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‘Discipline’ or ‘Purpose’ – which one wins in the race for growth? 1

‘Discipline’ or ‘Purpose’ – which one wins in the race for growth?

Jim Collins, the veteran author of Good to Great, believes that “10x companies” – i.e. those which outperform their industry average by 10 times or more – possess 3 fundamental and distinctive traits:

1. Fanatic discipline and monomaniacal focus on achieving goals.

2. Empirical creativity: an obsession with facts over opinion and a readiness to ignore conventional wisdom once armed with these facts.

3. Productive paranoia:  constant worry which fuels relentless preparation and precautions against even the most improbably bad events.

To illustrate 10Xers at work, Collins, along with his co-author Marten Hansen goes on to give some wonderful examples.

“Even his contingencies had contingencies”.

Drawing from outside of the business world, he tells the story of Scott and Amundsen’s race to the South Pole. While Scott took a somewhat relaxed and cavalier approach to the expedition, Amundsen’s level of preparation was truly extraordinary.

Even his contingency plans had contingencies. In some cases there were even contingencies to the contingencies within the contingency plans! He was the personification of productive paranoia which gave him the confidence to march forward, with a sense of knowing that when the inevitable challenges arose, his obsessive levels of preparation – the way in which he managed his risk – would be forgiving when mistakes were made or unforeseen circumstances arose.

Relentless Tester

Amundsen was a relentless ‘tester’ – In preparation for his journey, he ate raw dolphin meat to see if it could provide a decent energy supply. He loaded up with far more supplies than Scott to serve a much smaller team. And, tellingly, for Collins and Hansen, Scott took just one thermometer, which disastrously broke, whereas Amundsen brought four.
Amundsen reached the pole more than a month before Scott and made it back alive. ‘Amundsen and Scott achieved dramatically different outcomes,’ Collins and Hansen write, ‘because they displayed very different behaviours.’

By looking ahead and forecasting potential issues and pitfalls Amundsen engendered in himself and his team a reassuring sense of confidence. By doing the hard work up front, they made the journey somehow ‘easier’ for themselves, in the best sense of the word.

Why Microsoft thumped Apple in the mid 1980s to 1990s

The same applies to companies and helps explain why US company Southwest Airlines trounced its discount rivals and why Microsoft thumped Apple in the mid-1980s to 1990s.

Bill Gates used to keep a photograph of Henry Ford in his office to remind himself of how Ford had been overtaken by General Motors in the early days of the car industry. Gates wanted the constant reminder that, however well Microsoft did, there was almost certainly some younger version of himself toiling in obscurity to one day knock him from his perch.

The 20 mile march

Armed with these behaviours, 10X companies set off on what Collins and Hansen call the ’20 mile march’, a long period of sustained growth, characterized by hitting well-defined performance targets and demonstrating both resolve and control.

Through the discipline of behaving consistently over time and proving resistant to a changing marketplace, an organization discovers self-control. And this, far more than more nebulous ideas such as innovation or creativity, is what determines 10X success.
They compare the process of successful innovation to firing bullets in order to zone in on your target, and only then heaving a cannonball at it to do the job properly. Disasters happen when one uncalibrated cannonball after another is fired, each big, reckless bet made in the hope of recovering from the last one, with little or no time taken to test the waters.
One of the most important lessons in the book is that innovation is not always the surest route to success. In their comparisons of companies in the same industry, notably the biotech firms Amgen and Genentech, Collins and Hansen found that it was the less innovative firm, Amgen, that generated better returns for investors over 20 years. Sometimes, it serves companies to be ‘one fad behind’.
Consistent with this idea is the authors’ assertion that the 10X companies are not the brash risk-takers, but the ones that prepare rigorously for what they cannot predict, the antithesis of many Wall Street banks before the 2008 financial collapse. These companies hoard cash and keep comfortable buffers in every area of their business, just in case. They are hyper-realists, who act according to Collins and Hansen’s ‘SMaC’ methodology, being ‘Specific, Methodical and Consistent’.

Purpose vs Discipline – 10Xing the 10Xers

In 2004, the All Blacks were beaten convincingly by the Springboks.

The incoming All Blacks coach, Graham Henry, found a team that had lost its mojo, its sense of togetherness and most importantly its purpose.

As the number 1 team in the world for so many years, what did they have left to achieve?
Henry inspired the team with a new vision that went beyond the individual players themselves.

The vision was to create a values based, purpose driven team, playing for something bigger than themselves.

His watchword was ‘legacy’: for every single player to leave their jersey in a better place.

His philosophy: “when you’re on top of your game, change your game.”

The culture he created, defined by a collective sense of purpose was like none other in All Blacks history.

The result?

They reached a totally new level of success. With a staggering 87% win rate they went on to win every possible piece of silverware.

Firms of Endearment

In his seminal book, Firms of Endearment, Raj Sisodia, charts the rise of the purpose driven business.

He shows that organizations aligned around their true purpose exponentially outperform their competition.

In fact, he argues that ‘purpose’ is the magic fuel that can break the bonds of conventional growth and take companies to a whole new space, outperforming Collins’ Good to Great companies.

When times are tough and external circumstances are beyond our control, often the best place to look is inwards.

When we remind ourselves of what our true purpose is, in life and in business, we tap into an energy that gives us the fuel to change the world, or at least some small part of it.

At The CFO Center our mission is to help companies define their true purpose – what they really want from their life/business – and build the plan to actually make it happen.

In fact, we help you bring the discipline described by Collins into your business to give you the space to tap into your true purpose and build a legacy you can be proud of.

If you would like to have a conversation about your ambition for your own business contact us at www.thecfocenter.com or [email protected]

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