10XERS
- $10,000 invested in 1972 – led to a value of $6 mil in 2002 – 23 times better than the general market.
- Spectacular results for 15+ years – related to market and industry
- Turbulent environment
- Started small/young
| 10X Case | Era | $10k inv val | Rel to Mkt | Rel to Ind | Comparison |
| Amgen | 1980-2002 | $4.5 m | 24 X | 77.2 X | Genentech |
| Biomet | 1977-2002 | $3.4 m | 18.1 X | 11.2 X | Kirschner |
| Intel | 1968-2002 | $3.9 m | 20.7 X | 46.3 X | AMD |
| Microsoft | 1975-2002 | $10.6 m | 56 X | 118.8 X | Apple |
| Progressive | 1965-2002 | $2.7 m | 14.6 X | 11.3 X | Safeco |
| Southwest | 1967-2002 | $12 m | 63.4 X | 550.4 X | PSA |
| Stryker | 1977-2002 | $5.3 m | 28 X | 10.9 X | USSC |
- Not more creative or visionary
- Not more charismatic or ambitious
- Not luckier or more risk-taking
- Not more heroic or prone to big, bold moves
- Amundsen & Scott 1911 Expeditions
- One achieved spectacular success… the other failure of equal magnitude
- Amundsen – sailing via bicycle, dolphin meat, Eskimos
- Scott – unproven technology, no redundancies, just enough supplies
- One to four thermometers…
- Same goals and exact same environment… different behaviors
Three Consistent Traits
- Fanatic Discipline
- Consistency of action – consistent with values, goals & performance standards
- Didn’t succumb to herd mentality – or alluring opportunities
- Empirical Creativity
- Relying on evidence over opinion
- Made unconventional choices
- Productive Paranoia
- Hyper-vigilance in good times as well as bad
- What could go wrong? How do we prepare?
Plus – Level 5 Ambition
- Driven to create something beyond themselves
- Focus on enduring company success over personal achievements
20 Mile March
- Distinguishing factor in 10X companies
- Focused on hitting specific performance measures with consistency over time
- Requires two types of discomfort
- Delivering performance in difficult times
- Holding back in good times
Elements of a 20 Mile March
- Performance markers with minimum acceptable achievement
- Self-imposed constraints – upper bounds
- Tailored to the enterprise and industry
- Within your control to achieve
- Goldilocks time frame
- Designed by the company and self-imposed
- Achieved with great consistency
Examples of a 20 Mile March
- Stryker – 20% net income growth each year
- Snorkel Award for those below the watermark
- Annual breakfast for those who hit the goal
- Comparison – USSC – 248% growth in 3 yrs, then…
- Southwest Airlines
- Profitable every year
- Slow consistent expansion
- Progressive – profitable combined ratio of 96%
- Intel – Moore’s law – double complexity every 18 months to two years
- Amundsen – 15-20 miles per day regardless of conditions
20 Mile March
- Provided an edge in most volatile markets
- Inverse correlation between pursuit of maximum growth and 10X success
- 20 Mile March philosophy in place at 10X companies before they were successful – helped them get there
- WHAT IS YOUR 20 MILE MARCH? What can you commit to achieving with consistency for 15 to 30 years?
Fire Bullets, Then Cannonballs
- 10X success not driven by innovaton
- 10X companies innovated – but less than expected relative to their industries and comparison companies
- Met the industry threshold for innovation
- Then blended creative intensity with relentless discipline and operating excellence
Bullets, Then Cannonballs
- Fire bullets – empirical tests that
- Are low cost (size appropriate to industry)
- Are low risk (not necessarily high probability of success, but minimal consequences if not)
- Are low distraction (for the overall company)
- Assess: Did they hit anything?
- Consider: Do they merit conversion to cannonballs?
- Convert: Concentrate resources and fire a cannonball
- Don’t fire uncalibrated cannonballs
- Terminate bullets that miss
Cannonballs
- Calibrated: 10X examples
- Biogen – multiple research projects
- Progressive – auto (hit/yes) & homeowners (miss/no)
- Microsoft – DOS/Windows
- Apple – iPod – for iMac, then iTunes, then…
- Uncalibrated: Comparison Company Examples
- Kirschner – high-risk acquisitions
- PSA – Fly-Drive-Sleep; L1011s
- 9% of pioneers end up as market winners
Fire Bullets, Then Cannonballs
- 10X companies fired a lot of bullets that didn’t hit… and even some uncalibrated cannonballs
- 10X companies learned from their mistakes
- Comparison companies fired more uncalibrated (untested) cannonballs
- 10Xers not more innovative or predictive – combined creativity and discipline to better scale the innovations than competitors
Key Question
- Which of the following behaviors do you most need to increase?
- Firing enough bullets
- Resisting the temptation to fire uncalibrated cannonballs
- Committing – converting bullets into cannonballs once you have validation
