, falls behind, or dies when the storm hits.
10Xers build buffers and shock absorbers far beyond the norm of what other do. The 10X companies studied carried 3 to 10 times the ration of cash to assets relative to the median of what most companies carry and maintained more conservative balance sheets than the comparison companies throughout their histories, even when they were small enterprises.
10X cases are extremely prudent in how they approach and manage risk, paying special attention to three categories of risk:
- Death Line risk (which can kill or severely damage the enterprise)
- Asymmetric risk (in which the downside dwarfs the upside)
- Uncontrollable risk (which cannot be controlled or managed)
10Xers zoom out, then zoom in. They focus on their objectives and sense changes in their environment; they push for perfect execution and adjust to changing conditions. When they sense danger, they immediately zoom out to consider how quickly a threat is approaching and whether it calls for a change in plans. Then they zoom in, refocusing their energies into executing objectives.
While you might not face the same circumstances in ChurchWorld as in the business world (especially in terms of generating revenue), you have a risk profile just as any business does.
Take a look at the environment around you – how much time before the risk profile changes?