In this chapter, the authors Collins and Hansen (2011) explore the three dimensions of productive paranoia that include building cash reserves and buffers, bound risk, and zoom in, zoom out. Under building cash reserves and buffers, the authors explain that success of a company during periods of economic storms depends on how well a company has prepared for these unexpected events and back lucked before they happen. On the other hand, the authors suppose, on bound risk dimension, that understanding the three basic types of risks in another impact factor in meeting challenges brought by economic downturns. He explains the three types of risks: death line risk is one which can either "kill" or cause severe damage to an enterprise; asymmetric risk is that in which the downside thwarts the growth of the upside; and uncontrollable risk is the unique type of risk that can neither be controlled nor managed. At this point, the authors embark on explaining how 10X leaders employ risk management techniques that keep their companies successful despite the storms.
According to Collins and Hansen (2011), 10Xers recognize an important fact that they cannot predict the future, but they can create it. The unpredictability of the future comes with the fact that such an attempt at prediction would be highly unreliable and inconsistent, necessitating obsessive planning ahead at all times, always. This, according to Collins and Hansen (2011), is what 10X leaders are good at. These managers assume that a series of negative events would ensure their quick succession at any time and unexpectedly. However, the aftermath of such a storm - pulling forward, falling behind or getting killed in the process - will depend on how decisions were made and which principles informed such decisions much earlier before the events occurred. Accordingly, Collins and Hansen (2011) reiterate that the ability of 10X leaders to prepare in time for all the three types of risks discussed is the basis of their success. He thus concludes that a change that has come rapidly does not require a disciplined thought or action rather it requires that a leader applies integrity in order to zoom out when there is a need to make fast yet rigorous decisions and zoom in when there is a need for superb execution of a business strategy.
Jim Collins and Hansen (2011) discuss very critical issues that are not only strategic to the survival of companies but are the building blocks of resiliency and sustainability of businesses in the dynamic global market today. Persistence of good performance at all times is, however, almost unnecessary if not impossible. This does not come out clear from Collins and Hansen's arguments. Persistent good performance may not be a very plausible idea in the face of a global economic downturn such as that of 2008. This is because these phenomena are macro-economic factors that are off the control of any single organization. What should be important is the ability to recover from such shocks. Probably, this is what Collins and Hansen (2011) address in a way that is partly appreciable and partly open to criticism.
Collins and Hansen (2011) open their discussion in the chapter by what constitutes best-practices when it comes to becoming resilient in the face of economic adversities. Here, he presents three key ways to get over three key business risks. This is very brilliant of him. To begin with, it is true that firms should always ensure that they have a strong backup in terms of reserves and buffers so that they can recover quickly from economic storms. This has been the survival tactic of many Fortune 500 firms. During hard economic times, the most probable peril is the exhaustion of operating funds in a diluted currency economy, probably due to skyrocketing prices of factors of production. Sojourning through this moment requires enough reserve that should not be depleted whether the downturn is short or long. This is where the author has not been very clear. How much reserve is just enough for a company? Well, history has it that one of the companies among those Collins and Hansen(2011) talked about is now bankrupt while another is on government receivership, which reiterates the same question that how much is just enough to get a company through economic downturns. At this point, it would be essential to quote a saying in this chapter: We cannot predict what the future holds, but we can create it.
According to Collins and Hansen (2011), 10X leaders are the most proficient business leaders when it comes to creating the future for their businesses. Unfortunately, such attempts are with a lot of inconsistencies and unreliability, probing them to take obsessive approaches. One of the stances shown by these leaders is the greater ability to take risks through their rushed decision-making in order to overcome issues to do with timing when it comes to unforeseen circumstances. But it is also true that this rushed decision-making does not result in a quality outcome. In fact, data has consistently shown that spending time to take on rational decisions is the basis of success of many companies, which again brings questions as to the rushed decision could be essentially helpful. May be it could be helpful in some circumstances but not always and therefore, should not be taken as one of the best-practices. Even in the dynamic world of technology, rushing to adopt a technology does not necessarily result in progress ahead of others because a technology must be accepted by the general population (Martinez, 2012). It must come out as the next big thing in the market unless we are talking about a niche market. This is clearer now with smartwatches that have struggled for market penetration since they were launched way back in 2014 as the next big thing in mobile technology. But as research has consistently shown over this period, the watches have not been the technological revolution they had expected (Mathar, 2015). This, augmented by already overwhelming technology in the market, smartwatch producers have now to focus on a niche market rather than the general consumer market, until when it has gained acceptance as a technological revolution (Mathar, 2015). Thus, should a company such as Samsung or Apple over-invested in this technology, it would be chaos created by themselves through what should be rushed decision-making. However, with a rational approach to this decision and taking time to analyze the market should be probably the reason why Apple maintains the greatest market share of about 52% in smartwatch global market (Mathar, 2015), but still with low volumes of shipment. In short, rushed decisions is not necessarily what keeps 10Xers ahead for the rest. It is, however, true that we cannot dispute this fact that at times, it surely helps.
Another important issue that attracts criticism is the interpersonal qualities of 10X leaders that Collins and Hansen (2011) talk about in Chapter 2, but revisits in Chapter 5. There are many qualities that are worth noting, but one quality is questionable: humility. It is plausible to say that prudence, discipline, creativity, boldness, consistency and boldness are very important qualities for successful management of corporate risks that 10X leaders have shown overtime. But that 10X leaders are humble is disputable especially with regards to history. Here, we probably have to adopt a fine specimen of these 10Xers who is the late Apple founder Steve Jobs. Way back in 2002 when Collins and his colleague analyzed their data on corporate governance, they had little knowledge about possibility of Apple being one of the biggest historical turnarounds - way ahead of even larger corporations such as Microsoft in terms of market value (Murray, 2016). Yet today, this turnaround story is shared by the Apple community and share in remembrance of late Steve Jobs who was a bold, innovative, visionary and most importantly, egoistic leader. It is this last trait that calls for discussion. Probably egoism is a trait of some 10X leaders that did not cross Collins and Hansen's mind during their research (Beattie, 2016).
In conclusion, the authors have tackled the most important issues. While the chapter attracts debates on some of the issues presented by the authors, the truth remains that this chapter is a very crucial to developing a resilient organizational culture that can overcome tests of moments. The chapter highlights key risks and embarks on how these risks can be handled by combination of unique character traits and good resource management. However, it is clear the data used was taken long before the greatest economic downturn of 2008 so that the authors must have missed on some important issues of risk management. The chapter remains relevant so long as we are talking about the on-going need to be big risk-taker in the dynamic global economy.
Beattie, K. (2016). Book Summary: Great by Choice. The Growth Faculty. Retrieved 2 October 2016, from http://www.thegrowthfaculty.com.au/articles/great-by-choice-book-summary#.V_Cewr1RXqA
Collins, J. C., & Hansen, M. T. (2011). Great by choice: Uncertainty, chaos, and luck : why some thrive despite them all. Ch. 5: "Leadership above The Death Line". New York, NY: HarperCollins Publishers.
Martinez, P. (2012). The consumer mind. London: Kogan Page.
Mathar, T. (2015). Smartwatch Market Research, Insight & Intelligence. Ljresearch.co.uk. Retrieved 24 September 2016, from http://www.ljresearch.co.uk/smartwatch-unlikely-to-cause-the-next-mobile-revolution/
Murray, A. (2016). Turbulent Times, Steady Success. WSJ. Retrieved 2 October 2016, from http://www.wsj.com/articles/SB10001424052970204422404576595722814588188
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