Success Brings Unintended Consequences

During a recent Auxano All-Staff call, founder Will Mancini brought up a conversation that he, Auxano Managing Officer Jim Randall, and noted church consultant George Bullard had that revolved around a book by Jim Collins – How the Mighty Falland its relevance to church and denominational settings today. This post from 2011 came to mind, so I’m reposting it.


Starbucks’ battle back from mediocrity is well documented in CEO Howard Schultz’s 2011 book Onward. Pairing it with Jim Collins’ 2009 book How the Mighty Fall gives ChurchWorld leaders a sobering lesson in how to handle success.

Collins’ 5 Stages of Decline begin with “Hubris Born of Success.” He describes it in a short paragraph:

Great enterprises can become insulated by success; accumulated momentum can carry an enterprise forward, for a while, even if its leaders make poor decisions or lose discipline. Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place. When the rhetoric of success (“We’re successful because we do the specific things”) replaces penetrating understanding and insight (“We’re successful because we understand why we do the specific things and under what condition they would no longer work”), decline will likely follow.

Here’s what Starbucks’ Schultz had to say in looking back to early 2008:

If not checked, success has a way of covering up small failures, and when many of us at Starbucks became swept up in the company’s success, it had unintended effects. We ignored, or maybe we just failed to notice, shortcomings.

We were so intent upon building more stores fast to meet each quarter’s projected sales growth that, too often, we picked bad locations or didn’t adequately train newly hired baristas. Sometimes we transferred a good store manager to oversee a new store, but filled the old post by promoting a barista before he or she was properly trained.

courtesy sodahead.com

courtesy sodahead.com

As the years passed, enthusiasm morphed into a sense of entitlement, at least from my perspective. Confidence became arrogance and, as some point, confusion as some of our people stepped back and began to scratch their heads, wondering what Starbucks stood for.

In the early years at Starbucks, I liked to say that a partner’s job at Starbucks was to “deliver on the unexpected” for customers. Now, many partners’ energies seemed to be focused on trying to deliver the expected – mostly for Wall Street.

Great organizations foster a productive tension between continuity and change. On the one hand, they adhere to the principles that produce success in the first place, yet on the other hand, they continually evolve, modifying their approach with creative improvements and intelligent adaptation.

When organizations fail to distinguish between current practices and the enduring principles of their success, and mistakenly fossilize around their practices, they’ve set themselves up for decline.

By confusing what and why, Starbucks found itself at a dangerous crossroads. Which direction would they go?

Questions for ChurchWorld Leaders:

  • Is your organization locked in on your vision, core values, purpose, and culture?
  • Or do you move in first this direction, then that, just to have “success”?

Beware the unintended consequences of success.

an updated post on a series reviewing Onward, by Howard Shultz

Onward

preparation for a new series coming soon on Leading the Starbucks Way, by Joseph Michelli

Print

We Are Freed by Our Choices

During a recent Auxano All-Staff call, Auxano founder Will Mancini brought up a conversation that he, Auxano Managing Officer Jim Randall, and noted church consultant George Bullard had that revolved around a book by Jim Collins – How the Mighty Fall – and its relevance to church and denominational settings today. This post from 2011 came to mind, so I’m reposting it today.


 

Here’s a quiz for you: What does this list of companies have in common? Xerox. Nucor. IBM. Texas Instruments. Pitney Bowes. Nordstrom. Disney. Boeing. HP. Merck.

Every one took at least one tremendous fall at some point in its history and recovered.

In every case, leaders emerged who broke the trajectory of decline and simply refused to give up on the idea of not only survival, but of ultimate triumph despite the most extreme odds.

Churches – and denominations – can go through the same cycle. During a conversation with a pastor today, he asked me what I thought about his church, and by extension, his denomination – in terms of success and failure. The lively discussion that followed reminded me of Jim Collins’ book How the Mighty Fall, ” in which he examines the five stages of decline and comes to a surprising conclusion:

 Circumstances alone do not determine outcomes. We are not imprisoned by our circumstances, our setbacks, our history, our mistakes, or even staggering defeats along the way. We are freed by our choices.

The signature of the truly great versus the merely successful is not the absence of difficulty, but the ability to come back from setbacks, even cataclysmic catastrophes, stronger than before. Great nations can decline and recover. Great companies can fall and recover. Great social institutions can fall and recover. And great individuals can fall and recover. As long as you never get entirely knocked out of the game, there remains always hope.

A major source of Collins’ inspirations has been Winston Churchill, a lesson in life of how the mighty fall – and come back stronger than ever. One of his most famous and inspiring speeches occurred in the darkest days of World War II. Collins adapted and expanded it for his closing remarks in “How the Mighty Fall.” With apologies to both Churchill and Collins, here is a modification of that same speech for the church.

Never give in. Be willing to change tactics, but never give up your vision. Be willing to end failed ministry ideas, even to stop doing things you’ve done for a long time, but never give up on the idea of building a great church to reach people for God. Be willing to change the way you do ministry, even to the point of being almost unrecognizable with what you do today, but never give up on the principles that define your church’s vision. Be willing to embrace the inevitability of creative destruction, but never give up on the discipline to create your own future. Be willing to embrace loss, to endure pain, to temporarily lose freedoms, but never give up faith in the ability to prevail for the cause of Christ. Be willing to work together with other churches, to accept necessary compromise in the areas of non-essentials, but never-ever-give up your core vision and values.

Failure is not so much a physical state as a state of mind; success is falling down, and getting up one more time, without end.

 

 

 

 

The Most Important List You Can Make Today

Jim Collins, teacher to companies around the world and best-selling author (Good to Great, Built to Last, How the Mighty Fall, and Great by Choice) speaks and writes about it frequently.

Tom Peters, consummate speaker and game-changing author (The Search for Excellence, Re-imagine, The Pursuit of WOW!, and The Little Big Things) doesn’t just speak on the subject – he rants about it.

Steven Covey, business consultant, professor, and author (The Seven Habits of Highly Effective People, First Things First, and Principle-Centered Leadership) made it the foundation of his time management principles.

Richard Swenson, physician-futurist, award-winning educator, and best-selling author (Margin, The Overload Syndrome, and In Search of Balance) thinks it is one of the keys to restoring balance in our lives.

Maybe you’re getting the idea it’s a big deal. It is…

…especially for such an innocuous thing.

Here it is:

“To-Don’ts” are more important than “To-Dos”

 

NotToDoList2

A little elaboration:

  • What you decide not to do is probably more important than what you decide to do
  • You probably can’t work on “to-don’t” alone – you need a sounding board/mentor/advisor/nag that you trust to act as a drill sergeant who will march you to the wood-shed when you stray and start doing those time-draining “to-don’ts.”

With only a little tongue-in-cheek:

The top of your “to-do” list for today is to immediately begin working on your “to-don’t” list!

The Geometry of Choice

Take a look at almost any decision-making reference in a book or magazine and what do you see? Most likely a matrix with one desirable feature across the top and another down the side. Conventional wisdom says you read the matrix in straight lines – you have to choose which feature you’re going to favor.

What if you chose both?

I first came across this idea in Jim Collins’ classic book “Good to Great.” Since then, many writers have used the phrase “both/and” to refer to decision-making that references both issues in a choice. Alan Webber, writing in “Rules of Thumb” states it this way:

We’ve moved from an either/or past to a both/and future.

One of the skills that defines an entrepreneur and an innovator is the capacity to generate new lines of sight. That mean looking at problems along a new dimension. It means rejecting old either/or choices and finding new both/and combinations.

It’s like the game of chess. Most of the plays involve moving pieces forward or backward or sideways. But the bishop? It’s a game changer because it moves on the diagonal. Now you have the ability to move across and up on the board at the same time. You have changed the geometry of choice with one move.

How are you going to put into practice the skill of making “both/and” decisions in your organization today?

Return on Luck

– 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

Today marks the final post this week on Great by Choice, the recently released book by Jim Collins and his colleague Morten Hansen. In much the same way as Collins’ previous works (particularly Good to Great), Great by Choice is written to a business leader audience using primarily business examples – but it is dead-center must reading for leaders in ChurchWorld.

Here are Collins’ and Hansen’s summary thoughts on the final principle in the book, Return on Luck.

courtesy jodymichael.com

courtesy jodymichael.com

A luck event is defined as one that meets three tests:

(1) some significant aspect of the event occurs largely or entirely independent of the actions of the key actors in the enterprise;

(2) the event has a potentially significant consequence (good or bad); and

(3) the event has some element of unpredictability.

Luck happens, a lot, both good luck and bad luck. Every company in the research experienced significant luck events in the era of analysis. Yet the 10X cases were not generally luckier than the comparison cases.

  • The 10X companies did not generally get more good luck than the comparisons.
  • The 10X companies did not generally get less bad luck from the comparison.
  • The 10X companies did not get their good luck earlier than the comparisons.
  • The 10X companies cannot be explained by a single giant-luck spike.

There are four possible ROL scenarios

  • Great return on good luck
  • Poor return on good luck
  • Great return on bad luck
  • Poor return on bad luck.

10Xers credit good luck as a contributor to their success, despite the undeniable fact that others also experienced good luck, but the never blame bad luck for setbacks or failures.

“Who Luck” – the luck of finding the right mentor, partner, teammate, leader, friend – is one of the most important types of luck. The best way to find a strong current of good luck is to swim with great people, and to build deep and enduring relationships with people for whom you’d risk your life and who’d risk their lives for you.

How’s your luck today?

Great by Choice

SMaC Down!

– 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

 

All week long I’ve been posting excerpts and summaries from Great by Choice, the latest work by Jim Collins (assisted this time by Morten Hansen). Great by Choice asks a simple question:

Why do some companies thrive in uncertainty, even chaos, and others do not?

Collins and Hansen have answered that question with solid principles, based on nine years of research and interviews. The following are the authors’  comments on SMaC.

SMaC stand for Specific, Methodical, and Consistent.

The more uncertain, fast-changing, and unforgiving your environment, the more SMaC you need to be.

A SMaC recipe is a set of durable operating practices that create a replicable and consistent success formula; it is clear and concrete, enabling the entire enterprise to unify and organize its efforts, giving clear guidance regarding what to do and what not to do. A SMaC recipe reflects empirical validation and insight about what actually works and why.

Developing a SMaC recipe, adhering to it, and amending it (rarely) when conditions merit correlate with 10X success. This requires the three 10X behaviors:

  • empirical creativity (for developing and evolving it)
  • fanatic discipline (for sticking to it)
  • productive paranoia (for sensing necessary changes).
courtesy greeceathena.wordpress.com

courtesy greeceathena.wordpress.com

Amendments to a SMaC recipe can be made to one element or ingredient while leaving the rest of the recipe intact. Like making amendments to an enduring constitution, this approach allows you to facilitate dramatic change and maintain extraordinary consistency.

Far more difficult than implementing change is figuring out what works, understanding why it works, grasping when to change, and knowing when not to.

What is your SMaC recipe? Is it still valid, or does it need amending?

Continually question and challenge your recipe, but change it rarely.

Great by Choice

Leading Above the Death Line

– 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

courtesy peakfreaks.com

courtesy peakfreaks.com

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.

  1. Build cash reserves and buffers to prepare for unexpected events and bad luck before they happen.
  2. Bound riskDeath Line risk, asymmetric risk, and uncontrollable risk – and manage time-based risk.
  3. 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:

  1. Death Line risk (which can kill or severely damage the enterprise)
  2. Asymmetric risk (in which the downside dwarfs the upside)
  3. 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?

What have you done to get ready for it?

Great by Choice

Fire Bullets, Then Cannonballs

– 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 Jim Collins’ last book Great by Choice, he and colleague Morten Hansen used extensive research to identify companies whose financial performance bettered their competition by at least a factor of 10 over the study period. Identifying these organizations and their leaders as 10Xers, they then discovered three core beliefs that these organizations had in common. Their research also revealed some common principles these organizations practiced; principles that lead the companies to greatness in environments characterized by big forces and rapid shifts that leaders could not predict or control.

Take this one, which could come out of the latest “Pirates of the Caribbean” movie:

Fire bullets, then cannonballs.

Here is a summary of what Collins and Hansen said about this principle:

A “fire bullets, then cannonballs” approach better explains the success of 10X companies than big leap innovations and predictive genius. A bullet is a low-cost, low risk, and low distraction test or experiment. 10Xers use bullets to empirically validate what will actually work. Based on that empirical validation, they then concentrate their resources to fire a cannonball, enabling large returns from concentrated bets.

courtesy examiner.com

courtesy examiner.com

The 10X cases fired a significant number of bullets that never hit anything. They didn’t know ahead of time which bullets would hit or be successful.

Next, there are two types of cannonballs, calibrated and uncalibrated.

  • A calibrated cannonball has confirmation based on actual experience – empirical validation – that a big bet will likely prove successful.
  • An uncalibrated cannonball means placing a big bet without empirical validation.
Cannon

courtesy jackintheteambox.com

Uncalibrated cannonballs can lead to calamity. The companies researched paid a huge price when big, disruptive events coincided with their firing uncalibrated cannonballs, leaving them exposed.  10Xers periodically made the mistake of firing an uncalibrated cannonball, but they tended to self-correct quickly. The comparison cases, in contrast, were more likely to try to fix their mistakes by firing yet another uncalibrated cannonball, compounding their problems.

Failure to fire cannonballs, once calibrated, leads to mediocre results. The idea is not to choose between bullets or cannonballs, but to fire bullets first, then fire cannonballs.

The difficult task is to marry relentless discipline with creativity, neither letting discipline inhibit creativity nor letting creativity erode discipline. This combination of creativity and discipline, translated into the ability to scale innovation with great consistency, better explains some of the greatest stories – from Intel to Southwest Airlines, from Amgen’s early years to Apple’s resurgence under Steve Jobs – than the mythology of big-hit, single-step breakthroughs.

The Leader’s Key Question

Which of the following behaviors do you most need to increase?

  • Firing enough bullets
  • Resisting the temptation to fire uncalibrated cannonballs
  • Committing, by converting bullets into cannonballs once you have empirical validation

Ready – Aim – Fire!

Great by Choice

20 Mile March

– a quick personal note: I’m away attending to some urgent family business, so I’ve had to suspend 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

Great by Choice is the latest work by Jim Collins, answering a single question: Why do some companies thrive in uncertainty, even chaos, and others do not? Collins and his colleague Morten Hansen enumerate the principles for building a truly great enterprise in unpredictable, tumultuous, and fast-moving times.

Like the world we live in today.

Yesterday’s post looked at the three core behaviors that Collins and Hansen identified in their successful group – the 10Xers.

courtesy gazellessystems.com

courtesy gazellessystems.com

The first of these – Fanatic Discipline – is illustrated by the term “20 Mile March.” You need to read the book to get the full understanding, but here is Collins’ summary:

To “20 Mile March” requires hitting specified performance marks with great consistency over a long period of time. It requires two distinct types of discomfort, delivering high performance in difficult times and holding back in good times.

A good 20 Mile March has the following seven characteristics:

  • Clear performance markers
  • Self-imposed constraints
  • Appropriate to the specific enterprise
  • Largely within the company’s control to achieve
  • A proper timeframe – long enough to manage; yet short enough to have teeth
  • Imposed by the company on itself
  • Achieved with high consistency

A 20 Mile March needn’t be financial. You can have a creative march, a learning march, a service-improvement march, or any other type of march, as long as it has the primary characteristics of a good 20 Mile March.

The 20 Mile March builds confidence. By adhering to a 20 Mile March no matter what challenges and unexpected shocks you encounter, you prove to yourself and your enterprise that performance is not determined by your conditions but largely by your own actions.

Failing to 20 Mile March leaves an organization more exposed to turbulent events. Every comparison case had at least one episode of slamming into a difficult time without having the discipline of a 20 Mile March in place, which resulted in a major setback or catastrophe.

The 20 Mile March helps you exert self-control in an out-of-control environment.

10X winners set their own 20 Mile March, appropriate to their own enterprises; they don’t let outside pressures define it for them.

20 Mile Marching wasn’t a luxury afforded to the 10X cases by their success; they had 20 Mile Marches in place long before they were big successes, which helped them to become successful in the first place.

How far are you going to march today? And tomorrow? And the next day? and the next…

Great by Choice

Are You a 10Xer?

– a quick personal note: I’m away attending to some urgent family business, so I’ve had to suspend 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

Jim Collins’ latest book is out – and it’s another winner, packed with an amazing depth of research that he and colleague Morten Hansen have distilled down into thought-provoking, sticky, and supremely practical concepts. Great by Choice is the equal to Good to Great, and is a must-read for leaders in ChurchWorld. Get your copy today, and dive into it. You’ll soon be introduced to some amazing concepts.

Like the 10Xer.

With a team of more than twenty researchers, Collins and Hansen studied companies that rose to greatness – beating their industry indexes by a 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 companies that failed to achieve greatness in similarly extreme environments.

Weaving the story of South Pole explorers Roald Amundsen and Robert F. Scott throughout the narrative, and juxtaposing them with current CEOs, Collins and Hansen paint a vivid picture of what 10X organizations (and their leaders) look like:

  • Fanatic discipline: 10Xers display extreme consistency of action – consistency with values, goals, performance standards, and methods. They are utterly relentless, monomaniacal, and unbending in their focus on their quests.
  • Empirical creativity: when faced with uncertainty, 10Xers do not look primarily to other people, conventional wisdom, authority figures, or peers for direction; they look primarily to empirical evidence. They rely upon direct observation, practical experimentation, and direct engagement with tangible evidence. They make their bold, creative moves from a sound empirical base.
  • Productive paranoia: 10Xers maintain hypervigilance, staying highly attuned to threats and changes in their environment, even when – especially when – all’s going well. They assume conditions will turn against them, at perhaps the worst possible moment. They channel their fear and worry into action, preparing, developing contingency plans, building buffers and maintaining large margins of safety.

Underlying the three core 10Xer behaviors describe above is a motivating force: passion and ambition for a cause or company larger than themselves. They have egos, but their egos are channeled into their companies and their purposes, not personal aggrandizement.

On the one hand, 10Xers understand that they face continuous uncertainty and that they cannot control, and cannot accurately predict, significant aspects of the world around them. On the other hand, 10Xers reject the idea that forces outside their control or chance events will determine their results; they accept full responsibility for their own fate.

Are you a 10Xer?

Great by Choice