MBA1898 Must Read: Great by Choice by Jim Collins

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Hey oh welcome to the Hub RBA show, the podcast your business can depend on every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started back in 2014 with my co founder and today's episode is a must read episode. On our must Read Episodes, I share with you a book that I've read that has influenced me as an entrepreneur. I share with you its takeaways, its insights and and why you should read it too. Today's Must Read is Great by Choice by Jim Collins Jim Collins is a fantastic author and wrote some amazing books that I've reviewed here on the show before. Books like Built to Last and Good to Great. The world is an uncertain place, constantly changing, often challenging. Jim Collins book Great by Choice takes a look at why some companies are unable to survive these challenges and some companies are not only able to survive it, but can even thrive in those conditions. I thought Great By Choice would be a great book to share with you given everything that has gone on with the pandemic. This book is really well researched but at the same time it's an easy read. It's written for the common person. So in today's episode. I want to share with you some of the great things I learned in this book, how you can apply them in your own business, and how to take the first steps in making sure your company is great no matter what happens around the world outside your realm of influence. So let's get into it. Let's get down to business.

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Great by Choice is a great book. It's not a long read, but at the same time provides really profound ideas for you to think about. The book opens up with the idea that companies that thrive in uncertainty rely on discipline. They rely on evidence based innovation and preparedness based on paranoia. I know this sounds crazy, but businesses that pass the test of time understand that the future is unknown. That no matter how much you study trends and your field of knowledge, you can't really accurately predict what will happen in the future. So the smart thing is to be prepared for any situation. Companies like these, when things go wrong, they thrive. To understand why, we only need to analyze the practices of these types of of companies. And that's what Jim Kahns does in this book. In fact, according to Jim's studies in the book, companies that thrive in times of uncertainty actually thrive in a big way compared to other companies, up to 10 times more. Meaning they outperform the competition by 10x. So what's the secret to their success? Well, the bottom line is, is that they have systems in place for every situation. They have contingency plans and they're disciplined in their planning. What does that mean? That means, say for example, you're budgeting so tight in your business that you have no wiggle room if you have a down month. Businesses like that are asking for trouble. Successful businesses that thrive when things are uncertain, when the economy's down, when there's a pandemic, they're prepared for this because they have a nest egg. They put some money aside. They know that things are going to be perfect all the time. So when the going was good, they had their acorns stored up. And as I mentioned in previous episodes, when the economy goes down, when there is a depression or recession in business or in the economy, the most powerful person is the person that is liquid, that has cash. When you have that power, you can negotiate deals you can never negotiate before. People are looking to get rid of assets, so you can buy assets for far less than they are worth. Now he's saying it kind of tug in cheek that this all comes out of paranoia. But it's this idea that hey, these bad things that we see happen over the course of a decade or a century, they're going to happen. History repeats itself. So let's plan accordingly. The next insight I thought was pretty interesting is that he studied these very successful companies. He calls them 10x companies and he noticed that these companies hit their target precisely, their sales targets or growth targets. And they do this year after year, no matter what the conditions are. This means that companies that are around for decades, for generations, they don't try to grow by 50% month over month, every single month. They have modest growth goals, but they hit them every single month. Slow and steady companies like AMD that make microchips. In the 1980s, they literally almost destroyed themselves. They attempted to gain a 60% growth rate and as a result the company over borrowed, leaving itself low on resources when the market collapsed. When things went bad, they had no nest egg. They fell behind competitors like intel who did save for a rainy day. Jim Collins says In his book 10X ers or successful companies is what he refers to when he says 10x ers are bold and inn, but only when the evidence supports such a tactic. This is an interesting, interesting chapter. I really enjoyed this one because he highlights companies like Apple who become famous for their constant innovation and boldness in innovation. But if you look under the surface, they only innovate when required. They don't just innovate for the sake of innovation, to just be inventing new things all the time. They only release innovative products when they are ready for use, meaning that they work really well. A good example of this is that Apple just released their latest iPhones and the iPhone 13 Pro has what they call promotion, which has a 120Hz refresh rate on the screen. Apple is one of the last mobile companies to do this. Samsung's been doing it for a while as well as other companies. They made the innovation leap only when they were ready and now the when they did it, they actually implemented it better than every other company. They did it without wasting battery life, they did it seamlessly. It looks much better in terms of the implementation. So innovation makes sense as long as it actually caches the checks it writes. In 2001, Apple also launched a small scale MP3 player called the Ipod. They were not the first to come out with an MP3 player, but they implemented the iPod or the MP3 player much better than other MP3 players. This then allow them to open up itunes which allow them to sell music and other media. But the point here that Jim is making is Apple doesn't just innovate so they can be cool or come out with the latest thing or have some flashy launch. They only do it when the evidence supports such a tactic, meaning that the tactic is going to work. They have actual proof that their implementation of this innovation is actually going to please their customers, actually going to make a difference in their lives. Otherwise, it's a gimmick. And that's the last thing Apple wants to be known for.

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Another fantastic chapter in Insight in Jim Collins book Great by choice is that great companies that survive the ups and downs of the economy create durable and specific operating procedures. This breeds consistency and success. Our company is totally, totally on board with this. We're big fans of SOPs, which are standard operating procedures. We literally document all our procedures in black and white in our Google Drive. Every single thing we do in our business has an sop, from how to write a blog post to publishing a podcast episode to asking for leave of your employee to where to go if you have a question. The reason why SOPs are so powerful is that it identifies the areas in your business that require a bit of polishing. Maybe the procedure is a little bit broken. It makes you analyze all your procedures. It also makes you conscious of the fact that, hey, your business is basically a set of rules. A set of procedures that work well together allows you to prepare for anything, including if one of your employees gets sick or leaves the company and you need somebody to step in and do their job. If there's an SOP for everything that they do, pretty much anyone in the company can do it because we have the step by step procedure for every task. This makes you feel super, super powerful as a business owner. It makes you feel like, hey, if anything happens, I'm okay. I can just look up the SOP and pull it off. Or somebody else on my team can take care of it. This allows you to have redundancy in your team. This allows you to feel like, hey, my company is prepared for anything, including a sale. Maybe one day you want to sell your company. Those sops are gold. It's going to make it so much easier to sell your company because the new company that wants to buy you are going to be like, oh, everything's laid out. There's no secrets. I don't need to have some sort of long procedure to kind of train my staff or understand how the business works. Everything's documented. SOPs give you the direction and the confidence to succeed. Guys, there is so much more in Jim Collins book. Great by choice, but I'm going to allow you to dig in and explore them on your own. I highly recommend you pick up this book. It's an easy read, but it gets you feeling like, hey, I got to take control. I have to own the what happens when things go wrong in my business, Even though things are not your fault? Thanks so much for listening to the $100 NBA show. If you love what you hear, leave us an Apple Podcast rating and review. We'd love to hear what you think of the show. Before I go, I want to leave you with this. One of the best pieces of advice I heard is that it's super helpful to recognize that when things go wrong, there's a difference between fault and responsibility. You as a company owner, as the founder, as the leader, you are responsible ultimately for everything. It doesn't necessarily mean it's your fault. Things can happen that is somebody else's fault in your company. It could happen because things outside of your realm of influence, like the economy, like your suppliers, like the customers themselves, it may not be your fault, but it's still your responsibility. So owning your plan for whenever things go wrong makes you feel like, hey, I'm responsible. I'm taking responsibility. So no matter what happens, even if it's not my fault, I know how to take care of it. Thanks so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

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