Twenty Mile Marching Amidst Shiny Objects: Awesomeness Chapter 24
My fifth recommendation on money and business
This is the full twenty fourth chapter of my book, and the fifth on money and business, from my book Awesomeness: An Amateur Potpourri of a How-To-Guide.
See part 23: A Purposeful Approach, here.
Jim Collins has dedicated his life to understanding what makes companies great. In his book Great by Choice, Collins looks at which companies thrive and which do not under volatile market conditions. One of his major findings is that companies that were consistent in their approach did substantially better than those that took an erratic approach, either trying to jump ahead quickly or hunker down.
He calls it “20 mile marching” after the philosophy of expedition leader Ronald Amundsen. In 1911, Amundsen and his team faced off against Robert Falcon Scott in a quest to be the first people to ever reach the South Pole. Amundsen’s team won. Scott’s team not only lost—they didn’t survive.
According to Collins, what separated them was Amundsen’s almost dogmatic approach to preparation. As Amundsen said,
“Victory awaits him who has everything in order – luck people call it. Defeat is certain for he who has neglected to take necessary precautions in time; this is called bad luck.”[1] (p. 13)
But it wasn’t just dogmatic preparation; it was “fanatic discipline.” Namely,
“Amundsen adhered to a regime of consistent progress, never going too far in good weather, careful to stay far away from the red line of exhaustion that could leave his team exposed, yet pressing ahead in nasty weather to stay on pace. Amundsen throttled back his well-tuned team to travel between 15 and 20 miles per day… When a member of Amundsen’s team suggested they could go faster, up to 25 miles a day, Amundsen said no.”[2] (p. 61)
Needless to say, Robert Falcon Scott had no such discipline.
Jim Collins then applies the analogy to business, and I think it could just as easily be applied to life in general,
“The 20 Mile March is more than a philosophy. It’s about having concrete, clear, intelligent and rigorously pursued performance mechanisms that keep you on track. The 20 Mile March creates two types of self-imposed discomfort: (1) the discomfort of unwavering commitment to high performance in difficult conditions, and (2) the discomfort of holding back in good conditions.”[3]
One example of such discipline is Southwest Airlines. They would open just a couple new cities each year, no matter how good the market was. In 1996, more than 100 cities wanted Southwest to open there; instead, they opened just four new locations—and they had an unbelievable 30 consecutive profitable years to show for it! Even after 9/11, when the airline industry was in shambles, Southwest still made a profit.
On the other side of the equation, Collins notes the failure of those who bounce around from thing to thing in his book How the Mighty Fall,
“In December of 1980, Bank of America surprised the world with its new CEO pick… a vigorous forty-one-year-old… who told The Wall Street Journal that he believed the bank needed a good “kick in the fanny.” Seven months after taking office, Samuel Amracost bought discount brokerage Charles Schwab… Then he engineered the largest interstate banking acquisition to date in the nation’s history, buying Seattle-based Seafirst Corp. He launched a $100 million crash program to blast competitors in ATMs… Amracost ripped apart outmoded traditions, closed branches, and ended lifetime employment. He instituted more incentive compensations…“[4]
And on and on and on. The result?
“Bank of America fell from its net income peak of $600 million into a decline that culminated from 1985 to 1987 with some of the largest losses up to that point in banking history.“[5]
What this illustrates the importance of taking a slow but steady approach. After all, the tortoise beat the hare.
It also means that we should avoid being a jack of all trades and a master of none.
In Collins most famous book, Good to Great, he looked at 11 companies whose stocks performed at or below the market for 15 years before a transition, which saw them beat the market for 15 consecutive years by at least a factor of three. He then compared those companies to 11 similar firms that made no such transition. One of his team’s key discoveries was what he phrased “The Hedgehog Concept.” The term comes from Isaiah Berlin’s essay, “The Hedgehog and the Fox.” As Collins describes it,
“The fox knows many things, but the hedgehog knows one big thing… Berlin extrapolated from this little parable to divide people into two basic groups: foxes and hedgehogs. Foxes pursue many ends at the same time and see the world in all its complexity. They are “scattered or diffuse, moving on many levels”… never integrating their thinking into one overall concept or unifying vision. Hedgehogs, on the other hand, simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything.”[6]
In plain English, the great companies Collin’s studied implemented The Hedgehog Concept, whereas the not-so-great companies acted like foxes. One example is Walgreens (a hedgehog) which drove fanatically to create convenient drugstores and nothing more. They went so far as to close down a Walgreen’s store in a good location and open a new store “if a great corner location would open up just half a block away” since corner lots allowed customers to “enter and exit from multiple directions,”[7] and were thereby the most convenient. CVS seems to have their own Hedgehog concept as well; which is to plop a store right next to Walgreens every time a new Walgreens opens.
But I digress, the comparison company Collins used for Walgreen’s was Eckerd, who by contrast, “…compulsively leapt at opportunities to acquire clumps of stores – forty two units here, thirty six there, in hodgepodge fashion with no obvious unifying theme,”[8] while also throwing itself into the home video market and other industries. Walgreens flourished, while Eckerd floundered.
John Maxwell discusses the same thing in his book The 21 Irrefutable Laws of Leadership. Rule 17 is the Rule of Prioritization, and he notes how Jack Welch took GE to unprecedented heights when he made the company focus on what it was best at, rather than dabble in a little bit of everything. As Maxwell notes,
“When Welch assumed leadership of GE in 1981, it was a good company. It had a ninety year history, the company stock traded at $4 per share, and the company was worth about $12 billion, eleventh best on the stock market. It was a huge, diverse company that included 350 strategic businesses. But Welch believed the company could become better. What was his strategy? He used the Law of Priorities.”[9]
Jack Welch decided to cut out every business line that couldn’t meet one simple criterion; to be either the best or second best in the world at it. Of the 348 businesses or products lines he started with, all but 14 were either closed down or sold. And the result?
“Since [Welch] took over, GE’s stock has experienced a 2 to 1 split four times. And it trades at more than $80 per share as I write this [in 1998]. The company is currently ranked as the nation’s most admired company according to Fortune, and it has recently become the most valuable company in the world, with a market capitalization of more than $250 billion.”[10]
In Pixar’s wonderful film Up, the main characters find themselves amongst dogs who have collars that translate their thoughts into English. The thoroughly insightful dog Doug then explains to them how “my name is Doug” and he has “a good and smart master who made this collar so I can talk” and then “SQUIRREL!”[11]
Doug immediately loses track of what he’s talking about and stares off camera at the squirrel for several seconds before returning his attention to our protagonists. And this joke is repeated throughout the movie to great effect.
Life is full of squirrels or shiny objects as I like to put it. These shiny objects could be a new entrepreneurial opportunity that’s completely different than the one your pursuing, an attractive girl or boy who just happens to start flirting with you despite your Facebook relationship status, a job offer from a different company, the bright idea to learn a new language or instrument or some late-night infomercial selling whatever. These are shiny objects.
I don’t mean to say that none of these are worth pursuing. But all of them cannot be simultaneously pursued. To master any given thing or to even become good at it requires a lot of time and energy. And unless your intent is to have a harem, the same could be said of any good relationship. You have to pick judiciously.
Furthermore, you can’t cheat. You’re not going to become a legendary pianist overnight. Nor is your new business venture going to be a Fortune 500 IPO in a few months. Great success requires a consistent, diligent and focused approach.
In whatever you pursue, to do it right, you must “20 mile march” in order to get there while avoiding the constant stream of shiny objects lined up along both sides of the road.
[1] Jim Collins, Great by Choice, HarperBusiness, Copyright 2011, Pg. 13
[2] Jim Collins, Great by Choice, HarperBusiness, Copyright 2011, Pg. 61
[3] Ibid., Pg. 45
[4] Jim Collins, How the Mighty Fall, HarperCollins Publishers, Copyright 2009
[5] Ibid.
[6] Jim Collins, Good to Great, HarperCollins Publishers, Copyright 2001, Pg. 90-91
[7] Ibid., Pg. 92
[8] Jim Collins, Good to Great, HarperCollins Publishers, Copyright 2001, Pg. 93
[9] John C. Maxwell, The 21 irrefutable Laws of Leadership, Thomas Nelson, Inc., Copyright 2007, Pg. 181-182
[10] John C. Maxwell, The 21 irrefutable Laws of Leadership, Thomas Nelson, Inc., Copyright 2007, Pg. 182
[11] Up, Pete Docter and Bob Peterson, Walt Disney Pictures and Pixar Animation Studios, 2009
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